Queen v McEachern [1967] PGSC 64 (6 April 1967)

IN THE SUPREME COURT
OF THE TERRITORY OF
PAPUA NEW GUINEA

CORAM: CLARKSON, J.

BETWEEN:

THE QUEEN

v.

LEONARD FRANCIS McEACHERN

This matter came before the Supreme Court in its Criminal sittings in Port Moresby on the 3rd April, 1967, when the Crown Prosecutor presented an indictment containing 16 counts against the accused.

Immediately the indictment had been presented, and before the accused had been required to plead to any count, Counsel for the defence moved to quash the indictment on the grounds that the committal proceedings and the indictment which followed were nullities.

The Crown Prosecutor objected to my entertaining the motion at that stage of the proceedings. He claimed, in effect, that the accused should be called upon under Section 594 of the Criminal Code to plead at least to the first count of the indictment_; with the consequence that the trial would, under that section "be deemed to begin." His further submission was that the motion to quash, if it did not come within terms of section 596 of the Code, should be raised as a plea to the jurisdiction of the Court under section 598(7).

It seemed to me, after considering what was said and done in R. v. Goa^[1] and R.v. Burasep^[2] that whilst an accused may well be able to raise at a later stage of the proceedings the objection that the indictment is a nullity, he was entitled to have^-the objection dealt with as soon as it was raised. I therefore ruled that I would hear the motion to quash before the accused was called upon to plead.

I then heard argument on the motion on the 3^rd, 4^th and 5^th of April.

I had before me, not only the indictment but also a Notice of Committal dated 12^th December 1966, a Recognizance of bail on committal for trial of the same date, the M
agistrate's record of proceedings in the. Central District Court at Port Moresby between 27th May 1966 and the 12th December 1966, and an Order dated 13th May 1966, made in the New Britain District Court at Rabaul. In addition, both the Crown and the accused without abjection from the other, tendered certain affidavits relating to events which occurred from the time when charges were first laid against the accused.

It appears that proceedings were commenced on the 9th December, 1965, when an information and a warrant for the apprehension of the accused was issued out of New Britain District Court at Rabaul on a charge corresponding to the seventh count of the indictment. The accused was arrested in Port Moresby on the following day and was remanded by the Central District Court at Port Moresby to appear at the New Britain District Court at Rabaul on the 22nd March 1966. Prior to that latter date the accused was served with summonses issued in respect of informations alleging other counts contained in the present indictment.

The preliminary hearing in accordance with the provisions of the District Courts Ordinance commenced on the 22nd March 1966 in Rabaul before Mr. J.P. O'Shea, a Stipendiary Magistrate. Both the informant and the accused were represented by Counsel, and by consent all 17 charges were examined together. The hearing proceeded until the 4^th May 1966, when the evidence for the informant and addresses by Counsel were completed. At this stage it was necessary for the Court to consider whether the evidence offered on the part of the prosecution was sufficient to put the accused upon his trial (section 102(1) District Courts Ordinance) and it considered that it was sufficient in respect of 14 of the 17 charges before the Court.

The examination then continued, the Court hearing witnesses called by the accused until the 13th May. At this stage the hearing was adjourned in order that the defence might call a witness who had previously been called by the Crown but who had returned to Australia and who, for domestic reasons, was unable to leave Australia for some time after the 13^th May.

At this stage there occurred the first of a number of events which the defence claims has rendered subsequent proceedings void. An application was made to the Court for an adjournment and by consent an order was made purporting to stay the proceedings and to transfer them to the Central Court at Port Moresby for hearing and determination by that Court.

The order reads as follows:-

"District Courts Ordinance 1963 – 1965

New Britain District Court, RABAUL.	Raymond Francis Jeffery Informant
	Leonard Francis McEachern Defendant

O R D E R

On the application of Mr. G.P.M. Dadd of Counsel for the informant and with the consent of Mr. Glynn Connelly for the defendant it is hereby ordered that all proceedings in respect of fourteen informations charging the above named defendant for that at Rabaul in the Territory of Papua and New Guinea he as set out in the charges 1 to 3 (incl.), 5, 7 to 16 (incl.), on the sheets attached hereto be hereby stayed and transferred to the Central District Court at Port Moresby for hearing and Determination by that Court for the following reasons and on the following terms:-

(1) Defendant a resident of Port Moresby;

(2) Defendant wishes to call a witness, Mrs. V.B. Simmonds, a resident of Sydney in the State of New South Wales who shall be far less inconvenienced by the transfer.

(3) Defendant agrees to the transfer of proceedings to Central District Court;

(4) Defendant to be released upon his entering into a recognizance in the sum of $2000 to appear in the Central District Court at Port Moresby at 10a.m. on 27^th May 1966.

(5) Further evidence to be adduced by the defendant on 9^th August 1966.

(6) The informant indicates that it will consent to all further necessary remands remanding the defendant to appear on 9^th August 1966 being granted provided that the defendant shall appear voluntarily on each date to which he is remanded.

Dated this 13^th day of May 1966.

By the Court

J.P. O'Shea

Stipendiary Magistrate

It will be seen that at this stage of the proceedings all the evidence offered by the prosecution had been heard; the Court had formed the opinion that at that stage the evidence was sufficient to put the defendant upon his trial for 14 of the charges and some evidence had been called by the defence. The stay of the proceedings in Rabaul and the transfer of them to Port Moresby was ordered with the consent of the defence for the convenience of the accused who ordinarily resided in Port Moresby. I assume that paragraph 6 was though necessary to meet the requirements of section 82 of the District Courts Ordinance.

The records of the Central District Court, Port Moresby, to which I have referred, show that the matter did come before it on the 27^th May, 1966 when the Court was constituted by the same Stipendiary Magistrate, Mr. O'Shea, who had conducted the proceedings in Rabaul. Thereafter, all proceedings in the District Court of Port Moresby were before Mr. O'Shea.

The hearing of evidence resumed on the 9^th August when proceedings were further adjourned. It is unnecessary to examine the reasons for the adjournment not for those which followed. It is sufficient to say, at this stage, that the proceedings terminated on the 12^th December 1966, when the Magistrate committed the accused for trial on the 14 charges to which I have referred.

The notice of committal and the Magistrate's records of proceedings both show that this committal was by the District Court at Port Moresby.

The first contention in support of the motion to quash is that the Central District Court at Port Moresby acted without jurisdiction in purporting to commit the accused for trial. It is argued that the New Britain District Court had no power to transfer the proceedings to the Central District Court, that the Central District Court had no jurisdiction to entertain the matter nor to commit, and that the committal and the subsequent indictment were, for these reasons both void.

The second contention of the defence is that even if the Central District Court were properly seised of the matter, certain events occurred on the 10^th and 12^th December 1966 which demonstrated a failure by that Court to follow the statutory requirements of the District Court's Ordinance. In these circumstances it is said the proceedings before the Magistrate were so defective that there was no lawful committal for trial and that therefore the document before me is not an indictment and the accused cannot be tried on it (Gee's Case at 91)^[3].

This second objection required a consideration of what occurred between the 10^th and 12^th December and to this I will return. I deal now with the first objection.

It seems clear that when the Magistrate made his order of 13^th May 1966 he purported to act under section 32 (1) of the District Court Ordinance which provides:

"(1) here proceedings have been commenced in a District Court, the court may at any time before judgment, either with or without an application from an interested person, in that behalf, for reasons which shall be recorded, make an order staying the proceedings and on such terms as seem to it just, transferring the proceedings for hearing and determination by some other District Court or, if the proceedings are such that they could have been instituted before the Supreme Court in the first instance, by that Court."

The argument is that this sub-section referring as it does to an order made "at any time before judgment" does not apply to committal proceedings in which no judgment can be given and that the only provisions in the Ordinance for the transfer of committal proceedings are those of sections 122 and 123. The charges against the accused were that the offences were committed at Rabaul which clearly cannot be described in terms of section 122 as a "place remote" from the Court before which the accused was charged, namely the New Britain District Court at Rabaul. Further, it is said, if section 32 were construed so as to apply to committal proceedings then no purpose is served by sections 122 and 123.

I pause here to note the results which this construction brings about.

The hearing was throughout conducted by the one Stipendiary Magistrate whose appointments were such that he could constitute each of the Central Districts Courts and the New Britain District Court. The transfer of proceedings from Rabaul to Port Moresby was to meet the convenience of a defence witness, and presumably, of the accused, who resided in Port Moresby and was made with his consent.

Either of these Courts could have conducted the examination of these charges under Part VI of the District Courts Ordinance and if the proceedings had commenced in Port Moresby and had then been transferred to Rabaul for the same reasons for which they were transferred to Port Moresby, then the transfer could have been supported under section 122 because Rabaul is remote from Port Moresby. But, because they were commenced before Mr. O'Shea in Rabaul and then continued before him in Port Moresby the whole proceedings and their consequences are of no effect.

If this is the result of a proper construction of the Ordinance this Court will accept and enforce it, but nevertheless it seems a strange result that proceedings properly commenced before a Magistrate, in one place should be avoided because the Magistrate, at the request of the parties, conducted part of the proceedings elsewhere. On the other hand it is clear that proceedings commenced in the New Britain District Court resulted in an order for committal made in the Central District Court and the real question is whether this is authorized by law.

I return to the construction of section 32. It occurs in the Part III of the Ordinance, "District Courts" and in the Division headed "Jurisdiction of District Courts". One possible construction which immediately occurs is that the section is not aimed at conferring a power to transfer on the Court which transfers but at giving jurisdiction to the Court to which proceedings are transferred, but for reasons which will appear, I have rejected that construction.

A District Court established under the Ordinance has cognisance of a wide variety of matters. Three parts of the Ordinance are directly relevant to the present enquiry, Parts VI, VII and VIII. I do not attempt to summarise these parts but generally, Part VI deals with committal proceedings. Part VII with the trial of simple offences and Part VIII with proceedings in a limited civil jurisdiction.

There is a territorial limit on the power of a District Court to deal with simple offences and civil matters (see sections 128 and 129 respectively) but any District Court has power to conduct the preliminary enquiry concerning an indictable offence committal anywhere in the Territory of Papua and New Guinea. (See sections 49, 57 and 101).

Each of the three Parts to which I have referred contains a limited provision enabling the transfer of proceedings to a Court other than that in which the proceedings were commenced. Where the Court is investigating an indictable offence under Part VI, section 122 to which I have already referred applies. When a Court is dealing with a simple offence under Part VII it may, by section 129, adjourn the hearing to any other Court which under, section 128, may have had jurisdiction, and under section 156 a defendant in a civil matter brought before the "wrong" Court (see section 19) may apply for the adjournment of a matter to a Court before which the complaint may more conveniently and "more properly" be heard.

When this situation is appreciated, much force is lost from the defence's argument that if section 32 applies to proceedings under Part VI, then section 122 is superfluous, for it can just as well be argued that if section 32 applies to Part VII, section 129 is superfluous and same can be said of section 156 if section 32 applies to civil proceedings under Part VIII.

The present Ordinance replaced earlier legislation relating to District Courts (see section 3 and First Schedule) in which there was no equivalent to the present section 32, but in which provision for the transfer of proceedings from the Court to another was made in terms somewhat similar to sections 122, 126 and 156 of the present Ordinance.

I am satisfied that the purpose of section 32 is not merely to confer jurisdiction on the Court to which proceedings are transferred - a possibility mentioned earlier - because under each of the three parts which I have referred, the Court to which the proceedings arc transferred is one which would have been competent to entertain the proceedings.

This consideration leads me to the conclusion that section 32 is intended as a general provision to extend and supplement some, or all of the particular provisions of sections 122, 129 and 156. Which of these provisions it affects must depend on the proper construction of the Ordinance including the terms of section 32 itself.

At this stage, the defence argues that there are two indications in the section that it does not apply to proceedings under Part VI. Firstly, as mentioned earlier, the phrase "before judgment" and secondly the phrase "for hearing and determination". Neither of these phrases, it is said, is apt to describe proceedings under Part VI.

In my view there is no substance in the second point. The examination is a hearing and a committal or dismissal falls within the wide and general description of "determination". It is only necessary to refer to section 11 which provides:-

"Subject to then powers and authority of the Supreme Court, a Magistrate is not subject to any direction whatsoever in, or in relation to, the hearing and determination of a case before him."

I cannot accept that the fundamental protection afforded by that section does not extend to a Magistrate when acting under Part VI and I can see no good reason for giving the phrase "hearing and determination" different meanings in sections 11 and 32.

The second objection is clearly one of substance. The term "judgment" can perhaps be applied to the result of proceedings under Part VII, a final conviction or acquittal, and even more readily to the result of civil litigation under Part VIII, but one would not ordinarily describe a committal or dismissal under Part VI as a "judgment". On the other hand, it is not a word of inflexible meaning and much depends on the context in which it is used, and there may be something to show an intention to use the word in a more extended sense. (See e.p. Chinery^[4] and Opie v Opie^[5].

After much consideration I have reached the conclusion that in the context in which it is used in section 32 the term "judgment" is used inelegantly and thoughtlessly to mean nothing more than the final result or completion of the proceedings referred to in the section.

The section defines the possible scope of its operation by the opening words "Where proceedings have been commenced in a District Court..." and sections 36 and 37 show that the laying of an information is ordinarily comprehended within this expression. The phrase "hearing and determination" is appropriate to all proceedings and the position of the section in Part III of the Ordinance is consistent with the notion that the section has general application.

I take the view therefore that the Magistrate had power under section 32 to transfer the proceedings in the way he did.

It could be argued even if section 32 did not authorize a transfer of the proceedings, that the purported transfer being ineffective the proceedings must be taken to have continued in the New Britain District Court, that section 25 and notices thereunder merely ensure that a Court will sit at specified places but do not prohibit its sitting elsewhere and that section 169 would authorize the amendment of the heading of the Committal notice to show that the committal was made by the New Britain District Court. However, in view of the construction I have placed on section 32 it is unnecessary for me to express any opinion on this argument.

It then becomes necessary to consider the second objection relating to the events which occurred in Port Moresby on the last few days of the proceedings.

I have considered carefully all the affidavits filed and the many cases to which I have been referred. I do not recount the facts in detail. I am satisfied that when the Magistrate on 12^th December refused any further adjournment he was entitled to take the view it was unlikely that, if he adjourned, Mr. Connolly who had previously acted as Counsel for the defence would be present on the following day. I am also satisfied that he gave the opportunity, perhaps in a somewhat peremptory manner for Mrs. McEachern to be called. From the description of it, her evidence was straightforward and in the circumstances could well have been given without counsel for the defence being present.

A number of objections were taken to things said and done by the Magistrate. I can only say, having considered them in the light of the authorities, that there was no departure from requirements of such a nature as would justify this Court adopting the view that the committal was of no effect.

I should refer to the submission that the Magistrate adopted a wrong standard in deciding whether to commit and that he made up his mind prematurely. In my view these submissions are based on a wrong construction of the Ordinance and of what the Magistrate said.

Many of the cases decided in other jurisdictions are helpful but clearly each must be considered in the light of the statutory provisions in the jurisdiction in which the decision is given.

The local Ordinance appears to me to differ from the equivalent provisions in at least some of the Australian States in two material respects. Firstly, the test to be applied by the Magistrate in considering all the evidence is, whether it induces in him an opinion that the evidence is, or is not, sufficient to put the defendant upon his trial. By contrast, in both Victoria and Queensland, reference is made to the test in these words and also in the words "to raise a strong or probable presumption of guilt."

Whatever difficulties of construction this elaboration may lead elsewhere, they do not arise here. My conclusion is that the Magistrate must bona fide form the opinion that there is a reasonable prima facie case against the accused, but this is far from saying that he must try the case, or that if someone else would have formed a different opinion the committal is avoided

The Ordinance expressly requires the Magistrate to ask himself on two separate occasions whether the evidence is sufficient for the purpose mentioned. It is unreal to suggest that the Magistrate having formed an opinion under section 102(1) that the evidence is sufficient must then put that opinion completely from his mind if the accused goes into evidence. He would be acting properly if he were to consider to what extent the evidence of each witness as it was given, or the sum of the evidence at any given stage required any modification of the previously formed opinion and if he did this he may well be able, at any stage of the defence's evidence, to say what his then opinion is.

In these circumstances I can find nothing fundamentally wrong with the Magistrate's intimation on the 10^th December that on the state of the evidence he would commit.

I would add a further comment. What the Magistrate said on the 12^th December is of importance in this application and I am surprised to learn that no counsel present made notes of it. It will be seen that in some respects, where the unaided recollections of the dependents do not agree, I have preferred the recollections of counsel. I have done this not because I disbelieve the accused but because I think counsel, by reason of their training and experience, would be better able to appreciate the course of events. For instance, I think it unlikely, having read what the other deponents say, that the Magistrate made the first remark attributed to him on p.4 of the accused's affidavit.

Motion to quash – refused.

This indictment contains 16 counts.

The defence has asked for an order under section 567 of the Criminal Code directing that a number of separate trials should be ordered.

The prosecutor maintains that the counts have, under that section, been properly joined and that there is no prejudice to the accused in all counts being heard together.

I have found a surprising lack of authority on the relevant provision. I do not obtain great assistance from the cases where a count for conspiracy to commit an offence has been joined with a count for committing that offence nor from the Common Law decisions because section 567 of the Code alters the Common Law.

If the joinder is justified it is because it falls within the second paragraph of the section, that is, that there are here several distinct indictable offences alleged to be constituted by a series of acts done in the prosecution of a single purpose.

I cannot find any case in this jurisdiction where this section been examined and I was referred to none. The equivalent section in Queensland is identical and that in Western Australia is significantly different.

After much consideration I have decided that I should adopt the extended meaning of "constituted" which was adopted by the Full Court in Queensland in Rodriquez^[6] a decision which a differently constituted Court refused to disturb in Gassman^[7].

I am satisfied on this construction, that counts 2-16 may properly be joined in the one indictment, the single purpose being on the facts alleged by the Crown, the maintenance by the accused unlawfully of a position of control and advantage in Cosmopolitan Hotel Limited.

I have had doubts about the propriety of the first count being joined with the others, but on reflection I have decided it is properly joined.

The allegation is that the letter which was uttered was intended to obtain for the accused from the Company a substantial remuneration. Clearly this would be of little value unless the position was maintained.

If the Crown establishes on all counts what it alleges, and I take pains to point out that I deal with the matter only on that basis, then what was done was done in the prosecution of the single purpose of obtaining unlawfully a continuing benefit from the Company.

Having reached this conclusion, I have then considered whether any prejudice to the accused requires a direction for separate trials. I am influenced by the facts that there is no jury and that the Crown claims, and the claim is unchallenged, that the evidence on the first count would be admissible as evidence on the trial of other counts.

In these circumstances, I can see no prejudice and refuse the application for separate trials.

I have considered the submission of the defence that on each of the 16 counts on the indictment there is no case to answer.

As I understand the authorities, in this situation the question for me to decide is not whether on the evidence as it stands the defendant ought to be convicted but whether on the evidence as it stands he could lawfully be convicted (May v. O'Sullivan^[8]) This is a question of law and its determination in favour of the prosecution does not prejudice the question whether the defendant ought to be convicted on the evidence now before me.

Again, paraphrasing part of the decision in May v. O'Sullivan a judge who has decided that there is a case to answer may quite consistently, if no evidence is called for the defendant, refuse to convict on the evidence for the prosecution. The prosecution may have made "a prima facie case" but it does not follow that in the absence of any answering evidence the defendant should be convicted.

It is hardly necessary to add that whether the defence calls evidence or not or makes a statement or not the question to be decided in the end in respect to each count is whether on the whole of the evidence the Court is satisfied beyond reasonable doubt that the accused is guilty.

In deference to counsel for the defence I add that I would not be prepared at this stage to reject the evidence of Mrs Simmonds even if I were entitled to.

Rule ---

No case to answer on 12th count. Case to answer on each of the other fifteen counts.

REASONS FOR DECISION

After my ruling on the 11^th April 1967 I commenced hearing evidence for the prosecution. The Crown case was closed on the afternoon of Friday, 28^th April, and on Tuesday 2^nd May I commenced hearing an application by the defence that there was no case to answer on any of the 16 counts. I upheld this submission in respect to the 12th count only and the trial proceeded on the remaining 15 counts. The addresses of Counsel concluded on the 17th May and I reserved my decision.

My verdicts are as follows:

I find the accused guilty an 8 counts, namely 1, 6,7,8,9 10, 14 and 15.

I find the accused not guilty on 7 counts, namely 2, 3, 4, 5 11, 13 and 16.

I now give my reasons:

The offences charged are alleged to have occurred in the period between April 1963 and October 1965 and considerable evidence was given of events which occurred in this time. In addition, the accused, without objection, put to Crown witnesses and himself gave evidence of many matters which occurred in the years prior to 1963.

To explain the circumstances in which it is alleged the offences occurred it is necessary to set out a brief history of events.

In 1962 the accused acquired a substantial shareholding in Sandy Creek Cold Sluicing Limited a public company incorporated in the Australian Capital Territory which had previously operated in the Territory of New Guinea. I refer to this company as Sandy Creek. Following his acquisition of shares the accused became a director and was appointed managing director. In the same year Sandy Creek acquired a controlling interest in Cosmopolitan Hotel Limited, a company incorporated in the Territory and to which I refer as Cosmopolitan. Sandy Creek was described to me as a "financial shell". Cosmopolitan owned and operated the Cosmopolitan Hotel at Rabaul.

In April 1963 the secretary of Cosmopolitan in Rabaul received a letter dated 10th April from Sandy Creek purporting to be signed by the chairman of directors, Stitt, and the secretary Mrs. Simmonds, an employee of the accused. This letter referred to a previous letter and it stated that the accused would draw a salary of £250 per month retrospective to the 1st July 1962 from Cosmopolitan.

In fact, the letter, although signed by Mrs. Simmonds, was not signed by Stitt but, following a subsequent meeting of the Board of Sandy Creek, a further letter dated 20th May and signed by all three directors of Sandy Creek, namely the accused, his father and Stitt, was sent to Cosmopolitan confirming "the appointment of L.F. McEachern at a salary of £250 per month retrospective to the 1st July 1962".

The letter of the 10^th April 1963 is the subject of the first charge.

In August 1963 the accused moved to Rabaul and assumed control of the hotel. In the previous month the accused had obtained from an Australian company Commercial Guaranty Limited, a loan of £11,000 payable with interest on the 9th January 1964. The loan was secured by a promissory note and the deposit with the lender of share certificates in the name of the accused for 686,650 shares in Sandy Creek together with blank signed transfers.

The borrowed money was lost in an unsuccessful business venture and it became apparent that the accused would be unable to repay on the due date. A request for an extension of time for payment was refused.

At this stage towards the end of 1963 the accused's position was critical. He was acting as managing director of Cosmopolitan and was managing the hotel but he himself held only one share in Cosmopolitan. His control of the hotel depended substantially on his family's share-holding in Sandy Creek and his position as managing director of that company. If his shares in Sandy Creek lodged with Commercial Guaranty were sold by that company his position at the hotel was clearly in jeopardy.

While Commercial Guaranty was investigating ways of realising its security, the accused, purporting to act as managing director of Sandy Creek, executed on behalf of that company an agreement bearing the date 29th January 1964 whereby Sandy Creek granted to one McDougall, a resident of New Britain_; for £10, an option for 12 months to purchase on terms Sandy Creek's shareholding in Cosmopolitan.

There was no suggestion before me that the price was not a fair one but some of the other terms could rightly be described as unusual McDougall was entitled to be appointed within 30 days as a director of Cosmopolitan. He was also entitled to a proxy from Sandy Creek for use at any shareholders meeting of Cosmopolitan. In addition, the agreement purported to secure for the accused his "appointment" with Cosmopolitan for 10 years from the 1st July 1962.

The effect of the agreement, if enforceable, was to remove any possibility of interference by Sandy Creek in the affairs of Cosmopolitan and McDougall, for the sum of £10 whether he exercise the option or not, was in a position to control the affairs of Cosmopolitan for 12 months.

This agreement is the subject of the second, third and fourth charges.

During February and March 1964 the accused's shares in Sandy Creek held as security by Commercial Guaranty, were transferred to officers of Commercial Guaranty who joined the accused's father on the Board of Sandy Creek in Sydney and who immediately took steps to re-establish Sandy Creek's control over Cosmopolitan.

Eventually an extraordinary general meeting of Cosmopolitan, requisitioned by shareholders, was held at Rabaul on the 30^th April 1964. The accused chaired the meeting. The witness Shand produced a proxy in his favour bearing the seal of Sandy Creek and dated 1st April 1964. The accused refused to accept it, preferring another proxy dated 29th January 1964, also bearing the seal of Sandy Creek but in favour of McDougall and given to McDougall by the accused pursuant to the terms of the option agreement to which I have referred. In the result the resolutions put forward by those requisitioning the meeting were rejected.

The proxy dated 29th January 1964 is the subject of the fifth, sixth and seventh charges.

On 28th February 1964 the accused had purported to appoint McDougall a director of Cosmopolitan, and on a date not established in evidence. Sandy Creek received a letter dated 29th April 1964 from McDougall giving notice of his intention to exercise his option. Thereafter entries appear in the records of Cosmopolitan indicating that payments on account of the purchase price were made by McDougall on the 13^th May 1964 and 26th May 1965. The fact that the payments were made to Cosmopolitan and not to Sandy Creek was explained by the accused on the basis that Sandy Creek was a debtor of Cosmopolitan for the total amount of the payments shown.

The eighth and ninth charges respectively refer to the entries of these two payments.

The meeting of the 30th April 1964 was followed by civil proceedings in both the Territory and Canberra, which extended over a considerable period and which were aimed at testing the validity of appointments made and actions taken by both Sandy Creek and Cosmopolitan.

In the meantime, the accused remained in control of the hotel subject to an interlocutory order made on 9th July 1964 that he account daily to a Rabaul accountant for cash transactions of the hotel. On the 6^th June 1964 the accused and McDougall had appointed the witness McLean a director but following a dispute with the accused regarding the minutes of a meeting said to have been held on the 15th March 1965, McLean resigned in July of that year and the accused's wife was then appointed a director and the accused was appointed secretary.

The tenth charge relates to the minutes of the 15^th March 1965.

On the 15^th July 1965 the Supreme Court of the Australian Capital Territory made an order which, in effect, declared valid the various share transactions and appointments of directors which had been effected by Sandy Creek since February 1964.

Part of the argument by which the accused has justified his actions depended on establishing the invalidity of the appointments of directors made by Sandy Creek in 1964 and the result of the proceedings in Canberra increased the prospects of success of anything done to challenge the accused's position in Cosmopolitan as a director and the appointments of McDougall, McLean and subsequently, Mrs. McEachern. In fact, by the time the action in the Territory came to trial in November 1965 the accused had amended his defence to concede that Sandy Creek was still the holder of the shares in Cosmopolitan purportedly sold to McDougall and that the appointment of McDougall as a director was void and a meeting of shareholders of Cosmopolitan had removed the accused from office.

After the Canberra proceedings in July it would have been obvious to the accused that he could no longer safely rely on the transaction with McDougall as securing his position at the hotel. He therefore set about endeavouring to entrench himself by imposing contractual obligations on Cosmopolitan which the shareholders might not be able or prepared to avoid.

The minutes of a meeting of directors of Cosmopolitan on the 1^st August 1965 record the accused's resignation as managing director and his continuance in office as a director. Also recorded is the appointment of the accused as general manager of the company under a service agreement until the 30^th June 1974 at a remuneration of £5,000 per annum together with 1% of the annual gross turnover of the hotel business. This document contains a number of other provisions favourable to the accused including a provision that the company was not entitled to determine the agreement "by reason only of the fact that the employee is or becomes in any way disqualified from managing or holding the licence of the said hotel" and a further provision whereby the company pursuant to Article 36 of its Articles of Association irrevocably appointed the accused its attorney for the term of his employment to carry on and conduct the business of the hotel and for such purposes conferred upon the accused" the powers, authorities and discretions which immediately prior to the execution of these presents were vested in and exercisable by the directors of the company..."

The eleventh charge relates to these minutes.

An attempt was made in October 1965 to secure the position of the accused even further when two additional documents were prepared and resolutions passed at a meeting on the 1^st October 1965 that they be sealed. One was a deed of release acknowledging the company's indebtness to the accused in the sum of £7,000 and by which in consideration of the accused's forbearance from suing, the company issued a debenture and released the accused from all claims in respect of any matter. The second document was a debenture whereby the company undertook to pay the sum of £7,000 with interest at 10%, on demand, secure payment by a floating charge on all its property and appointed the accused its attorney to deal with the hotel licence and to carry on the company's hotel business. The company was also required until payment of the principal sum to employ the accused on terms no less favourable than those "under which he is presently employed".

By the 11^th October notice of a motion had been given in the civil proceedings for an injunction restraining the accused from acting as managing director of the Cosmopolitan and steps had been taken to call an extraordinary general meeting of shareholders for the 18^th October.

Notwithstanding this, the accused continued his efforts to hold control. On the 13^th October a Sydney solicitor, J.J. Fahey, arrived in the Territory to prepare a lease of the hotel to a company, Palm Taverns Pty. Ltd. Negotiations for this transaction were completed and on the 16^th October the accused reported to the Board that "subject to the Board's approval" he had agreed to enter into certain agreements with Palm Taverns Pty. Ltd. As a result, the Board resolved to execute an agreement for sale of certain of the company's assets and a lease of the premises for 5 years from the 16^th October. I am satisfied in addition the accused made an agreement with the lessee for his employment as manager of the hotel. On that day the seal of Cosmopolitan was affixed to the lease, McDougall and Mrs. McEachern signing as directors and the accused witnessing as secretary.

This lease is subject to the thirteenth charge.

All this was accomplished before the extraordinary general meeting of shareholders on the 18^th October and if the lease were effective the shareholders of Cosmopolitan had lost control of the hotel for 5 years, but the accused still remained as manager.

At the meeting on the 18^th October the accused claimed the Chair but was ruled out of order by the shareholders. The accused, still claiming the chair, purported to adjourn the meeting and then left it. He told me that he took this manoeuvre on legal advice. The meeting however continued and proceeded to remove the accused and his fellow directors and to appoint new directors. On the same day the new chairman of directors wrote to the accused informing him of the decisions and of the appointment of one Smith as the company's manager. The accused's response consisted of two letters each dated 19^th October. In the first of these he maintained that he as chairman had adjourned the meeting of the 18^th October to 1^st November and stated "concerning the other remarks in your letter under reply I suggest you communicate with the lessees Palm Taverns Pty. Ltd. Champion Street, Port Moresby...". The text of the second letter was as follows – "I refer to your letter dated 18^th October and advised under the terms of my appointment, that this letter serves as notice of termination of Mr. Colin Kent Smith's appointment as manager."

On the 22^nd October an injunction until trial of the civil proceedings was granted, restraining the accused from acting as manager or director. The civil action came on for hearing in the Supreme Court early in November and on the 4^th November judgment was given, the accused having already cancelled as I have mentioned that various appointments purportedly made in Rabaul were invalid. The accused meanwhile had left the hotel premises.

During 1965 when the accused pursuant to the order to which I have referred was supplying certain particulars to a Rabaul accountant three entrees appeared indicating that certain sums had been paid on account of directors fees. These were –

- In March 1965 the sum of £100 to McDougall;

- In the same month the sum of £100 to McLean;

- On the 15^th October 1965 the sum of £300 to McDougall.

These payments are referred to in the 14^th, 15^th and 16^th charges respectively.

It will be seen that two of the charges allege forgery contrary to section 488 of the Criminal Code, three allege uttering a false document contrary to section 489 of the Code, three allege unauthorized making of a document with intent to defraud contrary to section 494 of the Code and the remaining seven allege fraudulent false accounting whilst acting in the capacity of a clerk or servant, contrary to section 441 of the Code. There are then ten charges in respect of the Code which expressly requires the prosecution to prove an intention to defraud. As to the remaining five neither section 488 nor section 489 expressly refers to an intention to defraud although counsel for the defence submitted that it was an essential element of the offence under each of these sections. On the facts as I have found them it is necessary to decide whether this is so but see "Carter's Criminal Law" (2^nd Ed.) 394 and 399, section 485 (b) and (d) of the Code and R. v. Stewart^[9].

Counsel for the Crown accepted of course that the prosecution must establish an intent to defraud in those cases where such an intent is expressly mentioned in the relevant section, but he sought to maintain that such an intent could be established by showing circumstances in which in civil actions a person having power would be held to have acted in fraud of that power. I am firmly of the opinion this contention is wrong and that the authorities to which I was referred do not show what is meant by an intent to defraud in the sections of the Criminal Code to which I have referred. One of the authorities to which I was referred was Vatcher v. Paull^[10], where the Judicial Committee of the Privy Council considered the exercise of a power of appointment contained in a marriage settlement. The opinion given in that case is, in my view, directly against the Crown's contention here. Speaking for their Lordships, Lord Parker of Waddington at 376 said "The term "fraud" in connection with frauds on a power does not necessarily denote any conduct on the part of the appointer amounting to fraud in the common law meaning of the term, or any conduct which could be properly termed dishonest or immoral. It merely means that the power has been exercised for a purpose or with no intent beyond the scope of, or not justified by, the instrument creating the power."

The phrase "intent to defraud" is not defined in the Code but there is good reason for attributing to it the same meaning as it bears when used in relation to equivalent common law offences, (Bank of England v. Vagliano Brothers^[11], Demsel's Case^[12], Valliance's Case^[13].

Counsel for the defence referred me to re London and Globe Finance Corporation ^[14]and other cases noted in Carter's "Criminal Law" at 353. I have also referred to other cases including R v. Carpenter^[15] and Kritz^[16] and in considering the charges under sections 441 and 494 I have proceeded on the basis that the Crown must establish not merely that the accused acted in excess of whatever his power was but that he did not act honestly in the sense discussed in Carpenter's case. I have also directed myself that in determining whether he so acted I am concerned with the state of mind of the accused and not of someone else and with his state of mind at the time of the act complained of (R. v. Cooper)^[17] .

I now deal with the charges.

Letter of 10^th April 1963:

I accept the evidence of Mrs. Simmonds that the accused dictated the letter to her and told her on the following day that he had posted it. That it was received by Jennings on Tuesday 16^th following the Easter holidays is consistent with such a posting. The accused was admittedly in need of income and he was the only person who stood to gain from the letter.

The accused's behavior at the meeting when Stitt challenged the authenticity of the signature is consistent with knowledge at the that time that Stitt had not signed but in an affidavit that he subsequently swore he suggests that Stitt had, in fact, signed. The suggestion canvassed at the trial that Stitt may have signed inadvertently or that the letter may have been signed by Stitt's secretary is not supported by the evidence.

It was suggested that it was pointless for the accused to obtain Stitt's signature because either the accused or his father could have signed as a director but, this argument does not stand examination. The secretary of Cosmopolitan in Rabaul had challenged the accused's instruction and wanted a letter of authority from Sandy Creek. If he were not satisfied with the accused's verbal instructions it is hardly likely he would have accepted without demure a letter written by either the accused or his father.

I believe Mrs. Simmonds when she says that the accused attempted to arrange for her to sign the letter alone as secretary and that she refused because she knew that Stitt had not agreed to the substantially increased remuneration. It was only because provision was then made on the letter for Stitt's signature that she signed as secretary.

I find that the accused sent the letter by post to Rabaul, knowing that the signature on it purporting to be Stitt's was a forgery and intending that the company in Rabaul should act on the information contained in the letter to his advantage. I am satisfied by the authorities to which the Crown referred me that this constituted a breach in the Territory of section 489.

Agreement dated 29^th January 1963.

The unusual provisions of this agreement and the time at which it was negotiated give rise to the gravest suspicion that the accused in completing it was acting in bad faith.

The prosecution says that the accused must have known that he had no authority as managing director of Sandy Creek to sell and that knowing this he purported to sell to the compliant McDougall when there was no reason to sell, except to preserve the accused's position of profit at the hotel.

This may well be the true position but after a lot of consideration I am still left with a doubt sufficient to persuade me that I should not convict.

It is not altogether unreasonable to concede that there may have been some justification for selling. The evidence is that prior to the sale the accused had legal advice that a position for the winding up of Cosmopolitan presented by Mrs. Adams was likely to succeed unless Sandy Creek's shareholding in Cosmopolitan was sold. The accused said he feared a liquidator's sale would realize less for Sandy Creek than the sale to McDougall. In these circumstances a sale might be proper even although at the same time it served the accused's personal ends.

I have somewhat similar doubts regarding the accused's belief in his authority to sell as managing director of Sandy Creek. The fact that as a matter of law the accused had no such authority does not provide the answer here. The very fact that he purported to sell knowing as he must have known that the transaction would be closely examined by hostile eyes is, to an extent, in the accused's favour. I am concerned with his state of mind at that time when the affairs of the company had, in the past, been very loosely run, when he had a fairly free hand when acting for the company and when, for what I think is quite good reason, he was unable to obtain legal advice in Rabaul.

It is true that subsequently when the validity of the agreement was put in issue, the accused endeavoured to support it by contending that Sandy Creek's shareholding in Cosmopolitan did not constitute the major asset of Sandy Creek and that, in any event, the sale had been authorized by a meeting of directors constituted by his father and himself, the minutes of which meeting had been lost or destroyed. I do not accept these contentions. I am inclined to believe that they are desperate inventions of the accused but that they were invented after the agreement had been completed in January 1964 and are therefore not necessarily inconsistent with an absence of fraudulent intent in January 1964.

I note that the agreement was also executed by the accused on behalf of the guarantors, namely Stitt and himself, but such execution is not the subject of any charge.

In spite of the grave suspicions to which I have referred, I am not satisfied beyond reasonable doubt that the offence alleged in the second count was committed.

The third count contains a charge of forging the agreement referred to in the second count.

During argument I enquired whether the third count was an alternative to the second. Counsel for the Crown submitted it was not but that the second count contained the major charge and that if I convicted on that charge I should return no verdict on the third count. The situation which now arises was not discussed.

On consideration, it seems clear that while the act of signing a document "A Ltd. per B" could, appropriate circumstances, constitute an element of an offence under section 488 of the Code and of an offence under section 494 it is unnecessary for me on the facts as I have already found them to pursue any of the problems which might then arise.

A person commits forgery as defined in section 486 only when he makes a false document "knowing it to be false" and for the reasons discussed earlier I am not prepared to hold that such knowledge has been established.

The fourth count must in the circumstances, fail with the third.

Proxy dated 29^th January 1964:

This document is the proxy which the accused identified as given to McDougall pursuant to the agreement of the same date and which was produced at a shareholders meeting on the 30^th April 1964. Much evidence was directed at establishing when and for what purpose it was sealed.

At the trial it was common ground that the company's seal was affixed and the signatures added to a blank paper which was to be a proxy and that appropriate particulars were to be completed by the accused.

The Crown contention was that the document was intended to be a proxy for an extraordinary general meeting of Cosmopolitan in July 1963 a meeting which was not in fact held and that the accused then completed the appropriate particulars on the blank form to make it the proxy now being considered.

Mrs. Simmonds identified the proxy as the blank sealed paper given to the accused for use at a meeting in July 1963 and could not recall sealing and signing any other blank paper.

The accused put in evidence another sealed proxy which Mrs. Simmonds could not identify but which admittedly bore her signature and which he said was the proxy intended for use in July 1963.

Whether this was so or not, what is important is to determine the origin of the proxy dated 29^th January 1964 and the purpose for which it was sealed.

Counsel for the defence put to Mrs. Simmonds in cross examination that the document which she said had been sealed for use in July 1963 was in fact one sealed for use in September 1963. Even if this were so I do not see how it assists the accused's case.

The evidence showed that Mrs. Simmonds did not act as secretary of Sandy Creek after the 30^th September 1963, and the fact that the proxy dated 29^th January 1964 showed the seal affixed in her presence on that latter date clearly required some explanation. The accused's attempts to give an explanation only worsened his position.

I do not attempt to deal with all the relevant evidence but I note the following points: a letter written by the accused to his father on the 6^th May 1964 indicates that the proxy dated 29^th January 1964 was sealed long before any negotiations with McDougall were contemplated; at one stage in his evidence the accused stated that the proxy was given to him by Mrs. Simmonds at his request in November 1963, but this could not be reconciled with the fact that Mrs. Simmonds ceased to act as secretary in September. It is clear there were no negotiations with McDougall before November at the earliest. I note that the accused in evidence did not attempt to confirm what was put to Mrs. Simmonds in cross examination and that when the accused was interviewed by Detective Sergeant Sadler on the 10^th December 1965 he denied that Mrs. Simmonds had handed him a blank proxy and claimed that the proxy had been sent to him in September when, as he then said, negotiations with McDougall had commenced.

I have no hesitation in rejecting entirely the accused's evidence regarding the proxy. It was clearly sealed and given to him for use at a meeting to be held not later than September 1963 and, to his knowledge, it was not brought into existence for use in relation to the agreement with McDougall.

There is this essential difference between the accused's state of mind in relation to the agreement on the one hand and the proxy on the other. Whatever the accused may have thought about his authority to sign the agreement on behalf of Sandy Creek, he knew perfectly well that the blank proxy was under the seal of the company and that without a resolution of the Board a form of proxy given for use in July or September 1963 could not be changed to a proxy given under seal as required by an agreement made in January 1964. At the end of September 1963 at the latest the blank form of proxy was useless. He also appreciated that for the meeting on 30^th April 1964 he should produce a proxy sealed by Sandy Creek. He was able to do this only by taking a document which the company had issued for one purpose and by additions making it appear that it had been issued for another purpose when, as the accused well knew, it had not. I am satisfied he forged the document within the meaning of sections 485 and 486 of the Code.

The defence faintly suggests that the proxy was not "used" at the meeting on the 30^th April 1964 and that therefore the accused did not utter it contrary to section 489. There is no substance in this contention. He produced the proxy at the meeting and told Shand that he the accused, as chairman accepted it and not the proxy tendered by Shand. It was the accused's insistence on the genuineness of McDougall's proxy which caused Shand to leave the meeting. The account of what occurred at the meeting, as set out in the minutes signed by the accused as chairman on the day of the meeting, are revealing. They contain the following passage "Mr. Shand asked if his proxy had been received and Mr. McEachern then proceeded to read both Mr. Shand's and another proxy received from Sandy Creek Gold Sluicing Limited, the other being in favour of Mr. McDougall. Mr. McEachern then rejected Mr.Shand's proxy on the grounds that it was over-ruled by Mr. McDougall's proxy. Mr. Shand asked to see Mr. McDougall's proxy and was handed the same...."

I consider that the charge contained in the seventh count is proved.

On the fifth count I return a verdict of not guilty.

I have considerable doubt whether, in the circumstances, the accused with the necessary intent "made in the name of Sandy Creek..." the document described in the charge. The document originally came into existence as an intended but incomplete form of proxy duly sealed by the company. However unwise it was to seal a document which could be so easily misused I doubt whether the accused at the time of the sealing then made it or if he did, it is not shown that he then had an intention to defraud.

The subsequent additions made to the document by the accused were, in my view, made with an intent to defraud but I am not convinced the accused was then making a document in the name of the company within the meaning of section 494. He was, as I have already held, forcing the document contrary to section 488.

Even if I had been satisfied that what the accused did constituted an offence under section 488 and also an offence under section 494, I would have followed the course suggested by the Crown and returned a verdict on only one of the two counts.

Alleged Payments by McDougall on account of Purchase Price:

Again I do not attempt to summarise the considerable amount of evidence which was given relating to these the eighth and ninth counts.

The conflict between the accused and McDougall was extraordinary. The accused claimed that McDougall made cash payments to him of £1,000 in May, 1964 and £1,982.3.6d. in May, 1965. McDougall denied making any payments and said that the accused informed him that he, the accused, had been able to borrow the money required and had applied it on McDougall's behalf to meet the two installments of purchase moneys due under the agreement and that when McDougall enquired where the accused had obtained the money the accused said that he preferred not to say.

The two payments referred to were said to have been applied in satisfying the indebtness of Sandy Creek to Cosmopolitan, but this still left the difference between £1,982.3.6d. and £3,000, which difference admittedly should have been paid to Sandy Creek. The accused said McDougall told him that he, McDougall at the accused's suggestion had paid it to Sandy Creek's bank account in Sydney. McDougall said that the accused informed him that he the accused had paid it to that account. No such payment was made by anyone. The amounts shown on the two receipts issued in the name of Cosmopolitan were brought to account in the records of Cosmopolitan.

I am quite satisfied that the payments in cash said to have been made by McDougall were not made. Most of the evidence on this issue came from the accused and McDougall and my conclusion reflects the fact that I believe the substance of McDougall's story. I believe McDougall was quite unversed in company procedure and was dominated by the accused to whom he left all matters relating to the agreement and all company administration. As a man with some business experience he knew enough to know that the agreement made by him with the accused for the purchase of the shares was worth preserving both for himself and the accused. He was on good terms with the accused and trusted him. I am satisfied that to a large extent he was a willing tool in the hands of the accused and that it was only in relation to a part of the hotel business such as repairs, maintenance plant and now construction that McDougall exercised an independent judgment.

McDougall, if not the accused, originally believed McDougall would be able to meet the instalments payable under the agreement and I find no difficulty in believing that when McDougall found himself unable to make the two payments he gratefully accepted the willing and speedy assistance offered by the accused and that because of his trust in the accused he accepted without query an obviously unbusinesslike arrangement.

I was for a time intrigued by the possibility that if the accused's story was false, as I believe it to be, there should be a demonstrable cash deficit in the company's accounts. However, bearing in mind the extremely loose way in which the hotel business was conducted on a cash basis with no complete record of receipts or expenditure, I have decided that this is not necessarily so.

It should perhaps be noted that no one suggested at the trial that McDougall was anything other than an innocent purchaser, and that if the accused's story were true, McDougall has parted with almost £3,000 and has made no attempt to recover it. On the contrary he has adopted a story which would make its recovery impossible.

I am not impressed by the suggestion that McDougall in a letter to Powell and in a conversation with Murray said he had paid the money. On his story he had paid the money. The accused had borrowed it and paid it on his behalf. I accept that the letter was written at the accused's dictation, and I note that the evidence of Murray, which I accept, is on this issue equivocal. He was concerned, as he said, that the provisions of Clause 5 of the agreement which related to instalments had been complied with, and he said he was assured "by the accused and McDougall" that it had not been.

Once I find as I do that to the knowledge of the accused McDougall did not pay the money, it follows that the accused by making the false receipts and duplicates, made false entries in the books of Cosmopolitan, and I am satisfied that they were made to give the false impression for his own ends that McDougall had made payments to Cosmopolitan on account of Sandy Creek which he had not made.

It was argued that the accused was a director of Cosmopolitan and for that reason could not be convicted under section 441 of the Criminal Code. I do not accept this submission. The accused was admittedly acting as manager of the hotel and was personally receiving and expending money on behalf of the company. Whether at the relevant times he was a director or not, he was, in my view, acting in the capacity of a servant of the company when he gave the receipts.

Minutes of Meetings dated 15^th March and 1^st August 1965:

These are the subject of the tenth and eleventh counts.

It is an understatement to say that the affairs of the company were conducted in a most informal way. The accused controlled the situation and any decisions to which the other directors were parties were made largely in the course of informal discussions and subsequently recorded as if a formal meeting of the Board had taken place.

It is said that sometimes the minutes were prepared in advance of a proposed meeting in expectation that what was recorded therein would be accepted. In these circumstances it might be difficult to say whether a decision made by the directors should be treated as one made at the time of the informal discussion or when the proposed minutes were considered and adopted. In these circumstances it seems to me that generally it would be unsafe to say that the offence charged had been established if it were shown that the resolution complained of and recorded in the minutes was, in fact, at or about the date shown, agreed to by these acting directors.

Even on this approach, I am satisfied that the record of the resolution relating to the accused's remuneration said to have been passed on the 15th March, 1965, is false. I accept McDougall's evidence that whilst there were discussions even before the 15th March regarding the accused's remuneration, it was not until later in the year that he reluctantly acceded to the demands then being made by the accused.

If there were a formal meeting on the 5th of July when the minutes of the 15th of March were confirmed, and if the minutes were then read out in McDougall's presence, it would not, I think, be of great significance because McDougall was then, almost four months later, beginning to yield to the demands which the accused was making.

I do not accept the accused's version that prior to the 15th of March McDougall had agreed to a remuneration which included 10 per cent of the net profits, and that on advice this was changed with McDougall's consent to a percentage of the turnover, and I note that this was not expressly put to McDougall in cross-examination. It was put to him and he agreed that many of the matters in the minutes of the 15^th of March had been discussed and accepted, matters which related to the hotel and the proposal regarding directors' fees, and he readily conceded that he had agreed that there should be a revision of the accused's remuneration.

The incident regarding the minutes handed by the accused to McLean is not without significance.

The^, accused denied to Detective Sergeant Sadler that a sheet of the minutes of 15th March had been removed and another sheet substituted, but it is obvious from an inspection of the book that this has occurred. The accused's explanation at the trial was that the minutes had been typed in advance showing McLean as present, but that since Mclean was unexpectedly absent the minutes had to be retyped, omitting the reference to McLean. If this were so, his denial of the substitution to Detective Sergeant Sadler was quite pointless. In any event a comparison of the texts of the two documents shows significant variations between them, and the evidence of Detective Sergeant Stuckney shows that the document originally pasted in the minute book was neither of the two documents now under discussion.

By recording the minutes of the 15th of March as they now appear without any approval of the other persons acting as directors the accused sought to obtain for himself a material advantage at the expense of the company to which he knew he was not entitled. The minute book was a book of the company, and the accused had accepted the responsibility of recording and reproducing the minutes. In my view, the false entry was made in the company's minute book by the accused, acting in the capacity of a servant of the company, with intent to defraud.

The eleventh charge relates to the minutes dated the 1st of August, 1965, and I have already said that in this charge I return a verdict of Not Guilty.

It is clear that at some time after July, McDougall, with some protests, agreed to terms of employment substantially similar to those recorded in the minutes. He says in effect that the Annexure "A" to the minutes could not have been available until September when Lind arrived in Rabaul, but I think he may be mistaken. The accused admits that Annexure "A" in its present form was not before the meeting of the 1^st of August, but says that Lind had sent up a draft which was discussed, and that the draft, with some agreed amendments, was then reproduced as Annexure "A" and pasted into the minute book with the minutes of the meeting of the 1^st August before the minutes were confirmed on 9^th September. I am also impressed by the evidence of Murray as to what occurred at the meeting of 9^th September , which he attended. I do not think the Crown has established this charge.

Lease of Palm Taverns Pty. Ltd:

The thirteenth count charges the accused with executing in the name of Cosmopolitan Hotel the lease to Palm Taverns Pty. Limited.

It is clear that the lease was negotiated in an attempt to prevent the major shareholders gaining control of the hotel and to preserve the accused's position. However, the accused was not a party to the lease and was clearly purporting to act as agent for the company when negotiating it.

The arrangements which he made with Palm Taverns were "subject to the Board's approval". McDougall was kept informed of the negotiations and approval of the transaction. Presumably Mrs. McEachern did also.

Unlike the agreement of the 29^th of January, 1964, signed by the accused on behalf of Sandy Creek the lease from Cosmopolitan was sealed pursuant to a resolution of the Board. There is no evidence who affixed the Seal. McDougall and Mrs. McEachern signed as directors and the accused signed as Secretary.

The relevant article of Cosmopolitan which is in common form reads:

"SEAL:

40. The Directors shall provide for the safe custody of the Seal and the Seal shall never be used except by the authority of the Directors or a Committee of the Directors previously given and in the presence of two Directors who shall sign every instrument to which the Seal is affixed and every such instrument shall be countersigned by the Secretary or such person as the Directors shall appoint."

As I have said, Mrs. McEachern and McDougall signed as directors and their signatures appear to the right of the Seal. The accused's signature appears towards the 1eft of the sheet under the words".... in the presence of and the word 'Secretary' appears under his signature. Although the countersigning by the Secretary is necessary under the Article he does not sign he countersigns, that is, after the directors sign he countersigns to attest the authenticity of the signatures. At the same time, he records, as a witness that the Seal was affixed in his presence.

During the hearing I did not direct my attention to the form of execution of the document, and there was no argument whether or not the accused "executed" it as alleged in the charge.

Again, I have considerable doubt whether section 494 covers a situation where, as here, the act complained of is some part of the process of affixing the Seal of a company in the manner provided by its Articles. Whatever the accused may have thought, there is nothing to suggest that Mrs. McEachern or McDougall were acting otherwise than in an honest belief that they were directors entitled to do what they were doing. But even if my doubts are unjustified, I am not satisfied the accused "executed" the lease nor even that he made or signed it for or in the name or on account of another person.

For these reasons I return a verdict of Not Guilty.

Directors' Fees'

The final three counts refer to the alleged payments of directors' fees to McDougall and McLean.

The two payments in March 1965 were alleged to have been made about the 10th March before the meeting said to have been held on the 15th of March.

I have already found that the minutes are not a proper record of that meeting, but I am satisfied that there had been discussions about directors' fees, and that general agreement had been reached that fees should be paid. Both McLean and McDougall agreed that this was so.

At the time when these two payments were allegedly made the accused was pursuant to an order made in July, 1964, obliged to give a daily account of cash transactions. How effective the supervision of this order was can be judged by the fact that the three payments now being considered were recorded as being made in March and October 1965, and yet the alleged recipients deny having received any part of the money.

The accused maintained that following the agreement to pay directors' fees both McLean and McDougall asked for a payment, that he paid a hundred pounds in cash to each of them, and that each gave a receipt for the payment.

McDougall's receipt was produced for the first time at this trial, McLean's receipt, the accused said, could not be found. This meant, as the Crown pointed out, that both witnesses came to Court prepared to swear that they had not received any payment when if the accused's story were correct, each could expect to be confronted with a receipt given by him for the payment.

The accused's explanation for this was that McLean did not want his wife to know that he had received £100 as director's fees and that McDougall, under threat of prosecution himself, was forced to give false evidence. Neither of these suggestions impressed me and the latter was not even put to McDougall. They were typical of a number of improvisations which the accused was forced to make during the trial.

In the opening for the defence it was said that one Bird would be called to give evidence of a conversation which indicated that McDougall and McLean had received payment of directors' fees in March 1965. This had been put to McLean who denied the possibility and pointed out that in the committal proceedings the accused's counsel, with no demur from the accused, had put to McLean that the witness of this conversation to one Butler. Neither Butler nor Bird was called and the accused's explanation of their absence was that he believed the prosecution had persuaded each of them to change his story.

Then there is McDougall's receipt which was produced at the trial. It is strange that it was not available earlier. It was put to McDougal that he printed the text of the receipt. The instruction endorsed on the document reading "Ian to sign", suggests this to be unlikely, and when the Crown announced that the document would be examined during the luncheon adjournment by Detective Sergeant Stuckey, a handwriting expert, it was conceded after the adjournment that the text may have been printed by the accused.

When the accused gave evidence he said that in fact he had hand printed the receipt before the money was paid to McDougall and that McDougall having signed the receipt had given it to the accused. Under McDougal1's signature his name and initials appear in type. The accused's explanation was that one of the girls in the office must have added this type to the receipt. The signature is clearly legible and the subsequent addition of the type would be quite pointless.

The alignment of the second line of the text suggests that the text was added after the signature, but it is not necessary for me to determine the origin of the document. I say only that in my view, it does not assist the accused.

I do not believe the accused's evidence and I am satisfied that neither of the payments a11eged to have been made in March was made, and that the charges in respect of them have been proved.

This brings me to the final count relating to the payment of £300 to McDougall recorded as made on 15th October 1965. Here there are significant differences. Firstly, it is admitted by McDougall that £300 was paid to him by the accused although McDougal1 says that it represented a loan he obtained from the accused. Secondly, Mrs. McEachern said she was present when the money was paid and that it was referred to as directors' fees and I am not prepared to reject entirely, as it was suggested I should, her evidence of this incident.

A1though the return in which the entry of £300 occurs is dated the 15th of October, both the accused and his wife say that the payment was made immediately following the General Meeting on the 18th of October and this could well be so. McDougall did not specify the day on which he received the money. The return dated the 15th of October was the last submitted by the accused to the accountant, and I note that apparently it was not received until the 26th of October 1965.

On the 18th October, McDougall was still very friendly with the accused, and was supporting him even to the extent of walking out of the General Meeting with the accused after the accused's unsuccessful attempt to adjourn the meeting. It had been agreed earlier in the year that the directors should receive fees and if, as I have already held, McDougall had so far received none it would not be unnatural for him to raise the matter at a stage when it was highly likely that control of the company would shortly pass to other and unsympathetic hands.

Again, if McDougall was in need of money and asked for it as he said he did, it is not unlikely that some misunderstanding could have occurred as to the nature of the payment being made, and that what started as a request for a 1oan finished as a payment of directors' fees to both McDougall and the accused.

I have said that generally I have accepted McDougall's evidence, but in all the circumstances as I think they existed on the 18th of October, 1965, I am left with a doubt as to what occurred sufficient to require me to say that the charges has not been established.

---

^[1] (1936) 2 ALL E.R. 89.
^[2] (1963) T.F. P.N.G. L.R. 181.
^[3] (1936) 2 ALL E.R. 89.
^[4] 22 Q.B.D. at 345.
^[5] 25 A.L.J. at 413.
^[6] (1939) Qd. S.R. 227.
^[7] (1961) Qd. R. 381.
^[8] [1995] HCA 38; 92 C.L.R. 654 at 658.
^[9] (1908) NZ. LR. 682.
^[10] (1915) AC. 372.
^[11] (1891) AC. 107.
^[12] (1891) AC. 580.
^[13] [1961] HCA 42; 108 CLR. 56 per Windeyer J at 75.
^[14] (1903) 1 Ch. 728
^[15] (1911) 76 JR. 158 at 160.
^[16] (1950) 1 KB 82.
^[17] [1914] NSWStRp 66; (1914) 14 SR. (NSW) 426 at 427.