Potape v State [2015] PGSC 84; SC1613 (31 July 2015)

SC1613

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCRA No. 34 of 2014 & SCRA No 4 of 2015

BETWEEN:

FRANCIS POTAPE
Appellant

AND:
THE STATE
Respondent

Waigani: Injia, CJ; Kariko & Poole JJ
2015: 30^th, 31st July April

CRIMINAL APPEAL- Against Conviction & Sentence - Conspiracy with intent to defraud & Misappropriation - Error on important points of law - Material irregularities in the trial - Conviction unsafe and unsatisfactory - Appeal allowed-Convictions quashed- Supreme Court Act (Ch 37), s 23.

Facts:

The appellant, a member of Parliament and Chairman of the Joint District Budget Planning and Priorities Committee (JDP & BPC), a statutory body set up under the Organic Law on National and Local-Level Governments, chaired a meeting of the Committee which resolved to reimburse the Chairman and Committee members expenses incurred in attending Committee meetings, at an increased daily rate. The trial judge found the decision of the Committee to pay themselves increased daily sitting allowances to be unlawful in that they usurped the function of the Salaries Remuneration Commission in approving additional sitting allowances which they were not entitled to receive as part of their service entitlements.

The trial judge found that the claims for reimbursement were not supported by receipts and records of expenses. The trial judge found his actions amounted to a conspiracy with other members of the Committee to defraud the State of those funds (first count). The trial judge also found that the funds so received were dishonestly applied to his own use (second count) and for the use of the other members of the Committee (third count). The trial judge found the charges under s 407 (1) (b) (conspiracy with intent to defraud) (first count), and s 383A (1) (a) (second and third counts) proved and convicted him on all three counts. The appellant was sentenced to 3 years imprisonment on the first count, 3 years imprisonment on the second count and 5 years on the third count, to be served concurrently. Two and half years of the 5 year head sentence was suspended on various conditions. The appellant appealed the convictions and sentence.

Held:

(1) The joint hearing of the three counts was proper given the three offences under s.407(1) (conspiracy with intent to defraud) and s.383A(1)(a) (misappropriation) of the Criminal Code were committed in the same series of acts and that the offences involved elements of fraud and dishonesty.

(2) The trial was fundamentally flawed from the start in that an essential element of the offence of conspiracy was omitted and not considered, that is, the "deceit or fraudulent means" by which the conspiracy was to be carried out. The omission was partly due to a drafting error in s 407(1) in which the paraphrasing that Subsection under paragraphs (a), (b) and (c) erroneously confined "deceit or fraudulent means" to paragraph (a) only when that element should apply to all three types of conspiracy set out in those three paragraphs. As a result the trial judge failed to find that the conspiracy was committed by deceit or other fraudulent means. This flaw vitiated the conviction on conspiracy and in turn, the conviction on misappropriation.

(3) The drafting error in s 407 (1) of the Criminal Code is simple and one that can be corrected by judicial act applying the purposive approach to judicial construction of statutes. Once corrected, the "deceit or fraudulent means" should appear in the opening sentence of Subsection (1) so that this element applies to all the three types of conspiracies set out in paragraphs (a), (b) and (c)of that Subsection respectively.

(4) The trial judge also failed to actually find that the prosecution had discharged its burden of proving fraudulent intent beyond reasonable doubt.

(5) In the circumstances, there were errors on important points of law, there were material irregularities committed in the trial and that the verdicts in all the circumstances were unsafe and unsatisfactory. The appeal against the convictions is allowed, the convictions are quashed and sentence set aside, that there shall be a new trial, and that the appellant is discharged forthwith on K1,000 bail on the condition that he shall appear for mention at the Waigani National Court at 9.30am on 7^th September 2015.

Cases Cited:

Papua New Guinea Cases:

Bakeri Pena v State [1997] PNGLR 289
Charles Ombusu v The State (No 2) [1997] PNGLR 699
Dale v The Police (1992) N1103
Dinge Damane v The State [1991 PNGLR 244
Epeli Davinga v The State [1995] PNGLR 263
Fred Bukoya v The State (2007) SC887
Gabriel Laku v The State [1981] PNGLR 35
John Beng v The State [1977 PNGLR 115
Kindi Lawi v The State [1987] PNGLR 183
Parkop v Vele (No 3) (2007) N 3222
Pila Ninigi v Francis Awesa (2013) N5322
PLARNo 1 of1980 [1980] PNGLR326
SCR No 6 of J 984; Re Provocation [1985] PNGLR 31
The State v fori Veraga (2005) N2849
The State v Yuants Kaman [1993] PNGLR 488
The State v Paul Tiensten (2013) N5422
State v Gabriel Ramoi [1993] PNGLR 390
The State v Napilye Kuri [1994] PNGLR 371

The State v Francis Natuwohala Laumadava [1994] PNGLR 291
The State v John Okun [2000] PNGLR 60
Timbu Kolian v R [1967-68] PNGLR 320

The State v Lastlin Inom (1981) N329

Thress Kumbamong v The State (2008) SC 1017

Overseas cases cited:

Dawson v R [1961] HCA 74; (1961) 106 CLR 1
Henly v Mayor of Lyme [1829] EngR 554; (1829) 130 ER 1218
Nothman v Barnet Council [1978] 1 WLR 220
R v Feely ([973] QB 530
R v Landy (1981) 1 WLR 355

Seaford Court Estates Ltd v Asher [1949) 2 K.B. 481
Woolahra Muncipal Council [1982] 2 AC 172

PNG Statutes referred to:

Criminal Code (Ch 262)
Supreme Court Act (Ch 37)
Wrongs (Miscellaneous Provisions) Act (Ch 297)

Overseas Statutes referred to:

Criminal Code of Queensland, Australia

Texts and treatises referred to:

CCH Macquire Dictionary of Law 2^nd Edition
Oxford Dictionary of Law Seventh Edition, 2009, Oxford University Press,

Counsel:

I Molloy with J Haiara, for the Appellant
C Sambua, for the Respondent

31^st July, 2015

1. BY THE COURT: This is an appeal from decisions of the National Court against conviction and sentence on one count of conspiracy to defraud and two counts of misappropriation. Although separate appeals were brought in respect of the convictions and sentence, they were heard together. If the convictions are affirmed on appeal, the Court will go on to determine the application for leave to appeal against sentence and if leave were granted, determine the merits of the appeal against sentence.

2. The decisions appealed from are described in the opening paragraph of the notice of appeal in the following terms:

"The Appellant appeals from the whole of the judgement of the National Court (Salika DCJ) given on 16^th October, 2014 in CR No 376 of 2013 The State v Francis Potape whereby the Court found the Appellant guilty on three counts, namely, conspiracy with others to defraud the State by fraudulently passing a resolution to pay inflated payments as JDP & BPC sitting allowances contrary to s 407(J) (b)of the Criminal Code Ch No 262, dishonestly applying to his own use the sum of K60 000.00 the property of the State contrary to s 383A (J)(a) of the Criminal Code, and dishonestly applying to the use of nine (9) named others monies in the sum of K270,000.00 the property of the State contrary to s 383 A (l) (a) of the Criminal Code."

3. There are nineteen (19) grounds of appeal which are not set out in any thematic order in the notice of appeal. The grounds are as follows:
   

(1) His Honour erred in mixed law and fact in that he found that the passing of resolutions of members of the JDP&BPC including the Appellant to pay the allowances was itself a conspiracy.

(2) His Honour erred in law in that he did not determine whether passing of resolutions of members of the JDP&BPC and in particular the Appellant had an unlawful intent.

(3) His Honour erred in law in so far as he found that the manner in which reimbursements were sought and paid amounted to conspiracy to defraud.

(4) His Honour erred in law in that he should have found it was an incident of the JDP&BPC 's powers to authorize and permit payment of allowances for meetings and expenses relating to meetings.

(5) His Honour erred in law in that he should have found that the JDP&BPC members including the Appellant were entitled to be paid allowances in respect of meetings.

(6) His Honour erred in law in that he should have found that the JDP&BPC members' allowances were not payable without receipts for expenditure against the overwhelming evidence that procurement of receipts was practicable.

(7) His Honour erred in mixed law and fact in finding that allowances for meetings for the JDP& BPC could only be determined by the Salaries and Remuneration Commission against the weight of evidence that such JDP&BCP meeting costs and expenses are the responsibility of the respective Provincial Government in the absence of any determination by SRC of those other allowances.

(8) His Honour erred in mixed law and fact in finding that the Appellant acted dishonestly in receiving and applying to his own use K60 000.00.

(9) His Honour erred in mixed law and fact in finding that the Appellant applied K270,000.00 (or any part thereof) to the use of other members of the JDP&BPC or advisers.
(10) His Honour erred in mixed law and fact in finding that the Appellant acted dishonestly in so far as he can be said to have applied K270 000.00 (or any part thereof) to the use of other members of the JDP&BPC or advisers.

(11) His Honour erred in mixed law and fact in that he should have found that the Appellant had acted under an honest claim of right with no intention of defraud.

(12) Further or alternative, his Honour erred in mixed fact and law in that he should have found that the Appellant acted under an honest and reasonable, but mistaken, belief in the existence of a state of affairs, namely, that the JDP&BPC was empowered to authorize the payments, and that the payments had been duly authorized by the JDP&BCP.

(13) His Honour erred in mixed law and fact in finding that the money the subject of the charges was the property of the State against the weight of evidence that the money was lawfully appropriated and paid by SHPG to the JDP&BPC to budget and spend according to their own requirement including paying its meeting cost and expenses.

(14) The judgement on one or more of the above grounds is unsafe and unsatisfactory.

(15) His Honour erred in fact in so far as he found that the JDP&BPC passed a resolution to pay themselves sitting allowances of K5 000.00 per day to Chairman and K2 500.00 per day to all other committee members instead of finding the resolution were to pay the said sums as meeting allowances for past meetings which sometimes ran over more than one day, plus for days of travel, and to include allowances for accommodation, travel, fuel, vehicle hire, meals and security.

(16) His Honour erred in fact in failing to find that there were six (6) JDP & BPC meetings conducted in 2009 and another five (5) in 2010, prior to receiving the payment of K70,000.00 in October, 2010 and for those meetings there was no evidence of the SHPG or Komo- Magarima District paying for the Appellant's and other JDP & BPC members' and advisers 'meeting costs and expenses for attending those meetings and therefore although receipts for costs were not produced costs would have been incurred by the Appellant and the other members of the JDP & BPC and advisers.

(17) His Honour erred in fact in finding that in 2009 the Southern Highlands Provincial Government provided K12 million for that Komo Magarima District received K2 million to support the work of its JDP&BPC, instead of finding in 2009 the Southern Highlands Provincial Government budgeted K1.5 million for each of eight districts in the Province but no funds were actually paid for the Komo Magarima JDP &BPC.

(18) His Honour erred in fact in finding that in 2010 the Southern Highlands Provincial Government provided K16 million for the work of the JDP & BPC in Southern Highlands Province, and that Komo Magraima received K2.6 million to support the work of its JDP & BPC, instead of finding in 2010 the Southern Highlands Provincial Government budgeted K2 million for each of eight districts in the Province, but actually paid only K 700, 000.00 for the Komo Magarima JDP&BPC in October 2010 for the entire period of2009 and 2010.

(19) His Honour erred in fact in finding that members of the JDP & BPC did not make their own arrangements to attend committee meetings.

Appeal against conviction

4. In a criminal appeal, the grounds on which an appeal against conviction is allowed are stipulated in s 23 of the Supreme Court Act ( Ch 37), which provides:
   

"23. Determination of Appeals in ordinary cases.

(1) Subject to Subsection (2), on an appeal against a conviction the Supreme Court shall allow the appeal if it thinks that -

(a) the verdict should be set aside on the ground that under all the circumstances of the case it is unsafe or unsatisfactory; or

(b) the judgment of the Court before which the appellant was convicted should be set aside on the ground of a wrong decision on any question of law,' or

(c) there was a material irregularity in the course of the trial,

and in any other case shall dismiss the appeal.

(2) Notwithstanding that the Supreme Court is of the opinion that the point raised in the appeal might be decided in favour of the appellant, it may dismiss the appeal if it considers that no miscarriage of justice actually occurred.

(3) If the Supreme Court allows the appeal against conviction, it shall subject to this Act, quash the conviction and direct a verdict of not guilty be entered.

(4) ... "

5. The three grounds set out in s 23 (1), though expressed disjunctively and in the alternative, are expressed in generic terms and they may overlap. Restating those grounds in question form, the appeal Court should determine the following questions:
   • Is there a wrong decision on a question of law?
   • Is there a material irregularity in the course of the trial?
   • Is the conviction in all the circumstances of the case unsafe or unsatisfactory?
   • If the point(s) raised in the appeal are decided in favour of the appellant, was there
     actual miscarriage of justice as a result?

Case background

6. The appellant is the member for the Komo-Magarima Open electorate in the National Parliament. By law, he is the chairman of the Joint District Planning & Budget Priorities Committee (JDP & BPC), a body set up under the Organic Law on Provincial and Local Level Governments (OLPLLG) to plan, coordinate and manage government funds allocated for projects in the District. In 2010 the Southern Highlands Provincial Government allocated K700,000 "for the work of the JDP & BPC". In a meeting of the Committee held on 20 November 2010 chaired by the appellant, certain decisions were made with regard to increased daily sitting allowances to be paid to the Chairman and members of the Committee by way of reimbursement of personal expenses incurred by members in attending previous meetings of the Committee. The meeting resolved to increase the daily sitting allowance from K50 per sitting day for the Chairman to K5,000.00 and from K25.00 per day to K500.00 per day for other members. The payments were to be made from the K700,000.0 allocated by the Provincial Government to the JDP/BPC "for the work of JDP & BPC". When the decisions were implemented, the appellant received K60,000.00 whilst other members each received K30,OOO.00.The decisions reached at the meeting of the committee led to the charge of conspiracy, the K60,OOO.OO payment received by the appellant led to the second count of misappropriation and the payment received by the other committee members (K270,OOO.OO) led to the third count of misappropriation. Both the prosecution and defence called evidence at the trial. The trial judge considered the evidence and convicted the appellant on each count. The appellant was sentenced to 3 years imprisonment on the first count, 3 years imprisonment on the second count and 5 years on the third count, to be served concurrently. Two and half years of the 5 year head sentence was suspended on various conditions. The appellant appealed the convictions and sentence.
   

The course of the trial

Conspiracy

7. With regard to conspiracy, the trial judge made the following findings and conclusions:
   • (i) "Whether or not there was conspiracy between the Accused, Tumbi Yari, the District Administrator and Francis Ank, the District Treasurer, to defraud the State of K330,000. 00?
     

"I 8. For the conspiracy allegation, the State relied on the evidence of the payments made to every member of JDP & BPC, the District Administrator and the District Treasurer. The minutes of the meeting dated 2th December 2010 do not show a narrative or how and why the decision was made to make the payments to the members and others of the committee.

19. The State has the duty to prove beyond reasonable doubt that there was conspiracy as alleged. The CCH Macquire Dictionary of Law 2^nd Edition defines conspiracy as "a criminal offence involving the agreement of two (2) or more to commit an unlawful act, or to do a lawful act by unlawful means". The same dictionary defines defraud as "to deprive of a right by fraud".

20. The question is was there an agreement between the members and advisors of Komo Magarima JDP & BPC to pay themselves the allowance. There is no direct evidence that those members and advisors made any agreement outside of the meeting or before the meeting. There is however evidence that at the committee meeting they agreed or resolved to pay themselves those allowances. Did that amount to conspiracy?

(ii) Whether the JDP & BPC resolutions made on 20 November 2010 amounted to conspiracy.

21. The meeting minutes of 20 November do not show any discussion as to whether the payment of those allowances were or would be proper or lawful. Moreover there is nothing recorded in the minutes of 20 November 2010. Whether any advise was given to the committee by the District Treasurer or whether they were even asked to give any advise on this payments as to whether it was lawful or not to pay themselves the allowances. It is however crystal clear to me that all of the beneficiaries of the decision were themselves which raised a conflict of interest situation in respect of them.

22. This meeting was held on a Saturday and began at 7:30 am and finished at 10:00 am. I wonder whether this was a meeting over breakfast. The minutes were taken by Tumbi Yrai the Acting District Administrator for Komo Magarima.. Seven members including the chairman were present. Four members recorded apologies and were absent. There is no record in the minutes that anyone of those recorded as absent and with apologies arrived later in the course of the meeting.

23. Yet those who were recorded as being absent with apologies were also paid allowances for not attending the meeting. The question arises, is it proper to pay those for not attending the meeting? The answer is obvious- No. In answering the second issue, I find that the decision to award themselves the various amounts as disbursements without receipts and that all had a vested interest in the awarding of the money in my view amounted to conspiracy to defraud.

(iii) Whether the JDP & BBC has authority to determine its allowances for its meetings such as "meeting allowances" and associated costs incurred for travel such as vehicle hire, accommodation, fuel, food, security.

The trial judge after considering provisions of the SRC Determinations and the evidence of the Executive Officer of SRC, Jack Bagita, answered the question in the negative. The judge found that it was the responsibility of the District Administration to make logistical arrangements for members to attend meetings of the JDP & BPC. Further the claims for reimbursement for transport etc were not supported by receipts to verify the expenses incurred. The reports of their out of pocket expenses were pure estimates and guesses. The manner in which the reimbursements were paid were improper and amounted to conspiracy to defraud the State.

Misappropriation

8. With regard to the misappropriation charge, the trial judge found the funds were the property of the State. He found that the designated purpose for which the funds were allocated by the Southern Highlands Provincial Government was for "the administration of the Komo Magarima District including holding JDP & BPC meetings and associated costs": see paragraph 47 of the judgment. He found that the reimbursements claimed and paid were for accommodation, security, transport, meals and incidentals associated with attending committee meetings. The trial judge found that the payments were unlawful or illegal from the start because they were not authorised by the SRC and that there were no receipts to support the claim for refund.
9. For a definition of "dishonesty", the trial judge adopted a passage from the English Court of Appeal decision in R v Freely [1973] QB 530 adopted in Kindi Lawi v The State [1987] PNGLR 183 The judge also adopted a passage from R v Landy [1981] 1 WLR 355 adopted in Kindi Lawi v The State, supra which said "we can see no reason why a man of his intelligence and experience would not have appreciated, as right minded people would have done, that what he was doing was dishonest" and applied the statement to the facts as found in the following manner:

.. I adopt this statement and say that the accused with his level of education, experience ought to have known that the JDP & BPC had no authority to determine the rate of allowances to pay himself and other members of the committee. Again his level of education, intelligence and experience he ought to have known that one cannot properly claim a refund without payment receipts. Proper financial processes need to be adhered to. The accused being the Chairman of the Komo Magarima JDP & BPC together with other members of the committee not only made a determination and decision to pay themselves K60,000 and K30,000 respectively but they all received it and used it. I am of the firm view that the K60, 000. 00 was dishonestly received and used by the accused".

10. The same findings were made with regard to the third count (applied K270,OOO to the use of others namely Thomas Potape, Eric Yawas, Hape Marale, Dennis Libe, Francis Keara, J Solomon, Francis Aule and Tumbi Yari).
    
11. The trial judge considered and determined that the defence of mistake of fact and honest claim of right (Criminal Code, s 23(2)) had not been made out by the appellant.
12. Applying the law to the facts, the trial judge found that the funds were not applied to its designated purpose; instead they were dishonestly applied to his own use or to the use of the other members of JDP & BPC.

Central point in the appeal

13. The three counts were jointly tried. The joint hearing of the three counts was proper given the three offences under s 407(1) (conspiracy with intent to defraud) and s 383A(l)(a) misappropriation) of the Criminal Code were committed in the same series of acts and that
    the offences involved an element of fraud and dishonesty.
14. At the hearing of this appeal, the appellant condensed the grounds into one main ground: that the trial judge failed to find as a fact that there was a fraudulent intent on the part of the appellant to commit the conspiracy or to apply the funds to his own use or to the use of others. It is submitted fraudulent intent is an element of the offence common to both conspiracy and misappropriation. Without making that finding, the trial judge erred in law in returning a guilty verdict on the charges.
15. The appellant argues that the Committee meeting made no decision to pay sitting allowances to its members, the decision was made to reimburse expenses already incurred by members in attending meetings of the Committee. The funds were allocated by the Provincial Government to cover "the work of the IDP & BPC". At the time the expenses were incurred for meetings through 2009 and 2010, the funds were not available. When funds were made available, they were expended on their designated purpose - to meet expenses associated with the work of the Committee. The trial judge misapprehended this distinction. The finding by the trial judge that the manner in which the reimbursements were sought and obtained, ie without supporting receipts and filing out necessary forms were improper, fell short of a finding of fraud. With regard to dishonest application, the Committee did have the authority to allocate funds for such purposes. The trial judge found that the Committee did not have the authority to determine allowances which it did not have authority, which is different from authority to authorise payment for reimbursement of expenses. The trial judge applied the objective and subjective test of dishonesty but fell short of making a definitive finding of dishonesty. The trial judge's findings that the appellant "ought to have known" fall short of any definitive finding of dishonesty: The State v Napiye Kuri [1994] PNGLR 371. The trial judge's finding that there was no right to claim a refund without a receipt fell short of a finding of dishonesty.

16. Finding of fraud is essential to support a conviction for these two offences, and in the circumstances, no such finding having been made, the conviction is unsafe and unsatisfactory.

17. The State argues that the trial judge applied the correct law to the facts and correctly returned a guilty verdict for each charge. It was established by evidence beyond reasonable doubt that the appellant conspired to hold a JD & BPC meeting on the week-end in which they approved sitting benefits or allowances for its members that they were not entitled to receive under law, that they unlawfully usurped the functions of the SRC which is lawful authority that approves such service entitlements, that the amounts they paid himself and other members some of whom did not attend the meeting were grossly excessive and when they were paid the amounts there were no proper receipts submitted to support their claims for reimbursement. The trial judge correctly found that their actions in agreeing to the resolution approving these payments was unlawful in that the Committee usurped the powers of the SRC amount to a conspiracy to commit an unlawful act and submitting and receiving reimbursement payments without supporting receipts were improper and dishonest. The appellant has not shown that the convictions are unsafe and unsatisfactory and they should not be disturbed.

Is there a wrong decision on a question of law?

Drafting error in s 407 (1) (conspiracy)

18. With regard to Section 407 (1)(b) of the Criminal Code (conspiracy with intent to defraud), there is a drafting error in the provision by which an essential element of the offence is omitted. As with previous cases of conspiracy under this provision before the Courts, the error was not detected at the trial: for example, see The State v Iori Veraga (2005) N2849. It was not raised by the parties or the Court at the hearing of this appeal. It has come to our attention during our deliberations and we consider it important that it is addressed at the outset because it raises an important point of law that is pertinent to the main point raised in the appeal.
19. Section 407 (1) of the Criminal Code is contained in Schedule 1 of the Criminal Code Act (Ch 262). It is in the following terms:

"407. Conspiracy to defraud.

(1) A person who conspires with another person-

(a) by deceit or any fraudulent means to affect the market price of anything publicly sold; or

(b) to defraud the public, or any person (whether or not a particular person);or

(c) to extort property from any person,is guilty of a crime.

Penalty: Imprisonment for a term not exceeding seven years. "(our emphasis)

20. The disjunctive expression of the three types of conspiracies set out in Subsection (1) indicates each is a distinct offence. Section 407 (1) (b) read as a whole then reads: "A person who conspires with another person-to defraud the public, or any person (whether or not a particular person) is guilty of a crime." (The same can be said of paragraph (c)). The "fraudulent means" by which the conspiracy to defraud is committed (and "the property" the subject of the conspiracy) is omitted from paragraph (b). There is an obvious absurdity in the legislation. The omission defeats the purpose of the Section which creates an offence for a person who, by employing deceit or any fraudulent means, commits any of the three types of conspiracies.

21. Our Criminal Code is adopted from the Criminal Code of Queensland, Australia (Queensland Code). The equivalent of our s 407 (1) in the Queensland Code is found in s 430 which states:

"Conspiracy to defraud. Any person who conspires with another bv deceit or anv fraudulent means to affect the market price of anything publicly sold, or to defraud the public, or any person, whether particular person or not, or to extort any property from any person,is guilty of a crime, and is liable to imprisonment for seven years". (our emphasis)

23. There is an obvious drafting error in section 407 of the Criminal Code. When the section was adopted from the Queensland Criminal Code, it was redrafted with the use of paragraphs but an omission occurred by not qualifying the offences under paragraphs (b) and (c) with the words "by deceit and fraudulent means.
24. The effect of the restructuring would clearly demonstrate the three offences of conspiracy created by this section, and those are conspiracies:
    • to affect the market price of any thing publicly sold;
    • to defraud the public or a person; and
    • to extort property from a person,

that are committed by "deceit or fraudulent means".

23. As noted earlier, the equivalent of our section 407 in the Queensland Criminal Code is section 430. That section 430 was omitted by the Criminal Code and Other Acts Amendment Act 2008 No. 55 but until then, the relevant form for the wording or statement of the charges under that section was Form No. 258 of the Schedule to the Criminal Practice Rules 1900 of Queensland. The Form read:
    

"No. 258-Conspiracy to defraud Section 430

(1) Conspired together [or with one M.N. (and others)] to affect by deceit [or by fraudulent means] ....

(2) Conspired together [or with one M.N.] to defraud the public by deceitfully [or fraudulently] .....

(3) Conspired together [or with one M.N.] to extort .... by deceit [or by fraudulent means] ."

24. The drafting error is simple and one that can be easily corrected by this Court by judicial act in the exercise of its statutory interpretive function. Section 407(1) should be re-arranged to read as follows:

"407. Conspiracy to defraud.

(1) A person who conspires with another person by deceit or any fraudulent means -
(a) to affect the market price of any thing publicly sold; or

(b) to defraud the public, or any person (whether or not a particular person); or
(c) to extort property from any person,

is guilty of a crime.

Penalty:

Imprisonment for a term not exceeding seven years.”(our emphasis)

25. In the rearrangement of this statutory provision, the purposive approach to judicial construction of statutes is employed to correct an obvious drafting error. In adopting this approach, this Court is merely straightening the provision and nothing more, or to use the words of Lord Denning, "ironing out the creases", to avoid an absurdity in the legislation. As Lord Denning said in Seaford Court Estates Ltd v Asher [1949] 2
    K.B. 481:

"Put into homely metaphor it is this: A judge should ask himself the question: If the makers of the Act had themselves come across this ruck in the texture of it, how would they have straightened it out? He must then do as they would have done. A judge must not alter the material of which it is woven, but he can and should iron out the creases. "

26. Lord Denning continues in Nothman v Barnet Council [1978]1 WLR 220 where he said:

"In all cases now in the interpretation of statutes we adopt such a construction as will promote the general legislative purpose underlying the provision. It is no longer necessary for the judges to wring their hands and say: "There is nothing we can do about it". Whatever the strict interpretation of a statute gives to an absurd and unjust situation, the judges can and should use their good sense to remedy it- by reading words in, if necessary-so as to do what Parliament would have done, had they had the situation in mind".

27. Lord Denning's approach has found acceptance in this jurisdiction: PLAR No 1 of 1980 [1980] PNGLR 326, SCR No 6 of 1984; Re Provocation [1985] PNGLR 31.
    

28. The result, six (6) elements of the offence under s 407(1)(b) require proof as follows:

(1) the accused person

(2) conspired with other persons

(3) by deceit or any fraudulent means
(4) to defraud the public or any person
(5) of any property

(6) property belonging to that other person.

29. With regard to s 383A(1) (a) of the Criminal Code there are no drafting issues. That Section states:

" (1) A person who dishonestly applies to his own use or to the use of another person- (a) a property belonging to another .. is guilty of the crime of misappropriation of property. (my emphasis)

30. The elements of misappropriation are the following:

(1) the accused person
(2) applied to his own use
(3) property

(4) belonging to another person
(5) the application was dishonest.

31. In dealing with offences under s 407 and s 383A(1 )(a), the trial judge should at the outset set out the distinct and complete elements of each offence and require the prosecution to prove each of the element of the offences beyond reasonable doubt. The trial judge should then make an express and clear determination that the prosecution has in fact discharged that burden to the required standard before returning a guilty verdict. These principles are trite and need no reminder by the appeal Court.
    

Conspiracy

32. With regard to the elements of the offence under s 407(1)(b), the trial judge omitted a separate consideration of the third element (by deceit or any fraudulent means). The apparent omission of this element of the offence may, in part, be attributed to the drafting error which did not come to his attention. The trial judge did not identify this element of the offence and assign the facts that he had found to satisfy this element.
33. The trial judge also did not make any clear finding of an intention to defraud the State
    of those funds.
    
34. The trial judge did not address his mind to how the meeting which approved the allowances without proper receipts and in usurpation of the

function of the SRC constituted a deceitful act or a fraudulent act by which the conspiracy to defraud the

State of the funds had been perpetrated. Except for the fact that the meeting was held on the week -end, and there is no rule against holding week-end meetings to conduct government business, the JDP & BPC meeting was lawfully constituted to conduct its meeting and was chaired by its designated Chairman and attended by designated members. As correctly found by the trial judge, the funds were budgeted and allocated by the Southern Highlands Provincial Government "for the administration of the Komo Magarima District including holding JDP & BPC meetings and associated costs "for the work of JDP & BPC". The funds were placed at the Committee's disposal to expend on any purposes associated with the work of the JDP & BPC. The
question is whether the convening of the meeting and its conduct of business, and the decision to reimburse expenses associated with members attending meetings was deceitful or fraudulent? Accepting that the approval of those allowances was outside of the SRC service entitlements and grossly excessive and therefore unlawful, does that of itself constitute a deceitful or fraudulent act? The failure of the trial judge to address his mind to this element is an error on an important point of law that vitiates the entire trial.

35. There was no evidence of a conspiracy at the trial. The passing of the resolutions at the Komo- Magarima JDP &BPC on 20th November 2010 cannot of itself amount to a conspiracy. Offences of conspiracy usually involve an element of secrecy by which an agreement is reached, a plan is hatched or a scheme is devised to carry out an unlawful act or a lawful act by unlawful means. For the charge of conspiracy to be sustained, the State was required to produce evidence that members agreed before the meeting to
    fabricate the occurrence of a proper meeting to pass the resolutions for the payments which they knew were unlawful. There was no such evidence.
36. In answering issue (ii): Whether the JDP& BPC resolutions made on 20^th November 2010 amounted to conspiracy, the trial judge referred to the evidence that:
    • the discussions of the meeting were not recorded in the meeting Minutes;
    • the meeting was held on a Saturday commencing at 7.30am;
    • the resolutions were made by the members for their own benefit (therefore giving rise to a conflict of interest)

before concluding at [23] of his judgement: "I find that the decision to award themselves the various amounts without receipts and that they all had a vested interest in the awarding of the money in my view amounted to conspiracy to defraud. "That evidence falls far short of establishing beyond a reasonable doubt a conspiracy to defraud let alone a conspiracy.

37. Pursuant to the indictment, the State also had to establish that the passing of the resolutions at the JDP&BPC meeting was fraudulent. While the JDP&BPC meeting may have approved payments (including amounts) that were unauthorised as being outside the SCR Determinations, the meeting was nevertheless a properly convened meeting attended by the Chairman and members who passed certain resolutions that were minuted. There would have been no proper basis for a finding that the meeting or indeed the passing of the resolutions were fraudulent as alleged in the indictment. However His Honour did not make any definitive finding that the passing of the resolutions were fraudulent, which was a necessary element of the charge. His Honour therefore fell into error in convicting the appellant on the charge of conspiracy to defraud.
    

Misappropriation

38. With regard to misappropriation, based on the resolutions passed at the JDP&BPC Meeting, the District Administration made the payments to the appellant (K60,000) and others (K270,OOO). The appellant did not authorise or issue the payments. As noted earlier, there was no definitive finding that the resolutions were fraudulently passed. As the payments followed the resolutions, the appellant could not have been found beyond a reasonable doubt to have dishonestly applied the monies. His Honour again fell into error in convicting the appellant on the charges of misappropriation.
39. Further, this was a joint hearing of two different offences but on the same set of facts and evidence because the elements requiring proof were similar in that both offences involved an element of fraud or dishonesty. The conviction for misappropriation was largely based on the findings of fact made in the conspiracy charge. The conviction for conspiracy charge having been flawed for the reasons given above, it follows that the convictions for misappropriation are also flawed. Furthermore, the trial judge failed to make any finding or conclusion that the State had actually discharged the burden of proof to the required standard.
    

Claim of right (s23(2)

40. Further, with regard to claim of right, the defence was fairly raised by the appellant in that the funds were budgeted for the purpose of the work of the JBP & BPC and as the trial judge found, those work included funding he operations of the JBP & BPC including meetings. The onus shifted to the prosecution to negative the defence beyond reasonable doubt. It was not for the appellant to prove there was an honest claim of right: see Criminal Law & Practice in Papua New Guinea, (3^rd ed,) at p 162- 3. The trial judge erred in failing to find that the prosecution had negatived the defence beyond reasonable doubt.
    

Proof beyond reasonable doubt

41. There is another error on an important point of law that is apparent on the face of the judgment that vitiates the joint trial. Although the trial judge reminded himself at the commencement of his reasoning of the burden and standard of proof on the prosecution to prove this and other elements of the offence beyond reasonable doubt, the trial judge did not make any finding or conclusion that the prosecution had actually discharged that burden to the required standard. Although we know of no statutory imperative or case authority that require a trial judge to make express pronouncement of his finding or conclusion that the test whether the offence has been "proved beyond reasonable doubt" has been satisfied, the test described as "a time- honoured formula" for determining guilt (Dawson v R [1961] HCA 74; (1961) 106 CLR 1 at 18) is firmly established in the common law and adopted and applied by the Courts in this country as part of the underlying law in every criminal case tried by the Courts. The test is also founded on the Constitutional protection on presumption of innocence in criminal cases. Its present wording is considered clear and simple enough and Courts have resisted attempts to substitute the test with other expressions that may change its meaning: John Beng v The State [1977 PNGLR 115. The test is formulated in those words for very good reasons, given the seriousness of a criminal offence, constitutional protection of presumption of innocence and the deprivation of personal liberty that flows from the conclusion. In every criminal case, it is highly desirable that the test should not only be expressly stated but a clear a determination is made that the test has been actually satisfied by the prosecution. It is imperative that such determination should be pronounced in the judgment to avoid ambiguity and confusion, given the seriousness of the offence and the deprivation of liberty that flows from that determination.
42. We are satisfied that there occurred actual miscarriage of justice in that the appellant was tried and convicted on facts which could not and did not satisfy the elements of the offences that there occurred conspiracy to defraud that was perpetrated by a deceitful or fraudulent means and therefore criminal. Thus it cannot be said that there was no actual miscarriage of justice.

Is there a material irregularity in the course of the trial?

43. The error on the points of law referred to above amount to material irregularities in the course of the trial.

Is the conviction in all the circumstances of the case unsafe or unsatisfactory?

The expressions intent to defraud, fraudulent means or dishonesty found in s 407 (1) and s 383A are often used interchangeably. In conspiracy with intent to defraud, it is the agreement to deprive the owner or a person having interest in a property by means of a deceitful or fraudulent act that constitutes the fraudulent act. In misappropriation cases, though the fund may be obtained by lawful means, it is the application of those funds for purposes other than its designated purpose that constitutes the dishonest or fraudulent act or purpose.

45. In criminal offences involving elements of fraud and dishonesty, it is the fraudulent or dishonest act that attaches criminal culpability or criminality to it that is punishable by a penal sanction. It is the criminality of the act that is the gist of an offence involving fraud or dishonesty. Acts of fraud and dishonesty go to a person's state of mind. Fraudulent or dishonest intent supply the mens rea (common law doctrine) required to support a criminal conviction for a criminal offence. Whilst it is suggested that the common law doctrine of mens rea is displaced by the criminal responsibility provisions found in Part V of the Criminal Code (see Thress Kumbamong v The State (2008) SC1017), it is nonetheless a basic doctrine that underpins every crime and one that is imputed by law. Mens rea is deeply rooted in the common law and adopted as part of the underlying law of this country: Dale v The Police (1992) NI103, per Sheehan J. The leading statement on mens rea is found in the judgment of Windmeyer J in Timbu Kolian v R [1967-68] PNGLR 320:

"In general, criminal responsibility is today attached to moral blame. And according to deeply rooted beliefs blame-worthiness does not depend simply on what a man did, or the results his action caused. It depends upon his knowledge and his intentions when he acted or upon - or upon his advertence to the possible consequences of what he was doing or about to do, or his careless ignoring of them. That of course is trite. The doctrine of mens rea in the common law and of dole in the law of Scotland express this element in guilt. I see no reason for thinking that s.23 (of the Code) demands any departure from this basic concept or that it all attenuates it".

46. Not every wrong known to law is a crime. With regard to wrongs known to public law which involve wrongs committed by public officials in the course of discharging their statutory functions, there are different types of wrongs that are attendant with their own practices and procedures designed to ascertain guilt and which provide due process and a fair trial. Each have different standards of proof and for which different redress or sanctions are available at law, commensurate with the nature and seriousness of the wrong and degree of culpability. The more serious the wrong, the higher the degree of culpability, the higher the standard of proof, the more stringent the procedural requirements designed to afford fair trial and the more severe the sanction. We suggest four categories of wrongs which are set out below in order of seriousness, as follows:
    
    • (1) Criminal offences- Of the wrongs known to public law, a criminal offence is the most serious of them all and it is punishable by a fine (enforceable by term of imprisonment) or term of imprisonment. The source of this wrong is the written law which prescribes the
      offence and penalty and the procedures by which guilt is ascertained. Only the Courts of law have the power to deal with breaches of the penal laws.
    • (2) Quasi-criminal offences -Breach of statutory duties for which there is a strong element of compulsion to obey or perform those duties. Prosecution lies before a statutory tribunal or authority. Some of these wrongs may be criminal in nature or character but
      fall short of a defined offence. The standard of proof in respect of some of those breaches is close to the criminal standard of beyond reasonable doubt. Breach of provisions of the Leadership Code is an example. The penalty ranges from a reprimand, an administrative fine or loss of public office through to dismissal from office.
      
    • (3) Disciplinary offences- Then there are those purely disciplinary wrongs which are punishable by an administrative fine, restitution, demotion, transfer or dismissal from public office. The standard of proof is much lower and closer to the civil standard.
    • (4) Civil wrongs- actions in tort and contract that are largely found at common law. The tort of misfeasance in public office is amongst those actions available in tort: see Dunlop v Woolahra Municipal Council [1982] 2 AC 172, Henley v Mayor of Lyne (1928) 1030 ER
      995. Some examples of actions founded on breach of statutory duties that give rise to a private action in tort or contract are found in the Wrongs (Miscellaneous Provisions )Act
      (Ch 297 ). The remedy lies in private law by way of declaratory relief, injunctions and damages or restitution. The standard of proof is on the balance of probabilities.
      

It would be wrong for the Courts of law to find or impute criminality to wrongful actions that fall under the second, third and fourth categories and invoke the full force of the criminal law to punish wrongs which are lacking in criminality. It calls for great care on the part of the Court when assessing the evidentiary material placed before the Court in a criminal offence involving an element of fraud or dishonesty to ensure that the case falls into the first category and that the prosecution proves each element of the criminal offence beyond reasonable doubt before a guilty verdict is returned for the offence.

47. The State v Yuants Kaman [1993] PNGLR 488 is a good example. The Deputy Premier of Western Highlands Province was charged with misappropriating a sum of money. The money in the form of grants was budgeted by the Provincial government for minor projects in his electorate. He applied for the funds for Church projects in his electorate which when approved were paid to a local supplier company for purchase of building materials. After considering the evidence, the trial judge said:

"So at the end of all the evidence, what is the court faced with? There is an absolute discretionary appropriation of government monies. There is an application to this vote by the accused for K4, 700 for building materials for some churches in his electorate. The materials are purchased and delivered, and then there is disputed evidence that the materials were distributed to some churches.

The whole scheme shows very poor administration of government money, but is there any evidence of criminal dishonesty in taking the monies and using them for his own purposes? Surely, if the fund was so discretionary, then it was open to the accused to apply for the funds

to give to whomever he wanted. And this is what he said he did. Some people have come forward and said he did apply the funds for their benefit, as sought.

I am sure that there must be some overriding principle that all public monies must be properly appropriated and then properly spent and acquitted. This is why we have a public service to oversee and monitor the application of public funds. I recall that there used to be a very strong Public Finances (Control and Audit) Act, which was strictly monitored, and anyone who had access to or control of the spending of public funds had to account for such spending quite strictly. If they did not, they would be surcharged and probably sacked. whilst I must assume that this is still the situation today, I do not know whether any strict administrative action is still taken.

The whole operation of this grants and subsidies appropriation with no proper controls, no accountability nor acquittal, with no guidelines, no costing, no records, and no receipts suggests such a gross mismanagement of public monies that the persons responsible should be removed from any office or position of responsibility. However this is not necessarily criminal misappropriation."

49. The types of cases that fall in to criminal misappropriation by public officials not observing administrative guidelines for disbursement of funds are where monies are taken under a deceitful scheme and paid to oneself into personal bank accounts and used against clear guidelines or use an agent to make payments to themselves or pay their personal debts: The State v Francis Natuwohala Laumadava [1994] PNGLR 291. The facts of the present case are distinguished from those cases.
50. In the case before us, the trial judge considered the defence raised under s 23(2) of the Criminal Code (bona fide claim of right). The trial judge dismissed the defence saying the appellant produced no evidence to support his assertion that he paid for services he received for purpose of attending committee meetings. There were no receipts provided to support claim for reimbursements. Also the District advisors were paid for services they were provided as part of their official duties. Others members who did not attend the Committee meeting were paid allowances regardless. They could be no bona fide recipients of the allowances. In our view, that was in itself an error. The onus of disproving a defence under s 23(2) lies on the prosecution.
51. These findings in our view fell short of any clear finding that the whole scheme was deceitful or that fraudulent means were employed with intent to defraud the State of those funds.

It is clear to us that the JDP & BPC meeting was conducted by the lawfully appointed body and chaired by the authorised person in the appellant. They voted openly to give themselves allowances thinking the Committee had the lawful authority to authorise such payments. The trial judge having found that the funds were allocated for the work of the Komo-Magarima District including "holding meetings and its associated costs" did not make any clear finding that the funds were not applied for its designated purpose and therefore dishonest or fraudulent. If those payments were allowances and associated costs that were properly the subject of authorisation by the SRC, then the approval granted by the Committee and payments received were above those contractual service entitlements for which an action in contract for recovery thereof was available, apart from being in breach of duties under the Leadership Code. The approval and receipt of such payments, though illegal or unlawful as that may be, of itself does not render the unlawful act an act of fraud or dishonesty. If that were the case, a clear finding must be made by the trial judge that what the appellant did in approving the allowances and paying themselves those reimbursement monies were done with a fraudulent intent and amounted to a crime. The trial judge made no such finding. The trial judge referred to the minutes of the Committee in the commencement of his reasons on verdict but made no such finding in the body of the judgement.

53. We are satisfied that the breaches of statutory duties and guidelines through the decisions of the Committee and the payment of the monies in the manner described in the evidence fell short of criminal conspiracy to defraud the State of those funds. I am also satisfied that the appropriation of those funds by the appellant did not amount to "criminal misappropriation" of those funds. The facts of this case fall under the statement of principle in State v Yuants Kaman, supra. A breach of SRC guidelines has occurred here, for which the appellant who is subject to the Leadership Code should have been referred to the Ombudsman Commission for investigation and prosecution under the Leadership Code. Other members of the Committee who were public servants should have been charged with disciplinary offences and dealt with in that way. They could all have been sued for damages under civil law and the State could have obtained and enforced judgments for restitution and damages.
54. All the findings made by the trial judge on the facts and questions of mixed fact and law proceeded on this basic misapprehension of the law relating to fraud and dishonesty. The judge could not have satisfied himself beyond reasonable doubt that there was a conspiracy to defraud committed by means of deceit or other fraudulent means and dishonest application of those funds in the circumstances.
55. Furthermore, the trial judge having reminded himself of the burden and standard of proof on the prosecution to prove the appellant's guilt beyond reasonable doubt earlier in the judgment, failed to reach the conclusion that the charges had been actually proved beyond reasonable doubt.
56. For the foregoing reasons, we are satisfied that the convictions for all three offences are unsafe and unsatisfactory.
    

If the point(s) raised in the appeal are decided in favour of the appellant, was there actual miscarriage of justice as a result?

57. The question of miscarriage of justice on appeal is whether, notwithstanding grounds of appeal being upheld, the Court is satisfied that there is no miscarriage of justice. We are satisfied that there occurred actual miscarriage of justice in that the convictions for conspiracy and misappropriation were rendered without any clear finding that what the appellant did was fraudulent and that the prosecution had actually discharged the burden of proving the appellant's guilt beyond reasonable doubt. The appellant was tried and convicted on facts which could not and did not satisfy the elements of the offences that the conspiracy to defraud perpetrated by a deceitful or fraudulent means and therefore criminal. Thus it cannot be said that there was no actual miscarriage of justice.
58. For the foregoing reasons, we would allow the appeal against conviction in respect of each of the three offences and quash the convictions and consequently, the sentence.
    

Re-trial

59. We consider it appropriate to order a new trial based on these considerations:
    

(1) There occurred procedural defects, errors and irregularities in the conduct of the trial with regard to the elements of the offence of conspiracy, the finding of fraud and the onus and standard of proof, for which is appropriate: Charles Ombusu v The State (No 2) [1997 PNGLR 669; Bakeri Pena v State [1997] PNGLR 289, Epeli Davinga v The State [1995] PNGLR 263, Gabriel Laku v The State [1981] PNGLR 35, Dinge Damane v The State [1991 PNGLR 244, Fred Bukoya v The State (2007) SC887.

(2) The expense and inconvenience to witnesses of conducting a retrial are not major considerations in this case.

(3) Special environment prevailing at the present time in the country in the
administration of justice where incidents of fraud or misappropriation by public officials, whether elected or appointed, are prevalent, and there is strong public interest in having the case properly tried: Ombusu v The State, supra.

(4) While a retrial may be an ordeal for the applicant, his individual interests are outweighed by the public interest that requires a proper determination whether public monies have been misused: Ombusu v The State, supra.

(5) The period from the time of the alleged offences (2010) to now cannot be considered inordinate such that witnesses are from within the jurisdiction and are available to be recalled to give evidence.

(6) The expense and inconvenience to witnesses of conducting a retrial are not major considerations in this case.

(7) It is in the interest of justice that there is a new trial: Ted Abiari v The State (No 2) [1990] PNGLR 432.

Orders of the Court

60. We make the following orders:

(1) The appeals against conviction are allowed.

(2) The convictions are quashed and sentences set aside.

(3) The matter is remitted to the National Court for retrial before another Judge.
(4) The appellant shall be discharged from custody forthwith on bail of K1,000.00 on the condition that he shall appear for mention at the Waigani National Court at 9.30arn on 7^th September 2015.

_____________________________________________________________

Haiara Lawyers: Lawyer for the Applicant
Public Prosecutor Pondros Kaluwin: Lawyer for the Respondent