Maladina v Independent State of Papua New Guinea [2016] PGSC 11; SC1495 (20 April 2016)

SC1495

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCRA. NO. 11 OF 2015

BETWEEN:

JIMMY MOSTATA MALADINA
Appellant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Respondent

Waigani: Gavara-Nanu J, Sawong J & Higgins J
2015: 28 October
2016: 20 April

APPEAL – Appeal against conviction – Conspiracy to defraud – Misappropriation – Criminal Code; ss. 383A (1) (a) and 407 (1) (b) – Elements constituting the offences charged.

APPEAL – Evidence – Circumstantial – Credible evidence or mere conjecture and surmise - Inferences to be drawn – Whether guilt the only rational inference that could be drawn– Whether other inferences consistent with innocence excluded.

APPEAL – Standard of proof – Proof beyond reasonable doubt – Prosecution carries the onus of proof – Onus of proof being shifted to the accused.

APPEAL – Right of accused to remain silent – Accused electing to remain silent - Constitution; s. 37 (4) (a) and (10) - No prima facie case established against the accused – Trial judge making adverse findings against the accused – Trial judge misdirecting himself on the law and misapplying principles of law – Trial judge falling into error.
Cases cited:

Allan Oa Koroka v. The State and Mariano Wani Simon v. The State [1988-89] PNGLR 131
Albert Karo v. Ombudsman Commission N1383
Billy Nara v. The State (2007) SC 1314
Fred Bykoya v. The State (2007) SC 887
Isaac Lupari v. Sir Michael Somare MP – Prime Minister and Chairman of the
National Executive Council & Ors SC 1071
Les Curlewis and Reben Renagi v. Protect Security and Communication Limited and David Yuapa SC 1274
Paulus Pawa v. The State [1981] PNGLR 498
Re Fisherman's Island [1979] PNGLR 202; N197
Rimbink Pato v. Umbu Pupu [1986] PNGLR 310
SCR No.1 of 1980; Res. 22A (b) of Police Offences Act (Papua) 1912 (repealed) [1981] PNGLR 28
SCR N0.2 of 1990: Re s.333 Income Tax Act, 1959 (Amended) [1991] PNGLR 211; SC407
Tabo Sipo v. Mukara Meli (1980) N 240
The Government of Papua New Guinea v. Elizabeth Lauwasi Uguna Moina [1978] PNGLR 184
The State v. Bob Morris N 1743
The State v. Herman Kagi Diawo (1980) N255
The State v. Iori Veraga (2005) N 2849
The State v. Jason Baleng (2006) N3395
The State v. Koivi Ipai (2010) N3972
The State v. Kuriday (1981) N300
The State v. Margeret Gara Torovel [1982] PNGLR 242
The State v. Steven Molu Minji; The State v. Didi Gelwak Sakol (No.1) (2009) N3795
The State v. Tanedo [1975] PNGLR 395
The State v. Tom Morris [1981] PNGLR 493

Other cases cited:

Air Marshall McCormack and Anor v. Vance [2008] ACTA 16
Azzopardi v. R [2001] HCA 25; (2001) 205 C.L.R 50
Barca v The Queen [1975] HCA 42; (1975) 50 ALJR 108
Chamberlain and Another v. The Queen (No.2) [1984] HCA 7; (1983-1984) 153 C.L.R 521
Dyers v. R [2002] HCA 45; (2002) 210 C.L.R 285
House v. King [1936] HCA 40; (1936) 55 C.L.R 499
Jones v. Dunkel [1959] HCA 8; (1959) 101 C.L.R 298
Micallef v. ICI Australia Operations Ltd & Anor [2001] NSWCA 274
R v. Barbouttis & Ors (1995) NSWSC 115
R v. Hoar (1981) 148 C.L.R 32
R v. Horsington [1982] 2 NSWLR 72
R v. Landey and Others [1981] 1 All ER 1172
Savvas v. R (1995) 1813 C.L.R 1
The Queen v. Lacey [1982] 29 S.A.S.R 525
Weissenstenier v. R (9193) [1993] HCA 65; 178 C.L.R 217

Counsel:
I. Molloy & G. Purvey, for the appellant
P. Kaluwin & A. Kupmain, for the respondent

20th April, 2016

1. GAVARA-NANU J: I have had the benefit of reading the judgment of my brothers Sawong and Higgins JJ, in its draft form and I respectfully agree with their Honours' reasons and conclusions. I would nonetheless like to add some observations of my own.

2. The background facts have been stated fully in the judgment of my brothers and there is no need for me to repeat them here.

3. The appellant was charged with two counts, the first count related to conspiracy to defraud and the second count related to misappropriation.

4. In the first count, it was alleged that the appellant between 1st day of November, 1998 and the 10th day of October, 2000, at Port Moresby, in Papua New Guinea conspired with Herman Joseph Leahy, Henry Fabila, Shuichi Taniguchi, Kazu Kobayashi and others to defraud National Provident Fund Board of Trustees (NPFBT) of K2, 650,000.00 by increasing the cost of construction of the National Provident Fund Tower (the tower) in down town Port Moresby. This count was laid under s.407 (1) (b) of the Criminal Code.

5. In the second count, it was alleged that the appellant between the 26th day of February, 1999 and the 30th day of July, 1999, at Port Moresby, in Papua New Guinea, dishonestly applied to his own use and to the use of others the sum of K2, 650, 000.00, the property of the NPFBT. This count was laid under s. 383A (1) (a) of the Criminal Code.

6. The appellant was convicted of both counts. He now appeals against both convictions.

7. Mr Anthony Kupmain of counsel for the State delivered an opening address before calling evidence, as he was entitled to do. In that address, Mr Kupmain gave a brief outline of the evidence the prosecution intended to adduce to prove the charges. The opening address was significant in that, it informed the Court and the defence that it had such evidence: The State v. Herman Kagi Diawo (1980) N255. Consequently, if the State failed to adduce the evidence then that was a clear indication that it did not have the evidence, and more importantly, the prosecution case could be inherently weak. These were two significant factors the trial judge was entitled to have regarded to at the end of the prosecution case.

8. In respect of the first count, Mr Kupmain told the court that the appellant and his alleged co-conspirators began conspiring in November, 1998, when they agreed that Kumagai Gumi (Kumagai) would charge extra fees, described as "further acceleration fees" on top of the normal cost for constructing the tower which was K50, 000, 000.00. Mr Kupmain told the court that the "further acceleration fees" was K2, 650,000.00, which was the amount the appellant was alleged to have defrauded the NPFBT with and misappropriated (p.28 A/B).

9. In respect of the second count, Mr Kupmain told the court that after the K2, 650,000.00 was paid to Kumagai by NPFBT, Kumagai then paid the amount to a bank account belonging to Ken Yapane and Associates (KYA) which was a subcontractor to Kumagai. Mr Kupmain told the court that the payment was made without the knowledge of Pacific Architecture Consortium (PAC), the tower construction project administrator, KYA then paid the K2, 650, 000.00 to the appellant (p.28 A/B).

10. The appellant was the managing partner of Carter Newell Lawyers (CNL) until his appointment in about January, 1999 as the Chairman of the NPFBT, replacing the former Chairman, Sir Brown Bai. The alleged co-conspirators to the appellant named in the indictment were, Mr Henry Fabila who was the Managing Director of NPFBT, Mr Herman Joseph Leahy who was the Company Secretary for NPFBT, Mr Shuichi Tamiguchi who was the General Manager of Kumagai and Mr Kazu Kobayashi who was the Project Manager for the construction of the tower, also employed by Kumagai. None of these persons gave evidence. The appellant elected to remain silent after the prosecution closed its case, he also did not call evidence.

12. The other person who featured prominently in the case was Mr Ken Yapane, the principal of KYA. He was not charged but was found by the trial judge to be a "conduit" in the alleged transfer of money from Kumagai to the appellant (p. 146 A/B).

13. Addressing first the offence of conspiracy to defraud alleged in the first count, the prosecution needed to establish that there was an agreement, which is an essential element of conspiracy, between the appellant and his alleged co-conspirators, to defraud the NPFBT of K2, 650,000.00 between November, 1998 and 10 October, 2000: The State v. Iori Veraga (2005) N2849. To establish such an agreement, the prosecution needed to show that there was meeting of minds between the appellant and his co-conspirators that they would and did through dishonest means defraud the NPFBT of K2, 650,000.00: The State v. Tanedo [1975] PNGLR 395 at 398 and R v. Landy and Others [1981] 1 All ER 1172.

14. The trial judge found that there was no direct evidence of an agreement (conspiracy) between the appellant and his alleged co-conspirators to defraud the NPFBT, but found that there was circumstantial evidence from which the court could draw an inference of such an agreement, hence the guilt of the appellant.

15. The principles to be applied in deciding the guilt or innocence of an accused in a case resting substantially or wholly on circumstantial evidence are well established. The principles were enunciated by the High Court of Australia in Barca v. The Queen [1975] HCA 42; (1975) 50 A.L.J.R 108 at 117, they were first adopted and applied in this jurisdiction by Miles J, in his landmark decision in The State v. Tom Morris [1981] PNGLR 493. That decision was subsequently adopted and applied with approval by the Supreme Court in Paulus Pawa v. The State [1981] PNGLR 498; the principles are now a part of our underlying law pursuant to Schedules 2.2 and 2.4 of the Constitution and they govern the criminal trials ran on circumstantial evidence on the question of proof beyond reasonable doubt, and are part of the criminal procedure: SCR No.2 of 1990: Re s. 333 Income Tax Act, 1959 (as amended) [1991] PNGLR 211; SC 407. See also The State v. Steven Molu Minji; The State v. Didi Gelwak Sakol (2009) N3795.

16. In Barca v. The Queen (supra) the High Court in stating the principles said:

"When the case against an accused person rests substantially upon circumstantial evidence the jury cannot return a verdict of guilty unless the circumstantial evidence are such as to be inconsistent with any reasonable hypothesis other than the guilt of the accused: Peacock v. The King [1911] HCA 66; (1911) 13 C.L.R 619 at 634. To enable the jury to be satisfied beyond reasonable doubt of the guilt of the accused it is necessary not only that his guilt should be a rational inference but that it should be the only rational inference that the circumstances would enable them to draw: Plomp v. The Queen (1963) C.L.R 234 at 252, see also Thomas v. The Queen [1960] HCA 2; (1960) 102 C.L.R 584 at pp. 605-606. However, 'an inference to be reasonable must rest upon something more than mere conjecture. The bare possibility of innocence should not prevent a jury from finding the prisoner guilty, if the inference of guilt is the only inference open to reasonable men upon a consideration of all the facts in evidence: Peacock v. The Queen at p. 661".

17. An inference as to the guilt of an accused should be drawn only after the court had made a full and thorough evaluation of all the circumstances in evidence: The State v. Tom Morris (supra); Paulus Pawa v. The State (supra); The State v. Jason Baleng N3395 and Chamberlain and Another v. The Queen (No.2) [1984] HCA 7; (1983-1984) 153 C.L.R 521. If after such an evaluation, the court found that all the circumstances could not enable it to draw a rational inference that the accused was guilty then the accused is entitled to be acquitted: The State v. Tom Morris (supra); Paulus Pawa v. The State (supra) and Allan Oa Koroka v. The State and Mariano Wani Simon v. The State [1988-89] PNGLR 131 and Re Fisherman's Island [1979] PNGLR 202; N197.

18. Inferentially, the underlying reason for the trial judge finding the appellant guilty was his view that the appellant should have given evidence and explained the issues that arose from the prosecution case. The trial judge viewed the appellant's decision to remain silent as a failure to give evidence. However, this approach by his Honour was contrary to an established principle of law that such an adverse finding can only be made against the accused if there was a prima facie case made out against him: Paulus Pawa v. The State (supra); Fred Bykoya v. The State (2007) SC887.

19. The prima facie case should establish that there were facts known only to the accused and that those facts would have explained the matters which were adverse to the accused had those facts been disclosed by the accused by giving evidence: Tabo Sipo v. Mukara Meli (1980) N240; Billy Nara v. The State (2007) SC1314 and Azzorpardi v. The Queen [2001] HCA 25; (2001) 205 C.L.R 50. In this case the prosecution did not make out a prima facie case against the appellant. This is a common law principle which is part of the underlying law, pursuant to Schedule 2.2 of the Constitution. A corresponding principle is prescribed under s. 37 (4) (a) of the Constitution which provides that a law may place an evidentiary burden on an accused charged with an offence of proving particular facts, which are, or would be, peculiarly within his knowledge. Pursuant to Schedules 2.2, 2.3 and 2.4 of the Constitution, given the lack of a law governing this procedural principle, its application has to be determined by reference to the common law. Other than the provision for this principle, s. 37 (4) (a) generally guarantees that an accused charged with an offence is presumed innocent until proven guilty according to law.

20. The right of an accused to remain silent is a basic right guaranteed and safeguarded by the Constitution under s. 37 (10). This right is part of the underlying law pursuant to Schedules 2.2 and 2.4 of the Constitution, thus no adverse finding should be made against an accused for exercising his right to remain silent, if the prosecution had not established a prima facie case against him: The State v. Margret Gara Torovel [1982] PNGLR 242 and Albert Karo v. Ombudsman Commission N1383. If an adverse finding is made against an accused for exercising the right to remain silent, such a finding would amount to an error of law, if there is no prima facie case against the accused.

21. An inference of guilt drawn against an accused should be the only rational inference the court is able to draw from all the circumstances in evidence. An inference should not be based on a mere conjecture, surmise, guesswork or assumptions: The State v. Tom Morris (supra); The Government of Papua New Guinea v. Elizabeth Lauwasi Uguna Moina [1978] PNGLR 184; Allan Oa Koroka v. The State and Mariano Wani Simon v. The State (supra); Rimbink Pato v. Umbu Pupu [1986] PNGLR 310; The State v. Koivi Ipai N3972 and The State v. Bob Morris N1743.

22. Having regard to the above principles, the pivotal questions are: was the guilt of the appellant the only rational inference the trial judge could draw from all the circumstances? or, were there circumstances or other reasonable hypothesis consistent with the innocence of the appellant?

23. After having considered the evidence that was before the trial judge as thoroughly as I could, I have come to an inescapable conclusion that there were gaps in the prosecution case, which were fatal.

24. Some of the gaps are those which the trial judge himself had highlighted in his judgment. There are other overlapping gaps which I will discuss later in my judgment. I deal firstly with the gaps highlighted by the trial judge. First, the Minutes of the NPFBT meetings held in 1999, especially the Minutes of the meeting held on 8 February, 1999, were not adduced before the Court. The trial judge was critical of the prosecution for not calling certain NPFBT members to give evidence on those meetings (p. 118 A/B). Plainly any evidence of any of the NPFBT members in respect of those meetings would have been helpful because such evidence would have shed some light on the decisions of the NPFBT, especially in regard to the payments the NPFBT made to Kumagai for the construction of the tower and how the appellant was involved in the discussions and decisions. Second, the trial judge found that there was no direct evidence of an agreement (conspiracy) between the appellant and his alleged co-conspirators to defraud the NPFBT (p.116 A/B) of K2, 650,000.00. Third, the trial judge found that no irregular payments were made by Kumagai to Ken Yapane, CNL "and others" (including the appellant) (p.113 A/B). Fourth, the trial judge found that there was no relationship between Ken Yapane and CNL (p.113 A/B). The trial judge made this observation while noting the payment of K421, 651.51 Kumagai made by a cheque to CNL's trust account on 27 July, 1999.

24. The trial judge also noted that Kumagai's cheque for K421, 651.51, was cleared with a fee of K30.00, which was debited against the CNL's trust account. The trial judge also noted that on 28 July, 1999, K400, 000.00 was transferred from CNL's trust account to CNL's general account. On the same day, CNL paid K400, 000.00 from its general account to the appellant.

25. When commenting on these transactions the trial judge said (pp.
114 – 115 A/B):

"Was that normal business practice in Carter Newell Lawyers? The State did not call evidence on this but then the defence has not either. Again, if it was a legitimate payment, tell the world".

The question that arises is, what was the K400, 000.00 payment to Jimmy Maladina for? The money transaction, seemingly proper, paid to Carter Newell Lawyers trust account was transferred the next day to the firm's general account and then paid to the accused. Who can best explain the K400, 000.00 payment to the accused other than the recipient of that K400, 000.00? Could it be Kumagai's officers, Taniguchi, Kobayashi, Kumagai's financial officers, maybe? But in this case, Jimmy Maladina, yes, it was incumbent upon him to explain what that K400, 000 was for.

There is no evidence before this court that Kumagai was a client of Carter Newell Lawyers and that the K400, 000 was normal client payment to its lawyer's trust account. The evidence goes further to show that the K400, 000.00 was then transferred from the law firm's trust account to the general account then further from the general account to Jimmy Maladina. From Jimmy Maladina, there is no trace of that money. As I keep saying, who can tell this court of the relationship, if any, between Kumagai and Carter Newell Lawyers – Taniguchi, Kobayasi? They are not here. Jimmy Maladina is here. He had the opportunity to tell the court of any relationship Kumagai and Carter Newell may have had. The opportunity was allowed to pass. If he did not know, he was at liberty to tell this court that as well.

In the end I find that Kumagai and Carter Newell Lawyers had no client/lawyer relationship. I also find that Jimmy Maladina did not do any work, legal, consultancy or otherwise for Kumagai. I come to this conclusion because there is no evidence of any such relationship between the two in this court. That finding, with respect, is open to the court in my respectful view.

What the court is left with is to come to conclusions from the evidence before it and what is reasonably open to it on the evidence before it in relation to the K400, 000.00 payment to the accused. In other words, in the absence of direct evidence, the court will have to make findings of fact from circumstantial evidence it has before it. The law on circumstantial evidence is that where evidence in a criminal trial is wholly circumstantial, the court must acquit unless the facts proved in evidence are inconsistent with any reasonable hypothesis other than the guilt of the accused...." (my underlining).

26. His Honour went on to find the appellant guilty of conspiring to defraud NPFBT of K400, 000.00, which is the amount CNL paid to the appellant. It was the trial judge's view that K400, 000.00 was part of the K2, 650,000.00 that the appellant and his alleged co-conspirators fraudulently got the NPFBT to pay to Kumagai.

27. The trial judge's view that the appellant should have given evidence to explain the issues raised by the prosecution was a fundamental error of law. First, as I alluded to earlier, there was no prima facie case against the appellant. Paulus Pawa v. The State (supra); Fred Bykoya v. The State (supra); Azzorpardi v. The Queen (supra); Tabo Sipo Mukura Meli (supra) and Billy Nara v. The State (supra). Second, by taking this approach, the trial judge had effectively shifted the burden of proof to the appellant to prove his innocence. This is evident from the trial judge's statement that it was "incumbent" on the appellant to give evidence and explain the issues raised by the prosecution, particularly the K400, 000.00 he received from CNL.

28. The view taken by the trial judge was of course contrary to the law relating to the burden of proof in criminal trials viz; proof beyond reasonable doubt. The prosecution always carries the burden to prove every element of the offence charged. This burden never shifts to the accused. This is the basis the law presumes every accused person charged with an offence innocent until proven guilty according to law. The presumption of innocence is part of the underlying law which as I alluded to earlier has its safeguard in s. 37 (4) (a) of the Constitution.

29. In my view given the weak state of the prosecution case resulting from the gaps noted above and those I will discuss later, the defence (appellant) could have made a no case submission and enforced this presumption of innocence: The State v. Kuriday (9181) N300.

30. That said, as a matter of law, the trial judge having found that there was no direct evidence of an agreement between the appellant and his alleged co-conspirators to defraud the NPFBT of K2, 650,000.00, the offence alleged in the first count had no basis: The State v. Iori Veraga (supra); The State v. Tanedo (supra) and R v. Landy and Others (supra). Once the trial judge made such a finding, that was the end of the matter since there was no circumstantial evidence from which such an agreement could be found.

31. Even the payment of K400, 000.00 by CNL to the appellant had no element of dishonesty or impropriety to warrant an adverse finding against the appellant: R v. Horsington [1982] NSWLR 72.

32. In my view, there were related key issues which the trial judge should have addressed but did not. For example, the kind of representation, if any, the appellant made to the NPFBT for the NPFBT to pay K2, 650,000.00 to Kumagai, how and why the K2, 650,000.00 was paid to Kumagai by NPFBT, and who paid it, what role did the appellant play, if any, in that payment and why did Kumagai pay K421, 651.57 to CNL's trust account. The prosecution also failed to call evidence on these issues. In my view, such failure by the prosecution and the failure by the trial judge to address the issues resulted in more gaps in the prosecution case, thus further affecting the sufficiency and the credibility of the evidence against the appellant.

33. The prosecution placed reliance on the evidence of Mr Robin Gerard Fleming, who was a Manager with the then Papua New Guinea Banking Corporation (PNGBC), but there was nothing from Mr Fleming's evidence that could implicate the appellant. For example, under cross-examination by the defence counsel, Mr John Griffin QC, Mr Fleming conceded that he had "no dealings whatever" with the appellant (p.48 A/B). Mr Fleming further conceded that the bank was lending money to the NPFBT to enable it to deal with commitments and the loan facility sought by the NPFBT with the PNGBC was "for funds that followed the ordinary course" (p.48 A/B). Mr Fleming also conceded that there was "nothing unusual" about the loan application (p.49A/B).

34. The trial judge also appears to have placed reliance on Mr Fleming's evidence in finding the appellant guilty (p115 A/B). This is apparent from his reference to the K400, 000.00 payment the appellant received from CNL. This was a mere conjecture as there was nothing from Mr Fleming's evidence which showed that K400, 000.00 was dishonestly received by the appellant.

35. His Honour said the "journey" for the K400, 000.00 began from PNGBC by way of a loan it lent to the NPFBT to fund the construction of the tower by Kumagai (p.115 A/B). Again, this was a mere conjecture. First, Mr Fleming had confirmed to the court that there was "nothing unusual" about the loan and he had "no dealings whatever" with the appellant. Second, and more significantly, how could one possibly conclude that the K400, 000.00 was the same money which the bank released in loan to the NPFBT? There was no evidence linking the K400, 000.00 CNL paid to the appellant to the loan that NPFBT obtained from PNGBC.

36. Furthermore, according to Mr Ian Molloy of counsel for the appellant, CNL had K1, 500, 000.00 in its trust account before K400, 000.00 was transferred from the trust account to its general account. This was unchallenged by the prosecution. This is a factor which could have given rise to other reasonable hypothesis consistent with the innocence of the appellant.

37. This was a key aspect of the prosecution case and the prosecution should have called more evidence on it. For example, the prosecution could have subpoenaed the records of CNL trust and general accounts and the people who kept those records.

38. With great respect, I find the judgment of the trial judge fundamentally flawed due to a series of errors resulting from conjecture and misdirections as to the law and the relevant principles. I also find that the guilty finding against the appellant was as a result of the wrong findings of fact. The appellant's conviction on the first count was therefore against the evidence and the weight of the evidence, thus it is a clear case in which justice was miscarried. The trial judge's misdirections on the law relating to the standard of proof essentially formed the actual basis of the trial judge finding the appellant guilty. The appellant has clearly demonstrated that the learned trial judge fell into a series of fundamental errors of law and fact in finding him guilty, thus providing the basis for the appeal to be allowed: Les Curlewis and Reuben Renagi v. Protect Security and Communications Limited and David Yuapa SC 1274; House v. King [1936] HCA 40; (1936) 55 C.L.R 499; Micallef v. ICI Australia Operations Ltd & Anor [2001] NSWCA 274 and Air Marshall McCormack and Anor v. Vance [2008] ACTA 16.

39. Given my findings in respect of the first count, there is really no need for me to consider the second count: Isaac Lupari v. Sir Michael Somare, MP – Prime Minister and Chairman of the National Executive Council & Ors SC1071. In any event, the second count really flows on from the first count, therefore, it suffices to say that given my reasons and conclusions regarding the first count, there really was no evidence from which a guilty finding could be made against the appellant on the second count, viz; misappropriating K2, 650,000.00.

40. Consequently, I respectfully agree with my brothers Sawong and Higgins JJ, that acquittal should be ordered in favour of the appellant on both counts.

41. In conclusion, I should say this, for the prosecution to call only 5 out of 27 witnesses indicated on the indictment, and to tender only 4 of its' remaining witnesses' statements was bound to result in such gross lack of evidence for the prosecution. Total of 22 witnesses were not called, although as found by the trial judge that there were witnesses the prosecution could have called (p.118 A/B). This case had a long history and it involved greater public interest. The trial was pending for a long time from the date of committal, which was 21 October, 2004. The indictment was presented on 11 August, 2008 but the actual trial did not take place until 4 May, 2015.The case required examination of a lot documentary evidence and the case rested substantially or wholly upon circumstantial evidence. Given these factors, the case obviously required good and thorough preparation and planning. That was in my view lacking, as evidenced by the numerous gaps in the prosecution case. In my opinion, the prosecution did not give the case the level of attention it deserved. The opening address by the prosecution was also found wanting because the evidence the prosecution said it would adduce, in the opening address to prove the charges was not adduced before the court. This was also pointed out and relied on by Mr Griffin QC, in his submissions on verdict while highlighting the gaps in the prosecution case (pp. 94 & 96 A/B): Herman Kagi Diawo (supra) and The Queen v. Lacey [1982] 29 S.A.S.R 525 at 532.

42. For the foregoing reasons, I allow the appeal and quash the convictions entered against the appellant on both counts.

43. I order that the appellant be acquitted on both counts.

44. SAWONG & HIGGINS JJ: This is an appeal by Jimmy Mostata Maladina (the appellant), against his conviction before Salika DCJ on 21 May 2015 on two counts alleging offences of conspiracy to defraud and misappropriation. They were as follows:

"First Count

Jimmy Mostata Maladina of Mena'ala, Esa'ala, Milne Bay Province stands charged that he, between the 1st day of November 1998 and the 10th day of October 2000, at Port Moresby, National Capital District in Papua New Guinea, did conspire with Herman Joseph Leahy, Henry Fabila, Shuichi Taniguchi, Kazu Kobayashi and other persons to defraud the National Provident Fund Board of Trustees of the sum of Two Million Six Hundred and Fifty Thousand Kina (K2,650,000.00) by fraudulently increasing the construction costs of the National Provident Fund Tower situated at Douglas Street, Port Moresby, National Capital District.

Second Count

And also the said Jimmy Mostata Maladina further stands charged that he, between the 26th day of February 1999 and the 30th day of July 1999 at Port Moresby, National Capital District in Papua New Guinea, dishonestly applied to his own use and to the use of others the sum of Two Million Six Hundred and Fifty Thousand Kina (K2,650,000.00), the property of the National Provident Fund Board of Trustees."

45. The background information was not in contention. Between 1 October 1998 and 10 October 2000, the National Provident Fund (NPF) engaged Kumagai Gumi Ltd (Kumagai) as builder of the NPF Tower in Port Moresby. The NPF Board also engaged Pacific Architects Consortium (PAC) as the administrator or project manager. PAC had the role of engaging subcontractors and, of course, supervising the works. Finance was provided by the Papua New Guinea Banking Corporation (PNGBC).

46. Between November 1998, and June 1999, the State alleged that the appellant conspired with Shuichi Tanigiushi and Kazu Kobagashi, employees of Kumagai, and Herman Joseph Leahy and Henry Fabila, employees of NPF, to defraud NPF of K2,650,000.00. The appellant was the managing partner of Carter Newell Lawyers and in January 1999 was appointed Chairman of NPF Board of Trustees.

47. His appointment was made at the request of the then Prime Minister, the late Bill Skate. He was to replace Sir Brown Bai, then Secretary of the Department of Treasury.

48. The latter last had anything to do with NPF on 22 December 1998, at its 116th Meeting, although he remained a member of the Board. He did not consider it appropriate to attend, being a former Chairman.

49. It appears that the original contract for the construction of NPF Tower was K50m. It was agreed by the Board at its 116th meeting for Kumagai to charge extra. There were, according to Mr. Robin Fleming, corporate banking manager of Bank South Pacific Ltd, the project funder cost overruns claimed by Kumagai and a progress claim was approved accordingly. Mr. Leahy and Mr. Fabila were the officers of NPF with whom he dealt. A cheque for K3, 445,842. 00 was raised in favour of Kumagai on 27 April 1999.

50. There was also evidence that Kumagai, pursuant to an arrangement with Ken Yapane & Associates, paid a sum of K2, 650,000.00 to the latter for disbursement to various persons and entities.

51. One was Ulya Real Estate Limited, a company of which Mr. Leahy was a shareholder and Director. Another disbursement was to Carter Newell Trust a/c in a sum of K421, 651.57.

52. There was, allegedly, a concern about the progress of the project hence, according to Sir Brown Bai, some extra payment to Kumagai was discussed to ensure completion on time. At that stage, K500, 000.00 was agreed to be offered. What happened thereafter was not made the subject of evidence save that various payments were made to Kumagai.

53. Sir Brown Bai did describe the appellant, in his dealings with him, as 'extremely' honourable.

54. Apart from that there was no evidence called to establish whether the K2,650,000.00, being a portion of monies paid to Kumagai, was for "cost overrun", an 'acceleration payment' or part of the K50.5m, Sir Brown Bai had referred to. There was clearly some process for approving progress payments though the evidence did not address the detail of it. Insofar as additional payments were made, there was no evidence that the Board did not approve them.

55. His Honour noted that (AB 110) in the following terms:

"The prosecution failed to produce to this court Minutes of the NPF Board Meeting No.117 mentioned in Sir Brown Bai's evidence which was scheduled for 8 February 1999. Similarly, the accused failed to produce the same before this court".

56. The prosecution was obliged to prove that there was a corrupt over payment to Kumagai which was then funnelled to various recipients who were not legitimately entitled to such payments.

57. Unless there could be found to be an onus on the accused to produce evidence that all payments to Kumagai were approved by the Board of NPF, no adverse assumption can be made. Nor is it proved that the appellant or anybody else deceived the Board into giving any such approval. It was not alleged that the other Board members were co-conspirators.

58. On the role of Ken Yapane & Associates, his Honour agreed that no lack of "commerciality" in the payments by Ken Yapane & Associates to Carter Newell Lawyers Trust a/c had been shown by the prosecution.

59. However, his Honour added: (AB 112)

"... similarly, the accused has not said anything about any relationship between the two and the propriety of payments made by Kumagai to Yapane and Yapane to Carter Newell Lawyers and others. The accused is and was in a better position to inform the court of that relationship, if any, and the propriety of the payments to Yapane, Carter Newell Lawyers, Fincorp and others."

60. Again that suggests that some onus fell upon the appellant to establish that the payments referred to were not a consequence of fraud but represented a legitimate transaction.

61. It must be pointed out that each of the transactions referred to had to be recorded, by the State in the records of Carter Newell Lawyers. Those records were not produced by the State.

62. If those records had revealed a false or unsatisfactory explanation for the payments that would have assisted the prosecution case. It may also have revealed an apparently legitimate justification for those payments.

63. A further issue was addressed by his Honour (at AB 113).

"... the prosecution brought no evidence to establish any irregularity in the payments made by Kumagai to Ken Yapane, Carter Newell Lawyers and others. Again, I agree with that submission."

64. That was then countered by the following comment made by his Honour: (AB 113)

"But the question must be asked why Kumagai was paying huge amounts of money to Yapane and others. Why the payments when Yapane was never there in 1998 and suddenly in 1999 he is paid huge amounts of money within a very short period of time by Kumagai."

65. As to the relationship, if any, between Ken Yapane and Carter Newell Lawyers, his Honour accepted there was no evidence about it but commented. Again, (at AB 113)

"Carter Newell Lawyers was in a better position to inform this court of the relationship, if any."

66. His Honour also pointed to the link with Mr. Leahy and a payment to Ulya Real Estate. Again, it is suggested that on each of those matters, the appellant bore an onus to dispel any adverse inference. (AB 113)

67. Then his Honour turned to the payment received by the appellant from the Carter Newell General a/c of K400, 000.00. That was enabled by a payment from the Carter Newell Trust a/c which had been preceded by a payment from Ken Yapane and Associates of K421, 651.51 .

68. The prosecution otherwise offered no evidence about the purported justification for such payments but his Honour asked himself: (AB 113)

"What was the payment for? Who can best explain what the payment was for other than the recipient? If it was a legitimate payment, tell the world."

69. Again, that assumes that an onus lay upon the appellant to explain that payment. It also assumes that the prosecution had no duty to adduce evidence from the records of Carter Newell demonstrating what the purported justification for those receipts and payments was. It is true that, if it was a corrupt payment, the records would not describe it as such but, if there was a justification recorded, the prosecution might well have been able to show that it was false or to verify it.

70. His Honour, then, reinforced the view that the appellant was obliged to explain his receipt of the K400,000.00 (at AB 114) even going so far as to refer to the appellant's decision not to testify:

"He had the opportunity to tell the court of any relationship Kumagai and Carter Newell Lawyers had or may had. The opportunity was allowed to pass. If he did not know, he was at liberty to tell this court that as well."

71. In other words, the failure of the appellant to give evidence was relied upon to draw an adverse inference. That raises an issue as to what, if any, inference can be drawn from the failure of an accused person to give evidence.

72. As far as his Honour was concerned that lack of evidence from the accused warranted a conclusion that the appellant:

"(AB 114)... did not do any work, legal, consult any or otherwise for Kumagai."

73. Of course a payment from Kumagai to the appellant's trust account need not necessarily have been payment for work done by the appellant for Kumagai. It could be discharging a debt or obligation of a third party. The payment to the General a/c could even have been to discharge a debt due from the firm to the appellant.

74. His Honour further referred to the payments to Ken Yapane & Associates totalling K2, 650,000.00. He noted there was no evidence of justification for those payments. He further assumed that two payments to Kumagai for the project in April and May 1999 of K3m and K3, 445,482.00 were double payment for the same expenses. There was no evidence to support that conclusion.

75. The K400, 000.00 taken by the appellant and the "extra" K2,650,000.00 paid to Ken Yapane was next referred to. That led his Honour to his ultimate conclusion:

"(AB 123) In the absence of any explanation, what the payments were for, I find that the monies paid by Kumagai to Carter Newell Lawyers for Jimmy Maladina and Ken Yapane in the aggregate amount of K2,650,000.00 were improper payments".

76. The appellant was then found guilty of both counts.

77. Before addressing the issue of the sufficiency of the evidence to establish the guilt of the appellant beyond reasonable doubt, an important issue arises concerning double punishment. Any crime allegedly committed in concert with one or more other persons necessarily involves a conspiracy to commit it, followed by an attempt to commit it, followed by the crime itself. To find the crime committed makes it otiose to convict the accused of those inchoate crimes.

78. In the case of Savvas v R (1995) 1813 CLR1, the High Court of Australia makes it clear that, on conviction for conspiracy to commit one or more offences, it is appropriate in sentencing to take account of the crime or crimes actually completed. That is not precluded by the undoubted proposition that conspiracy to commit a crime is complete once the parties have agreed to attempt that crime. Care does need to be taken in determining whether it is appropriate to prosecute through to conviction an offence of conspiracy to commit an offence and the substantive offence.

79. The issue is not whether conspiracy and the offence the object of the conspiracy can be severally and sequentially committed, it is whether a conviction for both enables a double punishment. As the High Court of Australia noted in R v Hoar (1981) 148 CLR 32, there is:

"[15]... a practice, if not a rule of law, that a person should not be twice punished for what is substantially the same act.

[16] in exceptional cases, the element of concert may justify a more severe penalty for conspiracy than for the substantive offence which the conspirators commit (see Verrier v Director of Public Prosecutions [1967] 2AC 195 at p 223) but where a court, imposing a penalty for conspiracy, takes into account the overt acts of the conspiracy, it would be wrong to impose a further penalty in respect of these acts."

80. In that context, to record a conviction, even without more, is itself a penalty. Unless there is justification for it where the gravamen of the State case is that substantive offences have been committed, the use of conspiracy charges should not be permitted. It carries the risk otherwise of double jeopardy and/or double punishment. It is not per se, objectionable to combine a conspiracy count with a count for the substantive offences allegedly the object of the conspiracy. However, its inclusion does need to be justified. For example, as in R v Barbouttis & ors (1995) NSWSC 115 where the object of the conspiracy was impossible of achievement (police had seized and substituted the prohibited drugs sought to be possessed) or where the object is the commission of numerous offences.

81. That is not the present case. The State case is that the appellant, as Chairman of the NPF Board procured an over payment to Kumagai of which K2.65m was to be disbursed to various recipients including the appellant. The receipt by the appellant of K400, 000.00 from the General Account of Carter Newell Lawyers was said to evidence that arrangement.

THE SUBSTANTIVE OFFENCE

82. The substantive offence alleged is the procurement of funds to Kumagai to which that entity was not entitled so that Messrs Taniguchi and Kobayashi could direct funds through intermediaries including Ken Yapane & Associates to recipients, including the appellant.

83. The evidence called by the State did not directly establish any of those matters save that it showed that a sum of K421, 651.57 was paid to Carter Newell Trust a/c by Kumagai (AB 179). However, the State offered no evidence as to the stated purpose of that payment nor on whose behalf it was received. It is trite that any payment to a lawyer's trust account must be acknowledged as received in trust for a particular client. A transfer from trust account to a lawyer's general account must be authorised by that client and, if for discharge of a debt due to the lawyers, specify that debt. If a payment is then made to one of the partners in the firm, then the records of the firm would need to show what debt due from the firm there was to justify that payment.

84. His Honour's comment (at AB 113) was:

"Does the prosecution know the normal course of business in Carter Newell Lawyers? No."

85. His Honour answered 'no' but it was open to the prosecution to subpoena the records of Carter Newell. The Trust a/c was subject to audit. It is not contended that all the partners of Carter Newell were parties to the allegedly fraudulent scheme any more than it was alleged that the Prime Minister of the day was.

86. If the records disclosed a false justification for the payments to or from the Trust a/c and/or from the General Account, that would support an inference of guilty knowledge on the part of the appellant. If however, the records appeared to justify those payments, the State would need to demonstrate their falsity.

87. Whilst his Honour correctly stated the test for drawing inferences of guilt from circumstantial evidence as affirmed in Paulias Paua v The State (1981) PNGLR 498, he clearly regarded it as incumbent on the appellant to explain the K400,000.00 as payment to him.

88. As his Honour noted, there was nothing to establish that payments from Ken Yapane & Associates and/or Kumagai to Carter Newell's Trust a/c were not proper payments.

89. Furthermore, it is an assumption that the K400, 000.00 was made to the appellant by reason of some obligation to him from Kumagai. It might as well be in discharge of an obligation to him owed by his firm. In any event, any obligation owed to the firm by the payer of the K421, 651.57 or the beneficiary of those funds acknowledged in the trust account might well and, indeed, should have been to the firm not merely to the appellant. For him to receive K400,00.00, each of the partners would have to surrender their interest in it either because the firm owed him a sum equal to or exceeding that amount or because it had been paid into trust for him. The latter could support the prosecution case. The former might not. However, the prosecution did not adduce any evidence to eliminate the hypothesis consistent with innocence.

90. It is not possible simply to ignore, as his Honour seems to have done, both the principle that no onus of proof, legal or evidentiary rests upon an accused person, hence no adverse inference can be drawn from his or her silence in the face of an accusation and the principle that an accused person is to be presumed innocent unless the contrary is proved beyond reasonable doubt.

91. Section 37(4) of the Constitution provides:

"(4) A person charged with an offence

(a) shall be presumed innocent until proven guilty according to law, but a law may place upon a person charged with an offence the burden of proving particular facts which are, or would be, peculiarly within his knowledge".

92. That relates to a specific statutory provision identifying the subject facts peculiarly within the knowledge of an accused person and placing some onus on him or her as well as any such provision of the underlying law.

93. As Miles J (Andrew J concurring) noted in SCR no.1 of 1980; Re s. 22A (b) of Police Offences Act (Papua) 1912 (repealed) [1981] PGLR 28, 43:

"The presumption of innocence is established by the laws of Papua New Guinea by virtue of the Constitution, s37 (4) (a), but even without the constitutional provision, it would have formed part of the underlying law.

94. That presumption is in symbiosis with the common law as to the burden and standard of proof in criminal cases.

95. There is nothing in the Criminal Code which reserves or qualifies the burden on the State to prove each element of the offences charged in this case before a finding of guilt can be made.

96. The underlying law where, as in this case, the accused person offered no evidence to rebut or explain the case put forward by the State must therefore be found by reference to the common law.

97. In Azzopardi v R [2001] HCA 25; (2001) 205 CLR 50 (esp. [50-56], the High Court of Australia (Gleeson CJ, Gaudron, Gleeson, Kirby & Hayne JJ, McHugh J) dissenting, affirmed the proposition that it was impermissible reasoning to conclude that the failure of an accused person to give evidence is some kind of admission as to the facts alleged by the prosecution. It does not fill any gaps in the prosecution evidence nor does it add any weight to that evidence. The only value for the prosecution is in a rare case where there are some additional facts which would explain or contradict the inference the prosecution seeks to have drawn which fact or facts would be peculiarly within the knowledge of the accused.

98. In Dyers v R [2002] HCA 45; (2002) 210 CLR 285, the High Court continued the operation of the rule in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 but expressly disapproved of the excuse offered for the prosecution not calling witnesses (such as other members of the appellant's firm) or the basis that it assumed them to be in the camp of the accused. Effectively, whilst the rule applies in full force to the prosecution, it does not apply to the defence. To hold otherwise, would weaken the presumption of innocence and the right to silence.

99. To quote Gaudron, Gummow, Kirby and Hayne in Azzopardi (supra) at 74:
    

"There may be cases involving circumstances such that the reasoning in Weissenstenier will justify some comment. However, that will be so only if there is a basis for concluding that, if there are additional facts which would explain or contradict the inference which the prosecution seeks to have the jury draw, and they are facts which (if they exist) would peculiarly within the knowledge of the accused, that a comment on the accused's failure to provide evidence of those facts may be made. The facts which it is suggested could have been, but were not revealed must be additional to those already given in evidence by the witnesses who were called. The fact that the accused could have contradicted evidence already given will not suffice."

100. The reference to Weissenstenier v R [1993] HCA 65; (1993) 178 CLR 217 is a reference to comment by their Honours in that case that:

"... the silence of the accused may bear upon the probative value of the evidence led by the Crown, particularly in cases in which the accused has not supported any hypothesis consistent with innocence from facts which are perceived to be within his or her knowledge".

101. However, the inference as to guilt must in any event be open to be drawn beyond reasonable doubt from the evidence the prosecution adduces.

102. In the present case, the State has refrained from procuring evidence reasonably open to it to adduce, in effect, casting the onus upon the accused to adduce such evidence unless an inference of guilt be drawn. Indeed, at AB 139, his Honour refers to other persons who might have been called to explain the dealings between the various parties. Whilst the alleged co-conspirators were reasonably absent from the list of prosecution witnesses the same could not be said for other members of the Board of NPF or of Carter Newell Lawyers.

103. In our view, the evidence called by the State did not exclude the reasonable hypothesis that the payments to Kumagai were legitimately made. It did not establish that the payments made by Kumagai were for some corrupt reason and not due and owing legitimately to the recipients. Most importantly, it made no attempt to obtain evidence by reference to the records of Carter Newell, even if the records of Ken Yapane and of Kumagai were unavailable to show how it was treated. It follows that the State had not proved that NPF was defrauded nor that Kumagai had been defrauded by its employees, had that allegation been made. Even if it had been open to draw an inference that Kumagai received an overpayment from NPF, it failed to show that the appellant rather than Messrs Leahy and Fabila orchestrated that outcome with the two Kumagai employees Messrs Taniguchi & Kobayashi acting without him. After all, if it was the appellant who orchestrated it, what was the role of the Board? Did no member of the Board question the overpayments? Who presented the request to them? Was any other member of the Board complicit in the overpayment? None of those issues was addressed by the State. Not even the minutes of the Board after the 116th Meeting were produced to confirm or otherwise the propriety of payments to Kumagai.

104. The State did not seek to answer the central question. His Honour referred to it at AB 138:

"What was the K400, 000.00 payment to Jimmy Maladina for? The money transaction seemingly proper, paid to the Carter Newell Lawyers Trust Account was transferred to the firm's General Account and then paid to the accused."

105. But to say that it was for the appellant to explain that sequence of events was effectively to disregard the presumption of innocence, the right to silence and the onus and burden of proof resting on the State to prove the guilt of the accused.

106. It follows that the findings of guilt must be set aside and verdicts of acquittal entered.

107. We would only add that had the verdict of guilty been sustained on the second count, the finding of guilt on the first count would have been duplicitous.

108. There is also the consideration that if it was Kumagai that was defrauded the findings of guilt alleging NPF was defrauded or to be defrauded could not stand.

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Appellant appears In Person: Lawyer for the Appellant
Public Prosecutor: Lawyer for the Respondent