Regina v Solomon Islands National Provident Fund [2001] SBHC 157; HC-CRC 092 of 2000 (14 December 2001)

HIGH COURT OF SOLOMON ISLANDS

Criminal Case Number 92 of 2000

REGINA

v.

SOLOMON ISLANDS NATIONAL PROVIDENT FUND & OTHERS

High Court of Solomon Islands
(Palmer ACJ)

Hearing: 12/11 – 16/11/2001, 19/11 – 23/11/2001, 26/11 – 27/11/2001
Judgement: 14th December 2001

Director of Public Prosecutions (F. Mwanesalua) for the Crown
R.V. Hanson QC and J. Sullivan (Sol-Law) for the First Defendant
J. Moti & Chris Hapa (Motis Pacific Lawyers) for the Second, Third and Fourth Defendants

PALMER ACJ: The first Defendant, Solomon Islands National Provident Fund Board (hereinafter referred to as “the Board”) has been charged with the offence of uttering a forged document contrary to section 343(1) of the Penal Code. Initially the Board was charged with two counts of uttering; count 1 however was dismissed on a submission of no case to answer whilst a prima facie case to answer was found in respect of count 2. The First Defendant (hereinafter referred to as “the Defendant”) has called a number of witnesses in rebuttal.

The particulars of the offence in count 2 read as follows:

“Solomon Islands National Provident Board, on or about 9 June 1997 in Honiara, knowingly and with intent to defraud, uttered a forged document, to wit an Excess of Loss Reinsurance Contract purporting to be made and signed by Solomons Mutual Insurance Limited with Luxembourg European Reinsurance S.A.”

Background Facts

The Board is a creature of statute set up under the Solomon Islands National Provident Fund Act [Cap. 109] (“the NPF Act”). It was set up as a saving scheme for workers in which contributions are required by law to be made by employees and employers calculated on a certain percentage of an employee’s salary. The contributions are paid into a fund called the Solomon Islands National Provident Fund (“the Fund”) [section 7(1)]. The controlling mind is the Board. Its constitution, powers and functions are set out in Part II of the NPF Act. Section 7(2) provides that the Board is the trustee of the Fund.

Subsection 7(2) also provides as follows:

“The Board shall be the Trustee of the Fund, and the moneys belonging to the Fund –

(a) shall, subject to the directions of the Minister, -

• (i) be deposited in a bank or banks or any branch thereof in Solomon Islands; or
  
• (ii) be invested in accordance with the provisions of any law relating to trusts; or
  
• (iii) be invested in any other security or any other loan specifically approved as an investment for the purposes of this Act by the Minister or guaranteed by the Government under the Public Finance and Audit Act; and
  

(b) may, subject to the approval of the Minister, be used for acquiring shares or interests in or establishing any business or business entity that appears to the Board as likely to serve the interests of all or a substantial portion of the members of the Fund:

Provided that it shall be lawful for the Board –

(a) to make loans or advances to its officers or servants as part of their conditions of employment, or grants, payments loans or advances for purposes relating to such conditions as aforesaid; and

(b) to make loans to members of the Fund for such purposes as the Board may approve,

upon such terms as the Board may consider reasonable.”

As trustee of the Fund, the Board is vested with a heavy responsibility. It must ensure that whatever investment or business undertaking it embarks on, is for the benefit and interests of all or a substantial portion of the members of the Fund. This requires diligence, vigilance and alertness to be exercised by all Board members at all times.

In 1997, the Board decided to embark on establishing a local insurance business for and on behalf of its members. The beginnings were hatched in a Social Security South Pacific Conference held in Vanuatu in early 1997, which Board members attended and became convinced was a viable proposition. On their return the Board met on 7th February 1997 (Ex. 2) to discuss the idea of setting up an insurance business. Two resolutions were made in that meeting:

“(1) Management pursue the idea of SINPF establishing an Insurance company in Solomon Islands;

(2) Management prepare an Information Paper for the Minister outlining the Board proposal.”

On 18th February 1997, a Memorandum of Understanding (“MOU”) (Ex. 1) was executed amongst Workers Mutual Insurance (PNG) Pty. Ltd (“WMI”), the Board and Siva Sivakumaran (“Sivakumaran”). Sivakumaran is described as the “Consultant” and was engaged by the Board to carry out consultancy work in accordance with the terms of reference set out in the MOU. Sivakumaran subsequently produced a Feasibility Study Report consisting of 6 volumes (Ex. 18/1- 18/6) and had it presented to the Board in it’s meeting on 11th April 1997 (Ex. 3) for consideration and approval. Among the matters discussed in that meeting included assurances about re-insurance arrangements having been secured with LURECO and that arrangements for an agreement to be signed were being prepared. It was also noted very favourable terms had been secured under the proposed re-insurance agreement. Resolutions made included the approval of the establishment of an insurance company on a joint venture basis with WMI and PAS (SI) Pty Ltd (this was supposed to be the proposed company of Sivakumaran) (Resolution [2]). The proposed shareholding was apportioned as follows: NPF Board – 75%, WMI – 15%, and PAS (SI) Pty Ltd – 10% (Resolution [3]). Resolution 5 required Management to review the Re-insurance contract and to propose any changes it saw fit before finalizing the contract for execution. In its Board Meeting of 23 May 1997 (Ex. 4) it was resolved that the Deputy Chairman (Milton Sibisopere) and the Board Secretary and Legal Advisor (James Apaniai) represent the Board at the negotiation of the Treaty with LURECO in Luxembourg and for Sibisopere to be authorized (Resolution 1.1 [e]) to sign the Treaty on behalf of NPF as promoter of Solomons Mutual Insurance Limited (“SMI”). SMI at that time was in the process of registration. Sibisopere and Apaniai left for Luxembourg on 25th May 1997 (T28 – Apaniai). Apaniai also had with him the proposed Memorandum of Association and Articles of Association of SMI. He confirmed, supported by Sibisopere that both documents were signed at Luxembourg on 5th June 1997 but that the dates had been backdated to 25th May 1997. Both witnesses confirmed the Excess of Loss Reinsurance Contract (hereinafter referred to as “the Treaty”) was executed on 5th June 1997 with Luxembourg European Reinsurance S.A. (“LURECO”). Those present at the signing ceremony were Sivakumaran, Napoleon Liosi (“Liosi”) – representative of WMI, and Michael Nyunt (“Nyunt”). Nyunt appears to be some sort of agent/broker responsible for arranging the Treaty with LURECO. Apparently Sivakumaran had appointed him. LURECO was represented it seems by its Managing Director, Carl Thomas. It is not in dispute that at the time of signing of the Treaty, SMI was yet to be incorporated. This was not a secret. Both Apaniai and Sibisopere confirmed in evidence that Nyunt and Carl Thomas knew SMI was yet to be incorporated.

One of the issues raised during trial related to the appropriate law to be applied to the Treaty. Defendant contended the law to be applied is the law of Luxembourg. Defendant relied on Article 9, as expressly providing in the event of dispute that the law to be applied was the law of Luxembourg. Defendant accordingly has sought to prove by affidavit evidence that according to the law of Luxembourg, once ratified, the Treaty became a valid and binding document with retrospective effect from date of execution. Defendant has sought to introduce this evidence by seeking leave to admit the affidavit evidence of Romain Adam a lawyer from Luxembourg purporting to give expert evidence on the law of Luxembourg as it applies to the Treaty. Learned Counsel Mr. Sullivan for the Defendant argues that the applicable law governing admissions of affidavit evidence in criminal matters must be the Criminal Justice Act 1988 (UK). Learned Counsel argues the Criminal Justice Act 1988 (UK) applies by virtue of section 240 of the Criminal Procedure Code (“CPC”). Unfortunately, section 240 must bow to the limits set by Clause 1 of Schedule 3 to the Constitution. Schedule 3 provides that Acts of the Parliament of the United Kingdom of general application in force on 1st January 1961 are the only laws permitted under the Constitution to have effect as part of the law of Solomon Islands in so far as they do not conflict with the Constitution or any Act of Parliament of the Solomon Islands. Schedule 3 does not permit The Criminal Justice Act 1988 (UK) to have effect as part of the law of Solomon Islands. That disposes of the submission of learned Counsel in respect of the application of The Criminal Justice Act 1988 (UK). The question however remains as to what law is applicable in relation to the application and proof of foreign law. In my respectful view, the relevant laws are the Administration of Justice Act 1920 and Judicature Act 1925 which state that foreign law is a question of fact which has to be proven by skilled witnesses (Lazard v. Midland Bank [1933] A.C. 289; R. v. Hammer [1923] 2 K.B. 786; see also Cross and Togher on Evidence (8th) 781 – “The general rule is that foreign law must be proved by an expert witness who will, in a disputed or complicated case, give his evidence on oath in the ordinary way.”). The simple effect of this rule is that the affidavit evidence of Romain Adam cannot be admitted and I do so order. If the Defendant wishes to adduce evidence of the applicability of Luxembourg law then it has to consider producing expert witness in this Court and subjected in the normal way to cross-examination.

After the Treaty was signed, Sibisopere and Apaniai returned to the Solomon Islands via London, Singapore and Brisbane, arriving at Honiara on the evening of 9th June 1997 (which is a Monday). This evidence is unchallenged. Apaniai states on oath two signed copies of the Treaty were made on 5th June 1997, one was kept by LURECO and the other by him. No other copies were made or given to anyone else. Apaniai denies sending by fax any signed copy to the Defendant, Teama or any of the Board Members. The earliest therefore any signed copy could have gotten to the hands of anyone else was on 10th June 1997. One of the crucial issues in the charge of uttering pertains to the date the Treaty was alleged to have been uttered. The Acting Controller of Insurance then, Kevis Harry (“Harry”) states he was given a signed copy on or about 9th June 1997. The earliest he would have been given a copy therefore would have been 10th June 1997.

The Elements of the Offence – is the Treaty a forged document?

Although the meaning of forged document is not defined assistance can be obtained from the definition of forgery in Section 333(1):

“Forgery is the making of a false document in order that it may be used as genuine....”

A false document in turn is defined in Section 334(1):

“A document is false if the whole or any material part thereof purports to be made by or on behalf or on account of a person who did not make it nor authorize its making; ...and in particular a document is false –

(a) [not relevant]

(b) if the whole or some material part of it purports to be made by or on behalf of a fictitious or deceased person;....”

The Defendant contends the Treaty is not a false document. Whilst it may superficially satisfy the definition of a false document (by purporting to be made by a fictitious person) the mental element necessary to make it a forged document is absent. Defendant relies on the following factors. That all parties to the Treaty:

(a) knew that SMI was not yet incorporated,

(b) expected it to be incorporated soon,

(c) believed that the treaty would become effective, and

(d) intended to be bound.

Defendant also relies on the undisputed evidence of Apaniai, Sibisopere, Kama, and Teama.

Was the Treaty a false document?

On the face of the document, it was false. It was purported to be signed by SMI, yet to be incorporated and therefore a non-existent entity. According to the principles of common law such agreement is a nullity (New Borne v. Sensolid (Great Britain) Ltd [1953] 2 WLR 596). The conclusive evidence adduced however showed Sibisopere and Liosi believed they were signing as promoters for SMI. The only logical explanation that I can come to regarding this “blunder” is that there had been an error of drafting. In his evidence before this Court, Kama, one of the Board members but also a Solicitor and Barrister of this Court pointed out that if he was drafting such document he would have made it clear that those signing the document were doing so as promoters. He pointed out he has a standard format for such pre-incorporation contracts. The obvious error committed in the drafting of this document was in not having Sibisopere and Liosi sign the document as “Promoters for and on behalf of SMI”. By allowing SMI’s name to be inserted instead of Sibisopere and Liosi as promoters, it was capable of giving wrong impression to any one not aware of the surrounding circumstances that SMI was an incorporated company. The effect of this error in drafting meant that whilst all the parties to the Treaty thought and believed they were executing a valid document it was in reality an invalid document according to common law principles. An unincorporated company simply in law cannot execute a binding document.

When the Treaty was presented to Harry therefore on or about 9th June 1997, it was for all purposes an invalid document. The answer therefore to the question whether the Treaty was a false document is more accurately answered by pointing out that the parties to the Treaty did not deliberately set out to make a false document in order that it may used as genuine. Sibisopere believed for all purposes he was signing a valid and binding document. He had received legal advice from Apaniai to that effect. He had also been advised the Treaty would be ratified when SMI was incorporated. Evidence adduced confirmed that the Treaty was purportedly ratified on 6th July 1997 (T46, Ex. 17), after SMI was incorporated on 26th June 1997. Simply proving that the Treaty is a false document is not enough. Crown is obliged to prove that it was created a false document in order that it may used as genuine. What sets apart a false document from a forged document is the element of mens rea involved in the creation of that document; that it was knowingly created or made a false document with the intention of using it as genuine in order to defraud someone. This is where the vital link in the chain falls apart. The Crown has not shown beyond reasonable doubt that Liosi and Sibisopere deliberately or intentionally set out to make a false (invalid) document in order that it may used as genuine. Although it has been shown Sibisopere, Teama, Kama and Apaniai knew SMI was yet to be incorporated, they all believed and assumed based on legal advice (though erroneous to a certain degree) that Sibisopere was entitled to execute the document as a promoter for SMI. The intention was obvious. The only failure was in not reflecting that intention accurately on the document itself. Can it be said in all the circumstances therefore that the Defendant intended to create a false document in order that it may be used as genuine. In my respectful view, this must be answered in the negative. The document as presented to Harry thus was not so much a false document as an invalid document. It was created a genuine document but rendered invalid or unenforceable by operation of law. Crown has failed respectfully to show that Defendant knew it was making an invalid document in order that it may used as genuine.

To the contrary the evidence has been overwhelming, that the Treaty was entered into on the honest and sincere belief (though mistaken), that it was a valid and binding document between the parties. LURECO was not deceived by the document. They knew at all times, that SMI was yet to be incorporated. They too believed they were signing a valid and binding document on the basis that according to Luxembourg law, on ratification by SMI it would become binding with retrospective effect. It was obvious this was anticipated as the Treaty (Article 10) expressly provided it was to take effect from 1st July 1997. When all the evidence has been weighed it would be illogical, unreasonable and improper for this court to accept the suggestion that the Treaty amounts to a forged document. As presented to Harry it was materially defective, a nullity, but it wasn’t a forged document. Neither Apaniai nor Sibisopere forged the document. Sibisopere did not make a false document. He signed a genuine document, prepared and screened by LURECO and the Board thinking it was valid but which turned out to be a nullity. I am satisfied Crown has failed to prove beyond reasonable doubt that the Treaty is a forged document and accordingly, no offence of uttering can arise from it. The Defendant should be acquitted at this point but for completeness sake I will deal with the rest of the elements in the offence.

Uttering on or about 9th June 1997.

The crucial evidence on this came from Harry. Initially he was of the view that a signed copy of the Treaty was given to him on 9th June 1997 [see Harry’s evidence in chief - T75, 76, 86, 98-99, 103; and evidence under cross-examination T122-123, 147-148] with the rest of the documents delivered to him by Teama. Later under intense cross-examination he conceded it may have been on or about 9th June 1997 [T151, 162, 167]. In his evidence before this Court, Teama denies giving any signed copy of the Treaty to Harry on or before 9th June 1997. He could not be positive though that a signed copy may have been delivered after 9th June. Teama also was careful to point out that he could not be sure either if any unsigned copy might not have been delivered to Harry before 9th June 1997.

I accept the evidence of Harry on this point. Although he has been shaken to a certain extent in having to change his evidence in chief that he could not have received a copy on 9th June 1997, he was adamant it may have been given to him on the next day. He did not waiver from his view that it may not have been given to him before 30th June 1997. I have considered submission of Mr. Hanson concerning a number of documents (Ex. 41, 46, and 47), which suggest Harry could not have received any copy of the Treaty before 30th June 1997. Unfortunately I am not satisfied a reasonable doubt has been raised that would cause me to reject Harry’s evidence that he did not receive a copy on or about 9th June 1997.

Was there intent to defraud?

There are two parts to this question, an intent to deceive and thereby defraud. It is vital Crown proves what element of deceit was relied on. Apart from the fact the Treaty delivered to Harry legally was an invalid document, no evidence has been adduced to suggest that any one had sought to deceive Harry in any way. Harry may have been pressurized and to some extent “threatened” to issue a recommendation to the Foreign Investment Board to approve the joint enterprise on or about 9th June 1997, but the important point to note about this is that the ultimate power or decision vests with Harry. Whether Harry is threatened or pressurized makes little difference and does not remove the cloak of responsibility vested in him as Acting Controller of Insurance. If Harry refused to issue any recommendation, there is nothing any one can do about that apart from perhaps rights of appeal to the Minister provided under the Insurance Act. No one, whether it is Teama, the Permanent Secretary of Finance or Minister has any right and power to interfere with his decision. If there is to be any interference it must be done according to the procedures and rules set out in the Insurance Act. If there is suggestion of impropriety, incompetence or whatever which may warrant the removal or transfer of an officer, then this must be done properly according to the procedures laid down in the Public Service Commission Regulations 1979. It must be clearly understood that the power to remove or have officers transferred lies with the Public Service Commission and any threats of removal or transfer sought to be made by any responsible officer or Minister is wrong and improper. That power and responsibility is vested in an independent body that can make objective decisions on such matters without interference from anyone.

The evidence adduced however showed conclusively Harry was and could not have been deceived by the Treaty when it came into his possession on or about 9th June 1997. He knew SMI had not yet been incorporated on 9th June 1997 (see T150, Ex. 41, 42, 43, 70, 30, 73). There is also no evidence to suggest that Harry was confused about the existence of that document or that it affected him in any significant way. No application for registration had also been received on said date. Application for registration was received only on 30th June 1997. It is pertinent to note also that the only reason why document was handed to Harry on or about 9th June was for information purposes and for purposes of making recommendation to the Foreign Investment Board. There was no reason therefore for anyone to induce or deceive Harry about that Treaty. There has been some suggestion made that Harry was pressurized nevertheless to make a positive recommendation to the Foreign Investment Board for approval to be granted. Unfortunately no evidence has been adduced to show that Harry was influenced or induced in any event by that document. But even if Harry may have been confused about the status of that document on or about 9th June 1997, it appears he raised no immediate query or concerns. Had he made enquiries with NPF, he no doubt would have been told what the position and understanding of the Board was regarding that document. The advice would have been no different to what was contained in the minutes of the Board (Ex. 2, 3, 4, 13, 15) and what Apaniai (T46, 50, 55 and 58) had told this Court. Kama, Teama and Sibisopere all confirmed in evidence what the intention and objective of the Board was. It was plain for all to see. There was no secrecy involved, no deceit or dishonesty on the part of anyone. The Board was genuine, though genuinely mistaken. I am satisfied Crown has also failed to prove beyond reasonable doubt that there was an intention on the part of the Board to defraud. The Defendant accordingly must be acquitted of this charge as well.

Order of the Court

Defendant acquitted of Count 2 of the Charge.

The Court.