Regina v Ashley [2011] SBHC 170; HCSI-CRC 178 of 2011 (13 December 2011)

After the ruling of a submission of no case to answer was made, only 7 counts were allowed to remain by the court, namely counts 3, 20, 24, 25, 26 28 and 29. The particulars briefly are as follows:

In their closing submissions prosecution pointed out that counts 20, 24, 25 and 26 were drawn from the $400,000-00 that had been transferred from the Trust Account to the BSP Account and therefore duplicitous. This is correct and should not have been included in the charges raised against the defendant. I order that they be dismissed and the defendant acquitted of them.

There are three grounds under which the defendant seeks to rely on in his defence. The first one is that prosecution have failed to prove the element of fraudulent conversion. The defendant submits that both trust accounts in the ANZ Bank and BSP Bank belonged to him and therefore he was entitled to do what he wanted with them.

The second ground relied on is that prosecution have failed to prove that the monies were converted to his own use or benefit. He says that the cheques were made out to different persons and not for his own use or benefit and therefore prosecution had failed to prove that element.

The third ground relied on is that there was an honest and reasonable mistake on his part when he used the monies and or made payments from them and therefore should be acquitted.

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The background facts to this case are not in dispute. There is no dispute that the sum of $1,454,000-00, being part of the proceeds of the sale of the Auki Plaza property owned by Francis Sawane and Molaisufa Sawane (“the Beneficiaries”) was paid into the trust account of the defendant at the ANZ Bank. The account number is 4221889 and styled Charles Kaukui Ashley T/F A & A Legal Service; this is referred to as the Trust Account. That money was paid into his account on 26 February 2009.

There is no dispute that the money was paid into his trust account for further disbursement to the Beneficiaries and or to Constance Sawane-Timothy (“Constance”). It was paid into his account as he was the family lawyer who had been dealing with the sale of the properties of the Beneficiaries and Constance.

There is no dispute that at any time the Beneficiaries ever authorised the defendant to use their money for his own use or benefit or for the use or benefit of others, apart from the legal fees of $240,000-00 which was later agreed to by them to be deducted.

There is no dispute that the amount of $1,110,000-00 remains outstanding as at this point of time.
The case for the prosecution

The case for the prosecution is that on the dates specified in the charges, the defendant used the money for his own purpose or benefit, and or the benefit of others, apart from the various payments totalling $344,000-00 which had been accounted for.

The monies used as set out in counts 3, 28 and 29 are for the sum of $25,000-00, $612,750-00 and $400,000-00 respectively, bringing these to a total of $1,037,750-00.

(c) (i) being entrusted either solely or jointly with any other person with any property in order that he may retain in safe custody or apply, pay or deliver, for any purpose or to any person, the property or any part thereof, fraudulently converts to his own use or benefit, or the use or benefit of any other person, the property or any part thereof or any proceeds thereof; ...

is guilty of a misdemeanour, and shall be liable to imprisonment for seven years.”

The elements of the offence which prosecution is required to prove beyond reasonable doubt are four-fold:

The main issue for determination in this case is whether there had been fraudulent conversion of the monies entrusted into his custody for disbursement to the Beneficiaries and or Constance.

“Where the charge is one of fraudulent conversion, it is essential that three things should be proved to the satisfaction of the jury; first that the money was entrusted to the accused person for a particular purpose; secondly that he used it for some other purpose and thirdly that the misuse of the money was fraudulent and dishonest.”

The first and second elements are not in dispute. It is not in dispute that the money was entrusted to the defendant for a particular purpose, namely to deliver to the Beneficiaries and secondly, it is not in dispute that the defendant used the money for some other purpose. The second element can be proved in two ways, if the defendant used the money for his own use or benefit or the use and benefit of others. The proof of the use of the money in either of those ways will suffice.

It is the third element which is in issue, that the misuse of the money was fraudulent and dishonest. The defendant says that while it was converted or used it was not fraudulent or dishonest.

In the case of Regina v. Reqeo[2], his Lordship Lungole-Awich J. also identified fraudulent intent as the crucial element in the offence of conversion:

“The essence of the offence of conversion, which was adopted in s:271 of our Penal Code from the English Larceny Act of 1916, is that the property had been received or was in the possession of the accused lawfully and that he fraudulently converted it to his own use or to the use of some other person. The most significant element in conversion, like in larceny, embezzlement and other related offences in the English Larceny Act of 1916 and our Penal Code is the fraudulent intent. The fraudulent intent is disclosed when one deals with the property of another, without that others consent and well knowing that it will prejudice the interest of that other person."

His Lordship had relied on the statements of the Court of Appeal in Toritelia v. The Queen[3], in which the Court had gone to great lengths to define the element of fraudulent intent and conversion. In essence, the phrase "fraudulently convert", means dishonestly to prejudice or take the risk of prejudicing another's right, knowing that you have no right to do so[4]. The Court held that the question to be considered is whether the prosecution had proved beyond reasonable doubt that the accused did prejudice or take the risk of prejudicing another's right, knowing that he had no right to do so.

The question in this case therefore is whether the use of the money by the defendant, did prejudice the right of the Beneficiaries to their money or risked prejudicing their rights, knowing that he had no right to it anyway?

The evidence on this issue is clear, unambiguous, uncontradicted and overwhelming. In his evidence under oath, Francis Sawane repeatedly commented that all he was interested in was his money, which the defendant held, that he can have his legal fees as agreed to but to pay him his money. He virtually begged the defendant to release his money and couldn't comprehend it seems why it had not been paid to him.

Both Molaisufa Sawane and Constance reiterated the same request in their evidence; that they had attended so many meetings called by the defendant, considered many arrangements and promises made as to dates when payment would be made and never fulfilled them.

One such instance was described in evidence by Constance when the defendant told them that payment would be made on 5th March 2009. She told the court she attended court that day and waited for the defendant outside to talk to him about the payment promised. She even got him to talk to his dad, Francis Sawane to confirm instructions as to what was to be done about their money, where it was to be deposited into etc. The defendant however told her that a deed of release needed to be signed before the money could be released. By that date however, the money in the Trust Account had been depleted to $125,819.52.

Another instance of a promise to pay and not fulfilling it is contained in the letter of 24 March 2009, in which he set out in quite plain terms how the money was to be disbursed. That letter is headed "Re: Disbursement of Trust Funds":

"Further to our previous letters and discussion on the above subject, we wish to advise that the remaining amount of $1,400,000-00 held in Trust will be disbursed as follows:

Date	Payee	Amount
Tuesday 24/03/09	ANZ A/C 4637058	$100,000-00
Wednesday 25/03/09	ANZ A/C 4637058	$100,000-00
Thursday 26/03/09	ANZ A/C 4637058	$100,000-00
Friday 27/03/09	ANZ A/C 4637058	$100,000-00
Monday 30/03/09	ANZ A/C 4637058	$200,000-00
Tuesday 31/03/09	ANZ A/C 4637058	$200,000-00
Wednesday 01/04/09	ANZ A/C 4637058	$200,000-00
Thursday 02/04/09	ANZ A/C 4637058	$160,000-00
Friday 03/04/09	A & A Legal Service	$240,000-00

As advised, the matter is listed again before the High Court on Thursday 2nd April 2009 at 9.30 am. On that date, lawyers for all the parties will inform the Court that all necessary transfer documents will have been executed and there are no outstanding issues. DBSI should then file a Notice of Discontinuance and the case will be closed.

As soon as DBSI files the Notice of Discontinuance, I will also sign the Deed of Release and Settlement. In the meantime, please ensure that all outstanding fees due to the Commissioner of Lands are settled to facilitate the transfer to the Malaita Provincial Assembly."

The ANZ A/C 4637058 I think is the account that had been nominated by the Beneficiaries and Constance and agreed to for the payments to be paid into.

When the dates fell due, no payments were received or made. By that time however, the balance in the Trust Account was a mere $2,302.92. The balance in the BSP Account was also a mere $2,107.24.

There can be little doubt about the knowledge of the defendant or that can be imputed to him in regards to the money that had been entrusted into his custody and what was required of him or his legal obligations towards them. He knew the money did not belong to him apart from the legal fees incurred for work done and services rendered. It is not money that he had earned for his legal practice or gifted to him. It is money given for a particular purpose and therefore cannot be diverted or used for any other purpose other than the sole purpose it had been entrusted into his custody. He ought to have known that he could not touch that portion until a bill of costs had been provided and agreed to by his client. Only then could he deduct that money; according to the evidence he could only have been able to deduct his legal fees around 16 March 2009.

The evidence is clear however, that he had already used the money for his own use or benefit or for the use or benefit of others by then. By 16 March 2009, the money in the Trust Account had been depleted to a mere $35,879.52. The Beneficiaries and Constance repeatedly denied ever giving him authority to use their money. When he used that money therefore, it is evident he did so without authority, was unlawful and improper.

It is trite law and I have touched on this in my judgement in the submission of no case to answer[5], that trust money should not be mixed up with his personal account or that of his legal practice. Regulations and rules governing Legal Practitioner's use and accountability of trust money are so particular and specific in many jurisdictions and stringent rules applied.
A very basic definition of trust money is that this is money received by a legal practitioner which he is not entitled to in law or equity and therefore cannot be accessed without authority and clear accountability being provided to the client.
This very basic requirement in the use and management of trust funds by a legal practitioner, addresses the first argument relied on by the defendant that he was entitled to use the money as it had been deposited into his trust account to attend to whatever matter he decides. The law makes a clear and bold distinction to trust money and its use, and as a legal practitioner he is deemed to be aware of such basic requirement.

In his defence, the defendant argued that because the money was paid by him to Paul Saru, who is another person and not to him personally, it cannot be said that the money was dealt with for his own use or benefit and that Prosecution have failed to prove this particular element.

It is important to appreciate that the crucial element in the section is that the money had been fraudulently converted and misappropriated by the defendant to the prejudice of the rights of another. This can be proven by what he does subsequently with the money. If he uses the money for his own purpose to benefit himself or to the benefit of others knowing full well that he had no authority to do so, then that is proof of fraudulent conversion. I have touched on this issue in this judgement that the second element as highlighted in the judgement of Hallet J. per R. v. Boyce[6] being, that he used it for some other purpose can be proved in two ways; that he used the money for his own use or benefit, or the use and benefit of others. The proof of the use of the money in either of those ways will suffice. In my view therefore the proof of either of those ways in this case will suffice.

In relation to count 3, being the payment of $25,000-00 to Paul Saru ("Paul") this payment was made in relation to the use of the name "Saru" by the National Provident Fund ("NPF"). Paul had been represented by the defendant in this civil suit and says that their claim was for $250,000-00. He also states that sometime in 2003, that amount was paid into the defendant's trust account for payment to him. He says that he was paid that amount as payment towards the money which was due to him from NPF.

This payment is not disputed. What is irregular is the fact that this payment was made from funds belonging to the Beneficiaries. If payment for the use of the name "Saru" had been made to the defendant by NPF for disbursement to Paul then this raises the question as to the existence of that money, for Paul should rightly be paid that money from that particular trust fund and not from the trust funds belonging to the Beneficiaries. These are two separate trust funds and again basic trust laws governing their use, requires that they be dealt with separately and not mixed up, with proper accountability and explanations in place. Nothing has been provided in this case.

It is overly simplistic to suggest that because the money was paid to Paul, it did not benefit him, or that it was not used for his benefit. I accept submissions of Ms. Olutimayin that the payment to Paul, was from the trust funds of the Beneficiaries, held in trust by the defendant, which funds he had no authority to use and that when it was paid out it was to fulfil an obligation he had towards Paul, for monies which had been paid earlier to him for further payment to Paul but had not released and because he had no funds to access other than this money, when he paid it out, it was to his benefit. In any event, I am not satisfied that this distinction is sufficient to raise a reasonable doubt in my mind that the conversion was not fraudulent. He has had ample notice as to the ambit of the case for prosecution. It is to do with the misappropriation of the monies belonging to the Beneficiaries which he had converted to his use or the use and benefit of others.

The same applies to the payment of the $612,750-00 made out to the Registrar of High Court. On 11th July 2008, the defendant raised a cheque for the value of $612,750-00 on behalf of Sol-Green Company being $600,000-00 for admitted liability and $12,750-00 for security for costs. On receipt of this cheque, the matter was listed before the Court of Appeal for hearing. This took place on 16 July 2008 and an order made requiring the payment of that sum into Sol-Law's account. Sometime on 29th August 2008 he directed the Office Manager of the High Court to raise the necessary payment into Sol-Law's account. It was at this point of time that the Registrar became aware that the cheque had been dishonoured.

On or about 28 November 2008 Sol-Law Legal Services took out an action against the Registrar and defendant for the said money. On or about 9th December 2008, an order was made requiring the payment of the said money. Subsequently the Registrar was compelled to take proceedings against the defendant for the payment of that money. On 26th February 2009 he produced a cheque payable to the Registrar. This is marked Exhibit E-8 and was paid from his Trust Account with the monies belonging to the Beneficiaries. There is no dispute about this fact.

Again that money should not and ought not to have been paid from the money belonging to the Beneficiaries. That payment should have come from separate funds belonging to Sol-Green Company and he had no right to touch the money belonging to the Beneficiaries. By paying that money out and fulfilling the orders of the Court of Appeal on him, he obviously benefited out of it for it absolved him of any further requirement and pressure to meet those costs. He had 7 months to have that outstanding payment resolved by his client.

The last count relates to the payment of $400,000-00 from his Trust Account to the BSP Account and from which he drew numerous cheques according to the prosecution case to benefit himself and others. A number of cheques were paid out from that BSP Account. These included the following:

There were also numerous payments of small amounts and by 20 April 2009, the BSP Account had reduced to $156-24 (see Exhibit E-25). Note, in the period between 26 February to 20 April 2009, no deposits were made, other than the transfer of $400,000-00 initially made on 26 February 2009. It can be safely concluded therefore that all those payments referred to above were from that $400,000-00 that had been transferred.

I am not satisfied it can be reasonably argued that the payments made did not benefit him, either directly or indirectly. If it was to benefit others, like the payment of the property on behalf of Dreamtime Shipping, again it is clear on the evidence that he had no right to use that money, being $304,400-00 to pay NPF off. He should have used separate funds that come from Dreamtime Shipping to pay those properties off. Again there is simply no explanation for using the Beneficiaries money and thereby prejudicing their right to it to this day.

The third and final ground relied on by the defendant in his defence is that of an honest and reasonable mistake as set out in section 10 of the Penal Code. Section 10 provides as follows:

"10. A person who does or omits to do an act under an honest and reasonable, but mistaken, belief in the existence of any state of things is not criminally responsible for the act or omission to any greater extent than if the real state of things had been such as he believed to exist."

The prosecution submits that such a defence is not open to a legal practitioner of many years experience that he could use his client's money without their consent. Ms. Olutimayin points out that criminal conduct is quite distinct to the conduct for which he will have to answer for as a legal practitioner. She notes that there is no evidence to show that the defendant intends to repay the money converted. While the defendant submits that he will have it addressed pursuant to the civil suits that had been brought against him, in the 2 years and 9 months to date, he has done nothing to address this outstanding issue. If he had paid up on the money promptly, this matter would not have come this far as the Beneficiaries and Constance were quite patient waiting on him to pay them their money.

In so far as the civil suit in civil case number 132 of 2009 is concerned, they had actually received a judgement for the full amount in their favour.

In Toritelia v. The Queen (ibid), ("Toritelia's Case) the Court of Appeal had gone to great lengths as well to address the question of honest belief, whether it can be a defence in law for a man charged with theft and proved to have taken money to say that when he took the money he intended to repay it and had reasonable grounds for believing and did believe that he would be able to do so? In the context of this case in similar fashion, whether there is a defence for the defendant to say that when he used the money he honestly believed that he was entitled to use it provided that he account for it to the Beneficiaries.

In Toritelia's case the Court was grappling with the element of honest claim of right and without intention to defraud as the defence raised in section 8 of the Penal Code. This is slightly different in this case where the defence is that of an honest and reasonable mistake.

In his judgement in Toritelia's case, Sir John White P. noted that it must be shown that the accused had acted deliberately and with knowledge that he was acting in breach of his legal obligation. Secondly, if the accused sets up a claim of honest belief that he was justified in departing from his strict obligations, even for some purpose of his own, then the next question to be considered is whether there is some evidence from which the jury might conclude that his conduct, though legally wrong, might nevertheless be regarded as honest. The failure of the prosecution, in the face of that evidence, to prove that he did not have such a belief, must result in an acquittal.

He then went on to point out that the question of whether accused was acting dishonestly at the material time, is a matter for the jury to look at all the facts and statements disclosed in the evidence from which inferences as to the honesty or otherwise of his belief may be drawn.

The questions for determination in this case therefore is whether prosecution had shown that the defendant had acted deliberately and with knowledge that he was acting in breach of his legal obligation. Secondly, is there evidence to show that his conduct was honestly held?

On the first question, this has already been dealt with in this judgement and answered in the affirmative. He knew the money did not belong to him and therefore he was not entitled to use it for any other purpose without the consent or express authority of the Beneficiaries. He knew what his legal obligations were in relation to the money received. I find on the evidence before me clearly established that he had acted deliberately in breach of his legal obligations in a manner which clearly prejudiced the rights of the Beneficiaries knowing that he had no right to do so.

This brings me to the second question whether there is evidence to show that his conduct was based on an honest belief. It would seem to me based on his submissions, that he believed he had right to use the moneys in whatever way he wished without the permission of the Beneficiaries and secondly, that all that was required of him was to account to them for the monies used.
In Toritelia's case, there was a hope or expectation that the accused had to repay after having used money for his own purposes. He had intended to repay the money from his per diem that he would receive when attending an overseas course. When this was cancelled, he notified his supervisors but was charged. The Court of Appeal held that his taking was fraudulent and that there was no honest or reasonable belief when it was based merely on a hope or expectation. Justice Sir Mari Kapi went on to point out that a person who intended to restore the money or property and has ability to do so may raise the defence provided he had successfully raised the element of honest claim of right. He found against the accused on this point.
Is there evidence which supports the defendant's case of an honest belief that he had right to use the moneys in the manner he did. Is there evidence that he intended to repay the money? Did he have a hope or expectation of repaying the money? Is there evidence of such a hope or expectation and is it reasonably or genuinely held? This second question must also be answered in the negative. He had made many promises and arrangements for payment but had not fulfilled them. Constance summed it succinctly in her evidence when she said that after a while she realised the defendant could not be trusted to fulfil his word. He has had more than 2 years and 9 months to account to the Beneficiaries for the money but has not. A mere belief and hope without sufficient evidence to support it cannot be held as being based on an honest and reasonable belief.
I am satisfied prosecution have shown that he did not and could not have held any honest and reasonable belief in the factual circumstances of this case and accordingly I find him guilty of those three offences and convict him accordingly.

^[1] 40CR. Ap. R. 62 at 63
^[2] [1998] SBHC 69; HC-CRC 96 of 1993 ( 17 July 1998)
^[3] Ibid at page 8.

^[4] Toritelia v The Quee87] SBCA 2; [1987[1987] SILR 4 (30 March 1987) at page
^[5] R. v. Charles K. Ashley CRC 178 of 2011, (1^st December 2011)
^{[6] 40CR. Ap. R. 62 at 63}

High Court of Solomon Islands

Regina v Ashley [2011] SBHC 170; HCSI-CRC 178 of 2011 (13 December 2011)