Public Prosecutor v Kalo [2001] VUSC 19; Criminal Case No 019 of 1998 (13 March 2001)

IN THE SUPREME COURT OF

THE REPUBLIC OF VANUATU

Criminal Jurisdiction
CRIMINAL CASE No.19 OF 1998

PGB">PUBLIC PROSECUTOR

-v-

JOSEPH KALO

Coram: Chief Justice Lunabek

Mr. Terry Gardner for the Public Prosecutor
Mr. Saling Stephens for the Defendant

REASONS FOR JUDGMENT

This is the trial of the accused, Joseph Kalo who is charged upon information with 46 counts of offences against Section 32 of the Insurance Act [CAP 82].

The accused, Joseph Kalo, pleaded not guilty to each and all 46 counts of offences against Section 32 of the Insurance Act. The trial proceeded on that basis. Section 81 of the Criminal Procedure Code (“C.P.C.”) Act [CAP 136] was read and explained to the Accused.

The thrust of the prosecution case is that between 1^st January 1995 and December 1996, the Accused Joseph Kalo, carried on business as an Insurance Agent and trading as Maureen Insurance Agency (“M.I.A.”). He then failed to remit the premiums to the insurer, the Solomon Island Family Assurance Limited (“S.I.F.A.L”) from 1^st January 1995 to 31^st December 1996 (“the relevant period”).

The defence case is that the proceeds of premiums were actually paid to the insurer who received them during the relevant period and also that the proceeds were utilised by Maureen Insurance Agency as reinvestment of the work done by Maureen Insurance. The accused owed, therefore, nothing to the Solomon Island Family Assurance Limited (S.I.F.A.L.).

This is a criminal trial and as in all criminal trials, it is the duty of the prosecution who brings the charges before the Court to prove them. The law is that the prosecution must prove each and all of the essential elements of the offences charged against the defendant, beyond reasonable doubt.

In this trial, I have the duty to look at the evidence upon each of the counts quite separately in order to return quite separate verdicts on each of them as against the accused.

As in any criminal case, there is no evidential burden at all on the defendant. The fact that the defendant in this case, has given evidence does not mean that any burden whatsoever is cast upon him. The defendant could have remained silent in the dock and simply allowed himself to be tried on the evidence called by the prosecution as Section 88 of the Criminal Procedure Code which was read and explained to the defendant, makes it clear to that effect. In this case, the accused gave evidence. This means that having given evidence, the Court must assess his evidence in the same way as any other evidence given by other witnesses in this case.

Section 32 of the Insurance Act [CAP 82] provides:

“A registered Insurance Agent,…who acts in negotiating or renewing a contract of insurance with an insurer and receives payment of the premium for such a contract from the insured, shall be guilty of an offence if he fails to pay the premiums over to the insurer within 30 days of the receipt by him of the premiums… less his commission and any other deductions to which by written consent of the insurer he is entitled…”.

Before I can convict the accused on each and all of 46 counts of offences against Section 32 of the Insurance Act, the prosecution must prove on the required criminal standard of proof the following essential elements:

1. That the accused was at all material times between 1^st January 1995 to 31^st December 1996, a registered Insurance Agent;

2. That the accused as a registered Insurance Agent, acts in negotiating or renewing a contract of insurance with an insurer;

3. That the accused as a registered insurance agent, receives payment of the premiums for such a contract from the insured;

4. That the accused as a registered Insurance Agent failed to pay the premium over to the insurer within 30 days of the receipt by him of the premiums… (less his commission and other deductions to which by written consent of the insurer he is entitled…).

SUMMARY OF FACTS ESTABLISHED BY EVIDENCE

The evidence in this case has been taken in writing and the trial notes will be the primary records of what was said. What I now do is just give a summary of these parts of the evidence, which are important to the decision.

In the present case, the prosecution called 4 witnesses: Ross Porter, the Managing Director of the S.I.F.A.L., Marisan Nalo, the Legal Officer of the Financial Services Commission, Mr. Obed Massingiow, President of Vanuatu Teachers Union, Lui Pakoa of the Finance Department (Salary Section).

The defence called 2 witnesses, the accused, Joseph Kalo himself and Jack Kalmet, a resident of Eratap Village.

The evidence of Jack Kalmet has been excluded by the Court on the basis of fairness.

I have had ample opportunity to listen and consider the evidence and observe the demeanour of all witnesses in the witness box.

The facts in this case are straight forward and the following are clearly established by the evidence:

1. The accused, Jodeph Kalo, was at all material times (from 1^st January 1995 to 31^st December 1996) a registered Insurance Agent. This is confirmed by the evidence of Marisan Nalo (see certificate of registration – Exhibit P7) and admitted by Mr. Kalo.

2. The Solomon Islands Family Assurance Limited (S.I.F.A.L.) was at all material times a registered insurer. This is confirmed by the evidence of Ross David Porter and the Certificate of registration as insurer – Exhibit P2. It is not disputed by the accused.

3. In 1993 business dealings started between the accused and the insurer. A group insurance scheme was proposed by Mr. Kalo to S.I.F.A.L. on behalf of the Vanuatu Teachers Union (“V.T.U.”) and that scheme was accepted by S.I.F.A.L. This is established by the evidence of David Porter and Obed Massingiow. It is not disputed by the accused.

4. The scheme proceeded on the basis that the premiums will be paid by each teacher/member of the scheme and together with members of V.T.U. subscription fee by authorised deduction from salary through the Government salary system operated by the Department of Finance. This is from the evidence of Porter, Massingiow and Lui Pakoa, which is not disputed by the defence.

5. And so, as admitted by the accused, the scheme, covering term life insurance and medical insurance, came into existence in 1993 and members of teachers authorised premium deductions from salary. This is confirmed by the evidence of Porter, Massingiow and Pakoa.

6. At all material times, the accused and his spouse operated Maureen Insurance Agency (M.I.A.), a business name registered in the name of Mr. Kalo and his spouse. Premiums deductions were made and the premiums were paid to Maureen Insurance Agency. This is confirmed by the evidence of Mr. Porter and admitted by the accused.

7. Lui Pakoa gave detailed evidence about the system for salary deduction operated by the Finance Department, which is as follows:

·  p;&nbbsp; sp; The teacher authorises deon ofium and subscription fee;

· &nnbsp; sp; During pay proce, indal deons wade from the teacher’s sr’s salary and paid to M.I.A. holding acco account; unt;

·  p;&nbbsp; sp; Salary system produces report, the Pay-20 report of each deduction by reference to the name of the teacher, TPF number, individual deduction amount and the total of all teachers deductions;

· n>spaan spng="ang="EN-GB" style="font-size:12.0pt;mso-bidi-font-size:10.0pt;mso-ansi-language: EN-GB">The Government Purchase Voucher (“GPV”) was raised in respect to the paymo be to M.I.A. from the hole holding ding accouaccount; the GPV is cross-referenced to each relevant Pay-20 report;

· & sp; The cheque to M.I.A. for the total amount of GPV was drawn;

p clasoNorstyle="margimargin-lefn-left:54.t:54.0pt;text-indent:-18.0pt;mso-list:l0 level1 lfo1; tab-stops:list 54.0pt">· & p; s The cheque together with a copy of the Pay-20 reports were collected from the Department of Finance by Mr. Kalo or a member of his staff.

8. It is also established that the accused, Mr. Joseph Kalo:

(a) banked the cheque to M.I.A. into an account at the ANZ Bank. This is not in dispute: (See Exhibit P11 – agreed relevant bank statements);

(b) Sent the cheque to V.T.U. for subscription fees together with a list of teacher members from whom deductions were made: (see evidence of Masingiow);

(c) deposit net premiums, after the deductions of commission, into ANZ Bank account operated by S.I.F.A.L: (See evidence of Porter);

(d) Sent reconciliation statement deposits to the S.I.F.A.L. account to S.I.F.A.L. in Australia with the copy of deposit slip: (See evidence of Porter);

9. In respect of any claims made by teachers under the insurance policy, payment was made by cheque drawn in Australia or by cheque drawn on S.I.F.A.L. account at the ANZ Bank but authorised in Australia. This is confirmed by the evidence of Mr. Porter and admitted by the accused.

10. Consequently, the V.T.U. group Insurance Scheme operated in this way from 1993: (see evidence of Porter and admitted by the accused, Mr. Kalo).

11. But, the reconciliation statements from Mr. Kalo to the S.I.F.A.L. ceased in 1994: (see evidence of Porter and Exhibit P12).

12. And the premiums deposits from Mr. Kalo to the S.I.F.A.L. bank account ceased in 1994: (see evidence of Porter).

13. Yet, subscription fees to V.T.U. continued to be paid by Mr. Kalo to the V.T.U. for all period of 1995 and 1996: (See evidence of Masingiow).

14. And the deductions of premiums payments from the teachers salaries for the V.T.U. Group Scheme continued throughout 1995 and 1996: This is the evidence of Pakoa and Exhibits P1, P8, P9 and P10. It is not disputed nor contrary evidence provided.

15. Further, cheques representing, in part, the teacherS premium deductions were paid to Mr. Kalo and banked by him into the M.I.A. account at the ANZ Bank: This transpires from the evidence of Pakoa and Exhibited P1, P8, P9, P10 and P11.

16. The evidence shows that Mr. Porter and other officers of S.I.F.A.L. asked Mr. Kalo about the reason for the stopping of premium payments and were advised by Mr. Kalo that the scheme had ceased after the teachers strike and had not ever recommenced. Mr. Porter continued to ask, both by correspondence and in person when Mr. Porter visited Vanuatu, about the scheme throughout 1995, 1996 and 1997 and was told by Mr. Kalo that the scheme had ended. Mr. Porter detailed in his evidence, comments made to him about claim problems with the scheme, which caused him to press Joseph Kalo about the scheme.

DISCUSSION ON THE EVIDENCE: CREDIBILITY AND FINDINGS

The evidence of Lui Pakoa, Masingiow and Marisan Nalo has not been challenged or contraverted in any way. Their evidence must be accepted as good evidence in this trial and I so find.

The only disputed fact in this trial is in relation to the payment of premiums by the accused into S.I.F.A.L. account.

The prosecution’s witness Mr. Porter gave evidence to the effect that S.I.F.A.L. did not receive the money (premiums) for the period 1^st January 1995 to 31^st December 1996.

The accused, Joseph Kalo, gave evidence that he paid the money corresponding to the premiums during the relevant period into the account of S.I.F.A.L.

The prosecution evidence (Porter) establishes the reconciliation of the account stopped in 1994. It is not disputed that the teachers went on strike in 1994 (evidence of Masingiow). The strike went on for a month. S.I.F.A.L. was informed by Mr. Kalo. So, after the strike, no money for premium were received, no deposits into the account and therefore, no reconciliation of accounts. The evidence establishes that the teachers returned to work. VTU paid subscription. Between January 1995 to December 1996, the deductions representing the premiums were made and delivered to the accused, Mr. Kalo.

Further, it is also established that the term life claim which Mr. Kalo should pay to individual teacher/member of V.T.U. were not paid and S.I.F.A.L. paid them all in 1997 (about 1,500,00 or 1,600,000 Vatu).

Mr. Porter, as the owner of the business, takes a close interest in the business of that Insurance Scheme. The insurance cannot survive if no premiums were paid. At no stage of the evidence either originally nor at his recall the question of payment of money was put to witness Porter as to whether it was untrue, challenged, nor wrong.

This is a matter for the defence counsel’s practical judgment as to how he framed the defence case and how he conducted the cross-examination of the prosecution witnesses, in particular witness Porter. It turns out that the evidence of witness Porter was not challenged by the accused.

In such circumstances, it can be inferred that the accused is taken to have accepted the evidence of Mr. Porter. This is so when the accused gave evidence himself on his own behalf and his evidence is assessed in the same way as the evidence of Mr. Porter for their credibility.

Mr. Kalo admitted in cross-examination to having lied on oath in an affidavit filed in the civil proceedings arising from the same factual matters as this prosecution. Mr. Kalo admitted he paid himself management fees of 250.000 Vatu whereas in the affidavit referred to earlier, he denied having done so. Mr. Kalo also admitted having consented to judgment in those civil proceedings for an amount that included a sum representing the V.T.U. Group Insurance Scheme deductions the subject of the counts in the information.

The accused, further, gave evidence that Mr. Porter intended to purchase Mr. Kalo’s business. Mr. Porter denied this. Mr. Porter said he never paid any agency anywhere as an underwriter. There are some innuendoes that failure to purchase the accused’s business will result in causing problem to Mr. Kalo. There is no proven facts before this Court in support and no inference can be drawn by this Court. This must be rejected.

The accused said he signed the consent judgment because he was threatened to be publicly exposed in the newspapers. He was concerned about his personal and business reputations so he signed the consent judgment.

I find the accused version of the facts difficult to believe. Further, at the time of the said threats, the accused had a lawyer. The evidence of Mr. Kalo on critical issues of facts, is not worthy of credit.

As to the amount of commissions, the prosecution says the accused’s commission is 15%. The accused says 20%. The exact amount is not fundamentally a relevant issue. It represents the total sum and the subscription fees to V.T.U. The case is that no single Vatu was paid to S.IF.A.L. between January 1995 to December 1996 by the accused, Joseph Kalo.

Based on these proven facts and admissions from the accused, it can be inferred that the accused having received the premium deductions in 1995 and 1996, had not paid them to S.I.F.A.L. within 30 days or at all and I so find.

THE LAW AND ITS APPLICATION

The defence raised time of the trial as an issue. The issue of time was not a relevant issue in this Court. There was no stay application made. The time frame was irrelevant.

The defence complained about the conduct of S.I.F.A.L. to delay the trial. The prosecution was brought by the Public Prosecutor but not S.I.F.A.L. Any alleged conduct by S.I.F.A.L. are not the Public Prosecutor’s.

The only issue, in this case, is under Section 32 of the Insurance Act [CAP 82].

Section 32 provides:

“A registered Insurance Agent,…who acts in negotiating or renewing a contract of insurance with an insurer and receives payment of the premium for such a contract from the insured, shall be guilty of an offence if he fails to pay the premiums over to the insurer within 30 days of the receipt by him of the premiums… less his commission and any other deductions to which by written consent of the insurer he is entitled…”

The trial is against Mr. Joseph Kalo operating an Insurance Agent in Vanuatu. The accused is required to comply with the terms of Section 32 of the Insurance Act [CAP 82]. The Act binds Mr. Kalo and his operation.

The case is that Mr. Kalo received premiums but failed to pay to the insurer within 30 days of the receipt of the premiums by him between 1^st January 1995 to 31^st December 1996.

The defence says that S.I.F.A.L. did not have a business licence to carry on business in Vanuatu. There is no business licence requirement for the S.I.F.A.L. under the Act. S.I.F.A.L., as an offshore insurer, operated through Mr. Joseph Kalo, as its agent in Vanuatu. S.I.F.A.L., as an international company, is covered under Section 10(1);(2) of the International Companies Act No.32 OF 1992. The defence’s submission on that point has no basis in law.

The defence further says that there was no contract of insurance between the insured and the insurer from January 1995 to December 1996. As such, S.I.F.A.L. is not entitled to receive any premiums from the V.T.U. at all. This is not a good defence and must be rejected. The evidence in the trial pointed to the contrary. An example of the evidence which is admitted by the accused is that the members of teachers authorised premium deductions from their salaries. The payment of any claims made by teachers under the insurance policy was made by cheque drawn in Australia or by cheque drawn on S.I.F.A. Account at the ANZ Bank but authorised in Australia. The V.T.U. group scheme operated this way from 1993. Further, after Mr. Kalo advised that V.T.U. scheme ceased, he did not settle term life insurance claims, which he should have paid. S.I.F.A.L. paid them all. This illustrates the existence and commitment of the contractual obligations between the insured and the insurer.

The defence says finally that there was no proper contractual agreement between the insurer and the accused. There is no requirement of a written contract under the Act and it is not an essential element of the offences charged against the accused to be proved by the prosecution.

The evidence in this trial is overwhelming against the accused, Joseph Kalo.

I find on the evidence before the Court that each and all essential elements of 46 counts of the information against the accused, Joseph Kalo, are proved beyond reasonable doubt.

VERDICT

I find the accused, Joseph Kalo, guilty on each and all 46 counts as charged in the information.

DATED at PORT-VILA, this 13^th DAY of MARCH, 2001

BY THE COURT

Vincent LUNABEK
Chief Justice