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Fiji Independent Commission Against Corruption v Vocea [2010] FJHC 477; HAC129.2009 (26 October 2010)

IN THE HIGH COURT OF FIJI
AT SUVA
CRIMINAL JURISDICTION

Criminal Case No: HAC129 of 2009

FIJI INDEPENDENT COMMISSION AGAINST CORRUPTION

V

ANASA VOCEA

Hearing: 22 & 23 October 2010
Ruling: 26 October 2010

Counsel: Mr. V. Perera & Ms E. Leweni for FICAC
Mr. B. Lateef & Mr. P. Yaqona for Accused

RULING ON NO CASE TO ANSWER

[1] After the close of case for the prosecution, counsel for the defence submits that there is no case for the Accused to answer.

[2] A no case to answer application is governed by section 231(1) of the Criminal Procedure Decree. Section 231(1) provides:

"When the evidence of the witnesses for the prosecution has been concluded, and after hearing (if necessary) any arguments which the prosecution or the defence may desire to submit, the court shall record a finding of not guilty if it considers that there is no evidence that the accused person (or any one of several accused) committed the offence."

[3] Section 231(1) is in identical terms with its predecessor, that is, section 293(1) of the Criminal Procedure Code. The test is that there must be some relevant and admissible evidence, direct or circumstantial, touching on all the elements of the offence. Matters of the credibility and weight of the evidence are not within the province of the judge at this stage of the trial (Sisa Kalisoqo v. State Crim. App. No. 52 of 1984, State v. Mosese Tuisawau Crim. A.R. No. 14 of 1990).

[4] The Accused is charged with eight counts of fraudulent conversion and eight counts of false declaration. Except for the dates and amounts, same particulars are alleged in the charges. The counts charging fraudulent conversion allege that the Accused being entrusted with money paid to him as Director's Fees from Pacific Forum Line (NZ) Limited, in order that he may pay it into the Ministry of Finance, he instead fraudulently converted the said Director's Fees to his own benefit.

[5] The false declaration counts allege that the Accused knowingly and wilfully made a false declaration in a Fiji Islands Revenue & Customs Authority Form by omitting to declare the income he earned as Director's Fees from Pacific Forum Line (NZ) Limited.

[6] There is no doubt that the offence of false declaration is an alternative to the offence of fraudulent conversion, albeit, the Information does not expressly state that the charges are in alternative. The failure to charge the two offences in alternative is not necessarily fatal to the prosecution. Any prejudice that may arise to the Accused due to the prosecution's failure to expressly state that the charges are in alternative can be cured by appropriate direction to the assessors to treat the offences in alternative and reach an opinion on either one of the offence.

[7] The offence of fraudulent conversion that the Accused is charged, is created by section 279(1)(c)(i) of the Penal Code. Section 279(1)(c)(i) reads:

"Any person who –

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 or any proceeds thereof;

is guilty of a misdemeanor, ...."

[8] The offence of false declaration is defined by section 121(b) of the Penal Code as follows:

"Any person who knowingly and willfully makes (otherwise than on oath) a statement false in a material particular and the statement is made –

in an abstract, account, balance sheet, book, certificate, declaration, entry, estimate, inventory, notice, report, return or other document which he is authorized or required to make, attest or verify by any Act for the time being in force;

is guilty of a misdemeanor."

[9] The offence of fraudulent conversion has three essential elements. The elements were succinctly expressed by Hallett J in R v. Boyce 40 Cr. Ap. R. 62 at p63:

"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."

[10] Both counsel filed detailed submissions. I do not find it necessary to outline every submission of counsel. For the purpose of this application, I summarize and highlight those submissions which have some bearing on the issues.

[11] Counsel for the defence submits that there is no evidence of entrustment of the funds by the paying entity on the Accused to pay it to the Government of Fiji. The charges allege that the Director's Fees were paid by Pacific Forum Line (NZ) Limited, while the evidence is that the fees were paid by Pacific Forum Line Limited. These are two separate legal entities, the former being a subsidiary of the latter.

[12] In my view the wrong company name in the charges is not a material defect. I cannot see how the defence was misled by the error. The entity from which the Accused received funds is not an essential element of the offence of fraudulent conversion. The crucial elements are that the Accused was entrusted with the funds for a particular purpose and that he fraudulently used it for his own purpose. These elements are alleged in the charges.

[13] Similarly, as regards the false declaration charges, the source of the Accused's income is not a material ingredient. The crucial ingredients are that the Accused knowingly and willingly made a false declaration by omitting to disclose his true income.

[14] In any event, the charges can be amended under section 214(2) of the Criminal Procedure Decree so that the particulars conform to the evidence led at the trial. I am satisfied that no injustice will be caused to the Accused if this amendment is made. I direct that the reference to the word (NZ) to the name of the company Pacific Forum Line Limited is to be deleted from the charges in conformity with the evidence.

[15] Pacific Forum Line (PFL) Limited is a limited liability company. PFL Limited is into shipping business and the objective of the company is to make profit. The shareholders of PFL Limited are the governments of twelve regional countries, including the Government of Fiji. PFL Limited is run by a Board of Directors. The Directors are appointed under Articles of Association of PFL Limited (D15). A Director is appointed by each shareholder and he or she can be removed by giving written notice to PFL Limited by the shareholder. The Articles of Association allows the Director to be appointed from both the public and the private sector. The Articles of Association allows payment of remuneration to the Directors for their services to the Company. The remuneration is paid as Director's Fees.

[16] Counsel for the defence submits that the Director's Fees paid to the Accused were his entitlement under the Articles of Association of PFL Limited or at least the Accused honestly believed it was his lawful entitlement. Counsel for the defence further submits that after the Accused was paid Director's Fees by PFL Limited, there is no evidence that he had applied the funds for fraudulent use.

[17] Counsel for the prosecution submits that the Accused received the Director's Fees in his capacity as a public servant of the Government of Fiji. He was appointed to the Board of Directors of PFL Limited in his capacity as a public official and not in a private capacity. The Government of Fiji was a shareholder in PFL Limited. When the Accused attended meetings of PFL Board of Directors he was representing the Government of Fiji. The Accused was in a fiduciary relationship with the Government of Fiji and when he received Director's Fees he had a legal duty under the Public Service Commission General Orders to return the funds to the Government of Fiji. Counsel submits that instead of returning the funds to the Government of Fiji, the Accused admits that he cashed the cheques he received from PFL Limited as Director's Fees and deposited the funds into his personal bank account in New Zealand.

[18] Counsel for the defence relies on the decision of the High Court of Australia in Stephens v. The Queen [1978] HCA 35; (1978) 139 CLR 315, for the principles to be applied in determining the issues. That case involved a charge of fraudulent conversion under identical legislation. The accused received deposits under building contracts and it was alleged that instead of applying the money in accordance with the terms of those building contracts he fraudulently converted it to his own use. The question of whether the deposit moneys had been entrusted to the accused for that purpose depended entirely upon the construction of the contract document under which it had been paid.

[19] The principles to be applied are expressed in the following extracts from the majority decision delivered by Gibbs J:

"If the accused has obtained or assumed control of the property of another under circumstances whereby he becomes entrusted, and he fraudulently converts it, he commits an offence against the section." (page 332)

"It is accepted that there can only be an offence under this subsection if there was a fiduciary element in the relationship of the accused person to the property alleged to have been fraudulently converted by him." (page 333)

"One of the ordinary meanings of the word "entrust" is "to confide the care and disposal of" (see Shorter Oxford English Dictionary) and it is in that sense that the word is used in the section. To bring the case within the section, the property must have been entrusted to the accused either for safekeeping or to be applied, paid or delivered for a purpose or to a particular person. In other words it must have been earmarked for certain purposes which are not the purposes of the accused ... It is necessary to consider the terms on which the property was received. If money were given to the accused on terms that he might use it as he wished, but must later return it (for example if an ordinary loan were made to the accused) the case would not be within the section." (page 333)

"Professor Smith in an article "The Scope of Fraudulent Conversion" [1961] Crim Law Review 797, at p.800 suggests the following test where the ownership in money is transferred:

"Was the transferee permitted, under the terms of the contract, to use the money as he thought fit; or was he obliged to apply it in a particular way or to retain an equivalent sum, either in his possession or in a bank? Only in the latter event can the transferee commit fraudulent conversion."

This seems to be a practical test to apply." (page 334)

[20] The majority recognized that every case must depend on its own facts. They held that whether or not there was an "entrusting" depended upon the construction of the written contract. That contract referred to the deposit paid as "funds held in trust" and provided that the accused was not authorized to use the funds until finance for the house had been approved. They were then to be used for the purposes of the contract. The funds were earmarked for that purpose and that was an entrustment. The finance was never approved and the accused therefore fraudulently converted these funds when he used them for his own purposes.

[21] The strong minority decision delivered by Barwick CJ adopted a slightly different approach to this issue. It held that the word "entrusted" contemplates money being paid to another on terms that the money remains the property of the payer at law or in equity and that it shall be applied to some specific and specified purpose. It is a fiduciary relationship because the money has never become the property of the recipient. The test of entrustment "is whether or not the common intention of the parties was that the money handed over should remain the property of the payer" (page 323). It was considered that a proper construction of the contract "did not evince a mutual intention that the deposit moneys remain the property of the owners" (page 330). It merely created a debtor and creditor relationship. There was therefore no entrustment and no offence of fraudulent conversion committed.

[22] The judgments in Stephens v. The Queen (supra) provide a very helpful review of the earlier decisions and the principles to be applied in cases of fraudulent conversion. The two different approaches to the interpretation of "entrustment" are very enlightening but the decision of the majority is the more persuasive authority.

[23] In my judgment the words "entrustment" and "purpose" as used in section 279(1)(c)(i) of the Penal Code are intrinsically related. There must be a mutual purpose for which money or property is handed over that creates a fiduciary relationship between the recipient and that money or property. It is that fiduciary element which makes the handing over of the money or property an entrustment. The recipient is not free to do whatever he wishes with the money or property. The use of it for a different purpose would be a breach of the recipient's fiduciary duty in relation to that property. The purpose must, of course, be one of the purposes defined in Section 279(1)(c)(i).

[24] The primary fact that is not in dispute is that the Accused was appointed as a Director to PFL Limited Board by a Cabinet Minister in Government of Fiji. At the time of the appointment, the Accused was holding a senior position as the Permanent Secretary for the Ministry for Works and Transport. There is evidence for consideration that he attended the Board meetings of PFL Limited in his capacity as a public official of the Government of Fiji because he was being remunerated by his employer as Permanent Secretary for the period he attended the meetings. It therefore follows that when he received an additional remuneration, the Director's Fees, while being paid a government salary at the same time, he would have been legally bound by the Public Service General Orders that required that any additional remuneration to be paid into Government revenue. It is the official position of the Accused in the public service that created the fiduciary relationship with his employer. When he was paid fees as remuneration in addition to his government salary when performing an official duty, the question remains whether the fees which were entrusted to him were to be paid into Government revenue. The evidence is that from 2000 to 2007 the Accused cashed the cheques he received from PFL Limited as Director's Fees and then put the funds into his personal bank account in New Zealand. There is evidence available that the Accused never paid those funds into Government revenue when he returned home from his official duty abroad. On the evidence, it is open to be concluded that effective conversion took place in Fiji although it began in New Zealand.

[25] There is evidence that when the Accused filed his income tax returns he did not disclose the remuneration he received as Director's Fees from PHL Limited to Fiji Islands Revenue and Customs Authority until 2010 when he filed amended returns after such procedure was permitted under a new law. There is also evidence that the Accused has returned these same Director's Fees which he had received from PFL Limited to the Company. The first payment was made on 21 0ctober 2008 in an amount of $100,000.00 (D18). The second payment was made on 4 November 2009 in an amount of $56,815.00 (D19).

[26] I find that there is available relevant and admissible evidence on all the counts and that there is jurisdiction to try the offences. The intention, knowledge and belief of the Accused are however matters of inference for the assessors after considering the whole of the evidence.

[27] The Accused therefore has a case to answer.

Daniel Goundar
JUDGE

At Suva
26 October 2010

Solicitors:
Office of Fiji Independent Commission Against Corruption for Prosecution
Office of Messrs. Lateef & Lateef for Accused