Papua New Guinea Law Reports - 1976
[1976] PNGLR 292
N55
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]
THE STATE
V
ASAOKA KOUJI OF RABAUL
Rabaul
Raine J
14 July 1976
CRIMINAL LAW - Particular offences - Falsification of accounts by servant with intent to defraud - “Intent to defraud” - Offence created only where employer defrauded - Criminal Code (Queensland, adopted) s. 441[cccxxx]1.
Section 441 of the Criminal Code (Queensland adopted) provides: that any person who being a clerk or servant, or being employed or acting in the capacity of clerk or servant, makes, with intent to defraud, any false entry in any book, document, or account, which belongs to or is in the possession of his employer, is guilty of a crime.
Held
(1)      The words “intent to defraud” in s. 441 mean intent to defraud the employer; they do not apply where someone other than the employer suffers loss as a result of falsification or false entries.
(2)      Accordingly, where the effect of the falsification, by a servant of an overseas company, of entries on tally sheets in respect of logging operations was to defraud the Department of State under the Forestry Act, an offence under s. 441 was not made out.
Counsel
KR Roddenby for the State
JA Griffin for the accused
14 July 1976
RAINE J:  The accused, a native of Japan, was working at Bialla for a Japanese logging company. He has been charged in an indictment containing twelve counts, the first three of which counts are pursuant to s. 441 (a) of the old Criminal Code, the remaining charges are laid under s. 441 (b). The alleged crimes involved either the falsification of a tally sheet, or sheets, or false entries in the same.
Mr. Roddenby made a careful opening address. This followed my suggestion that the important legal point indicated by Mr. Griffin of counsel for the accused should be decided after the opening address concluded. The point taken is a fairly short one, and it seemed to me highly desirable that time should not be wasted on such a terribly busy circuit as is this one, and could be decided at the conclusion of the opening, rather than waiting for two or three days for the evidence to be led, and a no case-to-answer submission made.
In September, 1974 the accused was employed by a corporation, Shin Asahigawa, as a servant. In the course of his employment he was required to measure logs extracted from the area where his employer was conducting logging operations. These logs were measured by a team which, using a tape, measured the length and girth of each log. When the measurements were taken a record was made in a tally sheet. This was compiled by the first witness named on the backsheet of the indictment. The office routine was that the tally sheet then went to the company office on the site, where a form required by the Forestry Act was prepared by a clerk in the office, using the information contained in the tally sheet. This form is known as an FD66, and it records the date of the measurement, the species of wood, the centre girth, and the length. The office clerk, supplied with this, was then able to estimate the gross content of each of the logs. I suppose this means their cubic content. This was important, because every month a return was sent, together with the FD66, to the Department of Forestry at Rabaul.
There the Department would check the information provided to it and would work out the amount of royalty required to be paid to the Government and, I think, to landowners as well. Something in the nature of a debit note was then sent to the company. By then, I am told, the logs would probably be in transit, or even have reached Japan. The company would then send a cheque or cash to the Government here, after, no doubt, checking the debit note against its own records.
Witness number 1 became suspicious of the accused, whom he noticed running his finger down the tape some distance, thereby reducing either the recorded girth or length of the log that he had helped to measure. The logs are large, it takes two men to do the job, unless, I suppose, one uses a drawing pin at one end of the tape. The witness was also suspicious because he noticed that the accused was starting to intercept him, and take the tally sheets himself to the company office. This was, as I understand it, unnecessary and unusual. Thus it was the witness started keeping independent tally sheets for his own edification, and with the help of these the accused was trapped, and it was found that, either by falsification, or by the making of false entries, almost every log recorded over the relevant period of time had been reduced in relation to its centre girth. In one case the reduction in girth was as great as sixteen inches, which, I imagine, would make a considerable difference in the royalty payment on the particular log.
It is agreed by counsel that this is not a case where it can be proved or suggested that the accused himself got anything out of the transaction at all, although I have a sneaking suspicion that he must have. The State is unable to show that the accused was in cahoots with his employer, and that he stood to obtain some sort of reward for helping the employer pay lesser sums in royalties. I say nothing as to this, but I rarely believe that people do things for nothing. Be this as it may. The only way in which the accused could have benefited financially was by entering into some sort of criminal conspiracy with his employer company, a conspiracy in which the employer promised to pay him a percentage of the amounts of royalties saved by dishonesty. There was no way in which the accused could have got his hands on any cash because, once the FD66 has been filled in, the accused was completely divorced from the subsequent transactions between the company and the Government Department. Actually, cash never seems to have been involved. It was a paper entry. Mr. Griffin conceded that Mr. Roddenby had opened the case correctly and fairly, and Mr. Roddenby agreed that there was no possibility that the State case could be put any higher than it was put in the opening address. I might add that I have never, in nearly six years on the Bench here, ruled on an opening, but I see no objection to such a course.
Mr. Griffin submits that the accused could not be convicted under s. 441 on these facts. Section 441 reads:
“441.   Fraudulent false accounting. — Any person who, being a clerk or servant, or being employed or acting in the capacity of a clerk or servant, does any of the acts following with intent to defraud, that is to say:
(a)      Destroys, alters, mutilates, or falsifies, any book, document, valuable security, or account, which belongs to or is in the possession of his employer, or has been received by him on account of his employer, or any entry in any such book, document, or account, or is privy to any such act; or
(b)      Makes or is privy to making any false entry in any such book, document, or account; or
(c)      Omits or is privy to omitting any material particular from any such book, document, or account; is guilty of a crime, and is liable to imprisonment with hard labour for seven years.”
(NOTE: In view of my later observations, the heading to Chapter XLII is not without significance.)
Mr. Griffin’s basic argument is that s. 441 is a section designed to catch and punish people who, whilst it cannot be proved against them that they actually stole money from their employer, nevertheless can be shown to have made false entries with clear intent to defraud such employer. Counsel submits that this is not a section where someone who just happens to be a clerk or a servant does something fraudulent in relation to a person who is not his employer, in this case the Department of State involved, or the State itself. Mr. Roddenby does not agree with this argument and says that it is weakened by the effect of s. 643. It reads:
“643.   Intention to defraud. — On the trial of a person charged with any offence of which an intent to injure or deceive or defraud, or an intent to enable another person to deceive or defraud, is an element, it is not necessary to prove an intent to injure or deceive or defraud any particular person, or an intent to enable any particular person to deceive or defraud any particular person.”
Neither counsel, and as I have said, both are most experienced, have been able to cite authority which is really quite directly in point. I do not say this in the least bit critically of counsel, because it became quite apparent that they have worked hard on the case.
I must say that I was attracted from the start with Mr. Griffin’s argument. If s. 441 is to be construed, as it were, at large, then I ask why was it necessary to insert the words “a clerk or servant, or being employed or acting in the capacity of a clerk or servant?” In addition, one sees in s. 441 (a) the words “which belongs to or is in the possession of his employer, or has been received by him on account of his employer.” Section 441 (b) does not actually contain the word “employed” but these words in (a) are perpetuated by the use of the word “such”.
Further support for Mr. Griffin’s argument is obtained when one looks at the history of the legislation in England, dealing with the falsification of accounts by clerks and servants. The matter is dealt with succinctly in Russell on Crime, 12th ed., p. 1128:
“FALSIFICATION of accounts by clerks or servants was not touched by the common law at all and, except in so far as it might fall within the provisions of the large number of statutes enacted to deal with forgeries, was not comprehensively dealt with by statute until 1875 when the Falsification of Accounts Act, 1875 (commonly known as Lopes’ Act), was enacted. This (as amended by the Criminal Justice Act, 1948) provides,
Section 1, ‘If any clerk, officer, or servant, or any person employed or acting in the capacity of a clerk, officer, or servant, shall wilfully and with intent to defraud, destroy, alter, mutilate, or falsify any book, paper, writing, valuable security, or account which belongs to or is in the possession of his employer, or has been received by him for or on behalf of his employer, or shall wilfully and with intent to defraud, make, or concur in making any false entry in, or omit or alter, or concur in omitting or altering, any material particular from or in any such book, or any document, or account, then in every such case the person so offending shall be guilty of a misdemeanour, and be liable to be kept in (imprisonment) for a term not exceeding seven years ...’
Section 3, ‘This Act shall be read as one with the Larceny Act, 1861.’
The above Act filled a gap in the law, which previously could not reach dishonest clerks or servants whose actual dishonest appropriation (amounting to larceny or embezzlement) of the specific money could not be proved, but who had made a false, statement or entry in the proper book or document of the master in respect of such money. It must be noted, however, that should his book or other account state correctly the amount of money which he ought to have in hand then he has not committed the offence specified in the Act even though he does not have that sum of money available for production; the Act is solely concerned with the falsification of the account.”
The section referred to in Russell was re-enacted in a rather similar form in 1948, but since 1968 the situation has completely changed, since the far-reaching Theft Act of 1968.
All of the cases cited by counsel indicate to me that there was always a nexus between the employee and the employer in relation to the alteration or falsification of books cases before 1968. The cases cited in argument all point to an employer/employee situation, and, in my opinion, s. 441, and similar sections in other statutes, many of which are cited by Professor Howard, Australian Criminal Law, 2nd ed., p. 191, are designed to attack employees who make false entries, or who falsify documents to hide defalcations or to hide schemes that they have hatched for their own benefit, to the detriment of their employers, but not, except since 1968 in England, to the detriment of others.
Mr. Griffin also referred to the significant change made by the English Theft Act in 1968. It specifically provides for the sort of factual situation that arises in this case, providing that the offence is complete even when the offender obtains no apparent gain for himself. Mr. Griffin seeks to take some comfort from this, but it is a United Kingdom statute to which he refers, and not a statute enacted by the Parliament here. To my mind the most comfort that Mr. Griffin can obtain from the alteration of the law in England in 1968 is that it is a recognition by Westminster that the Falsification of Accounts Act, 1875 was only directed at a situation where an employee falsified or made false entries in his employer’s books, with the object of gaining some money or advantage thereby from such employer. This is no more than persuasive.
I turn now to s. 643. In my opinion this section does not assist Mr. Roddenby’s argument. I think that Mr. Griffin’s submission is correct, and that the section is designed for quite a different situation than we have here. In my opinion the sort of situations contemplated by s. 643 are, for instance, the chain letter situation, where the accused does not know who is going to end up getting the letter, or the case of the quack doctor addressing a crowd of people and urging them to buy his fancy cancer cure. The quack does not know who is going to accept his invitation, but he does his best to persuade somebody to do so. I believe that these are the sort of situations that are envisaged by s. 643.
One final matter referred to by counsel was the fact that there seemed to be no section in the Criminal Code that allowed the State to strike at people like the present accused. Mr. Griffin suggested that the State could have instituted proceedings under s. 22 of the Forestry Act 1966. It is not necessary for me to decide this question but I incline to the view that s. 22 could not have been availed of. However, the submission, right or wrong, was, with respect, something of a sop, at least, so I imagine. I think that Mr. Griffin did not care to leave me with a feeling that there was no remedy.
In my opinion, the facts here do not permit charges to be brought against the accused under s. 441. Therefore, I find the accused not guilty on each of the charges preferred against him and he is discharged.
NOTE
Since delivering this extemporary judgment I have been referred to a decision of the Court of Criminal Appeal in Queensland, namely R. v. Jackson[cccxxxi]2. The December loose part had not arrived here when I gave judgment. The learned judges in R. v. Jackson[cccxxxii]3 came to a different conclusion than I[cccxxxiii]4. However, with great respect to them, I am unrepentant.
Verdict of not guilty.
Solicitor for the state: L. W. Roberts-Smith, Public Prosecutor.
Solicitors for the accused: Craig Kirke & Wright.

[cccxxx]infra p. 294.
[cccxxxi][1975] Q.W.N.
[cccxxxii][1975] Q.W.N.
[cccxxxiii]Ed note. In Jackson v. The Queen (1976) 50 A.L.J.R. 544, Jacobs J. queried whether the words “intent to defraud” in s. 441 mean only intent to defraud the employer or person acting for or in his interest.