Havila Kavo v The State (2015) SC1450

• Jurisdiction: Papua New Guinea
• Judge: Kirriwom J, Cannings J, Kassman J
• Judgment Date: 21 August 2015
• Citation: (2015) SC1450
• Docket Number: SCRA No 35 of 2014
• Court: Supreme Court
• Year: 2015
• Judgement Number: SC1450

Full Title: SCRA No 35 of 2014; Havila Kavo v The State (2015) SC1450

Supreme Court: Kirriwom J, Cannings J, Kassman J

Judgment Delivered: 21 August 2015

SC1450

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCRA NO 35 OF 2014

HAVILA KAVO

Appellant

V

THE STATE

Respondent

Waigani: Kirriwom J, Cannings J, Kassman J

2015: 30th April, 21st August

CRIMINAL LAW – appeals – appeal against conviction for misappropriation, Criminal Code, Section 383A(1)(a) – elements of the offence – whether government funds were trust funds, subject to conditions – whether appellant had dishonest intent.

The appellant appealed to the Supreme Court against the decision of the National Court to convict him of one count of misappropriation under Section 383A(1)(a) (misappropriation of property) of the Criminal Code, which states:

A person who dishonestly applies to his own use ... property belonging to another ... is guilty of the crime of misappropriation of property.

He was a provincial governor and received K131, 338.00 from the provincial government’s operating account to pay his outstanding allowances. It was agreed that he was owed that money by the provincial government, but the Public Prosecutor successfully argued at the trial that the sum of K10 million deposited in the operating account just before the money was withdrawn to pay the appellant’s allowances came from a State trust account set up specifically for the purpose of funding development projects in the appellant’s province and that, the appellant acted dishonestly in getting the money and applying it to his own use when he ought to have known that it was wrong to do so. The National Court held that the appellant, who was a party to the decision of the provincial executive council to pay him from the provincial operating account, had applied to his own use K131, 338.00, the property of the State (as it remained State property as it was never applied to the purpose for which it was required to be applied) and had done so dishonestly and accordingly was guilty of misappropriation. The appellant argued that the National Court erred in fact and law in two ways: (1) finding that the sum of K10 million deposited into the provincial government operating account was subject to trust obligations requiring that it only be applied to development projects, and consequently finding that the sum of K131,338.00 applied by the appellant was the property of the State; and (2) not making a definitive finding of dishonesty against the appellant and consequently not being satisfied of an essential element of the offence. The appellant argued that his conviction should be quashed and a verdict of not guilty entered.

Held:

(1) The elements of an offence under Section 383A(1)(a) are that a person:

(i) applies;

(ii) to his own use;

(iii) property;

(iv) belonging to another person;

(v) dishonestly.

(2) Elements (i), (ii) and (iii) were non-contentious. Elements (iv) and (v) were contentious and the appellant was convicted as the National Court was satisfied as to each of them beyond reasonable doubt.

(3) The National Court erred in fact and law in being satisfied of element (iv) as there was unequivocal and largely uncontradicted evidence from the person who was Secretary for Finance in the National Government at the relevant time that, despite being initially held in and later withdrawn from an account styled as a trust account that carried restrictions as to the purposes to which money in that account could be applied, the K10 million was in fact drawn from a different fund and was allocated by the National Government as an untied grant to the provincial government. This meant that when money was drawn against that K10 million it was not subject to the trust obligations pertaining to other money held in the trust account. It could lawfully be applied to normal provincial government operating expenses, including payment of the appellant’s allowances. Once it was applied to such expenses, it ceased to be the property of the State. When the appellant “applied””, “to his own use”, “that property” (elements (i), (ii) and (iii)), it was not the “property of another”, as it was no longer the State’s property. Therefore element (iv) was not established. Ground (1) of the appeal was upheld.

(4) Element (v), which requires the court to be satisfied that the accused applied the property “dishonestly” to his own (or another’s) use, requires a determination of the state of mind of the accused at the time of application of the property. It is a question of fact for the Trial Judge to determine, based on the facts of the case and according to the ordinary standards of reasonable and honest people (Brian Kindi Lawi v The State [1987] PNGLR 183). A subjective test must be applied: it must be proven beyond reasonable doubt that the accused in fact knew that he was acting dishonestly. However, in applying that test, an objective standard can be taken into account: it might reasonably be inferred that the accused must in fact have known that he was acting dishonestly. It is preferable, but not as a matter of law necessary, that a trial Judge make an express finding that the court is satisfied beyond reasonable doubt that the accused in fact knew that he was acting dishonestly. It is sufficient if the reasons for the trial Judge’s decision disclose that the court has applied the subjective test and arrived at a reasonable, albeit tacit, conclusion of fact that the accused acted dishonestly. Here the trial Judge applied the correct test and found that the accused should have known that the K131,338.00 was drawn from special development project funds and tacitly and sufficiently, if not expressly, found that the appellant acted dishonestly. The trial Judge did not fail to make a definitive finding of dishonesty. Ground (2) of the appeal was dismissed.

(5) Though only one of the two grounds of appeal was upheld, the error was significant as it concerned an essential element of the offence. The error, for the purposes of Section 23 of the Supreme Court Act, rendered the verdict unsafe and unsatisfactory and meant that the decision of the National Court was based on a wrong decision of law. Furthermore a miscarriage of justice occurred. Therefore the appeal was allowed.

(6) As to the consequences of allowing the appeal, a new trial would, in light of the Supreme Court’s finding that the sum of K131,338.00 was not the property of the State, have no practical utility. Therefore a verdict of not guilty was entered under Section 28 of the Supreme Court Act.

Cases cited

The following cases are cited in the judgment:

Brian Kindi Lawi v The State [1987] PNGLR 183

Havila Kavo v The State SC App No 23 of 2014, 23.12.14, unreported

James Singo v The State (2002) SC700

John Beng v The State [1977] PNGLR 115

The State v Andrew Ludwig Posai (2004) N2618

The State v Francis Natuwohala Laumadava [1994] PNGLR 291

The State v Francis Potape (2014) N5773

The State v Gabriel Ramoi [1993] PNGLR 390

The State v Graham Yotchi Wyborn (2005) N2847

The State v Mark Mauludu (2014) N5566

The State v Nathan Kovoho (2005) N2810)

The State v Steven Ulaias (2006) N3033

APPEAL

This was an appeal against conviction for misappropriation.

Counsel

I Molloy & S Ketan, for the Appellant

C Sambua, for the Respondent

21st August, 2015

1. BY THE COURT: Havila Kavo was convicted by the National Court of one count of misappropriation and sentenced to three years imprisonment. He appeals against his conviction.

2. He was indicted on a charge of dishonestly applying to his own use the sum of K131, 338.00, the property of the Independent State of Papua New Guinea. He was convicted, as charged, under Section 383A (1)(a) (misappropriation of property) of the Criminal Code, which states:

A person who dishonestly applies to his own use ... property belonging to another ... is guilty of the crime of misappropriation of property.

3. He was the Governor of Gulf Province when in February 2010 he received that sum of K131,338.00 from the provincial government’s operating account to pay his outstanding allowances, which had accrued over several years and was payable to him by the provincial government pursuant to determinations of the Salaries and Remuneration Commission. It was an undisputed fact at the trial that he was lawfully entitled to that sum of K131,338.00 and that he was owed that sum by the provincial government.

THE GUILTY VERDICT

4. The Public Prosecutor presented evidence at the trial showing that:

· not long before the appellant received the sum of K131,338.00, the provincial government operating account had a debit balance of K179.05,

· what enabled the sum of K131,338.00 to be drawn against the provincial government operating account was the deposit into it by the National Government of the sum of K10 million,

· the sum of K10 million was transferred from a State trust account styled as “Petroleum Outstanding MOA Commitment Trust Account”,

· that trust account, operated at Bank South Pacific and governed by a trust instrument, was established under the Public Finances...