King v. Godamune.
[In The Privy Council.]
1932 Present: Lord Atkin, Lord Tomlin, and Lord Macmillan.
KING v. GODAMUNE.
Criminal misappropriation—Trust property—Payment of interest to trusteepending settlement of action to recover trust money—Appropriation ofpayment—Ownership of property misappropriated—Duty. of Judge todecide on meaning and construction of documents—Misdirection—Nesessity for a full note of Judge’s summing—Criminal Procedure Code,ss. 244 (I) and 355 (I) and (2).
The appellant and another were the trustees of the marriage settlementof Ensor Harris, the trust property consisting of a primary mortgagefor Rs. 40,000 upon an estate called Belmont. The mortgage had beencreated in 1920 by one B as part of a transaction by which he hadpurchased the estate from Harris. Under the Settlement Harris wasthe beneficiary entitled to the income of the trust property. On March14, 1927, the interest on the mortgage was in arrear to the extent ofRs. 23,000, and the appellant and his co-trustee began an hypothecaryaction to enforce the mortgage.
The defendants to the action were B, and certain other personscalled a Syndicate who were joined as defendants because they claimedan interest in the equity of redemption of Belmont through B, suchclaim being the subject matter of then pending litigation between Band themselves.
The Syndicate were anxious to obtain a postponement of the hy-pothecary action in order that they might have an opportunity offirst clearing up the title as between themselves and B. Accordinglythey approached appellant and after negotiation entered into an agree-ment with him, the terms of which were embodied in a letter addressedto the appellant by their proctor.
The material parts of the letter were as follows: —
“ I understood from you that provided you were paid Rs. 10,000 onaccount accumulated interest, you would get the case to layby for one year, and that during that period the balanceinterest should be paid from time to time as my clients wereable. Further, you would undertake not to certify or recordany payments made- by my clients on account, should it becomenecessary for you to enforce writ for the recovery of the claim.If the amount realized by the sale of the property does notfetch the amount of the claim, then you could appropriate themoney paid by my clients towards the deficiency”.
Four payments were made to the appellant in terms of the letter.On March 28, 1928, the day on which the second payment was madea decree was entered in the hypothecary action by consent in favourof the plaintiffs for the full amount of the principal sum of Rs. 40,000,and the arrears of interest, without taking into account the sumsalready paid by the Syndicate to the appellant under the agreement.
The appellant was charged with criminal misappropriation of twosums of money” paid to him as interest alleged to be the property ofHarris.
Held, that.there was no evidence that the moneys were paid to theappellant as agent for Harris or that such moneys by reason of thepayment to* the appellant became Harris’ property.
8J. X. U 1G081 (4/52)
Delivered by LORD TOMLIN.—King v. Godamune.
Held, further, that it was the duty of the Judge to construe the letterand give the jury a direction in regard to its meaning.
In cases under section 355 (1) of the Criminal Procedure Code it isdesirable that there should be available for the tribunal deeding with. the reference a full note of the Judge’s summing up.
^ PPEAL from a judgment of the Supreme Court.
November 10, 1932. Delivered by Lord Tomlin.—
This is an appeal by special leave from a judgment and order of theSupreme Court of the Island of Ceylon delivered on March 3, 1931,whereby that Court by a majority answered adversely to the appellanta question of law reserved and referred for the decision of that Courtby Lyall-Grant J. under section 355 (1) of the Criminal ProcedureCode of Ceylon (Ordinance No. 15 of 1898) after the conviction andsentence of the appellant at a Session of the Supreme Court in its criminaljurisdiction for the Midland Circuit held at Kandy.
Section 355 (1) of the Criminal Procedure Code of Ceylon is as follows: —
“355 (1).—When any person has in a trial before a Judge of theSupreme Court acting in the exercise of its original criminal jurisdictionbeen convicted of an offence and sentenced, the Judge, if he thinks fit,may reserve and refer for the decision of a Court consisting of two ormore Judges any question of law which has arisen on the trial, statingin a case signed by him such question with the special circumstancesupon which the same shall have arisen.”
Sub-section (2) of the same section is in these terms : —
“If the Judge reserve any such question the person, convictedshall, pending the decision thereon, be remanded to prison or, if theJudge thinks fit, be admitted to bail, and the Supreme Court shall havepower to hear and finally determine such question and thereupon toreverse, affirm, or amend the judgment or to make such other order asjustice may require.”
At the close of the arguments before, their Lordships’ Board tljieirLordships were of opinion that the conclusion reached by the majorityof the Supreme Court was erroneous and that the conviction of theappellant ought to be quashed, and they intimated that they wouldhumbly advise His Majesty accordingly. The statement of the reasonsfor their decision was deferred.
Those reasons their Lordships now give.
The facts of the case so far as they are relevant to the matter underconsideration lie in a small compass.
At all material times the appellant and one W. R. Westland weretrustees of the marriage settlement of H. F. Ensor Harris, and the trustproperty consisted of or included a first mortgage for Rs. 40,000 uponan estate called Belmont.
The mortgage had been created in 1920, by one Boyagoda as part ofa transaction by which he had purchased the estate from Harris.
Under the settlement Harris was the beneficiary entitled to the incomeof the trust property.
Delivered by LORD TOMLIN.—King v. Godamune.
On March 14, 1927, the interest on the mortgage was in arrear to theextent of Rs. 23,000 and the appellant and his co-trustee began anhypothecary action (D. C. Kandy, 34,987) to enforce the mortgage.
The defendants to this action were Boyagoda and certain otherpersons, one of whom was named Peiris, and who are hereafter collectivelycalled the Syndicate.
The Syndicate were joined as defendants in the action because theyclaimed an interest in the equity of redemption of Belmont throughBoyagoda, such claim being the subject matter of then pending litigationbetween Boyagoda and themselves.V' – — •
The Syndicate were anxious to obtain a postponement of the hypothe-cary action in order that they might have an opportunity of firstclearing up the title as between themselves and Boyagoda.
Accordingly through their proctor, Cooke, they approached theappellant, and after negotiation entered into an agreement with him, theterms of which were embodied in a letter dated November 18, 1927,addressed to the appellant by Cooke.
The terms of the letter, which was marked “ Confidential, ” were,omitting formal parts, as follows : —
“ I understood from you at the interview you had with Mr. C. W.Peiris at my office some days ago that, provided you were paid Rs. 10,000on account accumulated interest, you would get the case to lay by forone. year and that during that period the balance interest should be paidfrom time to time as my clients were able. Further, that you wouldundertake not to certify or record any payments made by my clients onaccount, should it become necessary for you to enforce writ for therecovery of the claim. Of course, if the amount realized by the saleof the property does not fetch the amount of your claim, then youcould appropriate the moneys paid by my clients toward the deficiency,The reason for this, as explained to you, is that my clients do notwish Mr. Boyagoda or anyone else to profit at their expense, as themortgage was one that was executed by Boyagoda. On receivingyour confirmation of this I shall send you a cheque for the Rs. 10,009”.
At the time of this agreement the control of the hypothecary actionwas in the hands of the appellant in the absence elsewhere of his co-trustee Westland. At that time neither Westland nor Harris was toldof the agreement, and the appellant in his evidence said: —
“ If I gave time and the interest that accumulated was above thevalue of the land I thought in my position as a Trustee I would beliable to make good the deficit …. The monies paid to mewere payments to indemnify me against any risks I ran.”
Four payments were made to the appellant under the terms of theletter, namely : —
On November 26, 1927, Rs. 10,000.
On March 30, 1928, Rs. 5,000.
"3. -On August 28, 1928, Rs. 3,000.
4. On November 6, 1928, Rs. 5,000.
Delivered by LORD TOMLIN.—King v. Godamune.
It is to be observed that, on March 30, 1928, the day on which thesecond payment was made, a decree was taken in the hypothecaryaction by consent of all parties in favour of the plaintiffs for the fullamount of the principal sum of Rs. 40,000 and the arrears of interestwithout taking into account the sums then alreadyjsaid by the Syndicate •to the appellant under the agreement.
In November, 1928, the Syndicate had found someone who was willingto take an,-assignment of the benefit of the decree in the hypothecaryaction and were therefore not unnaturally desirous that the Rs. 23,000paid under the agreement between themselves and the appellant shouldpe certified as having been paid under the decree so as to reduce the'amount which the^aSsignee would be entitled to recover under thedecree, and on November 23, 1928, their proctor, Cooke, wrote to theplaintiff’s proctors asking that this should be done.
Westland, however, refused to assent to this course because theappellant had not accounted to him as his co-trustee or to Harris asbeneficiary entitled to the income of the marriage settlement trust forany part of the Rs. 23,000. The money had apparently been utilizedby the appellant in some way which made it difficult or impossible forhim immediately to produce it.
However, subsequently the plaintiffs’ proctors were authorized byboth Westland and Harris to assent to the sum of Rs. 23,000 beingcertified as paid in the hypothecary action and this was done on January21, 1929, on which date Harris wrote to the plaintiffs’ proctors a letterwhich, omitting formal parts, was in the following terms : —
“ With reference to the spm of. Rs. 23,000 paid to Mr. Godamune onaccount of interest, D. C. Kandy, 34,987, and for which the defendantsare now claiming credit, I beg to inform you that Mr. Godamune hassettled this matter with me as life rentor by transferring Lunuwillaestate in my favour. You can therefore credit the decree in the sumof Rs. 23,000 ”.'
The plaintiffs in the hypothecary action ultimately were paid orrecovered all that remained due to them under the decree after thepayment of Rs. 23,000 had been certified.
Subsequently, however, Harris, who had apparently taken a transferof the Lunuwilla estate from the appellant as security for the Rs. 23,000and by reason of deficiency of value or defect of title or otherwise wasunable to recover from the appellant the full amount of the Rs. 23,000,procured the launching of the prosecution out of which this appealarose.
The indictment was dated October 2, 1930, and as originally drawncontained seven counts, of which Nos. 1, 2, and 7 related to the firstpayment "made by the Syndicate to the appellant of Rs. 10,000, andwere withdrawn by the Crown apparently because any prosecution inrespect of that payment was out of time.
The remaining four counts, which were renumbered 1 to 4, relatedto the second and third payments and were as follows : —
“ (1) That on a date between March 30, 1928, and January 21,1929, at the place aforesaid, you did dishonestly misappropriate a sum
Delivered by LORD TOMLIN.—King v. Godamune.
of Rs. 5,000, the property of Mr. C. W. Peiris and others; and thatyou have thereby committed an offence punishable under section 38Sof the Ceylon Penal Code.
“ (2) That at the time andplacelastaforesaid,you did dishonestly
misappropriate a sum of Rs.5,000,thepropertyof Mr. H. C. Ensor
Harris; and that you have thereby committed an offence punishableunder section 386 of the Ceylon Penal Code.
“ (3) That on a date between August 28, 1928, and January 21, 1929,at the place aforesaid, you did dishonestly misappropriate a sum ofRs. 3,000, the property of Mr. C. W. Peiris and others, and that youhave thereby committed an offence punishable under section 386 ofthe Ceylon Penal Code.
“ (4) That at the time andplacelastaforesaid,you did dishonestly
misappropriate a sum of Rs.3,000,thepropertyof Mr. H. C. Ensor
Harris ; and that you have thereby committed an offence punishableunder section 386 of the Ceylon Penal Code ”.
By order of the Court the second and fourth of these counts wererespectively treated as alternative to the first and third of such counts.
On January 10, 1931, the jury found the appellant guilty on thesecond and fourth counts, namely, those which laid the property in thesums in question in Harris, and ’therefore inferentially acquitted himon the other alternative counts.
A sentence of rigorous imprisonment for one year on each count, thesentences to run concurrently, was pronounced, but a question of lawhaving arisen and been reserved, the appellant was admitted to bail.
On January 17, 1931, the learned trial Judge at the request of counselfor the appellant, stated a case for the Supreme Court under section355 (1) of the Criminal Procedure Code, reserving and referring for thedecision of the Supreme Court two questions of law which had arisenon the trial.
One question was subsequently abandoned by the appellant andneed not be considered. The other question was as follows: —
“ Was. there evidence upon which the jury could find that theproperty was the property of Harris ”?
On March 2, 1931, the Supreme Court by a majority (Macdonell C.J.and Dalton J.) answered the question in the affirmative and affirmedthe conviction and sentence. Garvin S.P.J. dissented, holding that’there was no evidence upon which the jury could have found affirmativelythat the property was the property of Harris.
It is to be noted that under the counts of this indictment the propertyin the case of each of the two sums was laid in' the Syndicate as the firstalternative and in Harris as the second alternative. The appellant hasbeen acquitted so far as the first alternative is concerned. If, therefore,there was no evidence upon which the jury could find that the propertywas in Harris, the only charge on which the appellant was tried and notacquitted falls to the ground and the proper result in the circumstancesof this case must, in their Lordships’ judgment, be the quashing of theconviction. The case is not one, therefore, in which it is necessary or pro-per for their Lordships to consider the extent of the powers of the Courtunder section 355 (2) of the Code of Criminal Procedure.
Delivered by LORD TOMLIN.—King v. Godamune.
Now, the meaning of the letter of November 18, 1927, is, in theirLordships’ opinion, the critical point in the case.
By section 244 (1) (b) of the Criminal Procedure Code it is the dutyof the Judge to decide upon the meaning and construction of alldocuments given in evidence at the trial.
The learned trial Judge did not construe the letter or give-to the juryany direction in regard to its meaning. On the contrary, he admittedevidence of intention from Peiris and Cooke, witnesses on the part ofthe prosecution, and from the appellant himself, evidence which, intheir Lordships’ judgment, was not admissable at all, and then left thematter to the jury at large with only such direction as is indicated inthe following passage from the case stated: —
“ I instructed the jury that if they found it proved that the moneyin question was paid to the accused as Mr. Harris’ agent for the purposeof being handed over to Mr. Harris and that the property had passedfrom Peiris and others, they might consider it to be the property ofMr. Harris from the time it reached the hands of the accused. Thatruling has been objected to and it is argued that there was no evidenceon which the jury could have been directed to find that it was theproperty of Mr. Harris ”.
,Now, the meaning of the letter regarded in the light of the surroundingcircumstances, of which evidence was properly admissible, is reasonablyclear. The money was to. be paid to the appellant in consideration ofhis getting the case postponed for one year. As he ran some personalrisk in doing that he was to be covered in this way, that if, on the ultimatesale, the proceeds.were insufficient to provide for capital and all arrearsof interest, he could make up the deficiency out of the monies paid tohim so far as they went. Except in this event the monies so paid werenot to go against what was owing on the mortgage at all, and if ultimatelysuch monies were not required to make up any deficiency they wouldhave had to be paid or accounted for to the Syndicate. The referencesin the . letter to “ accumulated interest ” and “ interest ” are nothingmore than references for the purpose of fixing a measure of the amountof money to be paid.
On this view of the letter it is plain, in their Lordships’ judgment,that it afforded no evidence that the monies were paid to the appellantas agent for Harris or that such monies by reason of the payment to theappellant became Harris’ property. On the contrary, it was an essentialfeature of. what was done that the arrangement should remain a privateone between the appellant and the Syndicate, of which no one else wasto know anything. If the appellant had paid the money over to Harrishe would clearly have committed a breach of his obligations to theSyndicate.
If any regard is to be paid to the evidence of Cooke and Peiris, calledon the part of the prosecution, it supported the view of the letter, whichhas been indicated, and no other view.
Cooke said, “ I would have objected to the accused having paid themoney to Mr. Harris …. Accused was to. hold the moneypending further instructions from me ” Peiris said, “ I still say that
Sahib v. Muthalip.
the terms of the arrangement were fully set out in Mr. Cooke’sletter …. He (i.e., the appellant) was to hold that money atour disposal …. I intended that he should not pay the moneyto Mr. Harris ”.
Reference has been already made to the appellant’s statement asto his understanding of the position, which accorded with that of Cookeand Peiris, the witnesses for the prosecution.
The fact that the Syndicate consented on March 30, 1928, to a decreein the hypothecary action against themselves for the full amount of theinterest in arrear without regard to the payments already made to theappellant under the letter of November 18, 1927, is a significant factimpossible to reconcile with the property in the monies paid havingpassed to Harris.
The prosecution did not suggest that the letter did not represent thereal bargain between the parties. The witnesses called by the prose-cution said it did. When once, therefore, the meaning of the letterhas been ascertained in the sense which, as already indicated, theirLordships think it bears, there remains nothing which could have beenplaced before the jury to found the conclusion that the monies paidto the appellant were paid to him as agent for or were otherwise theproperty of Harris, and the verdict of guilty upon the second and fourthcounts cannot be supported.
For these reasons their Lordships reached the conclusion which wasstated at the close of the arguments.
Before parting with the. case their Lordships desire to call attentionto the fact that they were at some inconvenience during the hearingof the appeal from not having had available any full note o-f the learnedJudge’s summing up. Their Lordships understand that no such notewas available to the Supreme Court. Their Lordships cannot butthink that in cases under section 355 (1) of the Criminal Procedure Codeit is desirable that there should be available for the tribunal dealingwith the reference a full note of the Judge’s summing up.
KING v. GODAMUNE