Morgan v Babcock and Wilcox Limited [1929] HCA 25

Morgan v Babcock and Wilcox Limited [1929] HCA 25 - HCA 1929 case summary — Zoe

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information of William Morgan, a detective sergeant of police, under the provisions of the Secret Commissions Prohibition Act 1919 (N.S.W.) for that it did at Sydney in the State of New South Wales corruptly give to Silas Young Maling (see R. v. Gates; Ex parte Maling (1)), then being an agent, within the meaning of the Secret Commis- sions Prohibition Act 1919, of the Municipal Council of Sydney, a valuable consideration, to wit, the sum of £10,600, as a reward for the said agent, Silas Young Maling, having done an act in relation to the affairs of his said principal, the Municipal Council of Sydney, to wit, for having recommended his said principal to accept a certain ofler made by Babcock & Wilcox Ltd. to his said principal for and in connection with certain plant for the Bunnerong Power Station. The prosecution was commenced on 11th July 1928. At the hearing before the magistrate in December 1928, Arthur James Arnot, the attorney and general manager for Babcock & Wilcox Ltd. in Australia and Australasia, gave evidence. He stated that after various interviews with Maling early in 1926, the latter told him that "we would have to pay £10,000 if we wanted to secure the order," and indicated that the money was to go to certain aldermen. Arnot protested but ultimately said to Maling : " I will have to recommend to my managing director or directors to pay the blackmail." Matters were in this position when the tenders for the plant were dealt with and that of Babcock & Wilcox Ltd. accepted. After the contract was signed Arnot told Maling that he would have nothing to do with the payment, that Maling would have to nominate someone to receive it, and that he would pass the name submitted on to his managing director, Sir James Kemnal. Maling said he would think the matter over and let Arnot know later. It was eventually arranged by Maling that the money should be paid into the account of Francis Buckle at the head office, Sydney, of the English, Scottish & Australian Bank. This arrangement was communicated by Maling to Arnot, the former at the same time telling Arnot that he (Maling) would want £600 more for expenses. Arnot agreed to the extra payment - thus bringing the amount to be paid to the credit of Buckle's account to £10,600. A letter was then written by Arnot

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anal The letter was in manuscript, probably marked " confidential," ai Lp. - _ was despatched towards the end of July or the beginning of Au "1926, but there was no record of it on the Company's files T Arnot stated in evidence that matters affecting the Company which he did not wish to become public property, he communicated to James Kemnal marked " Private" or "Confidential." The off of Sir James Kemnal was at the head office of Babcock & Wile' Ltd., London ; he occupied the managing director's office, and A directed his communications there. Early in September 1926 account of Buckle in the bank named was credited with the sum of £10,600, and the whole of that amount was subsequently transfe to Maling. A notice to produce the letter referred to by Arnot we served on Babcock & Wilcox Ltd., but, the notice not having complied with, secondary evidence of the contents of the letter wi admitted. The magistrate convicted Babcock & Wilcox Ltd., fined it £1,000, and ordered it to pay to the Municipal Council of Sydne the sum of £10,600. a The Company moved in the Supreme Court for a rule nisi a writ of prohibition on (inter alia) the following grounds: (1) there was no evidence of any act in contravention of the Commissions Prohibition Act 1919 and constituting the o charged committed by Babcock & Wilcox Ltd. within the jurisdiction of the State of New South Wales; (2) that there was no eviden that Babcock & Wilcox Ltd. authorized the payment of the £10,600, or knew of it at the time it was made ; (3) that, on the facts gi in evidence, there was no evidence of the commission of any constituting the offence charged by any person for whose act Babeock & Wilcox Ltd. was criminally responsible; (4) that there was evidence that the prosecution was commenced within the ti limited by law in that behalf; (5) that the magistrate was in error in admitting in evidence confidential communications between Ammo and Sir James Kemnal, two officers of Babcock & Wilcox Ltd. (6) that the magistrate was in error in admitting evidence by th

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The first question to be decided is whether secondary evid e or any evidence, of the contents of this letter was admissible. Th contents of the letter were clearly relevant because not only wa Kemnal's knowledge of the facts which the letter stated mater upon the issue of corruption, but the request and instruction Ww] the letter contained were part of the circumstances tending to sh payment by Kemnal. Whether secondary evidence was a prope medium of proof depends upon the effect of the defendant's fa to produce the letter after due notice. If the letter had come the defendant Company's possession or into the possession of Kemnal for and on behalf of the Company, or in such circumstances that the Company had a right to call for and obtain it from hin non-production, after due notice, would let in secondary evider "Tn order to let in secondary evidence the instrument need in the actual possession of the party: it is enough if it is in power, which it would be, if in the hands of a party in whom it be wrongful not to give up possession to him. But he must h such a right to it, as would entitle him not merely to inspect but retain" it (per Littledale J.in Parry v. May and Morrit (1) ). Pos the writer of the letter meant, and the recipient understood, that was to withhold the letter from the custody of the ordinary offic of the Company because of its compromising character. But tl fact that it was intended for his secret information does not mi his receipt of the letter any less a receipt for and on behalf of Company. It was because of the fact that he was head officer | the defendant Company that the letter was written to him, a was only in that capacity that he was concerned with the informati which the letter contained. If, therefore, his possession of the document was not actually that of the defendant Company, at le he was compellable in point of law to surrender the document to defendant Company if called upon to do so. His death makes difference, because it could not affect the legal right of the defenda Company to call for and obtain the document from any person Wl took over the custody of it. For these reasons secondary evide was admissible. i

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of the facts which have been shortly stated above. It then urged the wisdom of paying the bribe, and described the method in which it was to be paid, i.e., by placing £10,600 to the credit of Frank Buckle's account at the specified bank in Sydney. The circumstances proved are enough, in our opinion, to support a finding that Sir James Kemnal caused £10,600 to be placed to the credit of Buckle's account in payment of the bribe demanded by Maling. The fact that this exact sum, one of large amount, is placed to the precise account in proper time after the request to pay it had reached Kemnal, appears to us to afford presumptive evidence that it was sent in answer to the letter from the Company's attorney and business representative urging that it should be so paid. The question involved largely depends upon the degree to which coincidence of events and circumstances warrants a belief in their causal connection. An examination of hypotheses logically consis- tent with proved facts is the received method of testing their sufficiency to establish the conclusion. In the end, however, the reasonableness or the probability of the occurrence of such hypotheses determines their admissibility, and when coincidence of fact and concurrence of time are relied upon, the sufficiency of the circum- stances must inevitably be judged by considering whether general human experience would be contradicted, if the proved facts were unaccompanied by the fact sought to be proved. In our opinion it would be so astonishing if the crediting of £10,600 to Buckle's account were not the result of Sir James Kemnal receiving the letter which counselled him to pay that sum to that account, that, in the absence of further evidence, it may be inferred that Kemnal caused the credit to be made. It is, however, equally consistent with all the known facts that he did this without consulting his fellow- directors, and the question remains whether it is enough for the purpose of the charge against the Company to prove that its managing director did, in relation to its affairs, cause the bribe to be paid. No difficulty arises under the Secret Commissions Prohibition Act 1919 in relation to the criminal responsibility of corporations, because corporations are expressly included. An offence involving corrupt intention can be committed by a corporation only through

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than in cases involving imprisonment of the subject. It was established that in September 1926 a sum of £10,600 was placed to the credit of the account of one Buckle at the English, Scottish & Australian Bank in Sydney. The ledger of the Bank shows it to have been so credited by " t.t."" - which, I suppose, means telegraphic transfer. But the evidence of the Bank officer did not show where the money came from, or who paid it. This money, or a large part of it, found its way, by devious paths, into the hands of Maling. Arnot, the attorney and general manager of the defendant Company in Australasia, deposed that it had tendered for the erection of plant at the Bunnerong Power Station about February 1926, and that before the tender was accepted Maling informed him that it would be recommended if the defendant paid £7,500 (subsequently the demand was increased to £10,000), the money to be divided between Maling and members of the Municipal Council of Sydney. Arnot further deposed that he protested, but that he told Maling he would recommend his general manager "' to pay the blackmail." On 15th April 1926 Maling recommended the tender to the Council, and on the 27th the Council resolved that the tender be accepted, and a contract was signed on 5th May 1926. But Arnot deposed that after the contract was signed he told Maling that he would have nothing to do with the payment, and that he (Maling) would have to nominate someone to receive it. Maling, according to Arnot, nominated Buckle, and demanded a further sum of £600 for expenses. Arnot

agreed to this further demand, making the total sum £10,600. A few weeks later - about the latter half of July or the first day of August - Arnot declares that he wrote to Sir James Kemnal, the managing director of the defendant Company, who was in England, telling him the "history of the job"; "what he" (Arnot) "was up against'; that he "had made every effort to get the business without blackmail"; that " Maling had given him the name of Buckle and the English, Scottish & Australian Bank" as the account. to which the money should be paid, as he (Arnot) had " refused to-

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the present case really turns upon the credibility of Arnot, who apparently advised, recommended, and encouraged the transaction, if he did not actually participate in it. It would be prudent, I should think, in view of all the circumstances of the case, to require some corroboration of Arnot's story before accepting it. It is a grave accusation of bribery and corruption against Sir James Kemnal, who is dead, and should not be accepted without confirmation that places it beyond reasonable doubt. I am not unmindful of the fact that the magistrate saw and heard Arnot as a witness, but he makes nothing of this in his reasons, and merely states his conclusion. The credibility of the story is open to criticism. Thus, in May 1926 the contract with Babcock & Wilcox Ltd. was signed, and yet the supposed letter was not written until the latter half of July or 1st August, and the money which Kemnal is alleged to have provided to obtain a contract which had been signed in May was not paid into Buckle's account until September, and was by way of blackmail or a bribe which Arnot had not promised but only said he would recommend. Again, it is strange that nothing was said to the directors about the blackmail when Arnot was discussing the contract with them in London. The amount is startling, and must have seriously affected the profits of the Company. Arnot is deeply interested, and his motives cannot be fathomed: it may be that he is shifting responsibility in the transaction on to the shoulders of a dead man. Unless Arnot's evidence be true, the whole case fails. But, it is said, the fact that a large sum of money from a source and place unproved was placed to the credit of Buckle's account confirms Arnot's story, and, taken together with it, connects the defendant with the payment. All I can say is that the impression left on my mind by the evidence is one of doubt and uncertainty, and that it would be unsafe to convict anyone of gross dishonesty and corruption upon it. The payment is the only evidence in support of Arnot's story, and it completely fails to identify the party paying the money: Arnot cannot corroborate himself, and yet his evidence is all that can be suggested as an identification of the party paying that money. If one is asked: who then paid the money ?

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Judgment (100 paragraphs)