Rex v Asner

• Jurisdiction: South Africa
• Citation: 1938 AD 416

Rex Respondent v Asner Appellant
1938 AD 416

1938 AD p416

Citation	1938 AD 416
Court	Appellate Division
Judge	De Villiers JA, De Wet JA and Feetham AJA
Heard	April 12, 1938; April 13, 1938
Judgment	April 25, 1938

Flynote : Sleutelwoorde

Criminal law — Fraud — Fraudulent sale of shores — Proof of prejudice — Shares of no market value.

Headnote : Kopnota

Where a person has been fraudulently induced to buy shares at a certain price, he suffers prejudice if he cannot recover his money within a reasonable time.

The accused had embarked on a scheme of "share pushing" and had frequently induced certain persons to buy shares held by him in a gold mining company. Having been convicted of fraud, it was contended on appeal that prejudice, had not been proved inasmuch as there was nothing to show that the shares were worth less than was given for them.

Held, dismissing the appeal, that inasmuch as the shares were unsaleable and there was no prospect that they would become saleable within a reasonable time prejudice had been proved.

The case of Rex v Jones and Moore (1926 AD 355), discussed.

Case Information

Appeal upon a point of law reserved by TINDALL, J.P., sitting with assessors in the Witwatersrand Local Division. The facts appear from the judgment of DE VILLIERS, J.A.

R. Stratford, K.C. (with him M. N. Stein), for the appellant: The learned Judge projected his own feelings and habits of life into the accused's mind. See Rex v Difford (1937 AD 370). As to prejudice see Rex v Faulding & Young (1924 AD 483); Rex v Jones & More (1926 AD 350); Rex v Wood (1927 AD 19); Rex v Hendrikz (1934 AD 534); Rex v Dyonta and Another (1935 AD 52). As to concealment see Rex v Castleden (6 S.C. 235); Rex v Herzfelder (1907 T.H. 247) and Gardiner and Lansdown on S.A. Criminal Law (3rd ed., vol. II, p. 1102).

A. V. Dickinson, K.C. (with him C. J. Wiggett), for the Crown, was not called upon. The following is a summary of his written heads of argument.

The three allegations in the indictment or one or more of them, constitute the crime of falsitas. See Gardiner and Lansdown on S.A. Criminal Law (3rd ed., vol. II, p. 1131). The tests to be applied are stated in Rex v Shein (1925 AD 6 at pp. 7 and 8); Rex v Kumalo and Another (1930 AD 193 at p. 196); Rev. Tshabangu (1934 AD 514 at p. 516); Rex v Wall (1937 AD 209 at p. 210); Rex v Difford (1937 AD 370 at p. 387).

The evidence shows that the accused planned to carry out a fraudulent share-pushing scheme.

1938 AD p417

The representations must be taken together in their setting and in the light of circumstances existing at the time. The various documents should be looked at as part of one whole. The Crown contends that the representations are false in the sense that there is no truth in them, or alternatively that what may literally be true is made false by what is suppressed. See Aaron's Reefs Ltd. v Twiss (1896, A.C. 273 at pp. 281, 283); Rex v Kylsant (1082, 1 K.B. 442); and Rex v Bishirgian (1936, 1 All E.R. 586).

As to definition and value of shares see Borland's Estate v Steel Bros. & Co. Ltd. (1901, 1 Ch. 279 at p. 288) and Liquidators, Union Share Agency v Hatton (1927 AD 240 at p. 250).

There may be prejudice even when value is received for the price paid. See Rex v Hendrikz (1934 AD 534). Rex v Jones & More (1026 AD 360) is distinguishable on the facts.

Cur adv vult.

Postea (April 25th).

Judgment

De Villiers, J.A.:

This case is a point of law reserved by the Witwatersrand Local Division. The history of the case, as appears from the facts mentioned by the learned trial Judge in his summing up, is as follows:

The accused (an American citizen) arrived in Johannesburg early in 1936. There his met Bamber, a mining agent. The accused also met McGarvie, an experienced journalist. In February or March, 1936, he incorporated the "Counsellor Investment Service Limited," of which the chief shareholder was Bamber, who held 38,000 shares of the total of 40,000; but he held half of those shares as the accused's nominee. One of the "objects" of this company was to "act as advisers in regard to investments and speculations and to carry on business as stock and share brokers." The company was financed by the accused, who was the directing spirit of the concern. The company began, in March, 1936, to send out thousands of circulars (and also pamphlets) to persons living in the various Provinces of the Union, inviting them to consult it about their investments. The circulars were edited by McGarvie under the nom de plume of "The Old Counsellor," but the accused was admittedly responsible for the substance of the circulars, which were usually submitted to him for approval before being mailed, and were often inspired by him. In March, Cairncross (a director

1938 AD p418

De Villiers, J.A.

of the Magaliesberg Gold Mining Company who had also underwritten the capital of that company) wrote a letter to Bamber with a view to obtaining a loan of £750. This letter contained some optimistic statements about the prospects of the company; but that (as the learned Judge remarks) "is what one would expect, considering that the object of writing the letter was the raising of a loan." Bamber showed the letter to the accused.

The result was that the accused, on the 7th April, 1936, entered into a preliminary contract with the Magaliesberg Company and in May the

"Western Extension Gold Areas Limited" was floated, with a capital of 800,000 five shilling shares. The accused underwrote 400,000 shares and he was entitled to a commission of 10 per cent. on shares for which he subscribed or procured subscribers., J e accused had also a valuable right in regard to another 300,000 shares which went to the Magaliesberg Company, viz., that he was entitled to one fully paid up share for each share for which he subscribed or found subscribers, up to a limit of 200,000 shares. It must be mentioned also that the underwriting agreement contained a clause that the accused had the right to cede the whole or any part of the contract and that Western Extension should be bound to accept in his place any person or company to whom or to which the accused might cede the whole or part of the contract. He thus secured for himself a most...