Rex v Miller and Another

• Jurisdiction: South Africa
• Court: Appellate Division
• Judge: Stratford CJ, De Wet JA, Watermeyer JA, Tindall JA and Centlivres AJA
• Judgment Date: 20 October 1938
• Citation: 1939 AD 106

Watermeyer, J.A.:

The appellants, Joseph Miller and Harry Kaplan, were convicted of the crime of fraud in a trial held before a Judge and jury. Certain questions have arisen out of the trial concerning the admissibility of evidence and as to the proper form which the Judge's charge to the jury should have taken. These questions have been reserved as points of law for the determination of this Court, and there is also an appeal on a special entry. I shall set out in detail the exact points raised after the facts and the indictment have been referred to so far as it is necessary for the purpose of understanding how these questions arise.

Watermeyer, J.A.

The charge arose out of the dealings in the year 1933 of two proprietary companies, Waterproof Distributors (Pty.) Ltd and Globe Clothing Factories (Pty.) Ltd., which I shall refer to for convenience as Waterproof and Globe. Miller was the managing director and virtual owner of Waterproof and Kaplan was the secretary. Globe was managed by one Roy, but he was not persona grata with the Customs authorities and so he was not officially appointed or recognised as a director, director's duties being performed by a dummy. Waterproof was a company which imported material for making garments, and Globe was a company which manufactured garments for Waterproof out of material supplied by Waterproof.

Under the Customs laws as they were in 1933, certain kinds of imported material, if used for the purpose of making collars, shirts or pyjamas, paid no Customs duty; if used for any other purpose the prescribed duty was payable. In order to carry this scheme of taxation into practical effect the Customs authorities drew up certain regulations which were intended to keep a check upon the manufacture of garments from imported material. Under these regulations if goods were imported for the purpose of being made into shirts, collars or pyjamas, they had to be sent to a registered store, usually the store of a manufacturer under rebate, and their description was entered in a book known as the rebate stock book.

They were not allowed to be removed from that store without permission of the Customs authorities. To enable the Customs authorities to ascertain what had been done with the material by the manufacturer, the regulations provided that an entry should be made in the manufacturer's rebate stock book showing how the rebate material had been disposed of.

Now the charge against the accused was based upon false entries made in the rebate stock books of Globe and Waterproof. It took the following form. After reciting that Miller was a director and Kaplan the secretary of Waterproof, and that Roy was an employee of Globe, and that Waterproof and/or Miller imported material ostensibly for the purpose of manufacture into shirts, collars and pyjamas by Globe, it proceeded as follows: -

"Whereas the said Joseph Miller, Harry Kaplan and Louis Roy, acting for, on behalf of, or in the interests of their respective companies, did conspire together to remove goods from the premises of the Globe Clothing Factories (Pty.) Ltd., or to use them for

Watermeyer, J.A.

purposes other than the manufacture of shirts collars and pyjamas permitted to be manufactured under rebate of Customs duty, without payment of the Customs duty which would thereupon become due and payable thereon, and whereas it was necessary for the carrying out of this purpose that entries indicating that the goods had been utilised for the purpose of manufacturing clothing under rebate of duty be made in the rebate stock books required to be kept by the two companies, and whereas in respect of the materials hereinafter detailed such entries were made in the rebate stock book of the Globe Clothing Factories (Pty.) Ltd., by the said Louis Roy and in the rebate stock book of the Waterproof Distributors (Pty.) Ltd., by the said Harry Kaplan;

"Now therefore during or about the period set out in column 2 of the schedule, and at Cape Town aforesaid the accused in their capacities as aforesaid, did, by means of entries in the rebate stock books of the respective companies, wrongfully, unlawfully, falsely and with intent to defraud, give out and pretend or cause to be given out and pretended, to the Commissioner of Customs through: his duly authorised representatives, that the goods, described in column 4 of the schedule (being the whole or portion of the goods enumerated in column 3) which had been admitted under rebate of Customs duty for the manufacture of shirts, collars and pyjamas, in terms of the aforesaid, rebate regulations, had been cut up for, or utilised in, the manufacture of such articles, and did then and there, by means of the said false pretences avoid the payment to, the loss and prejudice of the Government of the Union of South Africa, of Customs duty on the whole consignment of which the aforementioned goods formed a part, amounting to the sums set out in column 5 of the schedule whereas in truth and in fact the accused, when they so gave out and pretended as aforesaid, well knew that the said goods had not been cut up for or utilised in the manufacture of shirts, collars or pyjamas."

Attached was a schedule containing 25 counts. If this be summarised it will be seen that in effect the charge against Miller and Kaplan was that they, acting in concert with Roy, committed a fraud on the Union Government by representing to the Customs officials by means of false entries in the rebate stock books of Globe and Waterproof, that rebate material had been manufactured into shirts, collars and pyjamas whereas in fact it had not.

Now the Crown, in the course of its evidence, sought to prove

Watermeyer, J.A.

that two methods of circumventing the Customs officials were adopted: (1) that rebate material was used by Globe for the purpose of making trousers which, after manufacture, were sent to Waterproof accompanied by false invoices describing them as shirts; false entries at the same time being made in the rebate stock books of both Globe and Waterproof purporting to show that this rebate material had been made into shirts; (2) that material other than rebate material was used by Globe in the manufacture of shirts which were sent to Waterproof, and false entries were made in the rebate stock books of both Globe and Waterproof purporting to show that rebate material had been used to manufacture these shirts. The entries in the rebate stock books of both Globe and Waterproof corresponded with the entries made in the invoices, and the entries in the Globe rebate stock book and the details entered in the invoices accompanying the goods sent by Globe to Waterproof were in the handwriting of Roy. Roy was not charged and was not called as a witness, but evidence was put before the jury from which they were asked to infer that Roy's entries in the rebate stock book were false. Included in this evidence were certain documents found in the possession of Globe which were mainly in the handwriting of Roy. They have been referred to throughout the hearing as "cutting slips" and "reconciliation slips." The cutting slips are written orders made out by Roy directing his employees to cut out and make troupers out of material given to them, and contain details of date, number, size, price, yardage of material and so on, also figures entered in. the slips by the workmen who carried out the orders. The importance of the cutting slips is that they give exact details of the work done in the factory, and when the details on these cutting slips are compared with the details on the corresponding invoices of sent by Globe to Waterproof and when certain other evidence as to the sale of trousers by Waterproof is added to it, then the inference is irresistible that the goods which were from time to time invoiced by Globe to Waterproof as shirts were in reality trousers.

The reconciliation slips only concern a few of the counts. They were memoranda made by Roy in which, for his own purposes, he made a note to record the identity of the trousers manufactured by the Globe with the garments purporting to be shirts sent to Waterproof. These memoranda were found in the possession of Globe An example will explain them. One cutting slip shows that on

Watermeyer, J.A.

5th June, 1933, Globe made 804 trousers out of 1,0281 yards of material at a price of 1s. 4d. each, total £53 12s. On 8th June Globe invoiced to Waterproof 119 dozen shirts at 9s each, total £53 11s., and added to the account on the invoice a sum of one shilling for labels. The reconciliation slip is a piece of paper on which Roy wrote: -

"804 trousers at 1s. 4d.	£53	12	0
1,028½ yards
119 dozen shirts at 9s	£53	11	0
labels		1	0
	£53	12	0."

It is clear that these cutting slips, and on some counts the reconciliation slips, were an important part of the evidence for the Crown, and the accused contend that they were inadmissible, or if admissible there should have been a special directions by the trial Judge as to the use which the jury were entitled to make of them. Certain questions have accordingly been reserved for this Court, and certain special entries made. They are as follows: -

"1. Whether upon the indictment it was necessary for the Crown to prove that shirts, pyjamas or collars were not made from the rebated material set out in column 4 of the schedule to the indictment.

"2. Whether, if it was necessary for the Crown to prove the matters set out in para. 1 hereof, there was any evidence in proof...