Article: Criminal Breach of Trust

What is the criminal offence of criminal breach of trust (CBT)? What are the elements that make up the offence? When would it be criminal as opposed to a mere civil breach of trust or breach of contract? What are the sentencing norms and precedents as regards CBT?

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Relevant Provisions

Sections 405 – 409 of the Penal Code (Cap. 224):

Criminal breach of trust

405 Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person to do so, commits “criminal breach of trust”.

Illustrations

(a) A, being executor to the will of a deceased person, dishonestly disobeys the law which directs him to divide the effects according to the will, and appropriates them to his own use. A has committed criminal breach of trust.

(b) A is a warehouse-keeper. Z, going on a journey, entrusts his furniture to A, under a contract that it shall be returned on payment of a stipulated sum for warehouse room. A dishonestly sells the goods. A has committed breach of trust.

(c) A, residing in Singapore, is agent for Z, residing in Penang. There is an express or implied contract between A and Z that all sums remitted by Z to A shall be invested by A according to Z’s direction. Z remits $5,000 to A, with directions to A to invest the same in Government securities. A dishonestly disobeys the direction, and employs the money in his own business. A has committed criminal breach of trust.

(d) But if A, in the last illustration, not dishonestly, but in good faith, believing that it will be more for Z’s advantage to hold shares in the Bank X, disobeys Z’s directions, and buys shares in the Bank X for Z, instead of buying Government securities, here, though Z should suffer loss and should be entitled to bring a civil action against A on account of that loss, yet A, not having acted dishonestly, has not committed criminal breach of trust.

(e) A, a collector of Government money, or a clerk in a Government office, is entrusted with public money, and is either directed by law, or bound by a contract, express or implied, with the Government, to pay into a certain treasury all the public money which he holds. A dishonestly appropriates the money. A has committed criminal breach of trust.

(f) A, a carrier, is entrusted by Z with property to be carried by land or by water. A dishonestly misappropriates the property. A has committed criminal breach of trust.

Punishment of criminal breach of trust

406 Whoever commits criminal breach of trust shall be punished with imprisonment for a term which may extend to 7 years, or with fine, or with both.

Criminal breach of trust by carrier, etc.

407 Whoever, being entrusted with property as a carrier, wharfinger or warehouse-keeper, commits criminal breach of trust in respect of such property, shall be punished with imprisonment for a term which may extend to 15 years, and shall also be liable to fine.

Criminal breach of trust by clerk or servant

408 Whoever, being a clerk or servant, or employed as a clerk or servant, and being in any manner entrusted in such capacity with property, or with any dominion over property, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for a term which may extend to 15 years, and shall also be liable to fine.

Criminal breach of trust by public servant, or by banker, merchant, or agent

409 Whoever, being in any manner entrusted with property, or with any dominion over property, in his capacity of a public servant, or in the way of his business as a banker, a merchant, a factor, a broker, an attorney or an agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment for a term which may extend to 20 years, and shall also be liable to fine.

Elements Of the Offence

Criminal breach of trust consists of the following elements (Tan Tze Chye v PP [1997] 1 SLR (R) 876 (HC) at [36]):

1. Entrustment. The accused must be “in any manner entrusted with property or with dominion over property. If the accused was entitled to keep the money and use it for his own purposes then plainly there could be no question of entrustment: Ang Teck Hwa v PP [1987] SLR (R) 513 at [27].

2. Misappropriation or conversion. The accused must misappropriate or convert to his own use that property. To misappropriate is to “set aside or assign to the wrong person or wrong use”: Tan Tze Chye v PP [1997] 1 SLR(R) 876 at [37]. The fact that the accused did not hand over the money he was entrusted with is often very strong evidence that he had misappropriated it since by keeping it in his possession, he had “set aside” the money for his own use. However, the defence can always seek to raise a reasonable doubt by explaining what happened to the money: for example, by claiming that the accused was robbed at knifepoint or that the money was lost in a fire: Public Prosecutor v Ng Teck Peng (No. 2) [2015] SGDC 226 at [32].

3. Dishonest intent. The misappropriation or conversion must have been done with a dishonest intention.

The word “dishonestly” is defined in section 24 of the Penal Code:

“Dishonestly”

24. Whoever does anything with the intention of causing wrongful gain to one person, or wrongful loss to another person, is said to do that thing dishonestly.

The phrases “wrongful gain” and “wrongful loss” are defined in section 23 of the Penal Code:

“Wrongful gain” and “wrongful loss”

23. “Wrongful gain” is gain by unlawful means of property to which the person gaining it is not legally entitled; “wrongful loss” is loss by unlawful means of property to which the person losing it is legally entitled.

Explanation — A person is said to gain wrongfully when such person retains wrongfully, as well as when such person acquires wrongfully. A person is said to lose wrongfully when such person is wrongfully kept out of any property, as well as when such person is wrongfully deprived of property.

The touchstone, as regards the mens rea or mental state, of criminal breach of trust, as opposed to a civil claim for breach of trust or breach of contract, is dishonesty or wilfulness as the case may be. “Whereas every breach of trust gives rise to a civil suit for damages, it is only when there is evidence of the mental element of dishonesty (or wilfulness in the appropriate instance) that such breach becomes a penal offence punishable as criminal breach of trust. In every case of criminal breach of trust, a breach of contract is implicit. It is therefore the mental element of dishonesty that clearly demarcates a breach of trust that is a civil wrong or tort, from the offence of criminal breach of trust. Put another way, every offence of criminal breach of trust involves a civil wrong in respect of which the complainant may seek his redress for damages in the civil court, but a breach of trust in the absence of the requisite mens rea cannot legally justify a criminal prosecution. The determining factor in judging whether a case is one of criminal breach of trust or of criminal breach of contract is whether the accused had acted dishonestly”: Er Joo Nguang and another v Public Prosecutor [2000] 1 SLR(R) 756 at [37].

A man is dishonest in the criminal context if he intended, by unlawful means, to cause “wrongful gain” to one person or “wrongful loss” to another pursuant to s 23-24, Penal Code: Tan Kim Hock Anthony v Public Prosecutor and another appeal [2014] 2 SLR 795 (HC) at [5].

“In most cases of CBT, where the accused is found to have been dishonest, he would have failed to provide any adequate explanation of his conduct. However, there have been other cases involving a bona fide claim, or where there was some other explanation which led the court to conclude that he was not dishonest”: Er Joo Nguang and another v Public Prosecutor [2000] 1 SLR(R) 756 at [39].

“[I]t scarcely accords with practical reality to say that this alone can engender the belief that funds from one entity can be used for the purposes of another without any prior authorisation”: Tan Kim Hock Anthony v Public Prosecutor and another appeal [2014] 2 SLR 795 (HC) at [8].

Where the accused knew that the monies were intended for a specific purpose that was unconnected with the purposes ultimately applied to, and that approval was required before he could use the moneys, he would be found to have been in CBT: Tan Kim Hock Anthony v Public Prosecutor and another appeal [2014] 2 SLR 795 (HC) at [9].  It is disingenuous for the accused to later claim that he had thought it was permissible for him to use the monies merely because they advanced the same cause: Tan Kim Hock Anthony v Public Prosecutor and another appeal [2014] 2 SLR 795 (HC) at [9].

An accused person’s dishonest intention cannot be directly proved, and has to be inferred from the accused’s conduct and also from surrounding circumstances: Er Joo Nguang and another v Public Prosecutor [2000] 1 SLR(R) 756 at [39].

Negligence or failure to account for entrusted property insufficient to constitute dishonesty. “In most cases of CBT, where the accused is found to have been dishonest, he would have failed to provide any adequate explanation of his conduct. However, there have been other cases involving a bona fide claim, or where there was some other explanation which led the court to conclude that he was not dishonest. In particular, it must be stressed that negligence is insufficient to make out an offence of CBT …   In the context of CBT, a series of cases have shown that negligence or a failure to account for entrusted property does not, without more, constitute dishonesty”: Er Joo Nguang and another v Public Prosecutor [2000] 1 SLR(R) 756 (HC) at [39]-[40].

Genuine commercial reasons would negate a finding of dishonest intent: Er Joo Nguang and another v Public Prosecutor [2000] 1 SLR(R) 756 (HC) at [48].

The court may take into consideration whether the accused’s actions were done surreptitiously: Public Prosecutor v Ang Geok Kim [2015] SGDC 244 at [244].

Sentence

Justice Lee Seiu Kin has described sections 406 to 409 of the Penal Code, which comprise the CBT group of offences, as revealing a “sliding scale of severity”: see PP v Tan Cheng Yew [2013] 1 SLR 1095 at [102].

Imprisonment the norm. “In Sentencing Practice in the Subordinate Courts 3rd Edition Vol.1 at page 767, the commentary states that the sentence of imprisonment is usually given for criminal breach of trust cases, even for a first offender, unless the property misappropriated is of low value”: at [9].

1st time CBT misappropriated property of value < $2,000. “The sentencing norm for a first time offender who committed CBT of not more than $2,000.00 would be an imprisonment term of 1 week and fine”: Public Prosecutor v Gan Ching Ping [2015] SGDC 133 at [13].

Value of property. “The value of the property which was the subject of the offence and the ultimate loss are important factors in determining the severity of the sentence. The sentence should reflect proportionately to the amount of loss to the victim”: Public Prosecutor v Lim Yong [2015] SGDC 160 at [11].

Restitution. The court will give consideration to full or partial restitution made by the accused which may warrant a shorter sentence: see e.g. Public Prosecutor v Gan Ching Ping [2015] SGDC 133 at [11].

Petty unsophisticated offender. The court may consider the fact that the accused, in the context of the offence, was a petty offender, not a sophisticated or hard core criminal who ought to be dealt with severely. Further, the court will consider whether the accused faced multiple charges instead of a single CBT charge: Public Prosecutor v Lim Yong [2015] SGDC 160 at [12].

Vulnerable victim. The court will consider whether the accused had targeted victims who were vulnerable or naïve: Public Prosecutor v Tan Tet Choot [2015] SGDC 130 at [40], [42].

Financial difficulties would not be a mitigating factor unless there are exceptional circumstances: Lai Oei Mui Jenny v PP [1993] 2 SLR(R) 406.

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