Criminal Breach of Trust

Criminal Breach of Trust

After several high profile cases involving Criminal Breach of Trust (CBT),  Parliament introduced long-awaited amendments to the Penal Code of Singapore, which came to effect on the 1st of January 2020. The main amendments were made in section 409 of the Code with the updated section articulating the definition of professional agents, and extending the liability to a wider range of persons entrusted with assets for acting in the interests of their clients and or the general public.

What is the Criminal Breach of Trust and Its Elements?

According to the section 405 of the Penal Code of Singapore, a Criminal Breach of Trust is committed when someone entrusted with property, or with any dominion over the property, dishonestly misappropriates it or converts it for his own use in violation of any express or implied contract or law.

The meaning of this legal formula sounds much simpler when the crime of CBT is further dissected into its 3 basic elements:

  • entrustment with the property or dominion over the property,
  • misappropriation or conversion,
  • dishonesty.

The presence of each of these elements determines whether someone is liable for CBT or some other type of offence if liable at all.

The entrustment/dominion means that the entrusted person has supervisory and general control over the property, monetary funds or other assets, received for the purposes of fulfilling the requirements of an express or implied legal contract or law.

If such a person has received those assets to use them or keep for his own purposes, the element of entrustment is absent. The examples of entrustment include receiving property for transportation or storage, the receipt of funds belonging to another person for the purposes of investment on behalf of that person, or the receipt of funds by an executor or administrator of a deceased’s estate for distribution to beneficiaries.

Misappropriation or Conversion. This includes usage of the entrusted assets or property for own use or use of third parties. According to the interpretation in Tan Tze Chye v PP case, to misappropriate means to “set aside or assign to the wrong person or wrong use.” Thus, for example, a person who does not hand over the entrusted assets at the request of the trustor is viewed as keeping funds in his own possession for own use.

Dishonesty is a key element in qualifying an offence as a Criminal Breach of Trust. According to section 24 of the Penal Code of Singapore, dishonesty happens when someone acts with the intention of receiving wrongful gain or causing wrongful loss to another person.

According to the case of Er Joo Nguang and another v Public Prosecutor, while dishonest intention can be rarely proven directly, it has to inferred from the accused’s conduct and surrounding circumstances. Thus, for example, if someone knows that the assets were intended for a specific purpose, and those assets were ultimately applied for a different purpose without the consent and knowledge of the owner of the assets, such usage of assets may be considered as dishonest.

Punishments for the Criminal Breach of Trust

The Penal Code outlines several types of CBT offenders with various consequences for each, depending on the scope of trust endowed to fulfill their functions:

  • anyone except those, mentioned below —may be imprisonment up to 7 years and/or fine;
  • those entrusted with property for the purpose of transportation for hire or storage for rent — imprisonment up to 15 years and/or fine;
  • employees or those acting as employees, entrusted in such capacity with property — imprisonment up to 15 years and/or fine;
  • public servants, bankers, merchants, agents, directors, officers, partners, key executives or fiduciary — punishment up to 20 years and/or fine.

In determining the penalty, the Court would consider various circumstances to assess the gravity of the offence:

  • duration of the offence,
  • value of entrusted property or assets,
  • whether the accused has made any restitution for the offence,
  • whether the accused faces other charges in addition to CBT,
  • impact of the offence on the victim, other persons, and the general public.

Summary

CBT in Singapore is considered as a serious offence. The legislators have amended the law to have better means of prosecuting those acting as professional agents and public servants, entrusted to deal with property and assets on behalf of others while dishonestly misappropriating their funds. Those individuals and companies who entrust their assets to others should be aware of the vulnerabilities of their contracts and seek professional advice to prevent Criminal Breach of Trust.

About the author

Mohamed Baiross
Mohamed Baiross

Managing Partner

Baiross is the managing partner of IRB Law LLP. He is an experienced lawyer with an excellent reputation across a broad selection of practice areas including divorce, insolvency, crime, probate, syariah, and civil litigation.

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