What Constitutes a Criminal Breach of Trust?

On 1 January 2020, Parliament introduced long-awaited amendments to the Penal Code of Singapore, following several high-profile cases involving Criminal Breach of Trust (CBT). The key changes relate to section 409 of the Code, and involved defining the term ‘professional agents’, and extending the liability to a broader range of individuals entrusted with assets, when acting in the interests of clients or the general public.

What is a Criminal Breach of Trust and What Are Its Elements?

Section 405 of Singapore’s Penal Code states that a Criminal Breach of Trust is committed when someone who has been entrusted with property, (or who has any dominion over it) misappropriates it dishonestly, or converts it for their own use, violating any express or implied contract, or the law.

Therefore, the crime of CBT – as stated above – has three simple elements, and the description is simplified by understanding each one in turn:

• Entrustment with property or dominion over property
• Misappropriation or conversion
• Dishonesty

The existence of these elements will determine whether someone is liable for CBT, or some other category of offence.

Entrustment with, or dominion over, property: in other words, the entrusted person has supervisory and general control over the property, monetary funds or other assets, which were received in order to fulfil the requirements of an express or implied law or legal contract.

If assets were received for an individual’s own use or purposes, then the element of entrustment is not present. Some examples of entrustment include the receipt of funds belonging to another for investment purposes on their behalf; receiving property for storage or transportation; or the receipt of funds by an administrator or executor of a deceased person’s estate, in order to distribute it to the beneficiaries.

Misappropriation or conversion: this means, for example, the use of entrusted assets or property for an unintended individual’s own purposes, or for the use of third parties. The case of Tan Tze Chye v PP interpreted ‘misappropriation’ as follows; “to set aside or assign to the wrong person or wrong use.” So, a person who does not hand over entrusted assets when requested to do so by the trustor, for example, would be seen as keeping funds in his own possession, and for his own use.

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

Another case – that of Er Joo Nguang and another v Public Prosecutor – found that, while dishonest intention is rarely directly proven, it can be inferred from the conduct of the accused and the surrounding circumstances. For instance, if a person knows that the assets were meant for a specific purpose, and applies the assets for a different purpose, without the knowledge and consent of the assets’ owner, then such usage of assets may be seen as dishonest.

Punishments for Criminal Breach of Trust

Several types of CBT offenders are outlined in the Penal Code, with various consequences for each, depending on the scope of trust given to them to fulfil their functions:

• For any person who is not in one of the categories below – the penalty is imprisonment up to 7 years and/or a fine;
• Those entrusted with property for the purposes of storage for rent or transportation for hire – the penalty is imprisonment for up to 15 years and/or a fine;
• Employees or anyone acting as an employee, entrusted in that capacity with property – the penalty is imprisonment up to 15 years and/or a fine;
• Public servants, bankers, agents, merchants, officers, directors, partners, key executives or those with a fiduciary duty – the penalty is imprisonment for up to 20 years and/or a fine.

The Court will consider various circumstances to assess the gravity and suitable penalty for the offence:

• The duration of the offence,
• The value of the property or assets entrusted to them,
• Whether any restitution has been made for the offence by the accused,
• Whether any other charges are faced by the accused, in addition to CBT,
• The impact that the offence had on the victim, other persons and the general public.

Summary

In Singapore, Criminal Breach of Trust is a serious offence. By amending the law, the legislators now have better means of prosecuting those acting as professional agents and/or public servants, who have been entrusted with property/assets on behalf of others, but who dishonestly misappropriate the funds. An individual or company who entrusts their assets to others should always be aware of the vulnerability of their contracts and obtain professional legal advice to prevent Criminal Breaches of Trust.