A Guide to Criminal Breach of Trust

A Guide to Criminal Breach of Trust

In October 2023, the Singapore High Court dealt with an appeal against sentence in a matter where a priest of the Sri Mariamman Temple pleaded guilty and was convicted on two charges of criminal breach of trust (CBT) relating to the pawning of gold jewellery belonging to the temple. Between 2016 and 2020, the appellant pawned 66 items of the temple's gold jewellery at various pawnshops on 172 occasions. The temple suffered no loss since all the pieces were returned, but the priest obtained pawn proceeds totalling S$2,328,760.

The appellant was sentenced to a total of five years and 12 months imprisonment (consecutively – this means one sentence runs after the other) by the District Judge (there were other charges and factors considered for sentencing).

The High Court dismissed the appeal against the sentence.

This case was one of many CBT cases the legal system had to deal with last year.

In another case, a director at four firms was accused of misappropriating more than S$2.3 million and charged with criminal breach of trust. He was allegedly handed large sums of money to construct a house. However, construction was not completed, and the funds were never returned.

In May last year, the police arrested a 26-year-old man for allegedly misappropriating money and stealing luxury watches valued at about S$1.6 million. The man was a luxury watch salesman who received large sums of money from victims to purchase watches but then misappropriated the money.

If convicted, the offence of criminal breach of trust by an employee carries a penalty of up to 15 years in prison and a fine.

Even though we have many arrests for criminal breach of trust, it remains a complex and vague concept for ordinary citizens. What exactly is a criminal breach of trust?

This article will discuss how the Penal Code defines criminal breach of trust. We look at what the prosecution must prove to obtain a conviction and the penalties if convicted. We will also touch on factors the court will consider when sentencing after a CBT conviction.

What is criminal breach of trust?

In simple terms, CBT happens when an individual entrusted with property or funds uses that property or funds for personal advantage. So, we are talking about "entrustment" and "misappropriation" - by misappropriating the entrusted goods, the person breaches the trust.

The Penal Code makes such a breach of trust a criminal offence.

Section 405 of the Penal Code explains when CBT is committed as follows:

A person who has been entrusted with property or who has dominion (control) over property and;

  • who then dishonestly misappropriates the property; or
  • converts the property for their own use; or
  • dishonestly uses or disposes of such property in violation of any express or implied contract or law prescribing the mode in which such trust should be discharged; or
  • intentionally allows any other person to do so.

The Penal Code gives us a few examples to illustrate and simplify criminal breach of trust.

Example 1: The executor of a deceased person's will dishonestly disobeys the law and his fiduciary duty, which says he must distribute the assets according to the will. Instead, he appropriates the assets for his own use.

Example 2: Z entrusts his furniture to A, a warehouse owner or operator, for safekeeping whilst Z goes on a long journey. The contract states that Z will pay A the stipulated sum for safe storage fees on his return. A dishonestly sells the furniture whilst Z is away. A committed criminal breach of trust.

As with the priest in the temple, both examples illustrate:

  • entrustment of goods; and
  • dishonest misappropriation or conversion of goods for own use; or
  • disposal of goods in violation of a contract or the law.

What must the prosecution prove for a conviction on criminal breach of trust?

Entrustment

The first element that needs to be established is a relationship of trust or entrustment. This trust could arise from a legal contract or a fiduciary relationship, meaning the person did not receive the property or funds for their use. They were given control over the goods for a specific reason expressed or implied in a contract or the law.

In our temple case mentioned above, the temple's management entrusted the priest with the keys and combination codes to the safe that contained the jewellery pieces. The jewellery was meant to adorn the Hindu deities during special events or prayers - not for the priest's own use.

Intention to act dishonestly

The Penal Code requires dishonesty as an element of criminal breach of trust, meaning the prosecution must establish that the person acted with the intent to be dishonest.

Acting with intent means a person acts deliberately. So, the person is deliberately dishonest.

Section 24 of the Penal Code defines "dishonesty" as follows:

A person (A) is said to do an act dishonestly if -

  1. A does that act with the intention of causing wrongful gain to Aor another person, or wrongful loss to another person, regardless of whether such gain or loss is temporary or permanent; or
  2. That act done by is dishonest by the ordinary standard of reasonable and honest persons, andknows that that act is dishonest by such standards.

This definition implies that a person will not be guilty of CBT if the person acted negligently or made an honest mistake.

Including "the ordinary standard of reasonable and honest persons and A knows that that act is dishonest by such standards" in the definition means that dishonesty can also be inferred from the circumstances - it need not be directly proven.

Misappropriation or conversion

Most CBT cases involve misappropriation, but one act can be either. What needs to be proved is the accused misused someone else's property, or the power given over the property in a way that violated the terms of the trust.

Misappropriation often involves money entrusted for a specific purpose, which is then used for someone’s own benefit. For example, is a government clerk and receives public funds to pay into a particular treasury that holds all the public money. A takes the money for personal use instead.

Conversion involves using the entrusted property as if it were your own. For example, B is a rental agent. A client entrusted B with his apartment to rent out. Instead, B runs a business from the property and pockets the money for himself.

Intentionally allow someone else to use or dispose of entrusted property

Even if you didn't misuse the property or funds yourself, you can be guilty of CBT if you intentionally allow a friend to misappropriate or use the entrusted goods in violation of the trust.

Penalties for criminal breach of trust

Section 406 of the Penal Code stipulates that a person convicted of CBT shall be sentenced to imprisonment up to seven years, or a fine, or both.

The Penal Code stipulates higher penalties for specific categories of CBT, called aggravated CBT. These include the following:

  • Sec 407 - Criminal breach of trust of property entrusted for transportation or storage purposes

If you are entrusted with property for transportation for hire or storage for rent or charge and you commit a criminal breach of trust regarding such property, the penalty can be imprisonment of up to 15 years and a fine.

  • Sec 408 - Criminal breach of trust by employees

If you are entrusted in your capacity as an employee with property or with control over property, and you commit CBT concerning that property, the punishment can be imprisonment of up to 15 years and a fine.

Note that the Penal Code stipulates a person may be an employee or engaged in such capacity even though the person does not receive a salary or other remuneration.

  • Sec 409 - Criminal breach of trust by public servants, bankers, merchants, agents, directors, officers, partners, key executives, or fiduciary

This section includes all persons entrusted with property in their professional capacity as a fiduciary.

Anyone entrusted with property in their particular capacity or position who commits a criminal breach of trust can be punished with imprisonment of up to 20 years and a fine.

The more severe penalties in sections 407 to 409 are meant to deter people in positions of trust from misappropriating entrusted goods or funds.

Factors when imposing a sentence for CBT

The court will take several factors into account, including the following:

(1) The amount misappropriated as an indicator of the harm suffered.

(2) The offender's gain, if any.

(3) Are there any aggravating factors? E.g.

  • What was the degree of trust bestowed on the accused, and what was the offender's position? In the temple case, for example, the priest was held in a high degree of trust as the chief priest.
  • How did the breach of trust impact the victim or the general public? For example, the priest's conduct led to a loss of trust and confidence in the temple's management.
  • The duration of the offence, e.g., the priest committed various acts of CBT between 2016 and 2020.

(4) Are there any mitigating factors? E.g.

  • Did the offender offer any restitution to the victim? For example, in the temple case, the offender made full restitution.
  • Remorse and other personal circumstances.
  • The accused's motivation.
  • Cooperation with the police.

What to do if you are suspected of criminal breach of trust

In Singapore, the police can arrest you without a warrant if they reasonably suspect you committed a criminal breach of trust.

If you face a CBT charge, you should contact a criminal lawyer as soon as possible. Once arrested, the police or the court will decide if you will be released on bail. A criminal lawyer can assist in getting you out on bail and prepare your case.

CBT is a serious offence. If you are convicted, you will have a criminal record. However, depending on your sentence and whether you have other criminal convictions or previously spent records, you may be able to have your record wiped clean.

An experienced criminal lawyer will assist with your case and help you prepare a good strategy to achieve the best outcome for your circumstances.

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