What must the Prosecution prove?

Criminal breach of trust (“CBT”) is defined in section 405 of the Penal Code 1871 (“PC”). There are several CBT offences. See our page on criminal breach of trust offences and their punishment for a full breakdown and explanation of these offences and their punishment.

The Prosecution must prove each of the following elements, including a particular mental state:

  • Entrustment or dominion. The accused must have been entrusted with the property, or with dominion (i.e., control) over it:

    • Entrustment may arise from established practice as well as from written instructions. In a 2020 decision (Chong Kum Heng v Public Prosecutor [2020] 4 SLR 1056), the High Court held that a project manager was entrusted with the proceeds of selling surplus cable. There was no written policy, but there was a longstanding practice, known to him, that the proceeds were to be used for staff welfare and site expenses.

    • Entrustment can also be collective. Where a board has dominion over funds, each member is entrusted, and the approval of innocent co-directors does not excuse those who act dishonestly, as the High Court held in the City Harvest case, Public Prosecutor v Lam Leng Hung and other appeals [2017] 4 SLR 474 (“Lam Leng Hung”).

  • Misappropriation or wrongful use. The accused must have misappropriated or converted the property, or used or disposed of it in breach of a legal direction or of the terms of the trust. In Lam Leng Hung, church building funds could be used only for building expenses and investments. Bond “investments” that were in substance a way of channelling the funds to the church’s music project were held to be a wrongful use. The later “round-tripping” transactions used to redeem the bonds were a continuation of the misappropriation.

  • Dishonesty (the mental state). The question is whether the accused intended to cause wrongful gain or wrongful loss, knowing that he or she was not legally entitled to act in that way:

    • Motive is distinct from intention. It made no difference to guilt that the City Harvest leaders believed they were acting in the church’s best interests.

    • Dishonesty is more readily inferred where the course taken was not to the advantage of the person to whom the property belonged (the “principal”). The High Court noted this in Chong Kum Heng.

  • The capacity (for sections407 to 409 of the PC). For the more serious offences, the Prosecution must also prove that the property was entrusted to the accused in the capacity the section describes, that is, as a carrier or warehouse operator, as an employee, or as a director, professional, fiduciary or other person listed in section 409.

What defences are available?

The following may provide a defence, or an answer to the charge:

  • Good faith. An agent who departs from the principal’s directions in good faith and believing it to be more to the principal’s advantage does not commit CBT, although he may be liable to the principal in a civil claim (Illustration (d) to section 405 of the PC). Lam Leng Hung draws the line between that kind of good faith and a dishonest intention to use funds in a way the accused knows he or she is not entitled to, whatever the motive.
  • Authorisation and claim of entitlement. Evidence that the use of the property was authorised, or that the accused genuinely believed he or she was entitled to it, goes to the determination of whether the accused had acted dishonestly. In family and closely held businesses, informal arrangements about who may use company money, and for what, are frequently at the centre of the dispute, and whether the accused acted dishonestly will depend on the facts of each case.
  • Challenging the elements. The Prosecution must prove each element: whether there was entrustment, whether the use was wrongful, whether the accused acted dishonestly, and how much was misappropriated. For sections 407 to 409 of the PC, it must also prove the capacity in which the property was entrusted and when the conduct took place. The capacity and the date are significant because the maximum punishment depends on them.

Matters that do not amount to a defence may still reduce the sentence – they are discussed in our page on what can reduce a sentence for criminal breach of trust.

What if the victim does not complain, or has forgiven the offender?

A prosecution is brought in the public interest, not on behalf of the victim. In Chong Kum Heng, the employer had not complained and regarded itself as having suffered no loss. That did not prevent a conviction, and the court held that it did not reduce the offender’s culpability.

The victim’s forgiveness generally has no effect on the sentence either, as the High Court confirmed in Chong Kum Heng. Repayment of the money is a different matter: it is treated as a material mitigating factor (see our page on what can reduce a sentence for criminal breach of trust).