News analysis

Ruling may set new legal position on CBT

Decision departs from 1970s precedent in interpreting criminal breach of trust

A key aspect of the verdict in the City Harvest Church (CHC) case could have wider ramifications for future criminal breach of trust cases, said lawyers.

CHC founder Kong Hee and five other church leaders had their sentences reduced because - while they were found guilty of criminal breach of trust (CBT) - they were cleared of the more serious charge of committing CBT as "agents".

Instead, they were convicted on plain CBT under Section 406 of the Penal Code, under which the maximum penalty is less than half of that for aggravated CBT under Section 409.

In reaching this conclusion, the High Court broke away from a legal position - based on the 1970s High Court case of Tay Choo Wah - that has prevailed in Singapore for the past 40 years.

Till now, directors who misappropriate the property of the company they are entrusted with are liable for the more serious offence of CBT as agents, under Section 409 of the Penal Code.

Section 409 makes it an offence for a person who misappropriates property that is entrusted to him "in the way of his business as a banker, a merchant, a factor, a broker, an attorney or an agent".

 
 
 

But yesterday, two judges out of a three-judge High Court panel ruled that directors such as the CHC leaders cannot be considered "agents" under Section 409.

The majority interpreted the provision to mean that in order to be found guilty under Section 409, the accused must be "in the business of an agent" at the time the property is entrusted to him.

Judge of Appeal Chao Hick Tin said the provision applies only to a "professional agent" who offers his services as an agent or makes his living as an agent.

In addition, the relationship between a director, who is entrusted with the property, and the company, which is the one entrusting the property, is an internal one. This stands in stark contrast, he said, to the external nature of the relationship that "a banker, a merchant, a factor, a broker (or) an attorney" shares with his customer who entrusts the property to him.

The second judge, Justice Woo Bih Li, agreed with him. The third, Justice Chan Seng Onn, disagreed.

Justice Chao stressed that the judge who convicted the CHC leaders was not wrong. This is because, as a lower court judge, he was legally bound by the Tay Choo Wah case.

The decision has significant ramifications, say lawyers.

"It will impact the way company directors who commit CBT of company funds are charged in future," said Mr Lee Teck Leng of Lee Chambers, who has been a criminal lawyer for over 20 years.

Mr Shashi Nathan, a partner at Withers KhattarWong, said: "There will be a rethink on how to prosecute accused persons in the future. For defence lawyers, there will be a seismic shift in how we pitch our cases."

Mr Lee said that as there are now two conflicting High Court decisions, the matter could go up to the Court of Appeal by way of a criminal reference on a question of law of public interest.

 
A version of this article appeared in the print edition of The Straits Times on April 08, 2017, with the headline 'Ruling may set new legal position on CBT'. Print Edition | Subscribe