Case Summaries

Public Prosecutor v Lam Leng Hung and others

SUPREME COURT OF SINGAPORE

1 February 2018

Case summary

Public Prosecutor v Lam Leng Hung and others
Criminal Reference No 1 of 2017

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Decision of the Court of Appeal (delivered by Justice Andrew Phang Boon Leong):

Outcome:

Court of Appeal upholds High Court’s decision that the six leaders of City Harvest Church charged for having conspired to commit the aggravated offence of criminal breach of trust as an agent cannot be convicted of that offence. 

1          This was a reference by the Public Prosecutor of two questions of law of public interest to the Court of Appeal for its determination. The application arose from the prosecution of six leaders of City Harvest Church (“CHC”), who were convicted after trial in the State Courts in 2015. Their appeal to the High Court was decided in 2017.

Background to the application

2          In 2002, CHC embarked on “the Crossover”, which was a project involving the recording of secular pop music albums as a means of evangelical outreach. At the same time, the church was seeking suitable premises for its activities and solicited donations for this purpose. These donations were segregated in a Building Fund (“the BF”). After public allegations about misuse of church funds for the Crossover, the six respondents, who were leading members of CHC, decided to place greater distance between the church and the Crossover by financing the Crossover through an independent company, Xtron Productions Pte Ltd (“Xtron”), which was controlled entirely by the respondents.

3          In 2006, a decision was made to expand the scope of the Crossover, which necessitated more funding. This was accomplished by using monies from the BF to purchase Xtron bonds. Subsequently, through similar arrangements, more funds from the BF were used for the purchase of bonds of Xtron and another company, PT The First National Glassware (“Firna”), in order to finance the Crossover. In 2009, after questions were raised by CHC’s auditors about the bond purchases, the relevant respondents redeemed the bonds through a series of round-tripping transactions which were not genuine commercial transactions but were, instead, intended to create the false impression that the Xtron and Firna bonds had been redeemed through proper means.

4          In 2010, the Commercial Affairs Department commenced investigations into the transactions. The respondents were charged with having conspired to commit the aggravated offence of CBT as an agent under s 409 of the Penal Code (Cap 224, 2008 Rev Ed) (“the Penal Code”), for the dishonest use of the BF to purchase the Xtron and Firna bonds as well as the subsequent round-tripping transactions to redeem those bonds, among other charges. Section 409 of the Penal Code (“s 409”) provides for the enhanced punishment of any person who commits the offence of CBT in respect of property entrusted to him “in his capacity of a public servant, or in the way of his business as a banker, a merchant, a factor, a broker, an attorney or an agent”. The charges against the respondents under s 409 were premised on the fact that three of the respondents were entrusted with the funds in their capacity as members of the CHC management board, and were thus “agents” of CHC.

5          At first instance, the Presiding Judge of the State Courts (“the Judge”) convicted the respondents of the charges against them at trial, including the charges under s 409. The Judge held that the relevant respondents were unarguably “agents” given that they were directors of the CHC board, applying the previous decision of the High Court in in Tay Choo Wah v Public Prosecutor [1974–1976] SLR(R) 725 (“Tay Choo Wah”). Dissatisfied with the decision, the respondents appealed. The appeal was heard by a specially convened coram of three Judges of the High Court.

6          On appeal, a majority of the High Court (“the majority”), with one dissent, ruled that the expression “in the way of his business as … an agent” in s 409 must necessarily refer to a professional agent, ie, one who professes to offer his agency services to the community at large and from which he makes his living. It did not encompass directors of corporations, or governing board members or key officers of charities, or officers of societies. The majority therefore held that the charges against the six respondents under s 409 were not made out as the relevant respondents were not professional agents. The CBT charges were accordingly reduced to charges under s 406 of the Penal Code, ie, for the offence of CBT simpliciter, which provides for a much lower maximum term of imprisonment than s 409. Section 409 provides that the offender “shall be punished with imprisonment for life, or with imprisonment for a term which may extend to 20 years” while s 406 provides for a maximum imprisonment term of seven years. Consequently, the sentences imposed on the respondents were significantly reduced.

7          In this application, the Prosecution, seeking to restore the respondents’ original convictions under s 409 as well as orders enhancing their sentences, referred two questions under s 397(2) of the Criminal Procedure Code (Cap 68, 2012 Rev Ed) (“the CPC”) to the Court of Appeal. The main issue of law arising from these questions was the meaning and scope of the phrase “in the way of his business as ... an agent” in s 409 – specifically, whether it refers only to a professional agent as the majority held, or if should it be construed more broadly so as to encompass directors and board members of corporations, charities and societies.

Decision of the court

8          The Court of Appeal affirmed the majority’s ruling that an “agent” within the meaning of s 409 refers to a professional agent, ie, one who professes to offer his agency services to the community at large and from which he makes his living. Therefore, the Court of Appeal ruled that the majority of the High Court had correctly found that the respondents could not be convicted under s 409. Accordingly, the sentences meted out to the respective respondents by the majority were ordered to remain.

Threshold conditions for the exercise of the court’s substantive jurisdiction

9          As a preliminary matter, the Court of Appeal laid down guidance on the principles which apply when the Public Prosecutor brings a criminal reference in circumstances where the Magistrate’s Appeal was heard by a specially convened coram of three Judges of the High Court.

10        Although the Public Prosecutor does not require leave to bring a criminal reference by virtue of s 397(2) of the CPC, it was well-established that this did not mean that the Court of Appeal was invariably bound to answer all questions referred to it under this section. In the exercise of its substantive jurisdiction under s 397 of the CPC, the Court of Appeal must be satisfied that the application properly falls within the scope of the provision. In this regard, the fact that a three-Judge coram of the High Court was convened to hear the appeal below was a relevant consideration. When a three-Judge coram of the High Court has ruled, its decision should generally represent a final and authoritative determination of the issues arising from the case. Accordingly, if the question sought to be referred has been considered and answered by a three-Judge coram of the High Court, the result is that the question can properly be regarded to have been settled and is therefore not one of “public interest” within the meaning of s 397 of the CPC. ([50], [56]–[57])

11        In the present case, the Court of Appeal found that the circumstances were sufficiently exceptional to justify the exercise of the Court of Appeal’s substantive jurisdiction under s 397 of the CPC even though a three-Judge coram of the High Court was convened to hear the appeal below. This was on the principal basis that a determination of the disputed issue would involve overturning or overruling High Court authority, given that there were two High Court decisions (ie, Tay Choo Wah, and the decision of the majority in the present case) which had adopted diametrically opposite positions on the issue. The particularly vexing nature of the questions referred was further evidenced and amplified by the fact that the High Court coram was split on the result. This indicated that an authoritative determination on the scope of s 409 by the Court of Appeal, as the apex court of the land, was necessary. ([58]–[60])

Decision on the questions referred

12        On the main issue, namely the scope of s 409, the Court of Appeal held that the majority’s interpretation of s 409 – that an “agent” within the meaning of the provision refers to a professional agent, ie, one who professes to offer his agency services to the community at large and from which he makes his living – was supported by the language and structure of s 409 itself, which not only made a clear distinction between the phrase “in the capacity” and “in the way of his business” but also identified five other trades or professions alongside that of an “agent”. In addition, the legislative history of s 409, which was first enacted in 1860 as part of the Indian Penal Code (Act 45 of 1860), also indicated that the phrase “an agent” was intended to be read in the light of the preceding words “a banker, a merchant, a factor, a broker, an attorney” in the provision, and only capture professional agents. Accordingly, both the text and context of s 409 indicated that the phrase “in the way of his business as a banker, a merchant, a factor, a broker, an attorney or an agent” only encompassed persons who are entrusted with property in the course of the commercial activities of their trusted trades or professions – including those who are in the business of agency (ie, professional agents). Finally, even if genuine ambiguity and uncertainty had persisted as to the scope of s 409, the rule against doubtful penalisation would have militated in favour of the narrower interpretation of an “agent” advocated by the respondents. ([237], [285]–[286])

13        The Court of Appeal acknowledged that in the modern context, where directors of companies and officers of charities and societies play key roles in the lives of companies and the economy as a whole, there did not appear to be a good policy reason to ignore their heightened culpability and the enhanced potential for harm were they to commit CBT. But the Court of Appeal was of the view that the task of law reform should be left to Parliament. The courts were ill-suited, and lacked the institutional legitimacy, to undertake the kind of wide-ranging policy review of the various classes of persons who, having regard to modern conditions, deserve more or less punishment for committing CBT. It observed that such a review was not only essential but also long overdue owing to the dated nature of the provision. The Court of Appeal noted that in any event, the Prosecution’s proposed definition of an agent in s 409 as referring to any legal agent would only exacerbate any perceived inadequacy in the law. That proposed definition was not only over-inclusive, as it would inculpate not only directors but also low-level workers entrusted with small amounts of money needed to carry out their regular responsibilities, but was also under-inclusive, given that there remained many significant categories of persons deserving of equal or greater punishment (such as trustees) who were not legal agents. ([276]–[282])

14        The Court of Appeal also stressed that the respondents in the present case were not getting away unpunished. They were facing substantial terms of incarceration, which the majority of the High Court saw fit to impose after its consideration of the harm and culpability associated with the respondents’ conduct. The fundamental consideration was that a hard case should not be allowed to make bad law – in this case, to undermine the principle of separation of powers which is one of the very bedrocks of the constitution. The text, context, and legislative history of s 409 all supported the majority’s interpretation of the provision and for the Court of Appeal to find otherwise would be a radical departure from legislative intent. ([283])

15        For these reasons, the Court of Appeal concluded that directors of corporations, governing board members or key officers of a charity, and officers of a society do not fall within the scope of s 409 as “agents”. Such persons are not in the business of agency, nor do they provide their services to the community at large. The Court of Appeal accepted that company directors do play a vital role in corporate governance, and consequently have a significant impact on commerce and enterprise. However, since a director of a company had only one principal, ie, his company, it would be a stretch to argue that he was in the business of agency even if he did receive remuneration for his services. In other words, a company director, while clearly a legal agent who bore onerous fiduciary duties, was not a professional agent within the object of s 409. The same difficulties arose, but to an even greater extent, in respect of governing board members or key officers of a charity, and officers of a society, since these persons were not even engaged in any commercial activity or business, let alone the business of agency. The Court of Appeal thus ruled that the majority had correctly found that the respondents could not be convicted under s 409. Accordingly, the sentences meted out to the respective respondents by the High Court were ordered to remain. ([287], [289])

This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.

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