OFFENCES AGAINST PROPERTY

CRIMINAL BREACH OF TRUST

(CBT) section 405-409
& CRIMINAL MISAPPROPRIATION
OF PROPERTY (sec 403)
Definition – sec 405
"Whoever, being in any manner entrusted with
property, or with any dominion over property,
dishonestly misappropriates or converts to his own
use that property, or dishonestly uses or disposes
of that property in violation of any direction of law
prescribing the mode in which such trust is to be
discharged, or of any legal contract, express or
implied, which he has made touching the discharge
of such trust, or wilfully suffers any other person
so to do, commits "criminal breach of trust".
Illustrations
 A, being executor to the will of a deceased person, dishonestly
disobeys the law which directs him to divide the effects
according to the will, and appropriates them to his own use. A
has committed criminal breach of trust.
 (b) A, is a warehouse-keeper. Z, going on a journey, entrusts his
furniture to A, under a contract that it shall be returned on
payment of a stipulated sum for warehouse room. A dishonestly
sells the goods. A has committed criminal breach of trust.
 (c) A, residing in Kuala Lumpur, is agent for Z, residing in
Penang. There is an express or implied contract between A and Z
that all sums remitted by Z to A shall be invested by A according
to Z’s direction. Z remits five thousand ringgit to A, with
directions to A to invest the same in Government securities. A
dishonestly disobeys the directions, and employs the money in
his own business. A has committed criminal breach of trust.
Elements of sec 405
 1. The accused must be entrusted with property or with dominion over
property.
 2. The accused must have:
 · (a) dishonestly misappropriated or converted the property to his own
use, or
 (b) dishonestly used or disposed of the property in violation of:
 (i) any direction of law prescribing the mode in which the trust is to be
discharged, or
 (ii) any legal contract made touching or concerning the discharge of
such trust, or
 (c) wilfully suffered any other person to:
 (i) misappropriate or convert the entrusted property to his own use, or
 (ii) use or dispose of the property in violation of any direction of law or
any legal contract concerning the discharge of such trust.
1. Entrustment
 A handing over of possession for some purpose which may
not imply the conferring of any proprietary right at all.
 According to Hanbury and Maunsley, Modern Equity, pg
46: A trust “is a relationship recognized by equity which
arises where property is vested in (a person or) persons
called the trustees, which those trustees are obliged to hold
for the benefit of other persons called cestuis que trust or
beneficiaries. The interest of the beneficiaries will usually
be laid down in the instrument creating the trust, but may
be implied or imposed by law.
 The subject matter of the trust must be some form of property.
Coverage/ feature of trust
 1) Entrustment in sec 405 covers those persons whose
positions are analogous to those of trustees
 Harihar Prasad Dubey AIR [1981] SC “When sec 405 which
defines criminal breach of trust speaks of a person being in any
manner entrusted with property, it does not contemplate the creation
of a trust with all the technicalities of the law of trust. It
contemplates the creation of a relationship whereby the owner of
property makes it over to another person to be retained by him until
a certain contingency arises or to be disposed of by him on the
happening of a certain event. The person who transfers possession of
the property to the second party still remains the legal owner of the
property and the person in whose favour possession is so transferred
has only the custody of the property to be kept or disposed of by him
for the benefit of the other party.
Feature 2
 Trust in sec 405 also implies confidence placed by one
person in another. It implies that this confidence is freely
given and that there is true consent
 The expression "entrusted" has been used in a wide sense
and includes all cases in which goods are entrusted, that is,
voluntarily handed over for a specific purpose and are
dishonestly disposed of in violation of any direction of law
or in violation of the contract.
 In other words, entrustment will arise whenever something,
whether it be goods or any other thing, is given to some
person with some direction as to how it should be dealt
with
2. Dominion over Property
Under sec. 405, the prosecution must establish that the
accused was either:
(1) entrusted with property, or
(2) entrusted with dominion over property.
Velji Raghavji Patel v. State of Maharashtra AIR [1965]
SC 1433 the Court held that the prosecution must show
that his dominion was the result of an entrustment.
Mere existence of the accused’s dominion is not enough.
Entrusted with property and dominion
over property - compared
A person who is entrusted with property possesses
certain apparent ownership.
He is actually in charge of the trust property and,
except for restrictions imposed by the trust, he is free
to use the property in any way he chooses.
A person who is entrusted with dominion over
property does not have the same rights over it
Sinnathamby v PP [948] MLJ Supp 75
 The appellant in this case was an employee of the Public
Works Department. He was convicted of criminal breach
of trust of stones from a PWD quarry. One of the grounds
of appeal was that there was no evidence that the appellant
was in fact entrusted with any sort of dominion over the
stones.
 Thomson J: Sec 408 of the Penal Code applies not merely
in cases where the exercise of possession of dominion over
property is one of the legal incidents of the contract of
service but in every case where by virtue of the existence
of the contract of service the accused person is in fact in a
position to exercise dominion
3. Property
This terms is not specifically defined in the Penal
Code. It is not restrictively defined to either
movable or immovable property
Property refers to both movable and immovable
property.
Movable property is defined under s 22 of the
Penal Code to include corporeal property of every
description.
Illustration to s 22, it includes writings relating to real or
personal property or rights. Such writings would be
movable property.
Property
CBT may be committed in respect of property which
belongs to the complainant.
The offence is concerned with entrusted property.
So long as there is entrustment, that is what matters.
It is irrelevant whether the complainant is the actual
owner.
The actus reus of sec 405
(i) misappropriation.
(ii) conversion.
(iii) use or disposal in violation of any direction of
law.
(iv) use or disposal in violation of any legal contract.
(v) the sufferance of any other person to commit any
of the four above-mentioned acts.
Misappropriate and convert
 To ‘misappropriate’ means to improperly set property
aside to the owner’s exclusion.
 To convert means to appropriate and deal with
another’s property, without right, as if it is one’s own.
 Misappropriation is equivalent to wrongful taking or
using of property but not necessarily to one’s own use
while if property is converted the element of personal use
must be present.
Tan Tze Chye v Public Prosecutor
[1997] 1 SLR(R) 876
Court: To “misappropriate” means to set apart or
assign to the wrong person or wrong use, and this must
be done dishonestly. Setting aside property by one
person for the use of another other than himself and
the true owner can also constitute misappropriation
Tan Sri Tan Hian Tsin v PP [1979] 1
MLJ 73
Criminal breach of trust was committed by the MD of
the company which paid money into the bank account
of another company of which he and his wife were the
sole shareholders. Therefore, in this case, setting aside
property for the appellant as well as his brother’s firm
could both constitute misappropriation.
Use or Disposal in Violation of any
Direction of Law
 The property that is entrusted must be used in accordance with the
prescribed directions.
 PP v. Teoh Teck Chye [1981] 2 MLJ 176 the accused was a bank
manager who was alleged to have approved payment of cheques to a
customer in excess of his overdraft. The trial Court found the accused
guilty of criminal breach of trust because his acts were done in
violation of the law prescribing the mode in which the entrustment
should be discharged. On appeal, however, the Federal Court held that
the accused’s acts were in breach of a legal contract concerning the
discharge of the trust. The Court found that the accused was governed
neither by specific law in the discharge of his managerial duties, nor by
any express provisions relating to overdrafts in his employment
contract. However, the accused was held to be in breach of implied
contractual terms gleaned from established banking practice.
Use or Disposal in Violation of Legal
Contract
The requirement is that the contract must be a legal or
valid one
Suffers any person "so to do" Acts
 In the case of Yeoh Teck Chye, the court pointed out the
elements of CBT as follows:
 The CBT offender should be:
(i) entrusted with property;
(ii) (a) that he should dishonestly misappropriate or convert it
to his own use or
(b) dishonestly use or dispose of the property or wilfully
suffer any other person so to do in violation of
(iii) (a) any direction of law prescribing the manner in which
such trust is to be discharged or
(b) of any legal contract made touching the discharge of
such trust.
Mens rea
1. Dishonestly
2. Wilfully (Wilfulness)

Dishonestly is associated with the first four acts, while

Wilfulness relates to the fifth act.
Dishonestly & wilfully
Defined in sec 24 - "Whoever does anything with the
intention of causing wrongful gain to one person or
wrongful loss to another person to do that thing
dishonestly.
The term ‘wilfully has not been defined in the Penal
Code..
"Dishonesty" reflects the guilty mind and raises
the elements of wrongful gain or wrongful loss.
A person is said to gain wrongfully when such
person retains wrongfully, as well as when such
person acquires wrongfully.
A person is said to lose wrongfully when such
person is wrongfully kept out of any property as
well as when such person is wrongfully deprived
of property.
Punishment – sec 406
“Whoever commits criminal breach of trust shall be
punished with imprisonment for a term not exceeding
ten years and with whipping, and shall also be liable to
fine. ”.
Sec 407 – CBT by carrier, wharfinger or
warehouse keeper
Whoever, being entrusted with property as a carrier,
wharfinger or warehouse keeper commits criminal
breach of trust in respect of such property, shall be
punished with imprisonment for a term which may
extend to ten years and shall also be liable to fine".
The following must be proved under sec
407
(1) that the accused is a carrier, wharfinger or
warehousekeeper;
(2) that he was as such entrusted with the property in
question; and
(3) that he committed criminal breach of trust in
respect of it.
Sec 408 – CBT by clerk or servant

“Whoever, being a clerk or servant, or employed as a

clerk or servant, and being in any manner entrusted in
such capacity with property, or with any dominion over
property, commits criminal breach of trust in respect of
that property, shall be punished with imprisonment for a
term which shall not be less than one year and not more
than fourteen years and with whipping, and shall also be
liable to fine.”
Elements of CBT by clerk or servant
For a charge to succeed under sec 408, the
prosecution must prove:
(1) that the accused is the clerk or servant of the
person reposing the trust;
(2) that he was in such capacity entrusted with the
property in question or had dominion over it; and
(3) that he committed criminal breach of trust in
respect of it.
Sec 409 – CBT by public servants, bankers, factors,
merchants, brokers, attorneys and agents
“Whoever, being in any manner entrusted with
property, or with any dominion over property, in his
capacity of a public servant or an agent, commits
criminal breach of trust in respect of that property,
shall be punished with imprisonment for a term which
shall not be less than two years and not more than
twenty years and with whipping, and shall also be
liable to fine. ”.
Elements of CBT under sec 409
 This section classes together public servants, bankers, merchants,
factors, brokers, attorneys and agents. With the exception of public
servant, all the other terms have not defined under the Code.
As a rule the duties of such persons are of a highly
confidential character, involving great powers of
control over the property entrusted to them; and a
breach of trust by such persons may often induce
serious public and private calamity.
Plowden J in the case of Bhag Singh:
 “In order to bring a case within sec 409 it is...necessary to show that
property was entrusted to a public servant and that he accepted the
property entrusted being in his public capacity required or authorized
to accept it. Otherwise in accepting the property he acts as a mere
volunteer and is not entrusted with it in his capacity of a public servant.
It is not sufficient to show merely that a person delivered property to
him because he was a public servant. The motive which induced the
person to deliver the property cannot alone determine the quality of the
trust created. The mistaken belief of the person delivering the property
or the person accepting it, or of both, that the latter was authorized to
receive it in his public capacity cannot alter the facts and supply the
deficient and requisite authority so as to convert simple breach of trust
into breach of trust by a public servant.
For a charge under sec 409 to succeed, the
prosecution must prove:
(1) that the accused was a banker, a merchant, a factor,
a broker, an attorney, an agent or a public servant;
(2) that he was in such capacity entrusted with the
property in question or had dominion over it; and
(3) that he committed criminal breach of trust in
respect of it.
Criminal Breach of Trust and Partnership
Property
 Whether a partner is liable for the criminal breach of trust
of partnership property?
 Is a fiduciary relationship necessary before a person can be
said to be entrusted with property? The partner has
dominion over property.
 The Partnership Act 196164 governs the position in Malaysia so far
as civil liability is concerned. This Act is based on the English
Partnership Act 1890.
R v Lee Siong Kiat [1935] 4 MLJ 53
 The appellant was the managing partner in a firm which
had formed a partnership with seven other firms.
 The 8 firms comprised the HHHK Kongsi which was
formed for the purpose of obtaining passenger tickets from
another firm called KPM. The appellant was the
representative of the Kongsi and the books of the Kongsi
were kept by a person under his supervision. KPM issued
free one ticket for every 15 tickets paid for; 225 free tickets
were issued over time to the appellant. He could not
account for all of these. Neither could he account for
money which had been paid to him by KPM by way of
interest on a sum deposited with KPM jointly by all
partners to the Kongsi as security for the payment of the
tickets.
Cases on CBT
Gan Beng v. PP [1939] MLJ 314

 This is an appeal against conviction under s. 406 Penal Code for

fraudulent breach of trust within the meaning of s. 405. The
complainant lent the appellant a bicycle, the latter promising to return it
in two hours. Ten days later the complainant received a letter from the
appellant, and afterwards met the appellant but the bicycle was never
returned. Proceedings were taken and the bicycle was only produced
by the appellant when the present case came on for hearing before the
Magistrate. It then had a new seat, rear mud-guard and fork. The
defence at the Court below was that the appellant did not
misappropriate it. The Court held that the appellant was rightly
convicted. In the opinion of the Court the wording of s. 405 is wide
enough to include bailments. Appeal dismissed.
Mohamed Abdullah Ang Swee Kang v.
PP [1988] 1 MLJ 167
The appellant was convicted in the Kuala
Lumpur High Court on his plea of guilty to a
charge of CBT under s. 409 of the Penal
Code. The charge was in the following terms.
That you on 9 April 1985 at No. 91 Jalan SS21/1A,
Damansara Utama, Petaling Jaya in the State of Selangor,
being an agent of Malaysia Overseas Investment
Corporation Sdn. Bhd., to wit, the managing director and
in such capacity entrusted with dominion over certain
property to wit, RM338,808.80, committed criminal
breach of trust in respect of the said property and you
thereby committed an offence punishable under s. 409 of
the Penal Code.
 After hearing a plea in mitigation from his counsel, the
appellant was sentenced to 8 years’ imprisonment and a
fine of RM100,000 in default another 6 months’
imprisonment but the case went in appeal to the Supreme
Court against the sentence on the ground that:
 1. the sentence imposed by the trial Judge was manifestly
excessive in all the circumstances of the case; and
 2. the trial Judge failed to take into account relevant
consideration and / or took into account irrelevant
considerations.
 The Supreme Court halved the sentence to 4 years from 8
years and set aside the fine of RM100,000 imposed by
High Court.
PP v. Tee An Chuan [1987] 2 MLJ 372.
 The accused pleaded guilty to a charge of criminal breach of trust by an
agent, to wit, as Chairman of Koperasi Belia Bersatu Berhad. The Koperasi
Belia Bersatu Berhad (KOSATU) was founded by the accused and the
accused was in control of the management and had dominion over all money
collected. The accused was also a director and major shareholder of Tee
Holdings Sdn. Bhd. Tee Holdings entered into an agreement to buy a piece
of land for RM3,500,000 and part of the purchase-price was paid from the
funds of KOSATU. The accused also entered into an agreement with Mount
Pleasure Corporation Bhd., to buy an apartment in Penang and again part of
the purchase price was paid out of the funds of KOSATU. The accused had
no authority to use the funds. The accused was entrusted in his capacity as
Chairman with dominion over the total sum of RM603,700 belonging to
KOSATU and he had dishonestly converted the money to his own use.
 Held: having taken all factors into account, the appropriated sentence in this
case is imprisonment for 12 years and a fine of RM50,000 or in default a
further 6 months’ imprisonment. The sentence is meant to be punitive. It is
meant to reflect the Court’s abhorrence of this type of mean criminal
conduct. It is a sentence passed in the interest of the public. It is also meant
to deter others who are minded to embark on so mean a crime.
PP. v. Khairuddin [1982] 1 MLJ 331
 The accused was the Credit Controller of Bank Rakyat at
the relevant times. As a responsible officer of the bank, he
had betrayed the trust given to him by squandering a total
sum of RM129,975 between 14 May 1975 and 6 June
1976. He pleaded guilty to a CBT charge under s. 408 and
to three charges of dishonest misappropriation of money
under s. 403 of the Penal Code. On the CBT charge the
sentence of one days’ imprisonment was enhanced to 18
months plus a fine of RM2000 more. The sentence imposed
on the other three charges of dishonest misappropriation
were affirmed. All together in total, the accused paid
(RM7000 + RM2000 = ) RM9000 as fine.
CRIMINAL MISAPPROPRIATION OF
PROPERTY (Section 403)
“Whoever dishonestly misappropriates, or converts to
his own use, or causes any other person to dispose of,
any property, shall be punished with imprisonment for
a term which shall not be less than six months and not
more than five years and with whipping and shall also
be liable to fine. ”
Essential elements
a) The property belongs to a person other than the
offender ;
b) The offender appropriated the said property or
converted it to his own use ;
c) He did so dishonestly or with the intention to
cause wrongful gain to him or to cause wrongful
loss to the other  person : and
 d) Dishonestly misappropriated property must be
movable (property)
 ELEMENTS
A) Mens Rea
dishonestly

B-Actus Reus
movable property
misappropriation and conversion
EXPLANATION
Dishonestly
Section 24 defines dishonestly as causing
wrongful gain to himself and to cause wrongful
loss to the victim
Wrongful gain and wrongful loss
 Section 23
 “Wrongful gain is gain by unlawful means of property to
which the person gaining is not legally entitled”.
 “Wrongful loss‖ is the loss by unlawful means of property
to which the person losing it is legally entitled.”.
 A person is said to gain wrongfully when such
person retains wrongfully, as well as when such
person acquires wrongfully. A person is said to lose
wrongfully when such person is wrongfully kept out
of any property, as well as when such person is
wrongfully deprived of property.
Movable Property
 Section 22 defines movable property includes corporeal
property of every description, except land and thing
attached to the earth, or permanently fastened to anything
which is attached to the earth
Property under sec 403 & 405
In sec 403, the subject of criminal misappropriation is
in respect of "movable property"
CBT deals with ‘property’ which is distinct from
movable property as defined in sec 22 of the Code
CBT can also be committed in respect of immovable
property.
Misappropriation
Emperor v sohan Lal[1915]
Court; “misappropriate” in section 403 means to
set apart or assign to the wrong person or a wrong
use, and this act must be done dishonestly

Conversion
Durugappa v State
Court; “Conversion” to one’s own use means to
appropriate and use another person's property
without right as is if it is one’s own
Differences between Criminal Misappropriation and Criminal
Breach of Trust
 In criminal misappropriation the property comes into the possession of
the accused in some neutral manner.
 A sees Z drop his purse with money in it. A picks up the purse with
the intention of restoring it to Z, but afterwards appropriates it to his
own use. A has committed an offence of criminal misappropriation (s.
403).
 In criminal breach of trust the property comes into the possession of
the accused either by an express entrustment or by some process
placing the accused in a position of trust.
 A, residing in Singapore, is an agent for Z, residing in Penang. There is
an express or implied contract between A and Z that all sums remitted
by Z to A shall be invested by A according to Z’s directions. Z remits
five thousand dollars to A, with directions to A to invest the same in
Government Securities. A dishonestly disobeys the direction, and
employs the money in his own business. A has committed criminal
breach of trust. (s. 405).
Difference between Criminal Misappropriation of property and
Criminal breach of trust
 a) In the offence of criminal breach of trust, there is a contractual relationship
between the parties . Whereas , in the offence of criminal misappropriation of
property no contractual relationship exists in between the parties .
 b) In Criminal breach of trust conversion takes place with respect to the
property held by a person in a fiduciary capacity . But in criminal
misappropriation of property the person does not hold the property in a
fiduciary relationship rather it comes to the possession of offender in any
manner; and
 c) In criminal breach of trust, the property is lawfully entrusted to the offender .
And the offender holds the property subject to some obligations , duties or trust
but he dishonestly misappropriates it or willfully suffers any other person
instead of discharging the duties and obligations attached to the trust. On the
other hand , in criminal misappropriation of property, possession of the
property is acquired by the offender not lawfully but casually or otherwise and
the offender misappropriates the property afterwards.
The fact that an accused person charged with the
offence of criminal misappropriation would usually
have come across the movable property in a legally
neutral manner is significant, because while civil rights
and liabilities would attach at the moment when the
accused person asserts possession over the property,
criminal liability would only attach when the accused
person forms a dishonest intention.
Illustrations
 (a)    A takes property belonging to Z out of Z’s possession in
good faith believing, at the time when he takes it, that the
property belongs to himself. A is not guilty of theft; but if A, after
discovering his mistake, dishonestly appropriates the property to
his own use, he is guilty of an offence under this section.
 (b)    A, being on friendly terms with Z, goes into Z’s house in
Z’s absence and takes away a book without Z’s express consent.
Here, if A was under the impression that he had Z’s implied
consent to take the book for the purpose of reading it, A has not
committed theft. But if A afterwards sells the book for his own
benefit, he is guilty of an offence under this section.
 (c)    A and B being joint owners of a horse, A takes the horse out
of B’s possession, intending to use it. Here, as A has a right to use
the horse, he does not dishonestly misappropriate it. But if A sells
the horse and appropriates the whole proceeds to his own use, he
is guilty of an offence under this section.
Difference between Criminal Breach
of Trust and Theft
 In theft, the accused has the intention to take dishonestly any movable property
out of the possession of any person without that person’s consent and he moves
the property for that purpose.
 A cuts down a tree on Z’s ground with the intention of dishonestly taking the
tree out of Z’s possession without Z’s consent. Here, as soon as A has severed
the tree, for the purpose of taking it, he has committed theft (section 378).
 In criminal breach of trust the accused does not take the property. The property
comes in his possession with the consent of the owner.
 Criminal breach of trust can be committed not only in respect of "movable-
corporeal" property, but has incorporeal property.
 In theft, the accused has a dishonest intention ‘to take’ movable property,
whereas in criminal breach of trust, the accused has a dishonest intention "to
misappropriate, or to dispose of, or to convert, or to use" the property, either
for his own purposes or in violation of any law or legal contract which affects
the trust.
 Either he does it himself or he wilfully suffers any person to do so. Incorporeal
property can be the subject matter of CBT.
Wong Seng Kwan v Public Prosecutor
[2012] SGHC 81
 The appellant, Wong Seng Kwan, was convicted in
the court below of dishonest misappropriation of the
cash taken from a wallet which he found on the floor
of the Marina Bay Sands Casino (“the Casino”). He
was sentenced to a fine of $2,000 and in default two
weeks’ imprisonment. He appealed against the
conviction and after hearing the parties, I was satisfied
that the conviction was safe and dismissed the appeal.
Steven Chong J:
The distinction between criminal misappropriation and
other property offences such as theft, cheating and
criminal breach of trust may not be immediately
apparent to a layperson. They all involve property and
an element of dishonesty but the punishment
provisions are somewhat different.
 While the element of dishonesty is common to all property
offences, the critical distinction between criminal misappropriation,
theft, cheating and criminal breach of trust lies in the manner in
which the accused person initially comes across the movable
property. An accused person commits theft if the movable property
was originally in the possession of some other person and the
accused person moves the property with a dishonest intention to
take it. For criminal misappropriation, the accused person initially
comes across the movable property in a legally neutral manner (eg,
by finding), and he subsequently forms a dishonest intention to deal
with the movable property in a manner that is inconsistent with the
rights of the true owner. As for criminal breach of trust, the accused
person is entrusted with property or dominion over the property at
the outset by another person, and he dishonestly uses or disposes of
that property in abuse of trust while for cheating, the possession of
the property is voluntarily handed over to the accused person as a
result of his deceitful or fraudulent misrepresentation.