Public Prosecutor v Benito Aloria Yap and others

JudgeKoo Zhi Xuan
Judgment Date09 June 2021
Neutral Citation[2021] SGMC 14
CourtMagistrates' Court (Singapore)
Hearing Date08 February 2021,15 October 2020,03 March 2021
Docket NumberR370-CAD-2020-0509-7266
Plaintiff CounselTan Ben Mathias, Koh Mun Keong, Regina Lim and Samuel Chew (Attorney-General's Chambers)
Defendant CounselLawrence Quahe, Diana Ngiam, Joel Ng and Derek Tan (Quahe Woo & Palmer LLC),Tham Lijing (Tham Lijing LLC)
Subject MatterCriminal Procedure and Sentencing,Seizure of Property,Section 370(1) Criminal Procedure Code,Whether Prosecution must show that its interpretation of the suspected offence in s 370 CPC report is defensible in law,Whether there is a reasonable basis for the Prosecution's interpretation of the suspected offence in the s 370 CPC report,Disposal of Property,Whether party not before the Court can be a party entitled to possession,Whether property should be returned to a party claiming to be beneficial owner arising from Quistclose trust
Published date16 June 2021
District Judge Koo Zhi Xuan: Introduction

When a property of a person is seized by a law enforcement agency (“LEA”) in the course of investigations, and the LEA wishes to continue seizing the property for more than a year, the LEA has to make a report to a Magistrate’s Court (“MC”) and satisfy the MC that the property is still “relevant for the purposes of investigation” etc, as required under s 370(3)(b) of the Criminal Procedure Code (Cap 68, 2012 Rev Ed) (“CPC”). At its core, the duty of the MC in these proceedings is to balance the need of a LEA to further retain seized properties for the purposes of investigation or future prosecution, and the presumption of innocence applying in favour of persons whose properties have been seized. Judicial oversight exists to ensure that persons who have not been charged in court, let alone convicted of an offence, “should not be deprived of their property except in accordance with the law” (Rajendar Prasad Rai and another v Public Prosecutor and another matter [2017] 5 SLR 796 at [39]). In the present case, the Respondents (three individual shareholders of a Singapore incorporated company) objected to the application of the Commercial Affairs Department of the Singapore Police Force (“CAD”) to continue seizing a bank account containing more than USD $16 million (“the Funds”) a year after the Funds were seized, which the Respondents claimed they were beneficial owners of.

The central issue which has arisen in this case is a novel one: to justify the continued seizure of property, does the Prosecution have to satisfy the MC that its interpretation of the suspected offence purportedly being investigated is defensible in law? The issue as framed is novel because no court has specifically considered and ruled on it. Yet the absence of such a ruling does not mean that the law is silent on what the correct answer is. In my judgment, when the principles underlying the s 370 CPC framework and the various judicial decisions that have shed light on s 370 CPC are considered, the law yields a demonstrably clear and just answer to the issue at hand: the Prosecution has to satisfy the MC that there exists a reasonable basis for its interpretation of the suspected offence.

As the Prosecution failed to satisfy me that there exists a reasonable basis for its interpretation of the stated suspected offence purportedly being investigated in this case, I was not satisfied that the Funds seized by CAD were relevant for the purposes of any investigation, inquiry, trial or other proceeding under any written law. Accordingly, on 3 March 2021, I issued an oral judgment ordering that the Funds seized by CAD be returned to the person entitled to possession, in accordance with s 370(2)(e)(i) of the CPC. I now set out the full grounds of my decision.

Facts and procedural history The background facts

The Respondents in this matter (Benito Aloria Yap, the late Guai Lian Phuay, and Manfred Low Cheng Jing) are shareholders of Yuk Tung Energy Pte Ltd (“YTE”), a company incorporated in Singapore which at the material time was in the business of oil trading.

Under a written contract dated 5 January 2018, YTE purchased gasoil from Petchem International Trading and Shipping Pte Ltd (“Petchem”) for US$15.8 million. Between 10 January 2018 and 23 January 2018, YTE transferred US$15.8 million to Petchem, which constitutes the subject matter of this dispute, ie the Funds prior to the accrued interest earned.

Between 24 to 25 January 2018, international news outlets reported the alleged ship-to-ship transfer of gasoil from MT Yuk Tung (a vessel operated by YTE) to MT Rye Song Gang 1, a vessel controlled by the Democratic People’s Republic of Korea.

On 26 January 2018, after Petchem learnt of the news reports that MT Yuk Tung was suspected of engaging in the ship-to-ship transfer of gasoil with MT Rye Song Gang 1, Petchem decided not to carry out the transfer of the gasoil to YTE. Petchem also did not return the Funds to YTE.

On 30 March 2018, YTE was added to the United Nations Security Council’s 1718 Sanctions List of individuals and entities, by virtue of which it became a “designated person” subject to sanctions under the United Nations (Sanctions – Democratic People’s Republic of Korea) Regulations 2010 (S 570/2010) (“UN-DPRK Regs”). Reg 9 of the UN-DPRK Regs (“Reg 9”) states as follows: a designated person; any entity owned or controlled by a designated person; or any individual or entity who acts on behalf of or under the direction of a designated person, including funds derived or generated from such property.

On 18 June 2018, the Respondents commenced a civil suit in the High Court, ie, Suit No 617 of 2018 (“Suit 617”), in their personal capacities as shareholders of YTE against Petchem for the return of the Funds. The Respondent’s suit was premised on the existence of a resulting Quistclose trust, ie, that they had loaned monies to YTE for a specific purpose (ie, to trade in oil) which had failed, and they therefore had a proprietary interest in the Funds.

On 4 October 2018, the High Court heard the Respondents’ interlocutory applications for: (a) a summary judgment under Order 14 of the Rules of Court against Petchem; and (b) an injunction to restrain Petchem from using the Funds. The High Court gave Petchem unconditional leave to defend Suit 617. It also granted the injunction sought by the Respondents which restrained Petchem from dealing with, transferring, encumbering, diminishing or otherwise disposing of the Funds until the conclusion of Suit 617.

Between 4 October to 31 October 2018, Petchem’s counsel sought clarifications from CAD as to whether CAD had any objections to Petchem resolving the matter with the Respondents on a without prejudice and without any admission of liability basis, which may include paying the Funds to the Respondents. CAD replied to these letters stating that they were “unable to comment on whether [the Funds were] required for the purpose of [CAD’s] investigations”, but CAD also brought to Petchem’s attention “its obligations under Regulation 9 of the [UN-DPRK Regs]”.

On 22 February 2019, Petchem filed an interpleader summons to seek the High Court’s direction to dispose of and/or deal with the Funds. A director of Petchem filed an affidavit stating that Petchem has “no intention of keeping or using” the Funds but its concern with returning the Funds (whether to YTE or the Respondents) was that “it would be in breach of [Reg 9] of the [UN-DPRK Regs]”.

In response, CAD filed an affidavit dated 25 March 2019 (“CAD’s affidavit dated 25 March 2019”) which stated the following: The interpleader summons is without factual or legal basis and should be dismissed; Payment of the Funds to the Respondents would contravene Reg 9 and Reg 10 of the UN-DPRK Regs; Given that the Respondents’ claim to the Funds were already before the Court in Suit 617, the evidential and legal issues relating to the claim, including any defence of illegality to be raised by Petchem should be fully ventilated and decided by the Court in Suit 617 instead of via the interpleader summons; and CAD accepts that it would be appropriate for the Funds to be paid into Court pursuant to an order of Court, pending resolution of the dispute to Suit 617.

On 24 April 2019, the Attorney-General’s Chambers (“AGC”) filed HC/SUM 2110/2019 in Suit 617, seeking leave to intervene should the High Court find that a trust was created over the Funds for the benefit of the Respondents. The AGC was prepared to make written submissions before the High Court on: the underlying public policy sought to be achieved by the UN-DPRK Regs; and whether payment of the Funds to the Respondents would contravene and/or undermine the underlying public policy of the UN-DPRK Regs.

On 10 May 2019, just 3 days before the trial of Suit 617 was due to commence, CAD seized the Funds which were in the bank account of Petchem pursuant to section 35 of the CPC.

Upon being notified of this act by CAD, the Respondents applied for leave to discontinue Suit 617. On 13 May 2019, the High Court granted the Respondents leave to discontinue Suit 617 “without prejudice to [the Respondents’] and/or [Petchem’s] rights to make any future claims against each other”.

The s 370 CPC Report

On 9 May 2020, CAD filed a report pursuant to section 370(1)(b) of the CPC (“the s 370 CPC Report”) seeking an order from the MC to permit the continued retention of the Funds by CAD because “CAD’s investigations are currently ongoing”. CAD also applied to redact certain portions of the s 370 CPC Report. In accordance with the procedure set out in Mustafa Ahunbay v Public Prosecutor [2015] 2 SLR 903 (“Mustafa Ahunbay”) at [81], I heard the Prosecution in an ex parte hearing on 26 June 2020 and allowed the redaction of certain portions of the s 370 CPC Report before ordering that the redacted report be released to the Respondents.

The relevant portions of the redacted s 370 CPC Report are reproduced as follows: This is the first report filed with the Magistrate’s Court in connection with the following sum of USD 15.8 million and its accrued interests (the “Seized Sum”) by CAD … as required under Section 370(1)(b) of the CPC.

Date of Seizure Amount at point of seizure Bank Bank a/c holder
10 May 2019 USD 16,198,013.83 ING Bank N.V. Singapore Branch Petchem International Trading and Shipping Pte Ltd
CAD’s investigations are currently ongoing. CAD is applying for...

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