Public Prosecutor v Intra Group (Holdings) Co Inc

• Jurisdiction: Singapore
• Judge: Yong Pung How CJ
• Judgment Date: 15 January 1999
• Neutral Citation: [1999] SGHC 11
• Docket Number: Criminal Revisions Nos 21 and 24 of 1998
• Date: 15 January 1999
• Year: 1999
• Published date: 29 November 2003
• Plaintiff Counsel: Ong Wei Jin (Deputy Public Prosecutor)
• Citation: [1999] SGHC 11
• Defendant Counsel: Abdul Rashid Gani, Shashi Nathan and Pradeep Pillai (Khattar Wong & Partners),Davinder Singh SC and Ameera Ashraf (Drew & Napier)
• Court: High Court (Singapore)
• Subject Matter: Restitution,Whether sale proceeds to be forfeited,Whether constructive trust arises over property at purchase,ss 3 & 14 Residential Property Act (Cap 274),Mistake,Disposal hearings,Criminal revision,Whether constructive trust survives provisions of Residential Property Act,Whether constructive trust arises over sale proceeds -Whether constructive trust unenforceable due to underlying illegality,Ownership of sale proceeds in dispute,Recovery of moneys paid under mistake of law,Illegality,Whether foreign principal has proprietary interest in sale proceeds,Express trusts,Criminal Procedure and Sentencing,Principles to apply,s 386 Criminal Procedure Code (Cap 68),Trusts,Whether express trust over sale proceeds,Scope of criminal revision,Purpose of disposal hearings -Court's duty to examine complex legal issues where facts not in dispute,Prosecution seeking forfeiture of sale proceeds,Sale of property without approval of principal,Whether right of recovery for payment under mistake of law gives locus standi in disposal inquiry,Constructive trust,Mistake of law,Confiscation and forfeiture,Purchase of property on trust for foreign principal in breach of Residential Property Act,Whether foreign principle's right of recovery personal or proprietary in nature,Resulting trust,Disposal of property,Whether foreign principal has proprietary claim in disposal hearings

Judgment:

YONG PUNG HOW CJ

Facts

1.In 1979, one Haresh Chotirmall (`the petititoner`) was instructed by one M Udharam Bahanani, the managing director of a Panama company, Intra Group (Holdings) Co Inc (`Intra`) to purchase, in his own name, but as a trustee for the company, a property at Lot 287-19, Mk 25, known as 8B Tanjong Rhu Road, from one Dr Melville Norman De Souza, for $245,000. Intra supplied the purchase moneys, and a further amount for the renovation of the property between 1982 and 1983, although apparently some of the purchase price or cost of renovation was paid for by the petitioner.

2.Being a permanent resident, the petitioner was a `foreign person` for the purposes of the Residential Property Act, and so sought and received approval from the Comptroller of Residential Property, subject to his first delivering an undertaking to use the property for his sole occupation and that of the members of his family as a dwelling house, and not for rental or any other purpose. He did not disclose to the Land Dealings (Approval Unit) that he intended to hold the property as a nominee for Intra. It was unclear whether he failed to do so intentionally, or simply because he was unaware that the legislation required him to obtain approval if he intended to hold it only as a nominee.

3.Nevertheless, pursuant to his having received such conditional approval to acquire the property in his own name, the sale and purchase of the property was completed on 4 September 1979.

4.In 1994, the petitioner contracted to sell the property to Hillview Mansion Pte Ltd for $11,064,050 without the consent of Intra. Hardikar Prasanna Dattaray, Intra`s assistant company secretary, lodged a police report against the petitioner. In the resulting investigations, the petitioner was charged with acquiring the property as a nominee with the intention of holding the property on trust for Intra under s 14(1)(a) read with s 25(1) of the Residential Property Act. He pleaded guilty to the charge and was convicted and fined $5,000 or three months` imprisonment in default.

5.The Commercial Affairs Department (CAD) took action to locate and seize the proceeds of sale. Part of the proceeds were represented by a bank account with the Bank of East Asia, containing $1,111,294.45 at 16 December 1995, the date the account was seized by the CAD. Another portion of the proceeds was located in the hands of Khattar Wong & Partners, who represented the petitioner in the sale and purchase, as stakeholders. The moneys held by Khattar Wong & Partners were paid over to the Accountant-General on 12 March 1997 and amounted to $7,785,501.70. Following the petitioner`s conviction and sentencing, these sums were subject to a disposal inquiry in the Subordinate Courts, presided over by district judge Eddie Tham.

6.A parallel civil suit, Suit No 767 of 1996, was instituted by Intra against the petitioner for breach of trust. The primary relief sought was a declaration that the proceeds of sale were held by the petitioner on trust for Intra. The suit, however, was settled on the first day of trial and consent judgment entered by Chan Seng Onn JC on terms to the following effect:

(1) The petitioner would pay Intra the sum of $1,269,751.88 with interest accrued thereon from 1 January 1998 at 7.5% per annum, compounded on a monthly basis.

(2) Any sums received by the petitioner in the disposal inquiry would be divided in the following way:

(a) the petitioner would pay Intra $695,000 being the sum remitted by Intra to the petitioner on account of the property;

(b) the petitioner would retain $64,168.97 being the amount paid by the petitioner on account of the property;

(c) the balance sum, if any, would be divided between Intra and the petitioner in the ratio 60:40.

7.The district judge, having considered the terms of the consent judgment, made an order to this effect in the disposal inquiry: (1). of a sum of $740,000, $695,000 be paid to Intra and the balance divided between Intra and the petitioner in the ratio 60:40;

(2). of the balance, 60% to be paid to Intra and the remaining 40% be confiscated by the prosecution.

8.It is in respect of the decision of the district judge, from which there can be no appeal, that these petitions for revision come before me. In Crim Rev 21/98, the Public Prosecutor seeks confiscation of the 60% of the balance of the proceeds ordered to be paid over to Intra. In Crim Rev 24/98, Haresh Chotirmall (referred to for convenience as `the petitioner`) seeks a reversal of the order that 40% of the balance of the proceeds be forfeited to the State, and contends that it ought to be paid to him.

9. Scope of criminal revision

Generally speaking, a court sitting in its revisionary capacity will not interfere with the decision of a district judge in a disposal inquiry unless there is `a fundamental error occasioning a clear failure of justice` or to `set right serious injustice` (per Yong Pung How CJ in Magnum Finance Bhd v PP [1996] 2 SLR 523 , applying Sofjan & Anor v PP [1969-1971] SLR 123 [1970] 2 MLJ 272 and Thai Chong Pawnshop Pte Ltd & Ors v Vankrisappan & Ors [1994] 2 SLR 414 ).

10. Purpose of disposal inquiry

In Thai Chong Pawnshop , Yong Pung How CJ held that the disposal inquiry is `an inexpensive and expeditious manner of distributing items produced at trial or found in the course of investigations`. It is not conclusive as to title and the rightful owner can assert his rights in a civil suit (applying Hoh Chee Khim & Ors v PP [1970] 2 MLJ 105 ). If, however, ownership is proved, the court has the discretion to award the item to its owner if it thinks fit ( Thai Chong Pawnshop at p 416 F-G). In the present case, the facts are not substantially in dispute. The complexity of the case stems from the legal issues.

11. The legal issues

The two main questions raised on the district judge`s order were, firstly, whether he had awarded the proceeds of sale to the rightful owner, and secondly, in view of the award, whether he had judiciously exercised his power of forfeiture under s 368 of the Criminal Procedure Code. I will deal with these in turn.

12. Ownership of sale proceeds

I first pause to reiterate my dicta in Thai Chong Pawnshop that the disposal inquiry is not a means by which to resolve conclusively a dispute on title. However, it is equally clear that this reasoning only applies where there is a dispute on the facts giving rise to competing claims to the property. In that situation, the court, lacking the procedures available in civil process to decide between competing claims, applies a `rough and ready` approach and makes an award in favour of the party it thinks has the better right to possession: see my decision in Sim Cheng Ho & Anor v Lee Eng Soon [1998] 1 SLR 346 at p 350.

13.In Thai Chong Pawnshop , however, there was no dispute as to the ownership of the property. The facts were that items in question had been stolen and pledged with certain pawnshops. In the disposal inquiry, there was no question that ownership of the stolen goods vested in the person from whom the goods were stolen: the pawnshop had no right to title. The pawnshop had purchased the goods caveat emptor and the only issue, after restoring possession to the rightful owner, was the exercise of the district judge`s discretion under s 31 of the Pawnbroker`s Act (Cap 222) to order the owner to make a compensatory payment to the pawnbroker. Where there are little or no factual disputes, and title turns only on a question of law, the court can consider the question, even if it is a complex one.

14.If, therefore, Intra had made a clear case for title on the undisputed facts, the district judge was correct to grant its claim. The Public Prosecutor contends, however, that Intra had no locus standi as a claimant in the disposal inquiry because it had acquired no proprietary interest in the subject matter of the inquiry, namely, the proceeds of sale. If that is correct, then the district judge committed a fundamental error in making an award in Intra`s favour.

15.There are three routes by which Intra may assert an interest in those proceeds, the validity of each of which I propose to discuss in turn. The first is by asserting the existence of an express trust arising in 1979, when the property was acquired by the petitioner; the second is by asserting that the same facts in 1979 gave rise to a constructive trust; lastly, Intra may assert that a constructive trust arose when the petitioner sold the property and pocketed the proceeds in 1994.

16. Express trust

It is common ground that the petitioner was or became a fiduciary for Intra in 1979 when he took moneys from Intra on the understanding that he would acquire the property in his own name, but on trust for Intra. The moneys were subject to an express trust. These moneys were then transmuted into a trust in the property. The petitioner, however, misapplied these funds (or more accurately, the property representing them) when he sold the property and kept these funds for himself. This constituted a breach of trust, or a breach of fiduciary duty, and, in the ordinary case, affords Intra with two alternative remedies, of which it must elect one. It may seek either a proprietary remedy by having a declaration that the proceeds of sale (which represent the trust property) be held on trust for Intra, or a personal remedy for damages and an account of profits.

17.However, the proprietary remedy is obstructed by two provisions of the Residential Property Act which render the trust in the immovable property null and void. The first is s 3(1)(b) read with s 3(2)(b) which I now set out:

3(1) Except as provided in this Act -

...

(b) no person shall create any trust for sale in respect of any residential property or any estate or interest therein in favour of any foreign person;

...

(2) Any -

...

(b) trust for sale in respect of any residential property or any estate or interest...