Breach of Trust (s. 336) Charges in Canada: Offences, Defences, Punishments

What is Breach of Trust?

There are two common breach of trust laws in Canada.

The first breach of trust law is breach of trust by a public officer, under s. 122 of the Criminal Code of Canada (the “Criminal Code”).  The second breach of trust law is criminal breach of trust (“breach of trust”) under s. 336 of the Criminal Code.

Breach of trust is a longstanding criminal offence in Canada and has existed in Canadian criminal law for over two centuries.  However, throughout its lengthy history, the offence has continued to protect individuals from trustees who attempt to abuse their position of trust by defrauding the trust they hold for their own unauthorized use.  This commonly entails a trustee using money held in trust for their benefit.

Breach of trust is a serious criminal offence and is known as a straight indictable offence, which frequently results in jail time upon conviction.

Examples

Some examples of breach of trust may include the following:

• an executor of an estate uses estate funds for personal expenses;
• a person with power of attorney of a disabled person, who is receiving social assistance funds, does not use the social assistance funds for the disabled person;
• a manager of a corporation uses investor funds to build their personal residence; and
• a lawyer uses money held for clients to pay off their personal loans.

Defences

The defences available to a charge of breach of trust is entirely dependent on the facts of your case.

However, some common defences to breach of trust include the following:

• the accused is not a “trustee”;
• there was no unauthorized use of the thing held in trust;
• there was no intent to defraud;
• the intent to defraud was not directed to trust duties; and
• a breach of the Charter resulting in the exclusion of evidence the Crown can use to prove the offence.

Punishment

Breach of trust is a serious, straight indictable criminal offence, which entails a maximum punishment as follows:

• up to 14 years imprisonment.

Breach of trust punishments frequently involves jail time, restitution, and subsequent probation.

Breach of trust convictions can also entail severe consequences for current and future employment opportunities and immigration status.

Overview of the Offence

A breach of trust is outlined in s. 336 of the Criminal Code: 

The Crown must prove the actus reus (the “guilty act”) and the mens rea (the “guilty mind”) of a breach trust offence beyond a reasonable doubt to ground a conviction.

Specifically, as outlined in the case of R v Solar, 2012 SKQB 113, the Crown must prove the following elements beyond a reasonable doubt:

1. the accused was a trustee of something;
2. that the accused converted the thing to an unauthorized use; and
3. that the accused intended to defraud.

The Guilty Act (Actus Reus)

The actus reus for a breach of trust offence requires that the Crown must prove beyond a reasonable doubt that:

• You were a “trustee” of something; and
• You converted the thing to an unauthorized use.

The court must first be satisfied that the accused is a trustee of something.

A “trustee” is defined in section 2 of the Criminal Code as “a person who is declared by any Act to be a trustee or is, by the law of a province, a trustee, and, without restricting the generality of the foregoing, includes a trustee on an express trust created by deed, will or instrument in writing, or by parol”.  A common example of a trustee is someone acting as an executor of a will.

The court must then be satisfied that the trustee converted the thing into an unauthorized use. For example, this may include an executor of an estate using property of the estate, such as money, for unauthorized personal use.

The Guilty Mind (Mens Rea)

The mens rea for a breach of trust offence requires that the Crown must prove beyond a reasonable doubt that:

• You intended to defraud.

For clarity, an expanded explanation of this mens rea element is found in the case of R v Theroux, 79 CCC (3d) 449, [1993] 2 SCR 5, where the Supreme Court of Canada outlined that the mens rea element is proved by:

• Subjective knowledge of the prohibited act; and
• Subjective knowledge that the prohibited act could have as a consequence the deprivation of another.

For example, if you were an executor of an estate and used funds from the estate for an unauthorized use, such as a specific personal expense, the Crown could prove the mens rea element by showing that you knew of the prohibited act (i.e., using estate funds for a personal expense outside your trust duties) and that you knew that using the estate funds could result in the deprivation of the estate.

A “deprivation”, as explained by the Supreme Court of Canada in R v Olan, [1978] 2 SCR 1175, 41 CCC (2d) 145, simply requires “proof of detriment, prejudice or risk to the economic interests of the victim. It is not essential that there be actual economic loss as the outcome of the fraud.”

As such, the mens rea element can be proved even if there was no economic loss to the victim.  There simply needs to be knowledge that the prohibited act could result in a risk of economic loss.

Breach of Trust Defences

How to beat a breach of trust charge

The presence or absence of a defence to breach of trust will depend on the specific circumstances of your case.  The following defences have been successfully used when fighting a breach of trust charge:

The accused was not the trustee of the offence

The Crown is required to prove that the accused is a trustee to obtain a conviction for a breach of trust unless otherwise specified.

In the case of R v Rosen, [1985] 1 SCR 83, 16 CCC (3d) 481, the Supreme Court of Canada explained that a person who “aids” or “abets” someone else committing a breach of trust can be convicted of a breach of trust.  However, a person, who is the “aider” and “abetter” of a breach of trust offence, cannot be convicted if the Crown does not specify that they were the “aider” and “abetter” of the offence.

As such, if you are charged with breach of trust, the Crown must be specific when they charge you as either the trustee or a “party” who assisted the trustee.

There was no unauthorized use of the thing held in trust

The Crown must prove that the trustee used whatever was held in trust for an improper purpose.

If you can show that you used the thing held in trust for some sort of benefit for the trust, then it is possible that the Crown will not be able to show that there was unauthorized use.

The accused lacked the intent to defraud

The Crown must prove that a trustee intended to defraud when they converted a thing to some unauthorized use.

This standard requires criminal intent.  It is not sufficient for the Crown to simply prove negligence or a breach of one’s duties as a trustee.  The Crown must show that the trustee’s actions were done with the intention of possibly risking economic loss to the victim for their own benefit.

For example, if you can show that your actions, which resulted in an unauthorized use of trust money, were simply the result of negligence or carelessness, then Crown will be unable to show your actions were done with the intention to defraud.

The intent to defraud was outside the scope of trust duties

The intent to defraud in a breach of trust offence is limited in scope and must be directed to the trust duties.  As such, a defence to a breach of trust charge might be that a trustee’s fraudulent actions were not directed to their trust duties.

For example, if a trustee used money held in trust for a fraudulent purpose, such as using investment money for a corporation they had a beneficial interest, but there is doubt whether these actions violated their trust duties, then the trustee might be convicted of theft instead of breach of trust.

The difference between a theft and breach of trust conviction is critical because theft is a lesser offence and entails sentence resolutions that are otherwise not available for breach of trust convictions, such as a discharge.

Breach of Charter rights

The Crown must prove the elements of breach of trust beyond a reasonable doubt.  The Crown will likely attempt to prove these elements using evidence obtained by police during their investigation.  However, this evidence must be obtained by police in a manner that complies with the Canadian Charter of Rights and Freedoms (the “Charter”).

The Charter affords every person a number of legal rights, such as the right to be secure against unreasonable search and seizure, the right not to be arbitrarily detained or imprisoned, the right to be informed of the reasons of their detention or arrest, and the right to counsel without counsel.

If the police obtain any evidence in violation of your Charter rights, then a court may exclude this evidence from being used by the Crown at the trial depending on the severity of the Charter violation.

Breach of Trust Punishments

The Criminal Code provides for a possible maximum term of imprisonment of 14 years for those convicted of breach of trust.

Consequently, persons found guilty of breach of trust are not eligible for a sentence entailing a discharge or conditional sentence order. Persons convicted of breach of trust are frequently given custodial sentences, required to provide the victims’ restitution, and put on probation.

The sentence that you may receive for a conviction of breach of trust will depend on the circumstances of the offence, the presence or absence of prior criminal history, and your personal circumstances.

Specifically, in breach of trust cases, courts have also paid attention to the following non-exhaustive factors for sentencing:

1. the level of education of the offender(s) and victim(s);
2. the amount defrauded;
3. the amount of participation each offender had in the offence;
4. the primary purpose for the offence (e.g., greed vs necessity);
5. the amount of complexity and planning needed for the offence;
6. the primary use of the defrauded property;
7. the financial suffering caused to the victim(s); and
8. the amount of restitution paid by the offender(s) prior to being sentenced.

Frequently Asked Questions

Is a breach of trust a criminal offence in Canada?

Yes, a breach of trust is a criminal offence in Canada and is covered under s. 336 of the Criminal Code.

Is a breach of trust a serious criminal offence?

Yes, a breach of trust is a serious criminal offence and is a straight indictable criminal offence punishable up to 14 years imprisonment.  Frequently, those found guilty of a breach of trust offence are given custodial sentences due to the serious nature of the offence and are required to pay restitution.

A breach of trust conviction may also have severe employment and reputation consequences.  A lifelong criminal record following a criminal breach of trust conviction will show current and future employers that you took advantage of your position of trust and defrauded others of their property and money.

A breach of trust conviction could also have severe immigration consequences for non-citizens.  Under s. 36 of the Immigration and Refugee Protection Act, a person convicted of breach of trust is inadmissible to Canada due to being convicted of a criminal offence meeting the requirements of serious criminality.

Should I get a lawyer if I’m charged with breach of trust?

Yes, you should get a lawyer if you are charged with breach of trust.

A breach of trust is a serious offence which frequently entails a custodial sentence for those convicted, even without a prior criminal record.  Breach of trust convictions also frequently entail conditions requiring large amounts of restitution to be repaid to the victims.  Further, a breach of trust conviction will result in a lifelong criminal record that may significantly hinder current and future employment opportunities.  A breach of trust conviction will also result in a non-citizen being inadmissible to Canada on grounds of serious criminality.

It is in your best interest to retain a lawyer who will advocate for your innocence and obtain an acquittal, or who will ensure that your sentence, such as the amount of jail time and restitution, is as minimal as possible.

Published Decisions

R v Rosen, [1985] 1 SCR 83, 16 CCC (3d) 481

The accused was a builder in charge of several residential and commercial building projects in Ontario and Quebec in the 1970s.  During this time, the accused instructed the Greater National Building Corporation (“Greater National”), which was a company he owned and controlled, to transfer its mortgage advances to several other companies he owned for his own financial benefit.  At trial, the accused was convicted of breach of trust because he converted funds held by Greater National for his own personal use and benefit.  On appeal, the Supreme Court of Canada found that the accused was not a trustee but instead a party to the principal offender, Greater National.  As such, the accused was acquitted because the Crown failed to prove that the accused was a trustee.

You can read the full decision here.

R v Abramenko, 2008 ABPC 23

The accused was a father of a 29-year-old man with a neurological defect, reduced mental capacity, and muscle difficulties.  The accused signed a “Trustee Appointment” and received Assured Income for the Severely Handicapped (AISH) payments for the benefit of his son.  For years, the accused largely used these payments for the benefit of his son but also received several “loans” from his son from these payments.  The court found that these loans were being used for the purpose of protecting the father and son from creditors.  As such, the accused was acquitted because the Crown failed to prove that the accused acquired these loans for an unauthorized use.

You can read the full decision here.

R v Van Bodegom, 2016 ONSC 68

The co-accused was a lawyer hired by the accused to hold money in trust for investors.  The co-accused helped the accused use this money for his personal use, resulting in the co-accused being charged with two counts of breach of trust.  The court found that the co-accused, while negligent and in breach of his duties as a trustee, did not intend to defraud the investors.  Specifically, the court found that the co-accused was unaware that the accused was using this money with fraudulent intent.  As such, the co-accused was acquitted because the Crown failed to prove that the co-accused intended to defraud the investors.

You can read the full decision here.