The standard of proof for civil fraud claims is the balance of probabilities, not requiring a higher criminal standard of proof.

Introduction:

[1] This court granted the appellant leave to appeal on 10 October 2013.

[2] There is only one leave question to consider which reads:

'Whether the Federal court should rely on the ratio set in Ang Hiok Seng v. Yim Yut Kiu , [1997] 2 MLJ 45 in determining the burden of proof in civil fraud?'

[3] At the outset we note that the leave question uses the term 'burden of proof in civil fraud'.

[4] There is of course a difference between the terms 'burden of proof' and 'standard of proof'.

[5] Briefly the former relates to the burden or obligation of proving a fact on the party who exerts the existence of any fact in issue and wishes the court to believe in its existence - ss 102 and 103 of the Evidence Act 1950 ('the Act'). The burden of proof of a party never shifts.

[6] The latter refers to 'the degree of persuasion which the tribunal must feel before it decides that the fact in issue did happen'. (In re B (Children) (Care Proceedings: Standard of Proof) (CAFCASS intervening).¹

[7] With respect, after hearing the submissions of learned counsel for the parties we are of the view that the real issue for determination is on the standard of proof required in civil claim when fraud is alleged. Accordingly we will take that the use of the term 'burden of proof' in the leave question is meant to be the 'standard of proof'.

[8] Now, before we dwell into the leave question we need to first consider the facts involved in this appeal. This is necessary so that irrespective of our answer to the leave question we would at the same time be able to determine the final outcome of this appeal.

[9] Further, in this judgment the appellant will be referred to as the plaintiff and the respondent as the defendant unless the context otherwise requires.

Background Facts

[10] In early 2005, the defendant, Damai Setia Sdn Bhd was awarded a contract by Public Works Department ('PWD') to upgrade Federal Road A13 into a four-lanes road from Jalan Sultan Azlan Shah Junction to Tanjung Rambutan in the State of Perak ('the project'). On 1 February 2005 the defendant appointed a company VN Sunrise ('Sunrise') as their sub-contractor for the project. The work on the project commenced on 1 February 2005. It was duly completed on 15 October 2005. There was a two months delay in the completion. Concurrently the defendant appointed the plaintiff, Sinnaiyah & Sons Sdn Bhd as the Project Manager for the project. As the Project Manager the plaintiff was to manage the accounts for the project and to make payments to subcontractors for the project including Sunrise for goods and materials supplied.

[11] In order to receive payments from PWD for the project and to facilitate the arrangement with the plaintiff, the defendant opened a current bank account with Bank Bumiputera Commerce in Johore Bahru. The plaintiff pre-signed all cheques and authorised the defendant to make the necessary payments from time to time from the said bank account. It was also agreed between the defendant and the plaintiff that the latter would be paid management fees for the services rendered for the duration of the project period (ie 1 February 2005 until 15 October 2005).

[12] Unfortunately, the arrangement between the defendant and the plaintiff did not go smoothly. Dispute arose. The plaintiff sued the defendant for the sum of RM301,767.40 which it claimed to be the unpaid management fees and financial advances given.

[13] In turn the defendant not only disputed the claim but also counterclaimed for the sum of RM535,836.04, being an amount the defendant alleged the plaintiff to have fraudulently paid itself instead of paying Sunr