Sinnaiyah & Sons Sdn Bhd

[2015] 5 MLRA v. Damai Setia Sdn Bhd 191

SINNAIYAH & SONS SDN BHD

v.
DAMAI SETIA SDN BHD

Federal Court, Putrajaya

Richard Malanjum CJSS, Abdull Hamid Embong, Hasan Lah, A Samah
Nordin, Ramly Ali FCJJ
[Civil Appeal No: 02(f)-72-10-2013(A)]
10 August 2015

Civil Procedure: Fraud — Standard of proof in civil claims — Whether on a balance of

probabilities — Whether there was a third standard — Whether seriousness of allegation
or seriousness of consequences would make any difference to standard of proof applicable

Contract: Fraud — Standard of proof — Civil claims — Whether on a balance of

probabilities — Whether there was a third standard — Whether seriousness of allegation
or seriousness of consequences would make any difference to standard of proof applicable

Evidence: Standard of proof — Fraud — Civil claims — Whether on a balance of

probabilities — Whether there was a third standard — Whether seriousness of allegation
or seriousness of consequences would make any difference to standard of proof applicable

Evidence: Burden of proof — Definition of — Whether burden ever shifts — Whether

principles of law relating to “burden of proof” in Malaysia based on common law

Evidence: Standard of proof — Definition of — Whether principles of law relating to

“standard of proof” in Malaysia based on common law

The respondent/defendant appointed the appellant/plaintiff as Project Manager

to manage a road upgrading project (“project”) for it. The defendant was to
manage the accounts for the project and to make payments to subcontractors
for goods and materials supplied. The defendant was to be paid management
fees for the services rendered in managing the project. Disputes arose and the
plaintiff sued the defendant for unpaid management fees and financial advances
given. The defendant not only disputed the claim but counterclaimed against
the plaintiff, alleging the plaintiff had fraudulently paid itself instead of paying
its subcontractors. The plaintiff asserted that the sums it paid itself was for set-
offs or contra payments for goods and materials supplied to the subcontractors
for the completion of the project. The trial judge dismissed both the plaintiff’s
claim and the defendant’s counterclaim. The Court of Appeal dismissed the
plaintiff’s appeal against the dismissal of its claim but allowed the defendant’s
appeal against the dismissal of its counterclaim. The plaintiff appealed to the
Federal Court. The main issue for the Federal Court’s determination concerned
the standard of proof required in a civil claim where fraud is alleged.
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192 v. Damai Setia Sdn Bhd [2015] 5 MLRA

Held, dismissing the plaintiff’s appeal with costs:

(1) The term “burden of proof” relates to the burden or obligation of proving a
fact on the party who asserts the existence of any fact in issue and wishes the
Court to believe in its existence. The burden of proof on a party never shifts.
The term “standard of proof” refers to the degree of persuasion which the
tribunal must feel before it decides that the fact in issue did happen. (paras 5-6)

(2) There is no specific provision in the Evidence Act 1950 or in any Malaysian
legislation that stipulates the relevant standard of proof required in both
criminal and civil proceedings. Thus, the principles of law in relation to the
burden of proof and standard of proof in Malaysia are common law principles.
(para 20)

(3) Under English law, the standard of proof for fraud in a civil claim is on the
balance of probabilities. In re B (Children) (Care Proceedings: Standard of Proof)
(CAFCASS intervening) (folld). (paras 35, 37 & 39)

(4) The position of the law on the standard of proof for fraud in civil claims in
Malaysia is far from satisfactory. There was merit in the defendant’s submission
that the adoption of the criminal standard of proof for fraud in civil claims was
due to the misinterpretation or a blind adoption of the judgment of Lord Atkin
in Narayanan Chettyar v. Official Assignee of the High Court, Rangoon. (para 47)

(5) The correct principle to apply in Malaysia is as explained in In re B (Children)

(Care Proceedings: Standard of Proof) (CAFCASS intervening). At law there are
only two standards of proof, namely, beyond reasonable doubt for criminal
cases while it is on the balance of probabilities for civil cases. As such, even
if fraud is the subject in a civil claim the standard of proof is on the balance
of probabilities. There is no third standard. And neither the seriousness of the
allegation nor the seriousness of the consequences should make any difference
to the standard of proof to be applied in determining the facts. In re B (Children)
(Care Proceedings: Standard of Proof) (CAFCASS intervening) (folld). (para 49)

(6) To restate the general rule at common law: “in the absence of a statutory
provision to the contrary, proof in civil proceedings of facts amounting to the
commission of a crime need only be on a balance of probabilities”. Boonsoom
Boonyanit v. Adorna Properties Sdn Bhd (refd); Ang Hiok Seng v. Yim Yut Kiu (overd);
Lee You Sin v. Chong Ngo Khoon (overd); Yong Tim v. Hoo Kok Chong & Anor
(overd). (paras 52-53)

(7) Relating to the instant appeal, applying the principle on the standard of
proof for fraud in civil claims this court would agree with the Court of Appeal’s
decision to allow the defendant’s counterclaim. (para 56)

Case(s) referred to:

Ang Hiok Seng v. Yim Yut Kiu [1996] 2 MLRA 127 (overd)
Asean Security Paper Mills Sdn Bhd v. CGU Insurance Bhd [2007] 1 MLRA 12 (refd)
 Sinnaiyah & Sons Sdn Bhd
[2015] 5 MLRA v. Damai Setia Sdn Bhd 193

Bater v. Bater [1951] P 35 (refd)

Boonsoom Boonyanit v. Adorna Properties Sdn Bhd [1997] 1 MLRA 209 (refd)
Chong Song v. Uma Devi V Kandiah [2012] 6 MLRA 112 (refd)
Chu Choon Moi v. Ngan Sew Tin [1985] 1 MLRA 444 (refd)
Chua Kwee Chen, Lim Kah Nee and Lim Chah In (as Westlake Eating House) and
Another [2006] 3 SLR 469 (refd)
Datuk Jagindar Singh & Ors v. Tara Rajaratnam [1985] 1 MLRA 479 (refd)
Doe d Devine v. Wilson [1855] 14 ER 851 (refd)
Eastern Enterprises Ltd v. Ong Choo Kim [1969] 1 MLRH 355 (refd)
Eric Chan Thiam Soon v. Sarawak Securities Sdn Bhd [2000] 1 MLRH 624 (refd)
FH v. McDougall [2008] SCC 53 (refd)
Hanes v. Wawanesa Mutual Insurance Co [1936] 36 DLR (2d) (refd)
Helton v. Allen [1940]) 63 CLR 691 (refd)
Hornal v. Neuberger Products Ltd [1957] 1 QB 247 (refd)
In re B (Children) (Care Proceedings: Standard of Proof) (CAFCASS intervening)
[2008] UKHL 35 (folld)
In re S-B Children [2009] UKSC 17 (refd)
Lau Kee Ko & Anor v. Paw Ngi Siu [1973] 1 MLRA 604 (refd)
Lee You Sin v. Chong Ngo Khoon [1981] 1 MLRA 251 (overd)
Miller v. Minister of Pensions [1947] 2 All ER 372 (refd)
Narayanan Chettyar v. Official Assignee of the High Court, Rangoon [1941] AIR PC
93 (refd)
New York v. Heirs of Phillips Deceased [1939] 3 All ER 952 (refd)
PP v. Yuvaraj [1970] 2 WLR 226 (refd)
R (McCann) v. Crown Court at Manchester [2003] 1 AC 787 (refd)
Ratna Ammal v. Tan Chow Soo [1967] 1 MLRA 14 (refd)
Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563 (refd)
Rejfek & Anor v. McElroy & Anor [1965] 39 ALJR 177 (refd)
Saminathan v. Pappa [1980] 1 MLRA 250 (refd)
Secretary of State for the Home Department v. Rehman [2001] UKHL 47 (refd)
Shell Malaysia Trading Sdn Bhd v. Tan Bee Leh & Ors [2012] MLRHU 1295 (refd)
Tang Yoke Kheng v. Lek Benedict [2005] 3 SLR(R) 263 (refd)
Yogambikai Nagarajah v. Indian Overseas Bank [1996] 2 SLR (R) 774 (refd)
Yong Tim v. Hoo Kok Chong & Anor [2005] 1 MLRA 440 (overd)

Legislation referred to:

Contracts Act 1950, ss 17, 18
Evidence Act 1950, ss 3, 102, 103
 Sinnaiyah & Sons Sdn Bhd
194 v. Damai Setia Sdn Bhd [2015] 5 MLRA

Counsel:
For the appellant: Malik Imtiaz (Ananthan Ragawan, Chan Wei June & Gurbachan
Singh with him); M/s Ananth & Associates
For the respondent: Gopal Sri Ram (Yunus Ali & Norazali Nordin with him);
M/s Yunus Ali & Kam

[For the Court of Appeal judgment, please refer to Sinnaiyah & Sons Sdn Bhd v. Damai
Setia Sdn Bhd [2013] 5 MLRA 680]

JUDGMENT

Richard Malanjum CJSS:

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 [1996] 2 MLRA 127 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 and103 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.
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[2015] 5 MLRA v. Damai Setia Sdn Bhd 195

[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 Sunrise.

[14] In defence to the counterclaim the plaintiff asserted that the sums it paid
itself was for set-offs or contra payments for goods and materials supplied to
Sunrise for the completion of the project.

Before The High Court

[15] After hearing the evidence the learned trial judge dismissed both the claim
of the plaintiff and the counterclaim of the defendant. It was the finding of the
learned trial judge that the plaintiff had been duly paid for the management
fees, that any financial advances made would be on illegal money lending and
that the defendant failed to prove its counterclaim.
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196 v. Damai Setia Sdn Bhd [2015] 5 MLRA

Before The Court Of Appeal

[16] Dissatisfied with the decision of the High Court both parties appealed to
the Court of Appeal. In coming to its decision the Court of Appeal dismissed
the appeal by the plaintiff. The Court of Appeal held that the plaintiff had
failed to prove its claim for financial advances to the defendant. The defendant
did not sign the payment vouchers for the alleged financial advances and
with the project almost completed there was also no necessity for the alleged
financial advances. As to the claim for management fees the Court of Appeal
held that it was in fact a claim for interests. The project was already completed.
Management was no longer required.

[17] In respect of the counterclaim of the defendant the Court of Appeal held
that the finding of the High Court was against the weight of the evidence
adduced. The plaintiff was not authorised to pay itself but to Sunrise. The
set-offs and contra payments as alleged by the plaintiff were unfounded as
the defendant was still indebted to Sunrise. The appeal of the defendant was
therefore allowed.

Before This Court

Submissions Of Parties

[18] Briefly, learned counsel for the plaintiff submitted:

i. that the correct standard of proof for fraud in civil claims should
be on the balance of probabilities;

ii. that the learned trial judge was not satisfied even on the balance
of probabilities that the defendant had proved its counterclaim
based on fraud; and

iii. that the Court of Appeal therefore erred in finding that the
diversion of the fund by the plaintiff was unauthorised. The
defendant was aware of the diversion and explanation given but
was not considered by the Court of Appeal.

[19] In response learned counsel for the defendant argued:

i. that the present standard of proof for fraud in civil claims in

Malaysia is not in tandem with the standard applied in other
common law jurisdictions;

ii. that the present standard adopted for fraud in civil claims in
Malaysia is not premised on policy ground. It is a product of
misinterpretation of the judgment of Lord Atkin in Narayanan
Chettyar v. Official Assignee of the High Court, Rangoon2;

iii. that the principle propounded by this court in Ang Hiok Seng v.
Yim Yut Kiu3 is impossible to apply;
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[2015] 5 MLRA v. Damai Setia Sdn Bhd 197

iv. that the standard of proof for fraud in civil claims should be on the
balance of probabilities. However, where the allegation of fraud
is serious in nature as for instance criminal in nature, a higher
quality of evidence should be demanded while maintaining the
standard of proof to be on the balance of probabilities;

v. that in this case neither the learned trial judge nor the Court of
Appeal applied the proper standard. Nevertheless they must be
assumed to have applied the correct test;

vi. that in this case irrespective of which standard of proof to

apply the plaintiff should be liable for the counterclaim of the
defendant. There was a misappropriation of trust by the plaintiff
when it diverted the use of the pre-signed cheques to pay itself.
Further, if indeed the diversion of the fund was pursuant to an
arrangement made between the plaintiff and Sunrise, there should
be no longer any demand made by Sunrise to the defendant. Yet
there were six demand letters served on the defendant; and

vii. that the learned trial judge failed to properly consider the
documentary evidence while preferring the oral evidence
adduced. As such the Court of Appeal was right to review and
reassess the evidence adduced and coming to its own factual
finding.

Decision Of This Court

[20] We begin with our observation that there is no specific provision in the
Act or for that matter any legislation in Malaysia that stipulates the relevant
standard of proof required in both criminal and civil proceedings. Section 3 of
the Act in interpreting the words ‘proved’ and ‘disproved’ only makes reference
to a ‘prudent man’. As such the principles of law in relation to burden of
proof and standard of proof are therefore common law principles. (See: Public
Prosecutor v. Yuvaraj4, Bater v. Bater5 and Miller v. Minister of Pensions6).

[21] On casual perusal of the reported judgments by the courts in this country it
can be elicited that there are at least three principles propounded in addressing
the issue of what is the standard of proof required in civil claims when fraud
is the subject matter.

[22] The first principle is premised on the standard of beyond reasonable doubt
as applied in criminal cases. Such principle began in the case of Saminathan
v. Pappa7 in which the Privy Council upheld the decision of the then Federal
Court that adopted the principle enunciated in Narayanan (supra). Lord Atkin
in that case said this at p 95:
‘‘There are other difficulties in the plaintiffs’ way which have been sufficiently
considered in the judgments of the High Court. Fraud of this nature, like
any other charge of a criminal offence, whether made in civil or criminal
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proceedings, must be established beyond reasonable doubt. The High court

were justified in holding that the trial judge’s finding was largely based on
suspicion and conjecture.”

[23] After Saminathan (supra) most of the subsequent decisions by the courts in
Malaysia followed this first principle. (See: Chu Choon Moi v. Ngan Sew Tin8 and
Datuk Jagindar Singh & Ors v. Tara Rajaratnam9).

[24] But it would be quite erroneous to say that prior to Saminathan (supra) the
courts in this country had also applied the first principle as enunciated. On the
contrary before Saminathan (supra) the courts in this country applied albeit ‘a
very high degree of ’ the balance of probability standard in civil claims when
fraud was alleged. In the case of Lau Kee Ko & Anor v. Paw Ngi Siu10, Raja Azlan
Shah J (as His Majesty then was) delivering judgment for the then Federal
Court said this at p 607:
‘It is a wholesome rule of our law that where a plaintiff alleges fraud, he must
do more than establish the allegation on the basis of probabilities. While the
degree of certainty applicable to a criminal case is not required, there must, in
order to succeed, be a very high degree of probability in the allegation.’

(See also the earlier case of Ratna Ammal v. Tan Chow Soo11).

[25] Meanwhile we take note that this court in Ang Hiok Seng (supra) declared
that ‘to the extent that the general statement of the law in Lau Kee Ko (supra)
is understood to mean a total rejection of the criminal burden in all cases of
fraud, it is no longer good law.’ Whether this pronouncement is tenable today
depends on our answer to the leave question.

[26] Anyway, even after Saminathan (supra) the then Federal Court appeared
to have reverted to the earlier position. In the case of Lee You Sin v. Chong Ngo
Khoon12, the civil standard of proof for civil claims, that is, on the balance
of probabilities was adopted despite the allegation of fraud. However, the
court imposed the requirement of a higher degree of probability for a serious
allegation of fraud. We take it as the second principle.

[27] In delivering the judgment of the court Lee Hun Hoe CJ (Borneo) after
making reference to Bater v. Bater (supra) said this at pp 253-254:
‘We would therefore with respect suggest the test to be applied is one set out
in Bater v. Bater [1951] 2 All ER 458, ie the learned judge was correct in relying
on Bater v. Bater though his mistake was in not saying that the statement of
claim in substance alleges fraud.’

[28] The foregoing view expressed in Lee You Sin (supra) was in tandem with
what Winslow J said in the Singapore case of Eastern Enterprises Ltd v. Ong Choo
Kim13. He said this at p 366:
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[2015] 5 MLRA v. Damai Setia Sdn Bhd 199

‘I would therefore conclude for purposes of this action that the plaintiffs must
establish their allegation against the defendant on a balance of probability
as laid down by Doe d Devine v. Wilson subject to the qualification that in
tilting the balance against the defendant, they must attain a higher degree
of probability than is required in an ordinary case of civil negligence though
not the very high standard of the criminal law. Although the difference in the
standards of proof in civil and criminal cases “may well turn out to be more
a matter of words than anything else” (per Denning LJ in Bater’s case), the
Australian High Court in the Rejfek case held that it was no mere matter of
words but a matter of critical substance.’

[29] In other words, both the cases of Eastern Enterprises (supra) and Lee You Sin
(supra) applied the balance of probabilities standard when fraud was alleged
subject to the requirement of a higher degree of probability depending on the
seriousness of the allegation. The more serious it is such as tilting towards
criminal liability the higher degree of probability is required before it can
be said that the standard of proof on the balance of probabilities has been
satisfied.14
[30] But while the two earlier conflicting principles15 adopted by the highest
court of this country were yet to be reconciled, this court in the case of Ang
Hiok Seng v. Yim Yut Kiu (supra) crafted the third principle. It was held that
the standard of proving fraud should be dependent on the nature of the fraud
alleged. In delivering the judgment for the court Mohd Azmi FCJ said this at
p 139:
‘… where the allegation of fraud in civil proceedings concerns criminal fraud
such as conspiracy to defraud or misappropriation of money or criminal
breach of trust, it is settled law that the burden of proof is the criminal standard
of proof beyond reasonable doubt, and not on the balance of probabilities.’
…
‘… But where the allegation of fraud (as in the present case) is entirely founded
on a civil fraud – and not based on a criminal conduct or offence – the civil
burden is applicable.’

[31] We would say that the Ang case (supra) seemed to have made a distinction
between civil fraud and criminal fraud even in civil proceedings. Examples
of fraud with criminal nature in civil claims were given such as conspiracy to
defraud or misappropriation of money or criminal breach of trust while for
fraud of civil nature were those provided under ss 17 and 18 of the Contracts
Act 1950. Those sections define certain acts as ‘fraud’ and ‘misrepresentation’
if they have induced the entering or deceived someone into entering a contract.
Unfortunately even with such illustrations the demarcation between civil and
criminal fraud remained ambiguous.16
[32] The confusion was further compounded when this court quite recently in
the case of Yong Tim v. Hoo Kok Chong & Anor17 was emphatic and adopted the
first principle, namely, that ‘the standard of proof for fraud in civil proceedings
is one of beyond reasonable doubt which has been consistently applied by the
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courts in Malaysia. We see no reason to disturb that trend.’ (See also: Asean
Security Paper Mills Sdn Bhd v. CGU Insurance Bhd18).

[33] It is therefore not surprising that subsequent to Yong Tim (supra) the lower
courts, being bound by the principle of stare decisis, adopted the criminal
standard of proof for fraud in civil claims. (See: Chong Song v. Uma Devi V
Kandiah19 and Shell Malaysia Trading Sdn Bhd v. Tan Bee Leh & Ors.20

[34] In view of such uncertainty in the law both learned counsel for the parties
in this appeal strenuously urged us to revisit the earlier decisions of the courts
in this country. It was submitted that the position of the law should be rectified
so as to be in tandem with the generally accepted standard as applied in other
common law jurisdictions, in particular among the Commonwealth countries
such as England, Canada, Australia and Singapore.

[35] Now, before we respond to that urging it is only appropriate that we

begin by examining the English position. Based on the various decisions of
the English courts it is clear that under English law the standard of proof for
fraud in civil claim has been on the balance of probabilities. But ‘the elements
of gravity of an issue are part of the range of circumstances which have to be
weighed when deciding as to the balance of probabilities’.21

[36] While the English position appeared to be clear, some confusion came
about when the Privy Council through Lord Atkin held otherwise22 and
failed to consider an earlier decision of the same tribunal.23 This resulted in
some common law jurisdictions including this country adopting the criminal
standard of proof on a beyond reasonable doubt in civil claims when fraud
is alleged. But there were also some other jurisdictions, after considering the
rationale of the proposition by Lord Atkin, declined to follow it.24

[37] Be that as it may, the English position is now settled once and for all in the
case of In re B (Children) (supra).25 In that case the House of Lords held that there
is ‘only one civil standard of proof and that is proof that the fact in issue more
probably occurred than not’. The ‘range of circumstances which have to be
weighed when deciding as to the balance of probabilities’26 or ‘heightened civil
standard’27 is no longer a factor to consider ‘when deciding as to the balance of
probabilities’. This is what Lord Hoffmann said at p 7:
‘My Lords, I would invite your Lordships fully to approve these observations.
I think that the time has come to say, once and for all, that here is only one
civil standard of proof and that is proof that the fact in issue more probably
occurred than not. I do not intend to disapprove any of the cases in what I
have called the first category, but I agree with the observation of Lord Steyn
in McCann’s case, at p 812, that clarity would be greatly enhanced if the
courts said simply that although the proceedings were civil, the nature of the
particular issue involved made it appropriate to apply the criminal standard.’

[38] And Baroness Hale of Richmond was even more forceful in emphasising
on the law when she said this at p 11 and p 22 respectively:
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‘In our legal system, if a judge finds it more likely than not that something did
take place, then it is treated as having taken place. If he finds it more likely
than not that it did not take place, then it is treated as not having taken place.
He is not allowed to sit on the fence. He has to find for one side or the other.
Sometimes the burden of proof will come to his rescue: the party with the
burden of showing that something took place will not have satisfied him that
it did. But generally speaking a judge is able to make up his mind where the
truth lies without needing to rely upon the burden of proof.

My Lords, for that reason I would go further and announce loud and clear that
the standard of proof in finding the facts necessary to establish the threshold
under s 31(2) or the welfare considerations in s 1 of the 1989 Act is the simple
balance of probabilities, neither more nor less. Neither the seriousness of the
allegation nor the seriousness of the consequences should make any difference
to the standard of proof to be applied in determining the facts. The inherent
probabilities are simply something to be taken into account, where relevant,
in deciding where the truth lies.’

[39] It is worthy to note that the English Supreme Court in the case of In re
S-B Children28 followed the law as pronounced in In re B (Children) (supra). The
Supreme Court firmly approved that ‘there is only one civil standard of proof
and that is proof that the fact in issue more probably occurred than not’. The
court also rejected the “nostrum, ‘the more serious the allegation, the more
cogent the evidence needed to prove it”’. This rejection goes to show that even
for hybrid cases29 the same civil standard of proof applies.

[40] The Canadian courts took the same position as the English courts. In FH
v. McDougall30 the Canadian Supreme Court held that ‘in civil cases there is
only one standard of proof and that is proof on a balance of probabilities. In
all civil cases, the trial judge must scrutinise the relevant evidence with care to
determine whether it is more likely than not that an alleged event occurred.’

[41] And in rejecting the suggestion that there are different levels of scrutiny
of evidence depending on the seriousness of the allegation, Rothstein J in
delivering the judgment of the Canadian Supreme Court said this at para 45:
‘To suggest that depending upon the seriousness, the evidence in the civil case
must be scrutinised with greater care implies that in less serious cases the
evidence need not be scrutinised with such care. I think it is inappropriate to
say that there are legally recognised different levels of scrutiny of the evidence
depending upon the seriousness of the case. There is only one legal rule and
that is that in all cases, evidence must be scrutinised with care by the trial
judge.’

[42] In fact long before McDougall (supra) the position of the law in Canada31
was in line with the jurisprudence as stated in Bater v. Bater (supra).
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[43] In Australia the approach then by the courts there could be surmised in the
case of Rejfek & Anor v. McElroy & Anor32 in which the High Court of Australia
stated this at para 11:
‘But the standard of proof to be applied in a case and the relationship between
the degree of persuasion of the mind according to the balance of probabilities
and the gravity or otherwise of the fact of whose existence the mind is to
be persuaded are not to be confused. The difference between the criminal
standard of proof and the civil standard of proof is no mere matter of words:
it is a matter of critical substance. No matter how grave the fact which is to
be found in a civil case, the mind has only to be reasonably satisfied and has
not with respect to any matter in issue in such a proceeding to attain that
degree of certainty which is indispensable to the support of a conviction upon
a criminal charge.’

[44] It is to be noted that Rejfek & Anor v. McElroy & Anor (supra) followed an
earlier decision of the High Court in Helton v. Allen33 that preferred the decision
in Doe d Devine v. Wilson (supra) to that of Lord Atkin’s pronouncements in
New York v. Heirs of Phillips Dec’d (supra) and Narayanan (supra). Indeed the
pronouncements of Lord Atkin were considered as a mere dicta.

[45] Nearer home, in Singapore, the principle of law on the standard of proof
for fraud in civil claims is also on the balance of probabilities. And although
the notion of a third standard of proof where fraud is the subject in a civil
claim has been rejected, the courts there nevertheless added a caution that ‘the
more serious the allegation, the more the party, on whose shoulders the burden
of proof falls, may have to do if he hopes to establish his case’.34

[46] It is therefore quite obvious that the current law in Singapore on the
standard of proof for fraud in civil claims is the pre In re B (Children) (supra)
position under the English law.

[47] In view of the positions of the law in the respective common law
jurisdictions as summarised above, we agree with both learned counsel for the
parties in this appeal that the position of the law on the standard of proof
for fraud in civil claims in this country is far from satisfactory. With respect,
there is merit in the submission of learned counsel for the defendant that the
adoption of the criminal standard of proof for fraud in civil claims is due to the
misinterpretation or even a blind adoption of the judgment of Lord Atkin in
Narayanan Chettyar v. Official Assignee of the High Court, Rangoon (supra).

[48] As such, in our judgment the time has come to realign the position of
the law in this country on the standard of proof for fraud in civil claims.
While learned counsel for the defendant seemed to favour the adoption of
the Singapore position, learned counsel for the plaintiff urged us to adopt the
principle in In re B (Children) (supra).
 Sinnaiyah & Sons Sdn Bhd
[2015] 5 MLRA v. Damai Setia Sdn Bhd 203

[49] With respect, we are inclined to agree with learned counsel for the plaintiff
that the correct principle to apply is as explained in In re B (Children) (supra).
It is this: that at law there are only two standards of proof, namely, beyond
reasonable doubt for criminal cases while it is on the balance of probabilities
for civil cases. As such even if fraud is the subject in a civil claim the standard
of proof is on the balance of probabilities. There is no third standard.
And ‘(N)either the seriousness of the allegation nor the seriousness of the
consequences should make any difference to the standard of proof to be applied
in determining the facts.’

[50] Hence, it is therefore up to the presiding judge, after hearing and

considering the evidence adduced as being done in any other civil claim to find
whether the standard of proof has been attained. ‘The inherent probabilities
are simply something to be taken into account, where relevant, in deciding
where the truth lies.’ The criminal aspect of the allegation of fraud and the
standard of proof required thereof should be irrelevant in the deliberation.

[51] Accordingly as stated earlier we agree with the reasons given by learned
counsel for both parties that the present standard of proof for fraud in a civil
claim in this country is not in line with the principle as applied in other common
law jurisdictions and should therefore be reviewed.35 Indeed it is quite obvious
in Narayanan (supra) that Lord Akin did not provide any cogent reason for
applying the criminal standard of proof in a civil claim when fraud is alleged.
Similarly in Saminathan (supra) the principle in Narayanan (supra) was applied
without any discussion on its rationale.

[52] We therefore reiterate that we agree and accept the rationale in In re

B (Children) (supra) that in a civil claim even when fraud is alleged the civil
standard of proof, that is, on the balance of probabilities, should apply. And
perhaps it is not out of place here to restate the general rule at common law
that, “in the absence of a statutory provision to the contrary, proof in civil
proceedings of facts amounting to the commission of a crime need only be on a
balance of probabilities”. (See Boonsoom Boonyanit v. Adorna Properties Sdn Bhd
[1997] 1 MLRA 209, at p 216).

[53] Accordingly, despite the reaffirmation of the law on the issue in Yong Tim
v. Hoo Kok Cheong (supra) we hold that it is no longer the law in this country.
Similarly, the principles as pronounced in Ang Hiok Seng (supra) and Lee You Sin
v. Chong Ngo Khoon (supra) despite applying the civil standard to a certain extent
are also no longer the law. Hence, the disapproval of Lau Kee Ko (supra) in Ang
Hiok Seng (supra) is no longer relevant.

[54] However, we should make it clear that this judgment only applies to this
appeal and to future cases and should not be utilised to set aside or review past
decisions involving fraud in civil claims.

[55] Our answer to the leave question is therefore in the negative.

 Sinnaiyah & Sons Sdn Bhd
204 v. Damai Setia Sdn Bhd [2015] 5 MLRA

[56] Reverting to the present appeal, we have duly perused the facts and
evidence adduced. And applying the principle we have just pronounced on
the standard of proof for fraud in civil claims which is less onerous than the
standard applied by the courts below, we agree with the reasons, findings
and conclusions of the Court of Appeal in allowing the counterclaim of the
defendant.

[57] In the upshot this appeal is therefore dismissed with costs.

1
[2008] UKHL 35 - Per Lord Hoffmann para 4.
2
(28) [1941] AIR PC 93
3
[1996] 2 MLRA 127
4
[1970] 2 WLR 226
5
[1951] P 35
6
[1947] 2 All ER 372
7
[1980] 1 MLRA 250
8
[1985] 1 MLRA 444
9
[1985] 1 MLRA 479
10
[1973] 1 MLRA 604
11
[1967] 1 MLRA 14
12
[1981] 1 MLRA 251
13
[1969] 1 MLRH 355
14
See: Hornal v. Neuberger Products Ltd [1957] 1 QB 247
15
Re: Saminathan (supra) and Lee You Sin (supra)
16
Note on the view expressed on the difficulties in distinguishing between civil and
criminal fraud in Eric Chan Thiam Soon v. Sarawak Securities Sdn Bhd [2000] 1 MLRH 624
17
[2005] 1 MLRA 440
18
[2007] 1 MLRA 12
19
[2012] 6 MLRA 112
20
[2012] MLRHU 1295
21
See: Bater v. Bater (supra); Hornal v. Neuberger Products Ltd (supra) -‘ …for in all cases the
degree of probability must be commensurate with the occasion and proportionate to the
subject-matter. The elements of gravity of an issue are part of the range of circumstances
which have to be weighed when deciding as to the balance of probabilities.’
 Sinnaiyah & Sons Sdn Bhd
[2015] 5 MLRA v. Damai Setia Sdn Bhd 205

22
See: New York v. Heirs of Phillips Deceased [1939] 3 All ER 952; Narayanan (supra);
23
See: Doe d Devine v. Wilson [1855] 14 ER 851 –‘In a civil case … The jury must weigh
the conflicting evidence, consider all the probabilities of the case, not excluding the
ordinary presumption of innocence, and must determine the question according to the
balance of those probabilities’.
24
Canada and Australia courts declined to follow Lord Atkin’s preposition.

See Note 1 above; See also Secretary of State for the Home Department v. Rehman [2001]
25

UKHL 47, [2003] 1 AC 153 where Lord Hoffmann first stated the law
26
Hornal v. Neuberger Products Ltd (supra)
27
See: R (McCann) v. Crown Court at Manchester [2003] 1 AC 787 per Lord Steyn
28
[2009] UKSC 17
29
Civil cases but containing material allegations implying criminal conduct. There are
some judicial views that for a hybrid case a higher degree of probability or a higher
standard of proof is required. In the words of Lady Hale in re S-B Children (supra) such
views ‘had become a commonplace but was a misinterpretation of what Lord Nicholls
had in fact said’ in Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563.
30
[2008] SCC 53
31
See: Hanes v. Wawanesa Mutual Insurance Co [1936] 36 DLR (2d)
32
[1965] 39 ALJR 177
33
[1940] 63 CLR 691

Tang Yoke Kheng v. Lek Benedict [2005] 3 SLR (R) 263; Yogambikai Nagarajah v. Indian
34

Overseas Bank [1996] 2 SLR (R) 774

35
See: Chua Kwee Chen, Lim Kah Nee and Lim Chah In (as Westlake Eating House) and
Another [2006] 3 SLR 469 which discusses the thorny issues related to the application of
the criminal standard in a civil claim involving the allegation of fraud.