The Benefits of Filing a Police Report for Cases on Fraud

Fraud is one of the hardest causes of action in civil litigation that an aggrieved litigant may have to deal with.

Overlapping substantially with elements of criminal law, fraud can be loosely defined as “a false representation has been made knowingly, or without belief in its truth, or recklessly, careless whether it be true or false” based on the seminal case of Derry v Peek (1889) 14 App Cas 337.

However, the Federal Court in Letchumanan Chettiar Alagappan @ L Allagappan (as executor to SL Alameloo Achi aloas Sona Lena Alamelo Acho, deceased) & Anor v Secure Plantation Sdn Bhd [2017] 4 MLJ 697 observes that fraud is a far wider concept than what was stated in Derry v Peek (Supra) and as a result, it has a far wider effect. In this regard, Jeffrey Tan FCJ held that: 

[18] “What amounts to ‘fraud’? ‘It is not easy to give a definition of what constitutes fraud in the extensive signification in which the term is understood by Civil Courts of Justice. The courts have always avoided hampering themselves by defining or laying down as a general proposition what shall constitute fraud.

Fraud is infinite in variety … The fertility of man’s invention in devising new schemes of fraud is so great, that the courts have always declined to define it, or to define undue influence, which is one of the many varieties, reserving to themselves the liberty to deal with it under whatever form it may present itself … Fraud, in the contemplation of a Civil Court of Justice, may be said to include properly all acts, omissions, and concealments which involve a breach of a legal or equitable duty, trust or confidence, justly reposed, and are injurious to another, or by which an undue or unconscientious advantage is taken of another … All surprise, trick, cunning, dissembling and other unfair way that is used to cheat any one is considered fraud … Fraud in all cases implies a wilful act on the part of any one, whereby another is sought to be deprived, by illegal or inequitable means, of what he is entitled to … ‘The concept of fraud is notoriously difficult to define’ … We would not hazard to define ‘fraud’. We would just say that ‘fraud’ is a generic term which also covers all manner of cheat, deceit and dishonesty. Given its wide meaning, ‘an action in fraud will usually include a number of distinct causes of action …’ and ‘claims to trace assets in equity or, perhaps, at common law’ …”

Although the Federal Court has determined that the standard of proof for proving fraud is based on a balance of probabilities (see Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd [2015] 7 CLJ 584), the factual complexity in most fraud cases cannot be understated. Combined with the elaborate concept of fraud in its most fundamental sense, it may often times be the case that it will be very difficult to obtain evidence and proof relating to issues of fraud.

The courts have on numerous occasions recognized the difficulty in securing such proof and evidence to establish fraud to the extent that the court may also be open to accepting circumstantial evidence so long as it is so compelling and convincing so as to convince the court that fraud could have been committed on a balance of probability.

In the High Court case of Rajamani a/p Meyappa Chettiar v Eng Beng Development Sdn Bhd & Ors [2015] MLJU 148, it was held by Lim Chong Fong J that:

[64] “The adduction of direct evidence of fraud is often difficult and not practicably procured. Nevertheless circumstantial evidence may suffice and in Ng Pak Cheong v Global Insurance Co Sdn Bhd [1994] 3 AMR 50, Mohamed Dzaiddin bin Haji Abdullah J (as he then was) dealt with the reception of circumstantial evidence at 2673:

“In the famous Singapore case of Sumitomo Bank Ltd v Kartika Ratna Thahir [1993] 1 SLR 735, Lai Kew Chai J, in dealing with the burden of proof for allegations of fraudulent or criminal nature in civil cases, held, allowing a substantial part of Pertamina’s claim, that the legal and evidential burden of proof that Pertamina had paid Siemens and Klockner rests with Pertamina. Whilst it is necessary for Pertamina to prove their case to a higher standard than that required in a non-fraud case (there being allegations of a fraudulent or criminal nature), it is not the law of evidence that every step in the allegation of fraud had to be proved by calling live and admissible evidence nor is it the law that fraud cannot be inferred in the appropriate case. The inference, however, should not be made lightly; the circumstantial evidence must be so compelling and convincing that bearing in mind the high standard of proof the inference is nevertheless justified…” (emphasis added)”

In light of such difficulties, it will be very beneficial for any litigant to adduce a carefully drafted and particularized police report that has been filed in respect of circumstances that have brought these allegations of fraud. The police report, or formally known as the first information report, refers to the initial information relating to the commission of an offence given to the police officer under the procedure laid down in section 107 of the Criminal Procedure Code.

However, it should be noted that the police report is not substantive evidence for proving its facts but it can be used for corroboration or contradiction of those facts (see Tan Cheng Kooi & Anor v Public Prosecutor [1972] 2 MLJ 115).

Although the effect of lodging a police report means that a criminal investigation will automatically commence which may lead to prosecutions in the criminal courts, nevertheless the value of a police report in civil fraud cases is unmistakable in light of the general difficulties surrounding the proof of fraud. It was even observed in the High Court case of Chong Wan Ping & Anor v Shamshudeen Hj Mohd Yunus [2009] 1 LNS 834 that the absence of a police report lodged in relation to any allegation of fraud may be fatal to such a claim. It was held by Noraini Abdul Rahman J:

[9] “A summary of the decisions of the cases cited above is that for an allegation of fraud in a civil proceeding, it must be shown that a contemporaneous police report must be lodged. Otherwise, the allegation are merely bare allegations.”

…

[11] “Since no evidence was adduced nor was the letter to Senior General Than Shwe tendered, this Court is of the opinion that no police report or its equivalent was lodged. Therefore the Court is of the opinion that the claim by the Plaintiff that the Defendant had defrauded them must fail.”

Based on the above, whenever an aggrieved party has been involved in an issue relating to fraud, it is strongly recommended that a well particularized police report should be made filed to the nearest police station as soon as reasonably practicable in order to strengthen your civil case of fraud.

Such reports can be made at your nearest police station and it should be noted that the police cannot refuse the lodging of a police report as they are duty bound to receive any information in relation to any offence committed anywhere in Malaysia within the meaning of section 107(4) of the Criminal Procedure Code.