Preparing evidence to prove a case of civil fraud highlights two distinct challenges. The first is that evidence of dishonesty and concealment is by its nature scarce. The second is that the evidence of such a serious allegation must be sufficiently cogent to disprove the more likely scenario that someone was careless, rather than dishonest.
That creates a tension. The evidence must be persuasive to disprove a presumption of carelessness, but there is a recognition that evidence is not always apparent in allegations of covert behaviour.
In light of that, there are various nuances in admitting evidence in civil fraud claims.
Which evidence is admissible?
The general position (derived from common law) is that all relevant evidence, howsoever obtained, is admissible.
“Howsoever obtained” is potentially problematic, and raises questions about evidence that is obtained illegally. This point was challenged in the Court of Appeal case Ras Al Khaimah Investment Authority (‘RAKIA’) v Azimna [2021] EWCA Civ 349.
The claimant relied on evidence that was obtained through the unlawful hacking of the defendant’s computer. Even if the claimant was responsible for the hacking (which had not been established), and its case would have failed without the unlawfully obtained evidence, the evidence should not have been excluded.
The caveat to “howsoever obtained” is that if the admission of evidence would bring the process of the court into disrepute, there might be grounds for rejecting it. The concern is that it would encourage litigants to obtain evidence by illegal means.
In the RAKIA case, the significant factors for allowing the evidence were that:
- The evidence would have fallen within the opponent’s disclosure obligations anyway;
- The materials revealed a serious fraud had been carried out;
- Refusing to admit the evidence (and consequently striking out the claim) would have left the defendant to benefit from their fraud.
With that in mind, the consequences of refusing the evidence outweighed the risk of disrepute to the court.
It is usually more appropriate for the court to admit the evidence, but sanction the unlawful or inappropriate conduct of the party obtaining it with an adverse costs order (For an example see Jones v University of Warwick [2003] EWCA Civ 151).
Documentary Evidence
As in any case, the documents play an important role.
But in cases of civil fraud, the issue of authenticity may arise more commonly than in other types of cases. There may be documents that are deliberate forgeries, or documents signed by forged signatures.
In order to challenge whether an allegedly forged document can be used in evidence, the party must expressly plead that the document is a deliberate forgery, or that the signature is not genuine. They must provide evidence for their contention.
A recent example, though not itself a fraud case, was the judgment in Contax Partners Inc BVI v Kuwait Finance House (KFH-Kuwait & Ors) [2024 EWHC 436 (Comm). The court refused to enforce a £70m arbitration award after finding that the Kuwaiti arbitration award was a fabrication, and there was never an arbitration at all. Read more about this example in our recent article here.
Among other evidence, the defendants highlighted that substantial parts of the ‘award’ had been taken from another judgment – Mr Justice Picken’s judgment in Manoukian v Société Générale de Banque au Liban SAL [2022] EWHC 669 (QB).
Witness Evidence
Witness evidence is usually assessed hand-in-hand with documentary evidence in civil fraud claims.
The honesty and accuracy of witnesses is often challenged in fraud claims. So certain parameters have emerged in the judicial assessment of the truthfulness of witnesses.
The most commonly cited guidance is from Robert Goff LJ in The Ocean Frost:
“Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities.”
The documentary evidence is used to assess the veracity of the witness evidence and what the facts actually are.
Drawing Inferences
Given that direct evidence of fraud is relatively rare, it is often necessary to draw inferences from the evidence available or seemingly withheld.
Inferences can be drawn from:
- A party’s failure to disclose documents: The inference is that the documents in question contain adverse information to the party’s case.
- The absence or silence of a witness: Claimant can only invite the court to draw adverse inferences from a defendant’s failure to call a witness if: (a) the claimant has itself raised a case to answer by its own evidence (b) the relevant witness could be expected to have given relevant evidence (c) there is no satisfactory explanation for the absence of the witness.
The courts will not lightly draw adverse inferences from a failure to call a witness, but it will do so in appropriate cases. See Ahuja Investments Ltd v Victorygame Ltd [2021] EWHC 2382 (Ch) for an example. This was an unusual case in which inferences were drawn against both parties in a civil fraud case.
Conclusion
The courts recognise that evidencing claims of civil fraud presents unique challenges. Case law has developed to allow the court system to hold the perpetrators of fraud to account, without compromising the integrity and reputation of the courts. Inferences may be drawn in appropriate cases, so long as there is sufficient cumulative evidence to support it.
The requirement for a claimant in proving fraud is that the primary facts proved must give rise to an inference of dishonesty or fraud which is more probable than an innocent explanation (see JSC Bank Moscow v Kekhman [2015] EWHC 3073).
At Rahman Ravelli, we have extensive experience in civil fraud litigation and we represent claimants and defendants in this area.
