Documentary evidence in Civil Fraud
Civil Fraud deals with claims more commonly arising from the intentional use of deception, dishonesty and or misrepresentation to bring about a gain or disadvantage to a party.
By its very nature alleging fraud is serious as the allegation goes to the heart of the credibility of a party.
Although the civil standard of proof being ‘on the balance of probabilities’ does not change for alleging fraud, the courts take this allegation very seriously. Consequently, the courts require that each allegation of fraud is set out clearly and supported by a concise statement if facts. This means documentary evidence is important in fraud cases and it is wise to consider the legal and practical challenges arising from its use at trial.
Documentation is an essential part of the evidence especially when witness evidence concerns issues of credibility. Often it will be necessary to piece together a large documentary jigsaw to show how the fraud was undertaken with the documents coming from various sources.
In Digicel (St Lucia) Ltd v Cable & Wireless plc  EWHC 2522 (Ch) the court accepted a submission that “because the tendency of conspirators is to conceal rather than to reveal, proper disclosure is all the more important in a conspiracy claim”. This would apply to all claims involving dishonesty.
Advances in technology has meant that documentary evidence can often be found on various technological devices such as mobile phones, laptops, email servers, social media accounts and instant messaging platforms like whatsapp or telegram. The data must be captured, stored and managed and this can be a challenge. Technological experts often need to be engaged from a very early stage as upon starting a claim the parties’ duties include a requirement for the parties to take reasonable steps to preserve documents.
A balance is required in making sure that enough evidence is presented so that the claim is successful but not taking a disproportionate approach to incur wasted costs.
A party in a fraud case is likely to be assisted by a scheme that exists in the Business and Property Courts that now applies when it comes to the exchange of documents (known as disclosure). This scheme was introduced as a temporary regime but has recently been made permanent from 1 October 2022. It is found in Practice Direction 57AD of the Civil Procedure Rules (CPR) and was originally known as the Disclosure Pilot Scheme (DPS).
The DPS aimed to make disclosure less onerous, more proportionate and tailored to the circumstances of each case. The scheme includes a requirement for parties to disclose documents in two stages: “initial” disclosure, which is generally done when serving statements of case, and “extended” disclosure. Extended disclosure is undertaken once the statements of case have all been served and the court has ordered how to progress the claim to trial. Extended disclosure introduces different disclosure “models” for the parties to agree upon. The models range from model A (no disclosure on an issue) to model E (a broad search based disclosure model which may lead to a “train of enquiry” disclosure).
The parties must try to co-operate and agree issues for disclosure and complete a detailed document known as the Disclosure Review Document (DRD). The DRD details the scope of the searches a party must undertake for example what key words should be searched for and who the data custodians are. The parties’ disclosure duties are codified under CPR Practice Direction 57AD with the parties under an obligation to disclose adverse documents and to conduct searches in a responsible and conscientious manner.
Before this scheme was in place a disclosure exercise may have involved searching every place (electronically and physically) possible before disclosure was given. This could be an extremely lengthy and a disproportionate process. Now parties have to streamline the process and agree up front how the review will take place. This should make disclosure more focused and efficient. If a case is exceptional, although rare, Model E “train of enquiry” disclosure might be appropriate in relation to any number of issues. Model E can be a useful tool in fraud cases or where a party is suspected of questionable practices.
Further, parties must disclose adverse documents and are expressly reminded of their disclosure obligations and must sign a certificate confirming compliance to their obligations. The court may also get involved to resolve any issues at a disclosure guidance hearing. All of these factors may relieve concerns about a party taking a dishonest approach to the disclosure exercise.
Of course, there will be occasions when a party who has allegedly been fraudulent does not sufficiently engage in the process. If this occurs a party may seek to obtain disclosure in other ways such as via a freezing injunction (and the asset disclosure that follows), a Norwich Pharmacal order or a search and seizure order. We discussed this in our previous edition of DAF.
Locating and managing documents in fraud cases is a challenge but a structured and strategic approach will ensure that a proportionate balance is struck.