Malaysia: New Test for Fiduciary Duties of Employee

In the recent Court of Appeal decision with grounds of judgment dated 9 September 2015 by Tan Sri Idris Harun, the Court of Appeal set out the test for the imposition  of fiduciary duties on employees.

fiduciary

Unlike a director, an employee of a company would ordinarily not owe any fiduciary duties to the company.An employee may owe contractual duties as well as the common law duty of fidelity to the employer, but this is far removed from the stricter fiduciary duties.

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Fraud in Civil Claims: Balance of Probabilities

The Federal Court in its grounds of judgment dated 10 August 2015 in the case of Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd has made a significant clarification on the law. The standard of proof of fraud in a civil claim is now only based on a balance of probabilities and not beyond a reasonable doubt. The Federal Court overturned its earlier  decisions in Ang Hiok Seng [1997] 2 MLJ 45 and Yong Tim [2005] 3 CLJ 229.

The Federal Court examined the different authorities in the UK, Canada, Australia, and Singapore. The Federal Court emphatically adopted the English position as set out in the House of Lords decision in In re B (Children) [2008] UKHL 35. At law, there are only two standards of proof: beyond reasonable doubt for criminal cases and 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 other hybrid or third standard. 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 Federal Court made it clear however that the judgment only applied to the appeal in question and to future cases, and should not be utilised to set aside or review past decisions involving fraud in civil claims.