While this recent Supreme Court of Appeal judgment is a criminal case, with the onus on the State to establish proof beyond a reasonable doubt, it is a reminder for all parties to an insurance transaction of the burden upon the accuser establishing intent to defraud. In civil proceedings the burden of proof is on the balance of probabilities.
It is not an easy onus to discharge.
The appeal court held that the State had not discharged its onus to show that the accused was complicit in the taxpayer’s fraudulent scheme.
While the evidence did show a reckless disregard by the accused of his duties as a tax practitioner, that wasn’t the charge he was facing. The question was whether he made himself party to the fraud perpetrated by the taxpayer upon SARS.
The court said that there wasn’t any evidence that the accused knew that documents submitted to SARS were fictitious invoices and that the claim was fraudulent just because the accused submitted documents on the part of another person that he represented in support of the VAT refund claim, that he knew they were fictitious.
It was plain that the accused had acted recklessly. He had lent his efforts to secure the payment of a fraudulent claim. But the court said that absent proof beyond a reasonable doubt that he knew the claim to be fraudulent, he could not be said to have made himself party to the fraud. There was no proof that the accused had the intention required to be guilty of fraud. The conviction on the charges of common law fraud was set aside.
Before alleging fraud in any element of an insurance transaction, the party making such allegations must be satisfied they have all the evidence available to them to discharge the onus on a balance of probabilities of proving all the elements of fraud.