Rasmala Trade Finance Fund v Trafigura Pte Limited

Similar fact evidence is admissible in civil proceedings only where it is potentially probative of an issue requiring proof and its admission is proportionate having regard to prejudice, trial distortion and burden. At the pleading stage, the court assumes the pleaded facts can be proved but must still assess admissibility and evidential foundation. Allegations of fraud and knowledge require primary facts capable of supporting the pleaded inference. Evidence concerning transactions conducted in materially different circumstances will not ordinarily be sufficiently probative. The court may refuse amendments where they would expand one dispute into several satellite trials, particularly where relevant non-parties cannot participate and the resulting delay, disclosure and cost would materially prejudice a fair trial.

Rasmala sought permission to amend its particulars of claim to plead five transactions involving three other financiers as similar fact evidence of Trafigura’s knowledge of an alleged fraud by Farlin. Trafigura cross-applied to strike out the proposed allegations.

The existing claim concerned five payments made against fictitious coal shipments and forged documents. The proposed additional transactions involved real shipments, formal undertakings to provide original bills of lading, and delivery of the bargained-for security. The central issues were whether the proposed material was admissible similar fact evidence, whether the fraud and knowledge allegations had a sufficient evidential foundation, and whether the amendments would cause unfair prejudice or distort the trial.

1. Applications. The application to amend was dismissed and Trafigura’s strike-out application was granted.
2. Admissibility test. At the pleading stage, the court asks whether the facts, assuming they can be proved, are potentially probative or disprobative of an issue requiring proof. It then considers their significance under the overriding objective, including trial distortion, distraction, unfair prejudice and the burden imposed on the resisting party.
3. Material difference between transactions. The proposed transactions were dissimilar fact evidence. The Rasmala Payments concerned fictitious shipments, forged documents and no coal. The other payments concerned real cargoes, real shipments and formal security undertakings which were performed. The common feature that payments were allocated internally to historic debts was insufficient.
4. Pleading and evidential foundation. The allegations that Farlin defrauded the other financiers were, just, sufficiently pleaded at the interim stage. However, no primary facts supported the inference that Trafigura knew of, or had reason to believe in, those alleged frauds. Internal allocation of payments, where the banks received the security requested, did not support an arguable Ponzi scheme or fraud by Trafigura.
5. Relevance and case management. Even if proved, Trafigura’s alleged knowledge of other financiers being deceived would have little or no bearing on its knowledge of the fundamentally different fraud alleged by Rasmala. The proposed amendments would require investigation of several foreign parties’ states of mind, cause substantial delay and expense, and risk an unfair and overburdened trial. The claimant was therefore confined to the case as presently pleaded.