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Explainer: Why some wrongdoing is probed by the police but other instances can lead to a civil claim

Recently, a police report was filed against Kwon Do Hyeong, the co-founder of Terraform Labs, in relation to the crash of cryptocurrencies TerraUSD and Luna. However, it appears that the police are not investigating the matter.

Recently, a police report was filed against Kwon Do Hyeong, the co-founder of Terraform Labs, in relation to the crash of cryptocurrencies TerraUSD and Luna. However, it appears that the police are not investigating the matter.

This might be because there is no offence disclosed. Not all kinds of wrongdoing are necessarily criminal.

There is a distinction in Singapore’s legal system between civil and criminal law: Civil cases are disputes between private parties, whereas criminal cases generally relate to wrongs against society that are enforced by the state.

For example, breach of contract is a common form of civil wrong and the correct legal procedure is to sue the person in breach.

This was what happened to blogger Ang Chiew Ting, known as Bong Qiu Qiu, who was sued in 2016 by social media advertising network ChurpChurp for allegedly breaching her contract and denying it of fees from what it said were commercial deals with more than 30 brands including cosmetic brands such as Laneige, Yves Saint Laurent and Etude House.

In contrast, for example, cheating is an offence — a criminal wrong — and the correct legal remedy is to prosecute the offender.

This is what happened to dentist Andy Joshua Warren, who in 2015 tried to circumvent Medisave claim limits by authorising the submission of false claims, cheating the Central Provident Fund (CPF) Board into disbursing S$11,250.

He was prosecuted and recently fined S$45,000 after pleading guilty to cheating charges.

Criminal cases are generally more serious. Unlike civil cases, if convicted, the offender can be deprived of his liberty or, for certain offences such as murder, even his life.

Parliament decides what constitutes criminal conduct. Offences are usually defined in Acts of Parliament, also known as statutes, such as the Penal Code.

POLICE INVESTIGATORY POWERS

The police are given special powers to investigate offences by law, for example, by the Criminal Procedure Code, which is a statute. These powers include, for example, the ability to compel the production of evidence, confiscate evidence, and take statements from any person necessary to the investigation.
 
However, the police must exercise these powers according to law. This is to prevent abuse of power and to preserve the civil rights of ordinary citizens. Powers of investigation are intrusive and should therefore be exercised only when strictly necessary.

The police exist to prevent and investigate crime. They are a public force dedicated to serving the public, and do not serve private interests.

Therefore, they are generally not involved in the investigation of civil wrongs – that would be an unjustified use of taxpayers’ money.

In such cases, if no criminal wrong is disclosed in a report, the police will not exercise their powers of investigation.

WHO DECIDES IF AN OFFENCE IS DISCLOSED?

First, if it is obvious that no offence has been committed, the police may simply decline to investigate.

In Singapore, people are sometimes overzealous with reporting to the police: Anything from lost items to annoyance with neighbours’ conduct to breach of business agreements.

The police need to prioritise scarce resources and not waste time on things that are just not criminal.

Second, the matter may be considered by the Attorney-General’s Chambers (AGC).

The Attorney-General is the Public Prosecutor and, under the Constitution, has the power to start or stop any criminal proceedings.

If AGC determines that no offence has been disclosed, it may direct the police or any other investigating agency to take no further action.

For example, after reviewing the evidence, AGC directed that no further action be taken by the Ministry of Manpower against the family of former Changi Airport Group chairman Liew Mun Leong after it was alleged by his former domestic worker Parti Liyani that they had illegally deployed her at his son’s home and office.

Third, any person may make a Magistrate’s Complaint to the State Courts. A magistrate is a judicial officer — a judge — and, if there is sufficient cause, may look into the complaint or direct the police to carry out investigations.

WHAT CONSTITUTES A CIVIL WRONG?

Not all wrongs are civil wrongs. Civil wrongs require a legally recognised basis for beginning legal proceedings, known as a “cause of action”, for example, breach of contract or negligence.

Generally, the complainant (known as the plaintiff) will have to gather his own evidence and start the case. Unlike the police, plaintiffs do not have any special powers of investigation, so sometimes it is difficult to do so.

However, the standard of proof in civil cases is lower. To win, the plaintiff needs to prove his case only on the balance of probabilities, meaning more likely true than not.

In criminal cases, in contrast, the prosecution needs to prove the case beyond reasonable doubt to obtain a conviction.

For simple cases, it is possible for a plaintiff to conduct the legal proceedings by himself. For example, the Small Claims Tribunal is designed specifically for simple civil cases in which lawyers are not required.

However, for more complex cases, usually a civil lawyer will be engaged to advise on an appropriate cause of action and represent the plaintiff in the legal proceedings.

Cases are either civil or criminal, never both. The law governing civil and criminal cases differs and it is therefore important to keep them distinct.

However, the same set of facts may give rise to two separate cases, one criminal and one civil, that proceed in parallel.

For example, a traffic accident might result in the offender being both prosecuted by the state for reckless driving and being separately sued by the victim for personal injury and property damage.

HOW DOES THIS APPLY TO RECENT CRYPTO CRASH?

In the recent cryptocurrency crash, first, it is not clear whether any offence has been committed. The fact that Luna and TerraUSD collapsed is not, without more, evidence of criminal activity.

Cryptocurrencies are inherently risky investments.

For the police to investigate, there would have to be some indication of criminal conduct such as cheating.

However, cheating requires dishonesty and deception, such as in the case of serial fraudster Kalimahton Samsuri who, between 2012 and 2015, deliberately deceived her victims into believing that she had various investment opportunities for them, which did not in fact exist.

In contrast, a genuine business that collapses out of bad luck or bad business conditions is not a criminal matter.

Second, it is also not clear that any civil wrong has been committed. There is no such thing as a completely risk-free investment and the fact that money has been lost is not necessarily reason for the law to intervene.

Affected investors would probably have to engage lawyers to determine whether they have any cause of action and whether they have sufficient evidence to prove it in court.

The law protects people from wrongdoing, not from risk or loss. If someone suffers loss because of their own decisions, misunderstandings, or plain bad luck, then sometimes, there is simply nothing the law can do.

ABOUT THE AUTHOR:

Alexander Woon is a lecturer at Singapore University of Social Sciences’ School of Law and practises law as an of counsel at RHTLaw Asia. He was formerly a deputy public prosecutor at the Attorney-General's Chambers.

Related topics

criminal law civil action AGC police lawsuit cryptocurrency

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