England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM COLCHESTER COUNTY COURT
(His Honour Judge Brandt)

		Royal Courts of Justice Strand London WC2 Wednesday 21 March 2001

1. LORD JUSTICE SIMON BROWN: This is the London Borough of Havering's appeal against the order of Judge Brandt in the Colchester County Court on 29 June 2000 giving judgment for the respondent, Mr Biggar, against the Borough for certain sums due under a severance agreement and for damages for wrongful dismissal.
2. Although the case below took a somewhat complicated form (and the transcript of the judgment extends to 24 pages) it has been possible through the good sense of the parties and their advisers to reduce the scope of the dispute on appeal, and thus the need for detailed exposition of the facts, very considerably.
3. The basic facts of the case can be briefly summarised as follows. On 6 March 1995 the respondent commenced work for the appellant borough as Transport Group Manager. He had previously worked for two other London boroughs and before that had a background in the SAS.
4. On 7 November 1995 he was suspended from work as a result of an allegation made against him by a member of his staff of sexual harassment. That suspension (coupled, it may be, with a general liking for alcohol) reduced him after some time to substantial ill health. He suffered stress and depression and took further to drink. It appears indeed that he spent some three weeks as an in-patient in hospital in March 1996. On 3 June 1996 he was convicted of driving with excess alcohol and disqualified from driving for three years. On 25 June 1996 his suspension from work was lifted, the decision having been reached that there was no substance in the sexual harassment allegation against him, but at that stage he remained still unfit to return to work.
5. Following a meeting with the Director of Contract Services, Mr Paterson, on 12 November and a letter from Mr Paterson of 22 November confirming the substance of what had been agreed at the meeting, the respondent returned to work on 2 December 1996 as Transport Project Adviser, a new role. The agreed terms included that his employment with the council would terminate on 31 March 1997 on the grounds of early retirement, whereupon he would receive a lump sum of £19,410 and an annual pension allowance of £6,470. His other terms of employment remained substantially unaffected.
6. On 14 December 1996 the respondent was arrested by police officers for a number of offences, most particularly the illegal possession of firearms (apparently dating back to his time in the SAS); the cultivation of cannabis (a matter not proceeded with); and driving whilst disqualified. Through press reports those matters came to the attention of his employers and on 20 December 1996 Mr Paterson wrote to him in these terms:

"If you are disqualified from driving, then you would not be able to fulfil your duties as Transport Group Manager [he had by then become instead Transport Project Advisor]. I am therefore concerned at your capability to carry out the duties of your post.

You have been submitting claims for your essential car user allowance. If you have been disqualified from driving, these claims would appear to amount to a deliberate falsification of records and an inappropriate claim for expenses. The form states that:

'I certify that this claim is a true record of mileage and other expenses incurred by me in respect of official business. That during the period of this claim I had and now have an appropriate current driving licence, that I am properly insured to drive the vehicle on Council business, that it is duly taxed and in a roadworthy condition and where required I possess a current MOT certificate for this car.'

In view of these developments, I am holding your application for voluntary early retirement in abeyance at this time.

It is also necessary to formally suspend you from work until further notice."

7. There followed an internal council investigation into the allegations. On 16 January 1997 there was a disciplinary hearing before the Personnel Panel. The respondent was unable to attend it, being sick at the time. The panel unanimously concluded that he should be summarily dismissed, principally for:

"gross misconduct - deliberate falsification of records submitting claims for essential car user allowance while disqualified from driving".

8. He was notified of his right to appeal and there was a hearing the following month, on 27 February 1997, before the council's disciplinary appeals panel, which upheld the previous ruling and resolved that he be dismissed. Again he was unable to attend. On this occasion that was because he was before the magistrates in respect of an incident involving his wife. He was, I may record, later sentenced to two years and three months' imprisonment in respect of the various offences for which he had been arrested on 14 December 1996.
9. The fairness of the disciplinary hearings, both before the personnel panel and then on appeal, were the subject of evidence and argument below. It is now agreed by both sides, however, that nothing any longer turns on those issues. Rather, the single issue arising out of the facts was whether or not the appellant was entitled to dismiss the respondent summarily for gross misconduct; whether, in short, he deliberately falsified his expenses claims.
10. This is the point upon which the appeal has exclusively focused, or more particularly on the judge's self-direction as to the standard of proof which he had to apply to the resolution of this critical issue. That is the point lying at the heart of the appeal.
11. It is, I think, relevant at this stage to note the respondent's explanation for having signed, as undoubtedly he did, a series of monthly claim forms for essential car user allowance between June and November 1996. What he said in his witness statement, and apparently maintained in his oral evidence at the hearing (although there is no transcript of that before us), was this:

"Car expenses were paid in two ways, firstly by way of a lump sum every month of £50.25, which subsequently arose to £51.25 per month, and this was paid whether the car was used or not. I have never had it precisely explained to me, but I assume that it is compensation for depreciation, general wear and tear, servicing, etc. In addition to that standard figure there is also payable the figure of about 27.02 pence per mile which is obviously to cover petrol, oil, etc. Therefore, on the claim forms I merely wrote across them 'no mileage'. I do not consider that I have acted in any way fraudulently."

12. According to the judgment below, the respondent also explained how, in the other two London boroughs for which he had worked, those in his position had been entitled to a car allowance whether or not they drove on the council's business. It was simply tacked on to the monthly salary cheques: forms had only had to be completed if there was a claim for actual mileage. In short, it was the respondent's case on this issue that since he was not claiming for actual mileage, he was simply signing monthly forms for the basic allowance (forms which had been issued to him in bulk in the past) without him having applied his mind to the precise wording on the certificates.
13. Let me come to the critical issue on the appeal, the appellant's contention that the judge applied the wrong standard of proof when determining the factual issue as to whether the respondent had signed these forms fraudulently.
14. The critical passage in the judgment - far from a model textbook direction, let me say at once - reads as follows:

"I do have to bear in mind here that this is an allegation of fraud. I do not think there can be any doubt about that. Indeed it is an allegation of a criminal offence. I think the obvious offence that springs to mind is obtaining pecuniary advantage by deception. Maybe there are other criminal offences involved. I have to bear in mind that when that is the allegation a high standard of proof is required. It does not have to be to the standard of beyond reasonable doubt but it is to a high standard, a higher standard than simply the ordinary bare civil standard with regard to probabilities. I can do two things really here. Firstly, I can ask myself the question what would a jury have made of this had it been put before them as a criminal charge. All I could say, going by experience, is that I think it is extremely unlikely that a jury would have convicted him. I am not a jury, I have to make my own mind up about these things, and I can only say that I am not satisfied that this was a deliberate falsification. I think he simply regarded this as part of his salary and signed the document accordingly."

15. The correct approach to the standard of proof and the nature of proof required in the case of grave allegations is to be found in the speech of Lord Nicholls of Birkenhead in In re H (Minors) [1996] AC 563 at 586-587:

"The balance of probability standard means that the court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence. Deliberate physical injury is usually less likely than accidental physical injury. A stepfather is usually less likely to have repeatedly raped and had non-consensual oral sex with his under age stepdaughter than on some occasion to have lost his temper and slapped her. Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation.

Although the result is much the same, this does not mean that where a serious allegation is in issue the standard of proof required is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. The more improbable the event, the stronger must be the evidence it did occur before, on the balance of probability, its occurrence will be established. Ungoed-Thomas J expressed this neatly in In re Dellow's Will Trusts [1964] 1 WLR 451,455: 'The more serious the allegation the more cogent is the evidence required to overcome the unlikelihood of what is alleged and thus to prove it.'

This substantially accords with the approach adopted in authorities such as the well known judgment of Morris LJ of Hornal v Neuberger Products Ltd [1957] 1 QB 247, 266. This approach also provides a means by which the balance of probabilities standard can accommodate one's instinctive feeling that even in civil proceedings a court should be more sure before finding serious allegations proved than when deciding less serious or trivial matters.

No doubt it is this feeling which prompts judicial comment from time to time that grave issues call for proof to a standard higher than the preponderance of probability."

16. It is Mr Fraser-Urquhart's contention on behalf of the appellant that Judge Brandt here failed to follow that correct approach, so that there should now be a fresh trial before a different judge for the critical issue of gross misconduct to be determined afresh. The passages in the judgment upon which counsel fixes his main criticisms are, first, the judge's suggestion that a standard of proof higher than "simply the ordinary bare civil standard with regard to probabilities" was required; and, secondly, the passage where he asks himself what a criminal jury would have made of this and concludes that a conviction would have been extremely unlikely.
17. The imperfections of this part of the judgment need little emphasis. Clearly there are criticisms to be made of it, and on any view it is somewhat muddled and unhelpful. So much, indeed, is fully acknowledged by the respondent, who was at one stage prepared on advice, subject only to the court's own view of the matter, to submit to judgment on the appeal for a new trial.
18. That is by no means to say, however, that Mr Marsden accepts that the judge actually did apply the wrong standard of proof. On the contrary, he contends in his written argument (on which we have not required oral elaboration) that this judgment is far from unique in using the expression "higher standard of proof" essentially as shorthand for the need which, on true analysis, arises in these cases, namely the need for a greater degree of probative evidence when criminal allegations are made in civil proceedings.
19. The proper approach, of course, as now enshrined in In re H, is essentially this. The graver the conduct alleged, the more intrinsically improbable that it happened; and the more improbable the event, the stronger must be the evidence that it did happen. Yet in a real sense the need to produce more cogent evidence than is ordinarily required (that is, required for a less serious allegation) is closely akin to the notion of proving the case to a higher than usual standard.
20. For my part, despite the manifest infelicities of the judge's self-direction on this point, I am quite sure that he approached the matter in substantially the correct way and did not fall into the egregious error of applying the criminal standard of proof. In terms he had directed himself that "it does not have to be to the standard of beyond reasonable doubt." His subsequent conclusion that a criminal jury would have been extremely unlikely to convict is clearly unhelpful, but cannot sensibly be thought to detract from his earlier self-direction or to imply that when he then expressed himself "not satisfied that this was a deliberate falsification" he was there adopting the criminal standard. What it seems that the judge was doing in that passage was, as my Lords suggested to Mr Fraser-Urquhart in the course of argument, striking a contrast between, on the one hand, a jury seised of a criminal charge and, on the other hand, a judge trying a civil dispute.
21. As for the judge's self-direction that the standard required was "a higher standard than simply the ordinary bare civil standard with regards to probabilities", I cannot but note that he is not alone among judges using that sort of shorthand expression. In Hornal v Neuberger Products Ltd itself, Denning LJ himself said at page 258:

"[The judge] reviewed all the cases and held rightly that the standard of proof depends on the nature of the issue. The more serious the allegation, the higher the degree of probability required."

22. Similarly, Lord Scarman in R v Home Secretary ex parte Khawaja [1984] 1 AC 74 at 113 said this:

"The flexibility of the civil standard of proof suffices to ensure that the court will require the high degree of probability which is appropriate to what is at stake."

23. These considerations aside, one is struck by the final sentence of the judge's conclusions on this part of the case:

"I think he simply regarded this as part of his salary and signed the document accordingly."

24. Surely the judge by this was indicating not merely that the local authority had failed to prove the case for summary dismissal to a given standard, but rather that the respondent had persuaded him of his essential honesty. As my Lord, Lord Justice Mance pointed out in argument, the judge did not there say "I think he may simply have regarded this as part of his salary", but that he did so regard it. The defence in short did not fail merely on the burden and standard of proof: the judge positively concluded the issue in the respondent's favour.
25. For all these reasons, it seems to me that the judge is to be regarded as having directed himself properly in accordance with the law.
26. This court does not readily order a new trial. It is appropriate to do so only when we are satisfied that a substantial injustice has occurred. For my part, I remain wholly unpersuaded that such has occurred here. I would accordingly dismiss this appeal.
27. LORD JUSTICE TUCKEY:I agree.
28. LORD JUSTICE MANCE: I agree. It seems to me that there are two aspects of the judgment which cause concern. The first relates to the judge's statement that:

"I have to bear in mind that when that is the allegation a high standard of proof is required. It does not have to be the standard of beyond reasonable doubt, but it is to a high standard, a higher standard than simply the ordinary bare civil standard with regard to probabilities."

29. There the judge was, as my Lord has pointed out, using terminology which has not infrequently been used in the past, but which requires revision in the light of what Lord Nicholls said in In re H [1996] AC 563.
30. For other cases in which similar terminology has been used, in addition to Hornal v Neuberger and those to which my Lord has referred, one may draw attention to the Ikarian Reefer [1995] 1 Lloyd's Rep 455 where in this court, giving the judgment, Stuart-Smith LJ said this at page 459:

"On this issue, the burden of proof rests unequivocally on the insurers [that is the issue whether the vessel was deliberately set on fire with the connivance of the owners] and the degree or standard of proof which the law requires makes the burden heavier than that which rests upon the shipowners. Although the same 'balance of probabilities' test applies, the standard of proof required is commensurate with the gravity of the allegation made. . . "

31. Lord Nicholls in In re H, after disagreeing with the suggestion that where there is a serious allegation the standard of proof required is higher, then said this at 587D-E:

"If the standard were to be higher than the balance of probability but lower than the criminal standard of proof beyond reasonable doubt, what would it be? The only alternative which suggests itself is that the standard should be commensurate with the gravity of the allegation and the seriousness of the consequences. A formula to this effect has its attraction. But I doubt whether in practice it would add much to the present test in civil cases, and it would risk causing confusion and uncertainty. As at present advised I think it is better to stick to the existing, established law on this subject. I can see no compelling need for a change."

32. Here, the judge's words were in effect equivalent to the alternative that Lord Nicholls mentioned, and I think that this is a case where the use of that alternative did not in practice add anything to the relevant test or make any difference.
33. The second aspect of concern relates to the later passage in the judge's judgment which my Lord has dealt with, where the judge said that he could do two things really. The first was to put himself in the position of a jury with a criminal charge before it: the second is not clearly defined. It seems to me that the first thing he said he could do was, as my Lord has said, unhelpful and inappropriate, at least if the judge stopped there. It seems to me that in reality he used it as a stepping-stone before approaching the matter on the correct basis, namely as a civil judge sitting alone. The passage "I am not a jury, I have to make up my own mind about these things" seems to me to produce the correct approach, and I am satisfied that ultimately, at page 179A-B where he said:

"I can only say I am not satisfied that this was a deliberate falsification. I think he simply regarded this as part of his salary and signed the document accordingly",

the judge was undertaking the correct exercise and, indeed, reached a positive conclusion in the respondent's favour. Such a conclusion must necessarily have been at least on a balance of probability in the respondent's favour.

34. For those reasons as well as those my Lord has given, this appeal should in my judgment fail.
ORDER: Appeal dismissed with an order for costs under section 11 of the Legal Aid Act 1998, with detailed assessment of the respondent's costs. (Order not part of approved judgment)