Civil Fraud – Standard of Proof
Many are aware of the differing standards of proof between civil and criminal matters. In criminal prosecutions, the case has to be proven beyond reasonable doubt, whereas in civil claims findings are on the balance of probabilities. Many therefore assume, because fraud is a criminal offence, that the standard of proof is to establish fraud in the criminal one. However, that is not the case in the civil claims seeking compensation from a fraud. Like the O J Simpson murder trials, a civil claim has the lower standard of proof and hence should be more straightforward to establish.
However, in practice, the difference is somewhat opaque. This is because a civil judge will need more convincing evidence before making a finding of fraud, than for example making a finding of negligence.
“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 ….” (see H (Minors) as explained in re. S-B (Children).
This principle has been confirmed in a recent Court of Appeal hearing in the long running case of Burns v The Financial Conduct Authority  EWCA Civ 2140. In that case, Lord Justice Kitchin when dismissing the FCA appeal against Ms Burns held that: –
“Whereas here, the allegation is of a particular serious nature, the FCA must well know that it will require evidence of a commensurate cogency to make it good. It should consider with great care whether it is appropriate to advance such an allegation, and particularly so in circumstances where it has been considered and rejected by the RDC [the FCA’s Regulatory Decisions Committee]”.
As such, clients will want to consider very carefully the pros and cons of alleging fraud when seeking recovery of damages. Whilst the allegation is in some ways attractive, in terms of limitation and recovery options, the client will have to be confident as to the cogency of its evidence.