The Standard of Proof in Civil Cases: An Insurance Fraud Perspective

AuthorJohanna Hjalmarsson
DOI10.1350/ijep.2013.17.1.418
Published date01 January 2013
Date01 January 2013
Subject MatterArticle
STANDARD OF PROOF IN CIVIL CASES: AN INSURANCE FRAUD PERSPECTIVE
The standard of proof in
civil cases: an insurance
fraud perspective
By Johanna Hjalmarsson*
Informa Research Fellow in Maritime and Commercial Law,
University of Southampton
Abstract This article discusses the burden and standard of proof as they
apply to cases of insurance fraud, and notes some important historical
developments in the law. The tremendous importance of the exact
burden and standard of proof arises from the fact that fraud by its very
nature is something that the perpetrator will wish to conceal and that
there will be very little proof of any nature available or accessible. The
insurer may easily find itself bringing complicated circumstantial
evidence as to such elusive matters as the insured’s general financial
situation; the reasonableness of the valuation of the ship; or the
communications that took place between the insured and third parties,
perhaps requiring extensive procedural disclosure.
Keywords Civil standard of proof; Insurance fraud; Balance of
probabilities; Hornal vNeuberger
The burden of proof in insurance cases
his article discusses the burden and standard of proof as they apply to
cases of insurance fraud, and notes some important historical develop-
ments in the law. The tremendous importance of the burden and
standard of proof arises from the fact that fraud by its very nature is something
that the perpetrator will wish to conceal. The insurer may easily find itself
bringing complicated circumstantial evidence as to such elusive matters as the
doi:10.1350/ijep.2013.17.1.418
THE INTERNATIONAL JOURNAL OF EVIDENCE & PROOF (2013) 17 E&P 47–73 47
T
* Email: jhj@soton.ac.uk. The author would like to thank Dr Andrea Lista, Professor Rob Merkin and
the referees for their very helpful comments on this article. Any errors are attributable to the
author.
insured’s general financial situation; the reasonableness of the valuation of the
ship;1or the communications that took place between the insured and third
parties, perhaps requiring extensive procedural disclosure. It is appropriate to
start with a few words about the burden of proof, in order then to move on to the
standard of proof which is the more complex question and will be set out in
greater detail.
The basic principle applies equally to insurance matters: the party that proposes a
hypothesis must prove it. A leading case on the burden of proof generally is an
insurance case. The House of Lords in Rhesa Shipping vEdmunds (The Popi M)2decided
that the party arguing that a ship, the subject-matter of an insurance policy, had
been lost by an insured peril must prove that the loss happened in the manner
argued. The approach of Bingham J at first instance had been erroneous, in that it
was not permissible to choose between the various hypotheses put to the court for
how the loss happened. The case addresses the burden of proof in relation to losses
by perils of the seas, but is often used as authority for the general proposition that
the claimant must prove its case.
Insurance law generally operates without presumptions, for which reason the
basic rule on the burden of proof will more often than not find application. Thus
in most insurance cases the burden of proof will be exceedingly simple. The
insurance claimant must prove that the loss or damage is proven under the policy,
whereupon the insurer must prove that there is some exclusion in the policy
which operates to permit it to reject the claim.
Marine insurance
In relation to marine insurance, while the above propositions do apply, there is
also authority for further, more specific propositions in relation to the burden of
48 THE INTERNATIONAL JOURNAL OF EVIDENCE & PROOF
STANDARD OF PROOF IN CIVIL CASES: AN INSURANCE FRAUD PERSPECTIVE
1 This is a very complex matter since a ship will have a completely different value if she is
unchartered compared with if she is under a lucrative time charterparty or has been specially
converted for a particular purpose, in which case her resale value may be very low, but the
repurchase value to the insured may be very high. For different examples on the related
assessment, see O’Kane vJones [2004] 1 Lloyd’s Rep 389 and North Star Shipping Ltd vSphere Drake
Insurance Plc [2005] EWHC 665 (Comm), [2005] 2 Lloyd’s Rep 76, at first instance [169]–[170] and
[201]–[204]. This issue was not discussed in depthupon appeal (North Star Shipping Ltd vSphere Drake
Insurance Plc [2006] EWCA Civ 378, [2006] 2 All ER (Comm) 65).
2 [1985] 2 Lloyd’s Rep 1. Distinguishing The Popi M for the applicable burden of proof where there are
genuinely only two possibilities, see Milton Keynes Borough Council vNulty [2011] EWHC 2847 (TCC). In
European Group Ltd vChartis Insurance UK Ltd [2012] EWHC 1245 (Comm), a so-called 50/50 clause in
the policy was designed to alleviate the impact of difficulties in proof by stipulating that where it
could not be proven on which of two insurers the loss should fall, the loss should be borne half by
each.

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