| Date | 23 March 2005 |
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| Judgment | Stephens v Cannon, CA 14 March 2005 |
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| The Issue | Circumstances in which disputed matters should be decided according to the "burden of proof". |
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| Implication |
A tribunal should not decide a disputed issue by resorting to the burden of proof unless the situation is exceptional. Where a tribunal does resort to the burden of proof, it should set out clearly the steps it has taken to decide the disputed matters and the reasons why it has concluded that it cannot decide on the available evidence. |
printIn resolving construction disputes the tribunal, whether that is a court, arbitrator or adjudicator, must decide the case according to the civil standard of proof. This means the claimant must prove its case on the balance of probabilities. Put another way, the tribunal must decide what 'probably' happened. Theoretically, the balance of probabilities means the tribunal must be 51% satisfied in respect of crucial facts, even though 49% of the evidence might point to the opposite conclusion. In practice of course, evidence cannot be so finely assessed. Where the evidence is evenly balanced it is often said that the claimant will fail because it has not discharged the onus of proving its case. This is called the "burden of proof", which is the legal and evidential obligation placed upon a party to prove disputed facts necessary to support its case. The general rule is "he who asserts must prove". However, in complex construction disputes where there may be numerous strands of defence and cross claim, it is often a tricky question to identify where the burden of proof lies. In the recent case of Stephens v Cannon, the Court of Appeal gave some helpful guidance related to the application of the burden of proof. Cannon had agreed to buy from Stephens property and land in Surrey. The contract of sale included a supplemental agreement, the effect of which was to oblige Cannon to obtain planning permission and then to construct at least one dwelling on the land, which would then be sold. The agreement obliged Cannon to pay Stephens one half of any excess over £1 million that was achieved on the sale of the new property after taking into account legal and estate agency fees incurred in connection with the sale. Though Cannon obtained planning permission for the construction of one property, this was never constructed and in due course Stephens commenced proceedings for damages or alternatively to enforce the obligation to construct and sell the property and to account for monies due under the supplemental agreement. Cannon accepted that he was liable for breach of the supplemental agreement and subsequently the trial judge had to consider the evidence put forward by the parties as to the price at which the hypothetical property might have been sold. Each party instructed expert chartered surveyors. Stephens' expert contended that the property would have been sold for £1.9 million. Cannon's expert contended that the property would have sold for only £1.5 million. The judge had some difficulty in reconciling the opposing positions of these experts. He noted "it is always invidious for a court to have to choose between the views of two apparently honest and competent experts, especially when their valuations are so far apart and there appears to be little material with which the court can bridge the gap". The judge summarised the guidance given by each expert. Numerous points had been raised. For example, one had suggested that the property value should be enhanced since it would have had a view over a pond. The other had said that the value should be reduced because it was near a landfill site. The judge commented that he did not regard it appropriate for him to enter into his own subjective view of the valuation evidence since that would be to set himself up as an expert and to usurp the role of the experts. It was necessary for him to choose between the views which had been expressed on both sides. That being the case, he concluded that he was unable to decide that he preferred one view over the other and in those circumstances the case would have to be decided on the basis of the burden of proof. Accordingly, the judge agreed with the lower figure and after having deducted the likely costs of sale, calculated that the excess over £1 million was approximately £440,000, of which one half was payable to Stephens. The matter came before the Court of Appeal. Stephens argued that the trial judge had been wrong to adopt the lower figure and in particular had been wrong to apply the burden of proof in arriving at that figure. In the Court of Appeal, Justice Wilson noted that a court should not decide a disputed issue by resorting to the burden of proof unless the situation was exceptional. A situation would be exceptional only if the court could not reasonably make a finding in relation to the disputed issues, notwithstanding that it had made all efforts to do so. Where a court resorts to the burden of proof, it must ensure that others can see from the face of the judgment that it has done its best to make a finding in relation to the disputed issues and that the reason why it cannot make a decision on the available evidence is readily understandable. Justice Wilson indicated that he had sympathy for the trial judge in confronting the task of valuation in the case. However, it did not appear that the judge had done enough to evaluate the evidence. Instead of asking himself "which of the two valuations should I accept?", he should have asked "what, in the light of the evidence of the two valuers, was the probable value of the property?" Had the judge adjudicated on the specific differences between the two valuers, he might have come to an answer. He was not entitled to resort to the burden of proof in the absence of such an approach. The appeal was allowed and the proper valuation referred back to the court.
CJ-0511
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