Rejfek v McElroy

The appellants sued the respondents in the Supreme Court of Queensland for the rescission of a contract to purchase a milk run in the environs of Brisbane, and for damages, because of fraudulently untrue representations inducing the contract. The case was heard in Brisbane by Douglas J. before whom the male appellant gave evidence of the representations made by the male respondent. The male respondent denied that evidence. In the end the appellants pressed only one representation as the basis of their claims. As the learned trial judge viewed the whole of the material before him, he said that he simply had the uncorroborated oath of one party against the uncorroborated oath of the other as to the making of this representation. Upon one matter which did not directly bear on that question his Honour did not accept the male appellant's evidence, preferring that of the respondents, the female respondent having given evidence supporting the male respondent in this connexion; but this refusal to accept the appellant did not lead his Honour to reject the appellant entirely.

Feeling himself bound by decisions of the Full Court of the Supreme Court of Queensland to which we will refer, his Honour held that for the appellants to succeed in the action, the deceit of which the appellants complained had to be established to his satisfaction beyond all reasonable doubt. Having so directed himself as to the standard of proof and not having found the male appellant completely acceptable, his Honour said he was not so satisfied; and for that reason he gave judgment for the respondents.

The appellants have appealed to this Court to set aside this judgment and for a new trial of the action on the ground that his Honour misdirected himself as to the standard of proof appropriate to the occasion. It seems to us to be beyond question that if his Honour did misdirect himself in this connexion there must be a new trial.

The latest of the line of decisions of the Supreme Court of Queensland insisting that any conduct which is criminal must be established in a civil action according to the criminal standard of proof by which his Honour felt himself bound was the decision of the Full Court in Origliasso v. Vitale [1] . In that case the majority of the Court following an earlier decision of the Full Court in King v. Crowe [2] held that the criminal standard of proof was to be satisfied where the "cause of action is founded on a tort amounting to a criminal offence."

1. [1952] St.R.Qd. 211. 2. [1942] St.R.Qd. 288.

This Court decided in 1940 in Helton v. Allen [3] that in a civil proceeding facts which amount to the commission of a crime have only to be established to the reasonable satisfaction of the tribunal of fact, a satisfaction which may be attained on a consideration of the probabilities. This decision was arrived at after due consideration of the dictum of Lord Atkin in the case of New York v. Heirs of Phillips Dec'd [4] and a careful examination of its meaning and its acceptability. Helton v. Allen [1] thus established that the criminal standard of proof is inappropriate to the determination of any such fact in any civil action tried in any court in Australia where there are no statutory provisions to the contrary. That decision is binding on all courts in Australia unless and until there is a precise decision to the contrary by the Court or by the Privy Council.

1. (1940) 63 C.L.R. 691. 2. [1939] 3 All E.R. 952, at p. 955. 3. (1940) 63 C.L.R. 691.

However, the Full Court of Queensland in King v. Crowe [2] appears to have thought that a sentence in the judgment of the Privy Council delivered by Lord Atkin in Narayanan Chettyar v. Official Assignee of the High Court, Rangoon [3] and [4] was a decision to the contrary of this Court's decision in Helton v. Allen [1] ; and, accordingly, did not follow that case.

1. [1942] St.R.Qd. 288. 2. (1941) 39 Allahabad L.J. 683. 3. [1941] All Ind. Reporter 93. 4. (1940) 63 C.L.R. 691.

But, in our opinion, it is abundantly clear that the sentence in the judgment delivered in Narayanan Chettyar v. Official Assignee of the High Court, Rangoon [5] was obiter: the preceding and the following sentence of the judgment make that evident. The question of the appropriate standard of proof does not appear to have been considered by their Lordships in that case as a matter arising before them nor were any authorities discussed; in particular, the decision of this Court in Helton v. Allen [1] does not appear to have been considered.

1. (1941) 39 Allahabad L.J. 683, at p. 686; [1941] All Ind. Reporter 93, at p. 95. 2. (1940) 63 C.L.R. 691.

Further, the validity of the proposition of law which that sentence in the judgment of the Privy Council appears to assert was examined by Davidson J. in Hocking v. Bell [6] in the course of a careful and full review of the relevant authorities. The judgment of Davidson J. as to the standard of proof in a civil proceeding was expressly accepted by Latham C.J. and Dixon J. (as he then was) in that case on appeal to this Court: Hocking v. Bell [7] . Although the course taken by the other Justices participating in that appeal did not call for any pronouncement by them on the point, there is nothing in any of the reasons of those Justices to suggest disapproval of the judgment of Davidson J. in presently relevant respects. Dixon J. (as he then was) expressed his clear opinion that "the solid body of authority against introducing the criminal standard of persuasion into civil causes cannot be shaken by the unconsidered statement of Lord Atkin in the case from Allahabad" [8] being Narayanan Chettyar v. Official Assignee of the High Court, Rangoon [9] .

1. (1944) 44 S.R. (N.S.W.) 468, at p. 478. 2. (1945) 71 C.L.R. 430, at pp. 464, 500. 3. (1945) 71 C.L.R., at p. 500. 4. (1941) 39 Allahabad L.J. 683; [1941] All Ind. Reporter 93.

The Supreme Court of Queensland, in our opinion, quite clearly was bound at the time of the decision of King v. Crowe [1] and thereafter to follow the decision of this Court in Helton v. Allen [2] and was in error in not doing so. That case and the cases antecedent and subsequent to it which decided that the criminal standard of proof had to be satisfied in civil proceedings as to facts which amounted to a crime should to that extent be overruled.

1. [1942] St.R.Qd. 288. 2. (1940) 63 C.L.R. 691.

Before parting with this aspect of the matter, we might mention that in Slaughter v. Storm and Storm Press Pty. Ltd. [3] , Mansfield C.J. considered himself as following both Helton v. Allen [2] and Narayanan Chettyar v. Official Assignee of the High Court, Rangoon [4] when he said that the plaintiff must prove allegations of fraud "as clearly as they would have to be proved in a criminal proceeding", these being Lord Atkin's words in New York v. Heirs of Phillips Dec'd [5] . If this phrase is used to mean no more than that proof of fraud should be clear and cogent such as to induce, on a balance of probabilities, an actual persuasion of the mind as to the existence of the fraud, it is in accordance with the decision of this Court in Helton v. Allen [2] , but it is, in our opinion, at variance with the proposition in the sentence in Privy Council's judgment in Narayanan's Case [4] . The "clarity" of the proof required, where so serious a matter as fraud is to be found, is an acknowledgment that the degree of satisfaction for which the civil standard of proof calls may vary according to the gravity of the fact to be proved: see Briginshaw v. Briginshaw [6] , per Dixon J. [7] ; Helton v. Allen [2] per Starke J. [8] ; Smith Bros. v. Madden [9] , per Dixon J. [10] .

1. [1952] Q.W.N. 46. 2. (1940) 63 C.L.R. 691. 3. (1941) 39 Allahabad L.J. 683; [1941] All Ind. Reporter 93. 4. [1939] 3 All E.R. 952, at p. 955. 5. (1940) 63 C.L.R. 691. 6. (1941) 39 Allahabad L.J. 683; [1941] All Ind. Reporter 93. 7. (1938) 60 C.L.R. 336. 8. (1938) 60 C.L.R., at p. 362. 9. (1940) 63 C.L.R. 691. 10. (1940) 63 C.L.R., at p. 701. 11. [1945] Q.W.N. 39. 12. [1945] Q.W.N., at p. 42.

But the standard of proof to be applied in a case and the relationship between the degree of persuasion of the mind according to the balance of probabilities and the gravity or otherwise of the fact of whose existence the mind is to be persuaded are not to be confused. The difference between the criminal standard of proof and the civil standard of proof is no mere matter of words; it is a matter of critical substance. No matter how grave the fact which is to be found in a civil case, the mind has only to be reasonably satisfied and has not with respect to any matter in issue in such a proceeding to attain that degree of certainty which is indispensable to the support of a conviction upon a criminal charge: see Helton v. Allen [1] per Dixon, Evatt and McTiernan JJ. [2] . The reservation made in Watts v. Watts [3] is no longer necessary in Australia having regard to s. 96 of the Matrimonial Causes Act 1959.

1. (1940) 63 C.L.R. 691. 2. (1940) 63 C.L.R., at p. 714. 3. (1953) 89 C.L.R. 200.

In our opinion, therefore, his Honour misdirected himself as to the standard of proof to be attained by the appellants of the fraud they alleged; and accordingly there should be an order for a new trial.

The respondents, however, submitted that taking the appellants' own evidence at the trial unaided by any other material in the case, it must be held that the appellants had elected not to rescind the contract because of the representation of the respondents and that, consequently any new trial which may be ordered should be limited to the appellants' claim for damages for the fraudulent representation. But we are not persuaded that upon that evidence such a conclusion must or should be drawn. Consequently, in our opinion, the issue as to the rescission of the contract remains to be determined in the Supreme Court of Queensland.

The appeal should be allowed, the judgment for the defendant set aside, and a new trial had of all the issues in the action.