Hornal V Neuberger Products Ltd Case Study

Annie hired a removal firm, XY & Co, to move the contents of her housein Plymouth to a house which she had bought in Worcester. The removal van and all its contents were destroyed by fire in a layby just outside Exeter. Some time after the loss, Annie was told by an employee of XY & Co that the van had been deliberately set on fire so that XY & Co could claim from their insurers for its loss.

Annie is suing XY & Co for the value of her destroyed property, which she estimates to be £250,000. She claims first in respect of their deliberate destruction by the defendants; alternatively, she alleges that they were destroyed by reason of the defendants’ negligence. By their defence, XY & Co deny deliberately setting fire to the van and plead that
Since this is a civil action, all these matters will have to be proved according to ‘the preponderance of probability’ ( Miller v Minister of Pensions (1947)). Even where Annie is alleging matters that would amount to the criminal offence of arson, she does not have to prove them beyond reasonable doubt.

In Hornal v Neuberger Products Ltd (1957), the plaintiff was sold a lathe by the defendants. One of their directors was alleged to have stated falsely that the machine had been reconditioned by a named firm.
Had this representation been made by the director with knowledge of its falsehood, he would have been guilty of fraudulent misrepresentation. In a civil action for damages for breach of warranty, alternatively for fraud, the trial judge found that the claim in respect of fraud had been proved on the balance of probabilities, but added that he would not have been satisfied had the criminal standard been applicable. The Court of Appeal held that he had correctly applied the civil
This is the basic common law rule in cases of bailment for reward, of which this contract is an instance. It could be argued that any ambiguity as to the burden of proof should be resolved in Annie’s favour because this basic principle has not been clearly excluded, and its rationale is clearly present here: after the goods were consigned to the defendants, they, and not Annie, were in a better position to explain what happened to them. This was a consideration which proved persuasive in Levison v Patent Steam Carpet Cleaning Ltd (1978). In this case, the defendant carpet cleaners lost the plaintiff’s Chinese carpet in unexplained circumstances. A clause in the contract would have exempted them from liability for negligence, but not for any fundamental breach of contract.

The burden of proof on the latter issue was held by the Court of Appeal to lie on the defendants. They had to show that they had not been guilty of fundamental breach because they could more easily discharge this burden than could a plaintiff who had a burden to prove that there had been such a breach. It will of course be for XY & Co to establish the existence of the exclusion clause and, if need be, that the goods were destroyed by fire. Similarly, if they wish to rely on the limitation of damages clause, they will have to prove