Practice and procedure – Abuse of process – Fraud – Claimant applying to set aside judgment on ground that defendants obtaining it by fraud – Whether claimant establishing signature forged – Whether defendants having responsibility for forgery – Whether forgery material to outcome of original claim – Claim allowed
The first defendant company was the registered proprietor of various properties in Coventry which had been transferred to it by the claimant, who, along with the second and third defendants, was a shareholder and director of the company.
The claimant claimed that the properties had been transferred as a result of undue influence or other unconscionable conduct on the part of the second and third defendants. Judge Purle preferred the respondents’ evidence, finding that the transfer had been made on the terms of a written joint venture agreement which accurately reflected what the parties had orally agreed.
The claimant later applied to set aside the judge’s order on the ground that it had been obtained by fraud. She claimed that her signature on the joint venture agreement had been forged and sought to adduce the evidence of a handwriting expert to that effect. The question whether the claim to set aside the judgment amounted to an abuse of process was tried as a preliminary issue.
In 2015, Newey J held that the present claim was not an abuse of process and should not be struck out: [2015] EWHC 1276 (Ch); [2015] PLSCS 135. The Court of Appeal allowed the respondents’ appeal, holding that a person who sought to have a judgment set aside on account of fraud had to show that the fraud could not have been discovered by reasonable diligence: [2017] EWCA Civ 147; [2017] PLSCS 69.
The claimant appealed to the Supreme Court, which held that where it could be shown that a judgment had been obtained by fraud, and no allegation of fraud had been raised at the trial which led to that judgment, a party seeking to set aside the judgment was not required to show that the fraud could not with reasonable diligence have been uncovered in advance of the judgment. Accordingly, Newey J’s order refusing the defendants’ strike-out application was restored: [2019] UKSC 13; [2019] PLSCS 54.
Therefore, the claimant’s set-aside action proceeded and came before the High Court.
Held: The claim was allowed.
(1) It was common ground that if the court found that the claimant’s signature was forged on any document, the defendants had responsibility for that and the forgery was material to the outcome of the original claim, the court had to set aside the judgment.
There had to be a conscious and deliberate dishonesty in relation to the relevant evidence given, or action taken, statement made or matter concealed, which was relevant to the judgment sought to be impugned. The relevant evidence, action, statement or concealment (performed with conscious and deliberate dishonesty) had to be material, which meant that the fresh evidence adduced after the first judgment was such that it demonstrated that the previous relevant evidence, action, statement or concealment was an operative cause of the court’s decision to give judgment in the way it did. Put another way, it had to be shown that the fresh evidence would have entirely changed the way in which the first court approached and came to its decision. Thus, the relevant conscious and deliberate dishonesty had to be causative of the impugned judgment being obtained in the terms it was. The question of materiality of the fresh evidence was to be assessed by reference to its impact on the evidence supporting the original decision, not by reference to its impact on what decision might be made if the claim were to be retried on honest evidence: Royal Bank of Scotland plc v Highland Financial Partners LP [2013] EWCA Civ 328 applied. Hamilton v Al-Fayed (No 2) [2001] EMLR 394, Sharland v Sharland [2016] AC 871 and Salekipour v Parmar [2017] EWCA Civ 2141 considered.
(2) In the present case, the court was satisfied, on the balance of probabilities, that not only did the defendants have strong motive, and opportunity, to forge the document by transposition of the claimant’s signature onto it from elsewhere, but that they did do so. Based on all the evidence before the court, the defendants were, on the balance of probabilities, responsible for the forgery of the signed profit-sharing agreement document by adding the claimant’s signature to a copy of it by transposition from a letter; that amounted to conscious and deliberate dishonesty.
(3) The evidence showed that the joint venture document was forged by the defendants. In any trial, and in a fraud trial in particular, the court was looking for independent and contemporaneous indicators of where the truth lay on crucial issues, such as in this case, whether there was a profit-sharing agreement. The forged document clearly evidenced that, in the absence of forgery of the claimant’s signature on it. Had the judge known that her signature on the copy before him had been forged, for which the defendants were responsible, that plainly would have entirely changed the way in which the first court approached and came to its decision, and it was plainly an operative cause of the court’s decision to give judgment in the way that it did. Applying in full the test laid by Aikens LJ in Royal Bank of Scotland plc v Highland Financial Partners LP and approved by the Supreme Court in Takhar itself, which represented the law, it was material to the judgment given at trial.
(4) The ultimate result of this dispute was not for the present court to determine but would be for a court to decide on the basis of all the evidence before it at a new trial following the existing judgment being set aside. The question of materiality of the fresh evidence was to be assessed by reference to its impact on the evidence supporting the original decision, not by reference to its impact on what decision might be made if the claim were to be retried on honest evidence. Accordingly, the claim would be allowed and the order in favour of the defendants would be set aside.
John Wardell QC and Jia Wei Lee (instructed by Tanners Solicitors LLP of Cirencester) appeared for the claimant; Joseph Sullivan (instructed by Gowling WLG (UK) LLP of Birmingham) appeared for the defendants.
Eileen O’Grady, barrister
Click here to read a transcript of Takhar v Gracefield Developments Ltd and others
