Practice and procedure – Judgment – Fraud – Abuse of process – Claimant applying to set aside judgment – Claimant alleging defendants obtained judgment by fraud – Defendants claiming abuse of process – Court being asked to decide as preliminary issued whether claim against defendants to be dismissed as abuse of process – Preliminary issue decided in favour of claimant
The claimant was formerly the registered proprietor of various properties in Coventry but they had been transferred into the name of the first defendant company, the shares in which were at the time split equally between the claimant and the second and third defendants. The claimant subsequently brought proceedings against the defendants contending that the properties had been put into the name of the first defendant as trustee for her, or as a result of the exercise of undue influence, or that the transactions giving rise to the transfers had been otherwise unconscionable. She also suggested that there had been a failure of purpose giving rise to a resulting trust and that the transfers had not been properly executed and were therefore void. The High Court dismissed that claim.
The claimant later issued proceedings asking that the judge’s order be set aside on the basis that it had been obtained by fraud in that the defendants had obtained judgment in their favour relying on documents they knew to have been forged. The trial of a preliminary issue was ordered to determine whether, among other things, the claim brought by the claimant against the defendants should be dismissed as an abuse of process.
Held: The preliminary issue was decided in favour of the claimant.
(1) The principles governing applications to set aside judgments for fraud had been summarised in Royal Bank of Scotland plc v Highland Financial Partners LP [2013] EWCA Civ 328: (i) there had to be a conscious and deliberate dishonesty in relation to the relevant evidence, action, statement or matter concealed which was relevant to the judgment sought to be impugned; (ii) the relevant evidence, etc had to be material in that the fresh evidence adduced after the first judgment demonstrated that the previous evince had been an operative cause of the court’s decision to give judgment in the way it had; and (iii) the question of materiality of the fresh evidence was to be assessed by reference to its impact on the evidence supporting the original decision.
(2) In the present case, the parties differed as to whether there was a further requirement that the new evidence could not reasonably have been obtained in time for the original trial. The claimant maintained that there was no such requirement, the defendants that the courts would not set aside a judgment if the relevant material could with reasonable diligence have been adduced at the trial. The defendants had relied on the decision of the House of Lords in Owens Bank Ltd v Bracco [1992] 2 AC 443 and the Privy Council in Owens Bank Ltd v Etoile Commerciale SA [1995] 1 WLR 44. Elsewhere in the Commonwealth, it had been held that a judgment could be set aside for fraud even if the new evidence could reasonably have been obtained for the original trial: see Toubia v Schwenke [2002] NSWCA 34; (2002) 54 NSWLR 46, Hansen Yuncken Pty Ltd v Ercision (trading as Flea’s Concreting) [2011] QSC 327 and Canada v Grantile Inc (2008) 302 DLR (4th) 40. The reasoning in those cases was compelling. Finality in litigation was of great importance but fraud was thing apart. Owens Bank Ltd v Bracco and Owens Bank Ltd v Etoile Commerciale SA [1995] 1 WLR 44 did not provide binding authority that a judgment could not be set aside for fraud unless there was new evidence which could not have been discovered with reasonable diligence before the judgment was delivered. What was said in each case about the domestic rule must have been obiter since neither case had been about that rule. The better view was that a judgment could be set aside if the loser satisfied the requirements summarised in the Royal Bank of Scotland case. He did not also have to show that the new evidence could not reasonably have been discovered in time for the original trial. In all the circumstances, it had not been established that the present proceedings amounted to an abuse of process or were otherwise unsustainable. Accordingly, the case should be allowed to proceed to trial.
John Wardell QC (instructed by Thrings LLP) appeared for the claimant; Avtar Khangure QC (instructed by Wragge Lawrence Graham & Co) appeared for the defendants.
Eileen O’Grady, barrister
Click here to read transcript: Takhar v Gracefield
