FRAUD – NO FREE PASS FOR GETTING JUDGMENT SET ASIDE

profile_PI_Bronia_Hartley1

By Bronia Hartley

 

Takhar v Gracefield Developments Ltd & Ors [2017] EWCA Civ 147

Headline: In applying for judgment to be set aside on the basis of fraud, a party must establish that the evidence of fraud was not available at the time of the trial and could not have been discovered with reasonable diligence.

Following a trial in which the judge preferred K’s account of a joint venture agreement relating to the renovation and sale of dilapidated properties and dismissed T’s claim, T brought another claim and sought to have judgment set aside on the basis of fraud.  T relied on evidence from a handwriting expert in relation to the signature on a joint venture agreement which she denied was hers.

The judge determined, as a preliminary issue, that the new action did not amount to an abuse of process and found that T had a real prospect of satisfying the conditions set out in Royal Bank of Scotland Plc v Highland Financial Partners LP [2013] EWCA Civ 328 for setting aside a judgment for fraud.

K appealed the decision.

The issue was whether T had to satisfy the additional test set out in Ladd v Marshall, namely establishing that the evidence of forgery had not been available to her at the time of the trial and could not have been discovered with reasonable diligence.

T submitted that it would be wrong on policy grounds to impose the reasonable diligence requirement in a case of fraud.

The court held:

The starting point in relation to res judicata was that parties to litigation were required to bring forward their whole case and not seek subsequently to raise issue which could have been decided in the earlier litigation.  There was a distinction between issue estoppel and cause of action estoppel.  In the former, circumstances could exist to justify an exception to the policy requirement that there should be finality to litigation, but even in a case of issue estoppel, a point could not be re-litigated unless the new material could not with due diligence have been produced at the earlier hearing.  It followed that T would not be able to re-litigate the issue of the terms of the joint venture agreement unless she could rely on evidence that she could not with due diligence have produced at the trial.  There was no distinction between applications to set aside previous judgments for fraud and applications to re-litigate issues on the basis of new evidence.  The reasonable diligence condition applied in both cases.  The matter would be remitted for consideration of whether T had satisfied the reasonable diligence condition.

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