Odyssey Re (London) Ltd & Anor v OIC Run-Off Ltd

A final judgment may be set aside where material perjury attributable to the successful party procured the judgment. Perjury is material where it entirely changes the aspect of the case.

Where the successful party is a company, attribution is not confined to perjury procured or knowingly adopted by its directing mind and will. The court must fashion an attribution rule suited to the fraud-of-a-party principle. It asks whether, on a realistic assessment, the witness had the status necessary to make the evidence that of the company. Relevant matters include responsibility for the underlying transaction, decisive importance as a witness and integration into the company’s litigation team.

Sphere Drake sought to set aside a judgment obtained by Orion in earlier insurance litigation. Hirst J had held that an oral agreement made in 1975 was not legally binding, substantially because he accepted evidence from Orion’s former general manager, Mr Sage. That judgment was reported at [1990] 1 Lloyd’s Rep 465 and upheld by a majority of the Court of Appeal at [1992] 1 Lloyd’s Rep 239.

In separate proceedings, Moore-Bick J later found that Mr Sage had lied: [1998] 1 Lloyd’s Rep (Insurance & Reinsurance) 35. Sphere Drake consequently brought this collateral action alleging that the earlier judgment had been procured by fraud. Langley J dismissed the claim after finding no perjury and holding, alternatively, that any perjury by Mr Sage could not be attributed to Orion.

The appeal concerned whether Mr Sage knowingly made a false claim to a long-held recollection, whether only a party’s fraud could justify setting aside a judgment, and whether his evidence could be treated as Orion’s evidence.

1. Appeal allowed by a majority. Nourse and Brooke LJJ held that Mr Sage committed perjury when he claimed that, independently of the Flint Note, he had long remembered saying at the 1975 meeting that the agreement was a goodwill agreement and not a legal contract. The contemporary documents established that he had no such recollection before the note was brought to his attention in 1989. He nevertheless claimed at the trial that the note merely confirmed an existing recollection. Perjury remained a distinctly more probable explanation than any innocent confusion between recollection, refreshed recollection and reconstruction.

2. The finding was reached by giving substantial weight to contemporary documents and the overall probabilities. Mr Sage had repeatedly been asked between 1985 and 1989 to remember the meeting, but had never recalled the critical exchange. He knew that his evidence was vital to Orion and had become a committed member of its litigation team. The majority did not impute dishonesty to Orion’s lawyers.

3. The perjury was material. Langley J’s unchallenged finding was that it entirely changed the relevant aspect of the case. The judgment obtained before Hirst J was therefore procured by the perjured evidence.

4. Nourse LJ, with whom Brooke LJ agreed on this point, held that a collateral action requires the fraud or perjury of a party. That requirement followed from the fraud exception to issue estoppel and the authorities beginning with The Duchess of Kingston’s Case, including Abouloff and Boswell v Coaks.

5. For a corporate party, however, attribution was not confined to evidence procured or knowingly adopted by its directing mind and will. Applying the approach in Meridian Global Funds Management Asia Ltd v Securities Commission, the court had to fashion an attribution rule appropriate to the policy that a party should not retain a judgment procured by its fraud. The question was whether the witness had the status necessary to make his evidence the company’s evidence.

6. Mr Sage had that status. He had been Orion’s general manager and a director when personally responsible for the transaction. At trial he was its vital witness, a paid consultant and a committed participant in the team deciding how Orion’s case should be presented. His perjury was therefore attributable to Orion.

7. Buxton LJ dissented. He considered that perjury had not been proved to the required standard and that, in any event, Boswell v Coaks and Tesco Supermarkets Ltd v Nattrass prevented attribution of Mr Sage’s perjury to Orion.

The judgment and order of Hirst J were set aside. General permission to appeal to the House of Lords was granted.

1. Court of Appeal (Civil Division): By a majority, allowed the appeal from Langley J and set aside the judgment and order obtained before Hirst J. General permission to appeal to the House of Lords was granted.
2. High Court, Commercial Court (Langley J): Dismissed Sphere Drake’s collateral action. He found that Mr Sage had not committed perjury and held alternatively that any perjury could not be attributed to Orion. The decision was unreported.
3. Earlier proceedings: Hirst J’s judgment, reported at [1990] 1 Lloyd’s Rep 465, was upheld by a majority of the Court of Appeal at [1992] 1 Lloyd’s Rep 239. The present court set that judgment and order aside.