Coghlan v Bailey & Anor

In an action to set aside a judgment on the ground that it was obtained by fraud, materiality is assessed by asking how the trial judge’s conclusions would have been affected if the witness had supplied the information allegedly concealed. The inquiry concerns the likely effect of the missing information, not merely the effect of exposing the witness’s dishonesty.

A deliberate lie, and the liar’s belief that it was important, may strengthen an inference of influence but cannot replace proof that the judgment would probably have been different. The relevant dicta in Meek v Fleming [1961] 2 QB 36 did not establish a legal rule. Permission for a second appeal was refused.

The appellant sought to set aside a recovery order made in civil recovery proceedings under the Proceeds of Crime Act 2002 and to obtain a retrial. Simon J had rejected his claim on 1 March 2012. The claim alleged that Daniel Bailey, an investigating officer, had fraudulently misrepresented the source of the deposit paid when the property was acquired.

Master Yoxall considered that there was a real prospect of proving at least recklessness, but no real prospect of proving that the alleged misrepresentation had materially procured the recovery order. Tugendhat J held that assessment was open to the Master and would have reached the same conclusion afresh. The renewed application concerned whether the alleged misrepresentation could probably have affected the original judgment and whether a trial or further appeal was justified.

Lord Justice Christopher Clarke gave the judgment. Sir Stanley Burnton agreed.

1. Materiality in a fraud challenge. An action to set aside a judgment obtained by fraud is subject to stringent safeguards. The materiality question is whether, if the witness had given the trial judge the particular information allegedly concealed, the judge’s conclusions would probably have been affected. The question is not simply how the judge might have reacted on learning that the witness was dishonest. This approach was applied from Gaillemer Sarland v McClelland (19 February 1996, unreported).
2. Effect of deliberate dishonesty. The dicta in Meek v Fleming [1961] 2 QB 36 did not establish a principle that the importance attached to a concealment by the person who made it determines whether the judgment was affected. The materiality and deliberate nature of an untruth may make influence more likely, but the decisive question remains its probable effect on the judgment.
3. Application. The original findings rested on a multiplicity of objective facts, evidence and inferences concerning the acquisition, development and concealment of the property. Disclosure that the immediate source of the £18,030 deposit was Mr Kayes’s account would not realistically have changed those findings. It would still have left the provenance of the money in issue. Nor would exposure of the alleged dishonesty itself have required the original case to be reopened.
4. Disposition. Since there was no realistic prospect of establishing that the recovery order had been obtained by fraud, there was no compelling reason for a trial. The proposed appeal would be a second appeal, and the application raised neither an important point of principle or practice nor another compelling reason for permission. Permission to appeal was refused.

1. Court of Appeal (Civil Division). On 2 July 2015, refused the renewed application for permission to appeal.
2. High Court, Queen’s Bench Division (Tugendhat J). On 1 April 2014, held that Master Yoxall was entitled to conclude that the alleged misrepresentation was insufficiently material and that the same conclusion would be reached afresh.
3. High Court (Simon J). On 1 March 2012, rejected the claim to set aside the recovery order and obtain a retrial.