Takhar v Gracefield Developments Ltd & Ors

A judgment obtained by fraud may be set aside where the claimant shows conscious and deliberate dishonesty which was material and causative of the judgment. The claimant need not additionally show that the evidence could not reasonably have been discovered before the original trial. At an interlocutory stage, proceedings should proceed to trial unless there is no real prospect of satisfying that test or the claim is otherwise plainly abusive. A proposed new claim may be refused under CPR 17.4 where it depends on a wider factual basis than the existing claim, even if both claims involve alleged forgery.

Mrs Takhar sought to set aside a judgment obtained in earlier proceedings concerning properties transferred to Gracefield Developments Ltd. She alleged that the defendants had relied on forged documents, particularly a profit-sharing agreement, and that the earlier judgment had therefore been obtained by fraud.

The defendants contended that the claim was abusive because the alleged fraud could have been investigated earlier and that a proposed conspiracy and deceit claim was time-barred. Mrs Takhar also sought permission under CPR 17.4 to amend her particulars of claim.

1. Fraud and finality. The requirements summarised in [2013] EWCA Civ 328 were adopted: there must be conscious and deliberate dishonesty relating to evidence, an act, statement or concealment relevant to the judgment; the matter must be material; and the dishonesty must have caused the judgment to be obtained in the terms it was. Materiality concerns the effect on the original decision, not merely the result of a hypothetical retrial.
2. The court rejected the suggested additional requirement that fresh evidence must have been undiscoverable with reasonable diligence before trial. The statements in Owens Bank Ltd v Bracco and Owens Bank Ltd v Etoile Commerciale SA on the domestic rule were obiter. The reasoning in the Australian and Canadian authorities was compelling, and fraud is a matter apart from ordinary finality considerations.
3. The claim was not abusive at the interlocutory stage. There was a real prospect that expert handwriting evidence would establish fresh evidence, conscious and deliberate dishonesty, and causation. The possibility that the claimant had pursued a settlement against her former solicitors did not make the claim against the defendants abusive.
4. The proposed conspiracy and deceit claim was reasonably arguable as time-barred. Section 32 of the Limitation Act 1980 might apply, but the position was not clear-cut.
5. Permission to amend was refused under CPR 17.4(2). Although the existing and proposed claims both relied on alleged forgery, the proposed claim also depended on distinct alleged misrepresentations concerning compulsory purchase, property value, transfers and legal representation. It therefore did not arise out of the same facts or substantially the same facts.

The existing proceedings were allowed to proceed to trial. Permission to amend was refused.