Broomhead v National Westminster Bank Plc & Anor

To set aside a judgment for fraud, a claimant must plead conscious and deliberate dishonesty which was material to the judgment. Materiality requires the alleged dishonesty to have been an operative cause of the result. The claimant need not show that the fraud could not have been discovered with reasonable diligence.

A claim that fails this threshold may be struck out. Summary judgment remains available under CPR 24.2 and is not subject to a more demanding test merely because fraud is alleged. However, where new evidence raises factual issues and a viable case may be repleaded, the court may strike out the existing particulars while allowing a further opportunity to plead.

The claimant had previously failed in a substantial claim against the defendant banks concerning alleged promises of continuing banking support. His appeal permission was refused, costs were unpaid, and bankruptcy proceedings followed.

He then issued a new claim seeking to rescind or set aside the earlier order on the ground that it had been procured by the defendants’ conscious dishonesty. He relied on alleged manipulation or non-disclosure of banking records and sought permission to amend his particulars. The defendants applied to strike out the claim and for summary judgment. The central issues were whether the pleaded facts satisfied the fraud threshold, whether the claim was abusive or bound to fail, and whether the claimant should have a further opportunity to replead.

1. Existing pleading: The draft amended particulars did not plead a viable case that the earlier judgment had been procured by fraud. Many allegations merely identified differing documents, redactions, late disclosure or documentary irregularities. They did not plausibly allege conscious and deliberate dishonesty.
2. Fraud and materiality: The governing test was that summarised in Royal Bank of Scotland plc v Highland Financial Partners LP [2013] 1 CLC 596 and approved in Takhar v Gracefield Developments Ltd [2019] UKSC 13. The dishonesty must be conscious and deliberate, relate to relevant evidence, conduct, statements or concealment, and be material in the sense that it was an operative cause of the impugned judgment. The fresh evidence must affect the evidence supporting the original decision, rather than merely show that a retrial on honest evidence might produce a different result.
3. Alternative materiality approach: Although Hamilton v Al Fayed [2000] EWCA Civ 3012 and Salekipour v Parmar [2017] EWCA Civ 2141 suggested a lower or differently expressed test, the express approval of the Highland test in Takhar meant that the court should proceed on the Highland formulation. In any event, the pleaded case failed even on the lower approach.
4. Procedural disposition: The particulars of claim were struck out and permission to amend was refused, but the claim itself was not struck out. In light of Mr Wright’s evidence concerning the defendants’ systems and document authenticity, the claimant was given an opportunity to provide draft repleaded particulars. The defendants’ summary judgment application was adjourned because the court could not be satisfied that a properly pleaded claim had no real prospect of success.
5. Evidence: The court gave reduced weight to evidence from a solicitor whose sources were not identified, particularly in a case involving serious allegations of dishonesty. Evidence based on personal knowledge of the defendants’ systems could not be rejected without effectively conducting a mini-trial.

The judgment records that the claimant’s application for permission to appeal from the earlier judgment was dismissed by Newey LJ on 13 December 2018. The present decision was at first instance on the defendants’ applications concerning the new claim.