Broomhead v National Westminster Bank PLC & Anor

A claim to set aside a judgment for fraud must plead primary facts from which dishonesty is more likely than innocence or negligence. Serious allegations require sufficient particulars, although the claimant need not plead facts consistent only with dishonesty. If that threshold is met, the claim may proceed to disclosure and trial.

For summary judgment, the court may consider evidence reasonably expected to be available at trial, but must avoid a mini-trial. A fraud-based challenge to an earlier judgment also requires fresh evidence showing that the alleged dishonesty was an operative cause of the judgment and would have entirely changed the earlier court’s approach.

The claimant sought to rescind or set aside an earlier judgment in favour of the defendants on the ground that the defendants had acted consciously dishonestly in presenting and pursuing the earlier litigation. The original claim concerned alleged promises by a bank employee relating to lending facilities and had been dismissed after an 11-day trial. Permission to appeal had been refused.

Following an earlier order striking out the particulars of claim but permitting reformulation, the claimant served revised particulars. The defendants opposed permission to amend and restored their applications for strike-out and summary judgment. The issues were whether any part of the revised claim was bound to fail and, if not, whether it had any real prospect of success.

1. Outcome. Permission to amend was refused. The revised claim was bound to fail and, in any event, had no real prospect of success.
2. Pleading dishonesty. The claimant had to plead primary facts making an inference of dishonesty more likely than innocence or negligence. The claimant need not plead facts consistent only with dishonesty, but the minimum threshold identified in JSC Bank of Moscow v Kekhman had to be met. Without facts justifying a fraud plea, there was no proper issue on which disclosure could be ordered.
3. Strike-out and summary judgment. The revised claim was considered as pleaded, with only limited use of extraneous evidence to explain its context. Under CPR Part 24, the court could consider evidence reasonably expected to be available at trial, but could not conduct a mini-trial or resolve ordinary conflicts of evidence. The claimant bore the burden of showing that the revised claim was not bound to fail; the defendants then had to establish the summary judgment test.
4. Disclosure allegations. Failures to identify E-Flex and REMIT, or inaccuracies concerning back-up tapes and customer identification numbers, did not justify an inference of conscious dishonesty. At most, the matters indicated carelessness, misunderstanding or negligent disclosure. The evidence also showed that the alleged missing May 2004 material was not in fact missing and that searches of relevant systems produced no documents material to the earlier claim.
5. Materiality. Applying the materiality test approved in Takhar v Gracefield Developments Ltd and derived from Royal Bank of Scotland plc v Highland Financial Partners LP, the claimant had to show that fresh evidence demonstrated that the alleged dishonesty was an operative cause of the earlier judgment. It had to be capable of entirely changing the way the earlier court approached and decided the case. Speculation that further documents might assist the claimant did not satisfy that test.

The judgment itself describes the earlier claim as having been dismissed by HH Judge Klein, with permission to appeal subsequently refused. The present decision concerned permission to serve revised particulars and restored strike-out and summary judgment applications.