William Andrew Tinkler v Esken Limited (formerly Stobart Group Limited)

An action to set aside a judgment for fraud is a free-standing cause of action concerning the conduct of the earlier proceedings. The claimant must establish conscious and deliberate dishonesty, new evidence and materiality.

The court hearing the fraud action must determine whether the new evidence establishes fraud and impugns the earlier judgment. It must not retry the underlying dispute on incomplete or supposedly honest evidence. Earlier evidence may nevertheless be considered where necessary to understand the alleged fraud or its effect.

Materiality requires the fraud to have been an operative cause of the judgment, or to have entirely changed the way the first court approached and reached its decision. The threshold is high because the action defeats the finality of a judgment.

The appellant sought to set aside a judgment arising from a boardroom dispute with his former company. He alleged that documents had been deliberately withheld and that witnesses had lied about a premeditated plan to remove him from office.

The High Court dismissed the fraud claim in [2022] EWHC 1375 (Ch). The appellant argued that the judge had wrongly concentrated on the new evidence, treated the original findings as presumptively correct and applied an unduly demanding test of materiality.

The central issues were how a court should try a free-standing action to set aside an earlier judgment for fraud, when it may consider evidence from the original trial, and what materiality standard applies.

1. The appeal was dismissed unanimously. The High Court had adopted a satisfactory approach to the fraud action. Its somewhat unorthodox ordering of the factual issues caused no injustice and resulted substantially from the procedure which the parties had invited it to follow.

2. An action to set aside a judgment for fraud is a free-standing cause of action directed to the conduct of the earlier proceedings. It is distinct from an application to admit fresh evidence. The claimant must establish conscious and deliberate dishonesty, materiality and new evidence. If fraud and materiality are established, the claimant is entitled to have the judgment set aside.

3. The court hearing the fraud action must not retry the underlying dispute on a partial evidential record. It must determine whether the alleged concealment or other new evidence establishes fraud and impugns the earlier judgment. Old evidence may be examined where necessary to understand how the new evidence shows that the first court was misled. The second court is not bound by findings alleged to have been procured by fraud, although it may examine those findings when assessing materiality.

4. The appropriate materiality formulation was that stated in Royal Bank of Scotland plc v Highland Financial Partners LP [2013] EWCA Civ 328. The dishonest evidence, act, statement or concealment must have been an operative cause of the impugned judgment, or the fresh evidence must have entirely changed the way the first court approached and reached its decision. Materiality is assessed by its impact on the evidence supporting the original decision, not by predicting the result of a retrial on honest evidence.

5. The materiality threshold must remain high because the remedy defeats the finality of a judgment. The Highland formulation does not require proof that, but for the fraud, the original judgment would probably have been different. The alternative “real danger” formulation arose in a different procedural context concerning the admission of new evidence.

6. The High Court had considered the relevant old and new evidence and permissibly found that deliberate concealment and perjury were not proved. It had also reached the same conclusion on materiality under both proposed formulations. The third ground concerning witness credibility could not independently affect the appeal and was not determined.

1. Court of Appeal (Civil Division): The appeal was dismissed unanimously. The court upheld the dismissal of the action to set aside the earlier judgment for fraud.

2. High Court, Business and Property Courts: In [2022] EWHC 1375 (Ch), Leech J dismissed the claimant’s action to set aside the original judgment for fraud.

3. Original proceedings: HH Judge Russen QC broadly upheld the company’s claims and dismissed the claimant’s cross-claims. Permission to appeal and an application to reopen the permission decision were subsequently refused. Those proceedings were later settled by a Tomlin order.