Baljit Singh Bhandal v His Majesty's Revenue & Customs & Anor

A judgment may be set aside for fraud despite the finality principle and the rule against collateral attacks. The claimant must show conscious and deliberate dishonesty concerning evidence, conduct, a statement or concealment which was material to the judgment. Materiality requires the fresh evidence to show that the dishonesty was an operative cause of the decision, assessed by its effect on the evidence supporting the original decision.

Earlier procedural decisions about whether fraud could be raised do not automatically bar a later fraud-based setting-aside action. Any election or estoppel must be established with particular care, having regard to the special principles applicable to fraud. A High Court order is not a nullity merely because a jurisdictional objection is arguable.

The claimant sought to set aside earlier orders made in long-running proceedings concerning a criminal restraint order obtained by HMRC. The earlier decisions included a stay by Master Moncaster, dismissal of a statutory compensation claim by Collins J, and strike-out of revived Chancery proceedings by HHJ Jarman QC.

The claimant alleged that HMRC and an officer had fraudulently represented that an arrest warrant existed, and that the alleged fraud affected the earlier decisions. The defendants applied to strike out the present action as an abuse of process, principally on the basis that it was a collateral attack on final judgments and that the claimant had elected to pursue the statutory compensation route.

1. Application of fraud principles. The claim could not be struck out merely because it sought to impeach earlier decisions. Under Takhar v Gracefield Developments Ltd and the formulation approved from Royal Bank of Scotland plc v Highland Financial Partners, the claimant had to establish conscious and deliberate dishonesty, materiality, and causation. The alleged fraud had to be an operative cause of the impugned judgment, assessed by its effect on the evidence supporting the original decision.
2. The court would not determine the merits of the alleged forgery on the strike-out application. It was an arguable case. The fact that the claimant had previously pursued statutory compensation proceedings did not, without more, establish that the present action was abusive.
3. Collateral attack and election. A fraud-based action is legally distinct from an attempt to re-litigate the original dispute and is permitted despite the collateral-attack rule. The decision of HHJ Jarman concerned whether the fraud allegations could be raised in revived Chancery proceedings. It did not determine whether a later action to set aside judgments for fraud was barred. An election or estoppel might arise, particularly where a claimant knowingly chose not to investigate or rely on suspected fraud, but that issue was fact-sensitive and required proper pleading, evidence and argument.
4. Nullity. Even if the absence of an arrest warrant created a jurisdictional objection to the statutory compensation proceedings, the order of a court of unlimited jurisdiction was not thereby a nullity. It remained effective unless set aside by the court that made it or on appeal, or by an appropriate subsequent application.
5. The present application was therefore not determined as an abuse based on collateral attack. The pleading that the Collins J judgment was a nullity was struck out as legally unsustainable. The court indicated that the defendants might seek a preliminary trial of whether election or another complete answer made the fraud claim abusive.