Balber Kaur Takhar v Gracefield Developments Limited & Ors

The fact a transfer is denominated a formal administrative or tax step does not prevent equity finding it was intended to reserve the beneficial interest; where a recipient uses deceit (including forgery) to procure a court judgment and thereby convert a family owner’s beneficial interest into proceeds, the transaction may be set aside for undue influence and the recipient held liable in equity and in tort. Fraudulent procurement of judgment by forged evidence can be an unlawful means of conspiracy causing compensatory loss.

The claimant, Balber Takhar, sought to set aside transfers of five properties and to recover their value after (i) earlier High Court litigation in 2010 (the Purle judgment) had been decided in the defendants’ favour; (ii) that judgment was subsequently set aside for fraud in separate set-aside proceedings; and (iii) the claimant brought consolidated claims including undue influence, resulting trust and conspiracy. The crucial factual and legal issues were whether the defendants misled the claimant before the 2006 transfers, whether the claimant had intended the transfers to be merely formal (so giving rise to a resulting trust), whether the defendants forged documents (notably a profit-share agreement (PSA)) and used them in the original litigation, and whether that conduct (and related false documents) amounted to ‘unlawful means’ conspiracy. The court tried the consolidated issues (including a full fact-finding retrial) and addressed the legal consequences where earlier judgments have been set aside for fraud.

Overall disposition

1. The court found that the defendants (Dr and Mrs Krishan) had, by a combination of false representations and pressure, induced the claimant to transfer the properties in 2006 and that those transfers were procured by undue influence and/or were held on resulting trust for the claimant. (paras 320–445)
2. The court found that, following issue of the original proceedings in 2008, the defendants forged the claimant’s signature on the draft Profit Share Agreement and used that forged document in the original trial; the forgery was an operative cause of the 2010 Purle judgment being given in the defendants’ favour and thus justified setting that judgment aside. The forgery was found proved on the civil standard and, on the evidence in this retrial, so strongly supported that the judge was satisfied it met the criminal standard. (paras 301–309)
3. The court held that the forgery and deployment of the forged PSA in the original proceedings constituted "unlawful means" capable of supporting an action in unlawful means conspiracy. The defendants were jointly liable for the conspiracy which caused pecuniary loss to the claimant. (paras 505–565)
4. Remedies: the court (a) granted rescission/ equitable relief for undue influence and resulting trust remedies against Gracefield (and consequentially against the controlling defendants); and (b) awarded compensatory damages for the unlawful-means conspiracy against the defendants as shown by the figures set out below. The court quantified losses after applying appropriate offsets and interest. (paras 566–620)

Key legal conclusions and guidance

1. A judgment subsequently set aside for fraud is "of no further legal relevance qua judgment", but findings in the set-aside action (and those upheld on appeal) can create issue estoppel as to matters actually decided in the set-aside hearing; contemporaneous documents and the factual matrix remain evidence to be assessed afresh on retrial. The Highland test for setting aside (conscious and deliberate dishonesty that was causative of the judgment) was applied and endorsed. (paras 40–54)
2. The modern approach to fact-finding after long delay and litigation (Gestmin and subsequent authorities) requires a holistic and iterative assessment giving proper weight to documentary evidence, contemporary material and the effects of memory distortion; the court may rely on documents where reliable but must test their provenance where forgery or manipulation is alleged. (paras 61–90)
3. Fraudulent misrepresentation may amount to the type of "actual" undue influence that will justify rescission, but the question is whether the consent was produced by means that make it unconscionable to treat the consent as the expression of free will; the court set out how to analyse both actual and presumed undue influence post-Etridge. (paras 320–415)
4. Forgery of documents used to procure a judgment is capable in principle of amounting to "unlawful means" for conspiracy; the court considered and rejected arguments that policy, witness-immunity or the absence of a separate tort of malicious defence should preclude civil remedies. Where forging and deploying documents in litigation amounts to contempt of court/abuse of process or a criminal offence it may be relied on as unlawful means in conspiracy. (paras 505–565)

Final orders (summary)

• Judgment in restitution and money: disclosed in the operative section (outcome) below; the judgment figures are the court’s assessment after offsets and interest. (paras 566–620)