The Estate of Euan Mcintyre Lindsay & Anor v Outlook Finance Limited & Anor

A judgment obtained by fraud may be set aside against a party who was not himself fraudulent. The relevant fraud-based requirements concern the integrity of the impugned judgment, rather than the separate conduct of every party against whom relief is sought. The court must still decide whether it is fair and equitable to grant relief against an innocent party, considering all relevant circumstances, including delay and prejudice. The party must be served and given an opportunity to oppose the application. Where fraud materially caused the original judgment and later evidence exposed the fraud, setting aside the judgment and ordering a retrial need not constitute abuse of process.

The claimants sought to set aside a 2014 judgment of HHJ Bird in the Chancery Division at Manchester, alleging that it had been obtained through fraudulent evidence and concealment by Outlook’s director, Mr Fradgley. The earlier proceedings concerned the validity of Outlook’s enforcement of security over a farm and livestock and resulted in dismissal of claims against Outlook, Mr Butcher and a third defendant, Beattie.

Subsequent Scottish proceedings resulted in findings that Mr Fradgley had fabricated documents, misrepresented the indebtedness and procured the loan and security documents by fraud and undue influence. The present claim alleged that those matters had materially affected the Manchester judgment. Mr Butcher was not alleged to have participated in the fraud, but the claimants sought a retrial of the claims against him. The central issue was whether the judgment could be set aside against a non-fraudulent co-defendant.

1. Outlook. The requirements stated by Aikens LJ in Royal Bank of Scotland plc v Highland Financial Partners LP were satisfied. Mr Fradgley had given consciously and deliberately dishonest evidence and concealed relevant matters. The dishonesty was material because it was an operative cause of the judgment, and the fresh evidence would have substantially changed the evidence supporting the original decision. The judgment was therefore set aside against Outlook.
2. Nature of the jurisdiction. The action is an equitable suit to impeach a judgment and protect the integrity of the legal process. The fraud-based requirements are directed to the impugned judgment, not separately to each party against whom it is sought to be set aside. Equity may therefore extend relief to another original party who was affected by the tainted judgment but was not himself fraudulent.
3. Procedural safeguard. A party against whom relief is sought must be served and given an opportunity to appear and argue against setting aside the judgment. The court could not grant relief against Beattie, which was not a party to the present proceedings.
4. Equitable assessment. Relief against an innocent party is not automatic. The court must consider whether it is fair and equitable in all the circumstances, including the party’s innocence, delay, prejudice and any other equitable defence. Mr Butcher had voluntarily undertaken a remunerated receivership, accepted the commercial risks of his role and benefited from the summary dismissal produced by the fraud. The delay was explained by the time required to uncover the fraud, and laches was not established.
5. A retrial against Mr Butcher was not an abuse of process. The claimants had not previously been able to present the fraud case because the necessary evidence was unavailable. The 2014 judgment was set aside against both Outlook and Mr Butcher, and a retrial was ordered. The judgment was not set aside, and the costs orders were not disturbed, as against Beattie.

• Chancery Division, Manchester: HHJ Bird dismissed the claims against Outlook, Mr Butcher and Beattie on 2 June 2014 and made consequential costs orders on 14 June 2014.
• High Court (King’s Bench Division): the present court set aside the earlier judgment against Outlook and Mr Butcher, ordered a retrial and left the position concerning Beattie unchanged.