Nicola Sharp of Rahman Ravelli details a recent case that focused on the grounds for taking such action.
While a judgment that was obtained by fraud can be set aside, a number of criteria have to be met for this to be achieved.
The underlying reasons for setting aside a judgment on the grounds of fraud are:
- the desire to do justice in an individual case, and
- to deny fraudsters the opportunity to benefit from their misuse of the court system
The second limb is an extension of the maxim that ‘fraud unravels all’, which was approved in the leading case of Takhar v Gracefield Developments Ltd [2020] UKSC 13.
To be successful in a claim to set aside a judgment for fraud, the claimant must establish conscious and deliberate dishonesty in relation to statements made or evidence given by the other side. It must also be shown that the dishonest conduct was an operative cause of the court’s decision to enter judgment in those terms.
Such cases are infrequent. There are relatively few instances of actions to set aside judgments on the grounds of fraud being successful. In those cases where judgment has been set aside, the fraud was blatant and its effect on the judgment obvious.
Despite the difficulties in succeeding in these claims, some aggrieved parties try to use this avenue as a way to negate a judgment against them. In this article, we look at a recent Court of Appeal judgment, where the claimant failed to get the judgment set aside by fraud. The decision follows a line of litigation between the same parties. The judgments give helpful guidance on the approach taken by the court to claims to set aside judgments allegedly obtained by fraud.
Case Background
Mr Tinkler was the CEO and executive director of Stobart Group Ltd (now Esken Ltd) in Stobart Group Ltd v Tinkler [2019] EWHC 258 (Comm) (“the Russen Judgment”). The court found that Mr Tinkler had been in breach of his contractual and fiduciary duties to the company. He had done this by briefing selected shareholders against the board, agitating for the removal of the chairman and writing to shareholders and company employees regarding his dispute with the other directors.
Mr Tinkler applied to set aside the judgment on the grounds of fraud. In Tinkler v Esken Ltd [2022] EWHC 1375 (Ch), (“the Leech J Judgment”) the High Court dismissed the claim. Mr Tinkler relied on new evidence that had not been available for the Russen judgment, claiming that had these documents been shown to the court then the outcome would have been different.
The court did not accept that the documents bore the meaning that Mr Tinkler placed on them and held that they would not have been material to the original proceedings.
The Leech J judgment set out a three-limb test for setting aside a judgment for fraud:
- the successful party (or someone for whom it must take responsibility) committed conscious and deliberate dishonesty,
- the dishonest conduct was material to the original decision, and
- there was new evidence before the court
The Court of Appeal decision
Mr Tinkler appealed the Leech J judgment in Tinkler v Esken Limited (formerly Stobart Group Limited) [2023] EWCA Civ 655. The primary ground of appeal was the correctness of Leech J’s approach towards the new evidence.
Leech J explained that he thought his task was to evaluate the new evidence to decide if it proved there had been fraud and, if so, to decide whether the Russen judgment could stand in the light of it.
He was clear that it was not his task to retry the issues before Judge Russen on different evidence. His task, as he said more than once, was “to hear and evaluate the new evidence and then decide whether Judge Russen’s findings could stand in the light of it.”
He focused on whether the alleged concealment and the new evidence established that there had been a fraud practised on the court. Leech J looked at the old evidence alongside the new evidence to discern whether the court was misled. He decided that the new evidence did not alter Judge Russen’s decisions.
The approach to setting aside a judgment for fraud
Sir Geoffrey Vos, in his Court of Appeal judgment, said that the modern approach is to regard the action to set aside a judgment for fraud as akin to an action for deceit. It must be shown that the court has been deceived. Deliberate dishonesty is required, and materiality (relevance) must be shown. If these elements are made out, the judgment can be set aside.
Mr Tinkler tried to establish deliberate dishonesty by alleging that the new evidence had been deliberately withheld and that the witnesses had lied. He said this was part of a pre-meditated plan and would inevitably have changed Judge Russen’s approach to the evidence and the way he came to his decision.
The new documents and the concealment did not, in the judge’s view, show there had been a plan. As this alleged plan was the critical element in Mr Tinkler’s case, the appeal failed on this ground (and on all the other grounds for different reasons).
