The claimant brought a claim alleging that various properties of which she was the owner had been transferred to the first defendant company as a result of undue influence or other unconscionable conduct on the part of the second and third defendants. The judge dismissed the claim, giving judgment for the defendants. Some three years later the claimant brought a further claim, seeking to have that judgment set aside on the ground that it had been obtained by fraud. In support of the allegation of fraud the claimant relied on evidence which had not been available to her at the original trial to the effect that the second and third defendants had forged the claimant’s signature on a document. The defendants applied for the claim to be struck out as an abuse of the court’s process on the basis that, with reasonable diligence, the claimant could have obtained the fresh evidence before the original trial. The judge refused the application and allowed the claim to proceed to trial, holding that the reasonable diligence condition did not apply where a party sought to set aside a judgment on the grounds of fraud, and there had been no abuse of process. The Court of Appeal allowed the defendants’ appeal, holding that reasonable diligence was required by the claimant.
On the claimant’s appeal—
Held, appeal allowed. The present case was not one in which new proceedings had been commenced concerning the same issue, since the question of whether the claimant’s signature had been forged had not been raised or decided in the original trial. The claimant did not seek to set aside that judgment on any of the issues decided by the judge. Further, there was no unequivocal judicial statement to the effect that seeking to set aside a judgment on the basis that it had been obtained by fraud constituted an abuse of process if evidence of the fraud could, with reasonable diligence, have been obtained and produced at the earlier trial. Moreover, the policy arguments for permitting a litigant to apply to have a judgment set aside where it had been obtained by fraud were overwhelming, and fraud should “unravel all”, even where the discovery of its existence had been possible before the original trial. Accordingly, it ought now to be recognised that where it could be shown that a judgment had been obtained by fraud, and where no allegation of fraud had been raised in the trial which had led to that judgment, a requirement of reasonable diligence should not be imposed on the party seeking to set aside the judgment. There were two possible qualifications to that general conclusion. First, where fraud had been raised at the original trial and new evidence as to the existence of the fraud was prayed in aid to advance the case for setting aside the judgment, it could at least be argued that the court dealing with that application should have a discretion as to whether to entertain it. Secondly, if it could be established that a deliberate decision might have been taken not to investigate the possibility of fraud in advance of the first trial, even if that had been expected, there should also be a discretion whether to set aside the judgment. But since neither situation arose in the present case, no final view on those matters would be expressed. The claimant should be allowed to proceed with her claim to have the judgment set aside (paras 22, 23, 25–29, 32, 33, 49, 50, 53, 54–55, 58, 59, 68, 89, 91, 106).
Dicta of Handley JA in Toubia v Schwenke [2002] NSWCA 34; 54 NSWLR 46, paras 37, 38, 41 applied.
Dicta of Lord Keith of Kinkel in Arnold v National Westminster Bank plc [1991] 2 AC 93, 104, 109, HL(E); Owens Bank Ltd v Bracco [1992] 2 AC 443, HL(E); Owens Bank Ltd v Etoile Commerciale SA [1995] 1 WLR 44, PC; and dicta of Lord Sumption JSC in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd (formerly Contour Aerospace Ltd) [2014] AC 160, para 2223–24, SC(E) considered.
Decision of the Court of Appeal [2017] EWCA Civ 147; [2018] Ch 1; [2017] 3 WLR 853 reversed.
John Wardell QC and Andrew Mold (instructed by Tanners Solicitors llp, Cirencester) for the claimant.
Joseph Sullivan and Tom Nixon (instructed by Gowling WLG (UK) llp, Birmingham) for the defendants.