Setting Aside A Judgment For Fraud: Applying The Three-limb Test

• Jurisdiction: European Union
• Law Firm: Herbert Smith Freehills
• Subject Matter: Litigation, Mediation & Arbitration, Criminal Law, Trials & Appeals & Compensation, White Collar Crime, Anti-Corruption & Fraud
• Author: Jan O'neill
• Published date: 09 August 2023

In a recent decision the Court of Appeal has analysed how a court should apply the established test as to when a judgment should be set aside on the basis of fraud: Tinkler v Esken Ltd [2023] EWCA Civ 655.

Despite the traditional adage that "fraud unravels all", an unsuccessful litigant must do more than merely produce evidence of fraudulent conduct by its opponent in order to have the judgment set aside. It must satisfy a court that (i) the successful party (or someone for whom it must take responsibility) committed conscious and deliberate dishonesty, (ii) the dishonest conduct was material to the original decision and (iii) there is new evidence before the court (The Royal Bank of Scotland plc v Highland Financial Partners LP and others [2013] EWCA Civ 328).

The present decision reinforces prior authority that such an application is a freestanding claim, in which it is the fraud and its impact on the original decision that need to be proved. The court's task is not to retry the issues in the underlying action, or to speculate as to how the trial judge would have ruled if the full and accurate evidence had been before them. The question for the court to decide, and for an applicant to address, is whether the new evidence discloses a fraud on the court and whether it undermines the supporting basis for the original findings, to an extent that vitiates the court's ruling.

However, as the judgments in this case illustrate, what that distinction means in practice will not always be straightforward. As the Court of Appeal observed, the nature of the fraud may be such that the question of the new evidence's impact is inextricably linked with the original evidence and the trial judge's findings.

The decision suggests that, provided a court has directed itself to the correct question, it will not be constrained by technical restrictions as to what it can and cannot take into account. In particular, it usefully confirms that, while the focus of the enquiry should be on the impact of the new evidence, a court may have regard to the evidence led at trial and the trial judge's assessment of it to the extent necessary to form a view as to whether the new evidence discloses fraud that vitiates the original ruling.

Background

The underlying proceedings involved a boardroom dispute between a company director, Mr Tinkler, and his fellow board members, regarding his removal as a director and dismissal as an employee for alleged misconduct. In a High Court action, the...