In the recent case of Broomhead v National Westminster Bank plc and another  EWHC 1005 (Ch) the High Court was asked to consider the grounds for setting aside a previous judgment on the basis of fraudulent conduct.
In June 2018, judgment was handed down dismissing Mr Broomhead (the “Claimant”)’s claim against National Westminster Bank plc (the “First Defendant”) and The Royal Bank of Scotland plc (the “Second Defendant”) concerning the Claimant’s business banking relationship with the First Defendant. The Claimant claimed damages in the sum of £13.78 million for breach of an oral collateral contract between himself and the First Defendant which he alleged entitled him to continued banking support. Such support was subsequently withdrawn when the Claimant’s accounts came under the control of the Second Defendant. The Claimant’s application for permission to appeal the judgment was dismissed in December 2018.
The Claimant was ordered to pay the Defendants’ costs of the first claim and ordered to make a payment on account of £871,157.60. No payment was made, and the Claimant was served with a statutory demand followed by the issue of a bankruptcy petition on 19 June 2019.
The Claimant issued a new claim on 23 July 2019. On 6 November 2019, the bankruptcy petition was put on hold pending the outcome of the Defendants’ application for strike out / summary judgment in respect of the new claim.
In the new claim, the Claimant alleged that “… by reason of post-trial discoveries and revelations he can show by [the new claim] that the Defendants were guilty of conscious dishonesty in the presentation and pursuit of the Defence [in the first claim]” i.e. that the judgment in the first claim was obtained by the Defendants’ fraud.
Chief Master Marsh recognised the tension between the principle that ‘fraud unravels all’ and the need for finality in litigation. This is something that was considered by the Supreme Court in Takhar v Gracefield Developments Ltd and others  UKSC 13 and which we discuss here https://tenetlaw.co.uk/articles/fraud-unravels-all/
The principles to be applied by the court when assessing a claim to set aside an earlier judgment on the basis of fraud were not in dispute in this case. Chief Master Marsh referred to the summary of Aikens LJ in Royal Bank of Scotland plc v Highland Financial Partners LP  1 CLC 596 which was unequivocally approved by the Supreme Court in Takhar and which sets out such principles as follows:
Chief Master Marsh considered that the Claimant’s Particulars of Claim “…fall a long way short of pleading a case of conscious and deliberate dishonesty that was material. The particulars do not justify a plea of fraud because they do not provide a plausible assertion of dishonesty and do not support a necessary inference of dishonesty, whether they are taken together or looked at separately. Furthermore, and importantly, materiality is merely asserted but is wholly unparticularised.” The conclusion was that, as currently pleaded, the claim was bound to fail.
However, Chief Master Marsh went on to consider whether there was any other reason that the court should not strike out the claim. He regarded the evidence of a former employee of the First Defendant (which indicated anomalies in the disclosure process including the possibility of document tampering and the withholding of information regarding a particular document retention system) as “troubling”. In light of this evidence, Chief Master Marsh considered that the Claimant should have the opportunity to replead his case as he could not be satisfied that the claim had no real prospect of success.
The Defendants’ application was supported by witness statements from a partner with Addleshaw Goddard LLP (representing the Defendants). His second statement contained evidence that was largely outside of his own knowledge. Where he was required to provide the source of his evidence, he stated he was “informed by the Bank” (meaning both Defendants). It was highlighted that stating the source of evidence as a named corporate party does not comply with the requirements of Practice Direction 32 paragraph 18.2(2). As a result, the court attached ‘significantly reduced weight’ to the witness statement.
There are times where judgment has been obtained and a party has a suspicion that the opponent has lied and deceived the court to get their judgment. This line of cases demonstrates that if evidence is identified to support those suspicions that the court was misled on important facts in the trial where judgment was made, then a party can look to these cases as a route to setting aside the judgment.
If you are interested to learn more about our experience or need guidance responding to fraud, please get in touch