The Court of Appeal has clarified the test to have a judgment set aside on the basis it was obtained by fraud against the court. The test requires that the court has been deceived through deliberate dishonesty, and that the dishonest conduct was material to the judgment reached. The recent decision in Tinkler v Esken Ltd (Tinkler) considered the meaning of “material” in this context.
Mr Tinkler had lost his original claim concerning his removal from office as a company director. He brought a claim to have that judgment set aside. Mr Tinkler argued that new evidence had been withheld deliberately from the court, and that this evidence would have been highly material to the court’s decision. The set aside was refused. Mr Tinkler appealed that refusal to the Court of Appeal on the basis that the judge hearing the set aside claim took the wrong approach.
The grounds of appeal considered were that the court had placed inappropriate weight on the findings of the judge in the original case, and that it had taken the wrong approach to “materiality” when assessing whether the alleged dishonest conduct had had a material impact on the judgment reached.
The first ground was in issue because a claim to have a judgment set aside due to fraud is separate from the original claim. It is not an application in that original claim and does not involve a rehearing of all the evidence. Instead, it is a new case in which the claimant must prove that the original judgment was obtained by specific dishonest conduct by the successful party. This is determined separately from the matters originally tried.
Mr Tinkler argued that the judge had made various errors of approach to the evidence in this regard. However, the Court of Appeal found that although it is understandably difficult fully to separate the prior factual findings from the new question of fraud, and the way the judge had set out his findings appeared unorthodox, he had not erred and had approached consideration of the evidence appropriately.
The second ground of appeal raised a key question of law: what is the meaning of “material” when assessing whether the allegedly fraudulent conduct materially impacted the judgment reached? The Court of Appeal endorsed its previous statement in Royal Bank of Scotland plc v Highland Financial Partners LP that in this context “materiality” means that the new evidence must demonstrate the alleged fraud was “an operative cause of the court’s decision to give judgment in the way it did” or that the new evidence “would have entirely changed the way in which the first court approached and came to its decision”. This was preferred over the older case of Hamilton v Al Fayed (No.2) which suggested the test was whether there was a real danger that the outcome had been affected.
Given the importance of the principle that there should be finality in litigation, it is helpful that the Court of Appeal decided “the hurdle of materiality which enables a party to defeat a final judgment must be set high”. It is now clear that a party bringing a claim to have a judgment set aside for fraud must show that the fraud it alleges did in fact have a significant operative effect on the outcome of the case.