6th November 2020

Fraud Trumps Judgment

Takhar v Gracefield Developments Ltd [2020] EWHC 2791 (Ch).

In a recent High Court decision, a previous Judgment has been set aside on the basis of fraud.

A judgment was obtained in 2010 (“the Judgment”), in a dispute in which the Claimant alleged that five commercial properties had been transferred to the Defendants on trust for her, on the basis the Defendants would manage and renovate the properties. Alternatively, the Claimant claimed the Defendants had transferred the properties by undue influence or that the transfers represented “unconscionable bargains”.

Shortly before the original trial in 2010, the Claimant sought to instruct a handwriting expert, alleging that she had not signed a key document – the Profit Sharing Agreement – and had never seen it until the dispute arose.

This application was refused, being made at such a late stage in the proceedings.

In 2013, the Claimant instructed a handwriting expert, who found the Claimant’s signature on the Profit Sharing Agreement had been forged, having being transposed from a letter signed by the Claimant and dated March 2006.

As a result of this enlightening new evidence, the Claimant issued separate proceedings to set aside the Judgment, alleging the forgery “was material in relation to the judgment obtained by the Defendants in the action tried before Judge Purle”.

The Defendants sought to strike out the proceedings as an abuse of process, which went to the Supreme Court as a preliminary issue.  The Supreme Court held that “where it could be shown that a judgment had been obtained by fraud, and no allegation of fraud had been raised at the trial which led to that judgment, a party seeking to set aside the judgment was not required to show that the fraud could not with reasonable diligence have been uncovered in advance of the judgment”.  The application to strike-out was dismissed and the proceedings continued in the Birmingham High Court.

Steven Gasztowicz QC sitting as a Deputy High Court Judge found for the Claimant. He stated that “[T]he evidence now shows, as I have found, that the Profit Sharing Agreement (or “joint venture”) document was forged, and forged, I have found, by the Defendants”. He goes on: “this document was part – and in my judgment a key part – of the contemporaneous evidence produced by the Defendants for trial and relied on by Judge Purle”.

The Judgment obtained in 2010 was, therefore, set aside, some 10 years later.

If you have any questions on this article or anything related, please contact Lindsey Whittle.

Fraud Trumps Judgment

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