Commodities in Focus - Edition 6 2019

COMMODITIES IN FOCUS EDITION 6 3 Fraud v Finality: a bare-knuckle fight? The general rule in English litigation is that claimants have one chance to put their case: they have one trial and need to use all their evidence and arguments at that point. Usually, new evidence and arguments cannot be raised at a later time. However, the Supreme Court has handed down an important judgment, clarifying that where a party wants to set aside a judgment on the basis that it was obtained by fraud, it does not have to demonstrate that the fraud could have been discovered at an earlier time by the exercise of reasonable diligence ( Takhar v Gracefield Developments Limited and others [2019] UKSC 13, on appeal from [2017] EWCA Civ 147.) In other words, a losing party can, in some circumstances, try to re-litigate a case if they can show the original judgment was obtained by fraud. Takhar v Gracefield: the facts When Mrs Takhar, the appellant, separated from her husband, she had acquired a number of properties from him. In November 2005, it was agreed that legal title to the properties would be transferred to Gracefield Developments Ltd ("Gracefield"). Mrs Takhar and the defendants were to be the shareholders and directors of Gracefield. The purpose of that transfer was disputed. The proceedings In October 2008, Mrs Takhar issued proceedings, claiming that the properties had been transferred to Gracefield as a result of undue influence or other unconscionable conduct on the part of the defendants. The Judge in that case rejected the claim. He relied in particular on a document described as a profit share agreement (the " Agreement "). Mrs Takhar said she had never signed that agreement, and asked the Court for permission to use an expert in handwriting to prove this. At trial, Mrs Takhar said that she could not say that the signature on the Agreement was not hers, but was unable to explain how it got onto the Agreement. After trial, Mrs Takhar instructed new solicitors, who obtained an expert handwriting report. The report concluded that the signature on the Agreement was a forgery. This meant that the first judgment had been obtained by the defendants in reliance on a fraudulent document. Mrs Takhar's new claim Mrs Takhar therefore issued new proceedings, asking the Court to set aside the first judgment on the ground that it was obtained by fraud. The defendants argued that Mrs Takhar's claim was an abuse of process because, amongst other matters, the documents on which the expert reported were available to Mrs Takhar and her legal team approximately 12 months before trial. The Judge held that a party who seeks to set aside a judgment on the basis that it was obtained by fraud did not have to demonstrate that he could not have discovered the fraud by the exercise of reasonable diligence ([2015] EWHC 1276 (Ch)). This judgment was appealed to the Court of Appeal, and then to the Supreme Court. The Supreme Court