The correct approach for dealing with applications to set aside judgments obtained through fraud.
Summary
This appeal concerned the proper process to deal with judgments that have been obtained through fraud, in view of some notable decisions on setting aside orders made as a result of fraud:
Jonesco v Beard (1930) AC 298 established that an action might be brought to set aside the judgment, giving particulars of the fraud and establishing the allegation by putting it to strict proof.
In Noble v Owens (2010) EWCA Civ 224 the Court of Appeal held that an appeal may be brought seeking to rely on fresh evidence where due diligence would not have uncovered it in the first instance. This follows Ladd v Marshall (1954) 1 WLR 1459.
Summers v Fairclough Homes (2012) UKSC 26 is the landmark case in which the Supreme Court decided that where it is “just and proportionate”, a statement of case can be struck out on the basis of abuse of process, and that this may be done summarily pursuant to CPR 3.4(2)(b).
Background
BCS Corporate Acceptances Ltd (BCS) and the other claimants were linked and jointly owned companies in the business of providing commercial loans. Terry (T) claimed to be a representative of various funding/securitisation companies. BCS paid T almost £2m for bond procurement and a credit facility.
BCS made a claim for the full amount of the premiums and for fraud, misrepresentation and breach of contract. No defence was filed, and default judgment was obtained.
T made an application to strike out the claim after judgement and alleged that the claim was “wholly fraudulent”, which BCS denied. T sought to rely on the Summers judgment and on CPR 3.1(7) which states that “A power of the court under these Rules to make an order includes a power to vary or revoke the order.”
At first instance, the County Court held that it could not strike out a claim after judgment had been given and “any cause of action, and thus the claim, has merged in the judgment”. T did not produce fresh evidence that reasonable diligence would have uncovered. Therefore, the criteria in Ladd v Marshall had not been met.
The court's decision
Appeal dismissed.
The Court of Appeal agreed with the County Court that Civil Procedure Rules - CPR 3.4 provides no jurisdiction to strike out a claim after final judgment. CPR 3.1(7) was also denied, with reference to Neuberger J in Customs and Excise Comrs v Anchor Foods (No 2) The Times, 28 September 1999, that “There is scant authority upon rule 3.1(7) but such as exists is unanimous in holding that it cannot constitute a power in a judge to hear an appeal from himself in respect of a final order”.
The judge had done nothing wrong and could not be criticised for dismissing T’s application without directions. T should have adopted one of the well-established means of challenging a judgment allegedly obtained by fraud. T's attempts failed due to their failure to properly plead and prove fraud.
Comments
Where a defendant alleges fraud in proceedings after a final order has been made, there is a duty to provide evidence of the alleged fraud.
If a final order has not been made, the court may be persuaded to strike out a statement of case summarily.