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Civil Litigation Solicitors

Supreme Court: when judgment can be set aside for fraud (Takhar v Gracefield Developments Ltd.) (12 May 2020)

Date: 12/05/2020
Duncan Lewis, Civil Litigation Solicitors, Supreme Court: when judgment can be set aside for fraud (Takhar v Gracefield Developments Ltd.)

The case of Takhar v Gracefield Developments Ltd. holds significant importance as it confirms the Supreme Court’s consistent position of not allowing fraudsters from benefitting from their fraudulent activity and upholding public interest matter.

Trainee solicitor in the civil litigation department Sagrika Mehak takes an in-depth look at this notable case.


Summary of the case

The appellant was the owner of various properties. In 2005, it was agreed between the appellant, the second, and the third respondent that the legal title of the properties of the formed company of the first respondent would be transferred to the second and third respondent, who were directors and shareholders at the time.

In 2008, the appellant issued proceedings in relation to the ownership of the properties. The appellant claimed that the properties were transferred as a result of undue influence. An important piece of evidence was produced at the trial which was a written copy of profit share agreement (PSA), apparently signed by the appellant.

At trial however, the appellant said that she could not say that the signature was not hers on the PSA – that is, she could not explain how it got there. In this instance, her claim was rejected.

Following trial, a handwriting expert was instructed who expressed the opinion that the appellant’s signature on the PSA had been transposed from an earlier document.

In 2013, the appellant issued the current proceedings seeking the judgment set aside on the ground that it had been obtained by fraud.


Supreme Court’s decision

The Supreme Court questioned whether a person who applies to set aside an earlier judgment on the basis of fraud is required to show that the evidence could not have been obtained with reasonable diligence at the earlier trial, i.e. ‘the reasonable diligence requirement’. It was held that there was no reasonable diligence requirement in the test for setting aside a judgment for fraud.

As Lord Briggs explained, the appeal turned on the outcome of a ‘bare-knuckle fight’ between two principles of public policy, namely, fraud unravels all and finality of litigation. Lord Kerr explained that it was contrary to justice that a fraudulent individual should profit because their opponent failed to act with reasonable diligence. A person who obtained judgment through fraud had perpetrated a deception not only on their opponent but also on the rule of law and the court itself.

As Lord Sumption held, an action to set aside an earlier judgment for fraud was not a procedural application but a cause of action which was independent of the cause of action asserted in the earlier proceedings.

The decision in Takhar v Gracefield Developments Ltd. underlines the special status afforded to claims in fraud and affirms the court’s commitment to maintaining the integrity of its own process.

Although, by allowing the appeal, the Supreme Court rejected the imposition of a reasonable diligence requirement on a party seeking to set aside an earlier judgment for fraud, one should not think that this will make it easy to challenge an earlier judgment for fraud. There are still very stringent requirements to do so.

For full details on the case, please refer to Takhar v Gracefield Developments Ltd and others [2019] UKSC 13, [2019] All ER (D) 94 (Mar).


Author Sagrika Mehak is a trainee solicitor in the civil litigation department at Duncan Lewis Solicitors, she works alongside director Sobashni De Silva. The litigation team assists with matters in relation to fraud and advises corporate clients on litigation matters, as well as advising private individuals in cases where litigation might be an option.

Contact Sagrika on 020 3114 1328 or at sagrikam@duncanlewis.com

Contact Sobashni on 020 3114 1180 or sobashnis@duncanlewis.com.


Duncan Lewis Commercial and Civil Litigation Solicitors

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