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Lloyd's Maritime and Commercial Law Quarterly

FRAUD IS A THING APART

KR Handley*

Takhar v Gracefield Developments
In Takhar v Gracefield Developments Pty Ltd 1 the Court of Appeal held that evidence tendered to establish that a perfected judgment was obtained by fraud must be evidence that could not have been secured for the trial by the exercise of reasonable diligence (the reasonable diligence condition: “RDC”). The court held that the evidence relied on must satisfy the RDC.
Patten LJ, who delivered the principal judgment, relied on appellate decisions dealing with the RDC in cases where fraud at the trial was not an issue. These included Ladd v Marshall 2 (fresh evidence to obtain a new trial admissible on three conditions, including the RDC); Phosphate Sewage Co v Molleson 3 (fresh evidence in support of a rehearing under the Scots law of res novitur veniens in notitiam); Hunter v Chief Constable 4 (fresh evidence in support of a civil action mounting a collateral challenge to a conviction to avoid abuse of process); Arnold v National Westminster Bank Plc 5 (fresh evidence as special circumstances avoiding issue estoppel); Virgin Atlantic Airways Ltd v Zodiak Seats UK Ltd 6 (ditto). Patten LJ also relied on dicta of Lord Bridge of Harwich in Owens Bank Ltd v Bracco 7 and of Lord Templeman in Owens Bank Ltd v Etoile Commerciale SA 8 about the RDC in relation to domestic judgments challenged on the ground of fraud. The cases involved the enforcement of a foreign judgment where there is no RDC and an issue of fraud can be relitigated subject to abuse of process.
However, there is another body of authority, not fully considered by the court, where the prior judgment was challenged for fraud. An action or application to an appellate court seeking to set aside a perfected judgment on the ground of fraud at the trial is, as the Earl of Selborne said in Boswell v Coaks (No 2),9 an action for rescission. As such it should be governed by the ordinary principles that apply to such proceedings which do not include the RDC. Patten LJ10 treated this decision as of no relevance because the RDC was not in issue, but that was the point. Delivering the only reasoned speech, the Earl of Selborne said:11
“the Court ought to receive such evidence pro and con as is material to the question whether there really has been, since the former judgment, a new discovery of something material … that it would be a reason for setting the judgment aside.”
He later said:12
“Was or was not this [the new evidence] a matter proper to be gone into … namely whether anything material to disturb … the judgment … had been newly discovered … That involves a

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