WHAT IS THE APPROPRIATE COURSE WHEN A PARTY ALLEGES THAT A JUDGMENT WAS OBTAINED BY FRAUD? THE HIGH COURT CONSIDERS THE ISSUES

What should a party do if it alleges that a judgment has been obtained by fraud? Can it apply within the proceedings themselves to set the judgment aside or should it issue separate proceedings?  In this case the judge carried out a detailed consideration of the principles involved and came to a clear conclusion.

(An important question here with a clear answer. Separate proceedings have to be issued).

“The leading authorities are unanimous that the correct procedure, consistent with the principle of finality, the nature of the claim being a cause of action and the requirement that fraud allegations must be pleaded and proved to a high standard, is that a party seeking to challenge a judgment on the grounds of fraud must bring a fresh claim. In my view, the Defendant must bring a claim for fraud if he wishes to challenge the orders of Master Eastman and Tipples J. I have no power to invoke CPR 3.1(7) in substitution for the established procedure at common law. Alternatively, if I do have such a power, it is not one that I should exercise. The Set Aside application is dismissed.”

THE CASE

Rashed v Deane [2025] EWHC 3201 (KB) DHJC Guy Vassall-Adams KC.

THE FACTS

The claimant had obtained judgment against the defendant in libel proceedings. The defendant’s defence had been struck out and permission was refused to amend the defence. Judgment was entered for the claimant.  At the remedies trial the claimant obtained a judgment for £85,000.

THE DEFENDANT’S APPLICATION TO SET ASIDE THE JUDGMENT

The defendant made an application within the proceedings to set aside the judgment on the grounds that it was obtained by fraud.

WHAT HAPPENED IN A NUTSHELL

The judge refused the defendant’s application.  There was clear authority for the proposition that a party seeking to set aside a judgment obtained by fraud must issue fresh proceedings and plead the allegations of fraud with full particularity. It was not possible for the court to make an order within the current proceedings.

THE JUDGMENT

The judgment contains a detailed consideration of the principles and cases relating to applications to set aside judgments in these circumstances.  The judge held that separate proceedings were necessary.

“61. The starting point is the principle of finality. This is an important principle in respect of both interim and final orders, but it is particularly important in respect of final orders where the court has granted judgment on the claim, or where the court has awarded damages on the claim, as the two impugned orders do in this case. Ordinarily, a successful party is entitled to assume that a judgment on liability and an award of compensation is the end of matters, subject to the right of the unsuccessful party to appeal.

62, The weight to be attached to the finality principle in any given case depends on the nature of the final order in question and the context in which it was made. The Supreme Court in AIC Limited held that finality is at its highest importance in relation to orders made at the end of a full trial and other final orders which end the proceedings at first instance, which attract the finality principle “to almost as great a degree”. The two orders impugned by the Set Aside application, which respectively granted judgment and compensation to the Claimant, are final orders which ended the proceedings at first instance and the finality principle should be accorded significant weight in this context.

63. The Claimant relies on a long line of authority going back to Flower v Lloyd [1877] 6 Ch D 297 and culminating in the Supreme Court’s decision in Takhar which states that the correct procedure for a party seeking to challenge a judgment on the ground of fraud is to bring a separate claim for fraud. This reflects the fact that a claim to set aside a judgment for fraud is not a procedural application, but a cause of action: Takhar at [60]. The cause of action is independent of the original claim because it relates to the conduct of the original proceedings, not the underlying dispute: Takhar at [61].

64. The bringing of a separate claim ensures that the claim has to be pleaded and proved in the usual way. This is an important safeguard for the successful party seeking to uphold the original judgment as the pleading requirements for fraud – which is a very serious allegation to make – are high. This means that a weak and speculative allegation of fraud is likely to be struck out at an early stage. But the procedural safeguards don’t only aid the resisting party, for example, the challenging party will have a right of appeal that is specific to the fraud claim.

65. I accept that CPR 3.1(7) provides a general power to revoke an earlier order of the court in appropriate circumstances. I can see that from the Defendant’s perspective that referring the case back to Master Eastman seems more proportionate, as a first step, than being required to issue a fresh claim. However, in Terry, the Court of Appeal held that the existence of established procedures for setting aside a judgment based on fraud undermined the defendant’s general argument in that case that it is consistent with the overriding objective and the need to deal with cases justly for there to be such a power under CPR 3.1(7).

66. In my view, the fact that courts have been willing in some “rare cases” to set aside final orders by reference to CPR 3.1(7), does not affect the position where a final order is being challenged on the ground it was obtained by fraud. In such a case, there is an established, and more suitable, alternative.

67. I am also not persuaded by the Defendant’s argument that I have the power to do what he asks of me. The Defendant’s case is that I should refer the case back to Master Eastman for him to reconsider his earlier judgment and make a “summary determination” as to whether he would have decided the case differently in the light of the evidence of fraud presented. When I asked Mr Brittain what power I would be exercising in this context he replied that it would be the same power as in Noble v Owens. But that was an appeal to the Court of Appeal where the Court has a power under CPR 52.20(2)(b) to refer the case back to the first instance judge to redecide an issue. Here I would be referring a case back to a judge of coordinate jurisdiction who has already given judgment. In my view, I would be doing precisely what the Court of Appeal in Roult held to be untenable, which would be asking Master Eastman to hear an appeal from himself.

68. The Defendant’s fallback position is that I should invoke the inherent jurisdiction. Ms Wilson points to Raja v van Hoogstraten [2008] EWCA Civ 1444, [2009] 1 WLR 1143, which is authority for the proposition that the Court should not invoke the inherent jurisdiction when there is an equivalent power under the CPR. Here there is an equivalent power under CPR 3.1(7), which is a general provision empowering the Court to vary or revoke a previous order. Having decided that CPR 3.1(7) should not be used and that the established common law procedure should be followed, it would be doubly wrong of me to rely on the inherent jurisdiction.

Conclusion

69. The leading authorities are unanimous that the correct procedure, consistent with the principle of finality, the nature of the claim being a cause of action and the requirement that fraud allegations must be pleaded and proved to a high standard, is that a party seeking to challenge a judgment on the grounds of fraud must bring a fresh claim. In my view, the Defendant must bring a claim for fraud if he wishes to challenge the orders of Master Eastman and Tipples J. I have no power to invoke CPR 3.1(7) in substitution for the established procedure at common law. Alternatively, if I do have such a power, it is not one that I should exercise. The Set Aside application is dismissed.”