COURT SET ASIDE A JUDGMENT OBTAINED 10 YEARS LATER: COURT FINDS THAT DOCUMENTS WERE FORGED BY DEFENDANTS: ANOTHER ROUND IN A BARE KNUCKLE FIGHT

In March last year I wrote about the Supreme Court’s decision in Takhar v Gracefield Developments Ltd & Ors [2019] UKSC 13. In that case the Supreme Court held that a claimant could bring an action to set aside an earlier judgment which, it was alleged, was obtained by fraud. That matter went back for hearing and in Takhar v Gracefield Developments Ltd & Ors [2020] EWHC 2791 (Ch) the claimant was successful in setting aside a judgment that had been obtained ten years previously.

“However, though the court will naturally be slow to find fraud, it is not limited to the manual classes.”

“People who lie to the court or create false evidence to bolster their case may do so because their case is false in the first place. Alternatively, they may do so because they consider they have a valid case and are worried that it may not otherwise succeed, and act out of, for example, the frustration of a genuine oral agreement being denied with no signed proof to the contrary”

THE CASE

The claimant lost a trial alleging that property had been transferred to the defendant as a result of undue influence.  After the trial she obtained expert evidence that showed that the signature on a document that was a key document in the trial was not her signature.   The claimant’s issued proceedings seeking to set aside the trial judgment.  The case was initially struck out but she was successful in the Supreme Court where it was held that the matter should proceed to trial.

Lord Briggs observing

“This appeal turns on the outcome of a bare-knuckle fight between two important and long-established principles of public policy. The first is that fraud unravels all. The second is that there must come an end to litigation.”

THE SUBSEQUENT TRIAL

Mr Steven Gasztowickz QC, sitting as a High Court judge, held that the document in question had been forged and that it the original judgment should be set aside.

1. 1. There was no mention in the Defendants’ witness statements for the current trial to them having been told by the Claimant that she had signed and returned the Profit Sharing Agreement document before witnesses. Nor in the Defendants’ correspondence, such as their solicitors’ letter responding to the letter before action, was there any reference to the Claimant having said she had signed the document, let alone that she had done so before witnesses, showing her agreement thereto. The conclusion I am drawn to is that these details are a recent fabrication designed to support their case in relation to the signing and return by the Claimant of a copy of the Profit Sharing Agreement document.

   2. All this affects the view I have formed of the matter. I am satisfied, on the balance of probabilities, that not only did the Defendants have strong motive, and opportunity, to forge the document by transposition of the Claimant’s signature onto it from elsewhere (and that there is no evidence or sufficient reason to think that anyone at X did so), but that they did do so.

   3. Based on all the evidence I have heard, the Defendants were in my judgment, on the balance of probabilities, responsible for the forgery of the signed profit sharing agreement document by adding the Claimant’s signature to a copy of it by transposition from the Whiston letter. This amounted, in the words of Aikens LJ in RBS, to “conscious and deliberate dishonesty”.

   4. I should add that the point was made by Mr Sullivan in submissions that the Defendants as professional people would not have forged the document, and also that they did not object to the Claimant’s application for permission to call expert handwriting evidence made shortly before the trial before Judge Purle. However, though the court will naturally be slow to find fraud, it is not limited to the manual classes. On the second point, their non-objection to the application may have been an act of bravado, designed to avert suspicion, in a belief also that as the true signature of the Claimant had been transposed and only a photocopy document was available it would, if the application was allowed despite its proximity to the trial date, have gone undetected.

   5. In relation to the point that the Defendants could have come up with a better version of the agreement if they intended to forge an agreement document, that point is covered by the observations I have made in paragraph 89 above.

   6. That is so whether the Defendants carried out the forgery to bolster a false case, or a true case, which it is not for me to determine. People who lie to the court or create false evidence to bolster their case may do so because their case is false in the first place. Alternatively, they may do so because they consider they have a valid case and are worried that it may not otherwise succeed, and act out of, for example, the frustration of a genuine oral agreement being denied with no signed proof to the contrary. This is not to be lost sight of but will be a matter for the judge at the next trial to consider if the existing judgment is set aside on the basis I find that the forgery was “material” in relation to the judgment given, which is the question to which I now turn.

III: Materiality

1. 1. In giving judgment in the trial of the action, Judge Purle noted at paras 21 and 22 in relation to the profit sharing (or “joint venture”) agreement document as follows,

“21. Mrs Takhar’s case is she didn’t sign it at all and she has never seen the agreement until this dispute arose. However, no case of forgery is advanced.

22. In the absence of Mrs Takhar giving a coherent explanation as to how her signature came to be on the scanned copy, I conclude that the Krishans’ evidence, which I believe anyway, should be accepted and that Mrs Takhar took the copy of the agreement that she was signed away, which was returned, probably by her in some way, duly executed to [Mrs A’s] firm, which then ended up misfiled. At all events, I am satisfied that that was the agreement that was made. The properties were transferred by Mrs Takhar in to Gracefield’s name before the written joint venture agreement was prepared, and the only credible explanation that I have heard is that they were so transferred on the terms subsequently set out in the joint venture agreement, which were previously agreed orally.”

1. 1. In paras 29 and 30 Judge Purle said,

“29. Following the objections that Mrs Takhar raised to the sale, she obtained the services of a Mr Matthews who looked into the history and suspected fraud. The Krishans claimed at that stage to have invested well over half a million pounds of their own money and appeared to be saying that Mrs Takhar could go back to square one if she wished but she would have to pay off the Krishans’ costs which included the sum of, as I have said, in excess of half a million pounds. In fact, it is now said by the Krishans, that what they had in mind was that their anticipated profit share would amount to a sum in excess of half a million pounds. However, they clearly did not say that at the time. There were two documents, one called the Balber Takhar account, the other the Gracefield Options, which clearly misstated the position, in my judgment deliberately so, in an endeavour to put pressure on Mrs Takhar. These were unworthy and wholly inappropriate steps to take and Mr Burton pertinently asks: Why tell these lies? The only, or at least most compelling answer, he says, is because everything that Mrs Takhar previously has said is true. The Krishans were concealing from Mrs Takhar the true purpose of the transfers. She never regarded the properties as anything other than hers. Nor did the Krishans, and they were put in to Gracefield merely as a shell and not because of any joint venture agreement, which is an invention.

30.However, I regard the other evidence to be too compelling. I regard the contemporaneous evidence to point unerringly in the one direction of a beneficial transfer to Gracefield in return for a joint venture agreement, which cannot be castigated as unfair or inappropriate. I regard the responses which were given in April and May 2008, to Mrs Takhar’s volte-face (which is what it was) to have been an exercise in frustration which, however understandable, were in truth inexcusable but did not alter the facts of the past”.

1. 1. The evidence now shows, as I have found, that the Profit Sharing Agreement (or “joint venture”) document was forged, and forged, I have found, by the Defendants.

   2. However, this document was part – and in my judgment a key part – of the contemporaneous evidence produced by the Defendants for trial and relied on by Judge Purle as pointing towards the Defendants’ case that profit sharing had been agreed being right. This included, most notably, the Claimant having herself, on the face of the evidence before him, signed a written agreement showing that was so, with no explanation as to how her signature came to be on the document if she had not so agreed at the time.

   3. That the Claimant attempted at trial to contend otherwise was disregarded by Judge Purle on the understandable basis of her not having any evidence or even “coherent explanation” as he put it in para 22, as to how otherwise her signature appeared on it.

   4. No doubt Judge Purle as the trial judge came to the conclusion he did – that there was a transfer of beneficial ownership on the basis of a profit sharing agreement as the Defendants contended, not a wholly different arrangement as the Claimant contended – for a variety of reasons, as will often be the case in a trial. I have, of course, carefully considered the judgment as a whole. However, the signing of the Profit Sharing Agreement document by the Claimant as he believed it to be was undoubtedly one of them.

   5. In any trial, and in a fraud trial in particular, the court is of course looking for independent and contemporaneous indicators of where the truth lies on crucial issues, such as in this case, whether there was a profit sharing (or “joint venture”) agreement. The forged document clearly evidenced this in the absence of forgery of Mrs Takhar’s signature on it. Had the Judge known that her signature on the copy of that before him had been forged, for which the Defendants were responsible (causing him also to weigh their oral evidence in the light of that knowledge), that plainly would have (in the words of Aikens LJ in RBS) “entirely changed the way in which the first court approached and came to its decision” and it was plainly an “operative cause of the court’s decision to give judgment in the way that it did”.

   6. Applying in full the test laid down by Aikens LJ and approved by the Supreme Court in Takhar itself – which in my judgment represents the law, as set out above – it was plainly material to the judgment given at trial.

   7. A fortiori, were the legal test any lesser one in terms of “danger” in relation to the outcome of the original trial, though my analysis of the true position in relation to the applicable test is as I have set it out above.

   8. The Defendants’ counsel contended that the position would be the same at a second trial on the basis that the arrangement put forward by the Defendants made sense and that it was obvious that the Defendants would only have acted as they did on the basis of a profit sharing agreement. There may or may not be force in that. The Claimants’ counsel contended on the other side of the argument that the Claimant would not have given away a half share of the eventual proceeds from the properties in return for such little work by the Defendants. There may or may not be force in that. As I have emphasised previously, the ultimate result of this dispute is not for me to determine but will be for a court to decide on the basis of all the evidence before it at a new trial following the existing judgment being set aside. As Aikens LJ said in RBS, the question of materiality of the fresh evidence is to be assessed by reference to its impact on the evidence supporting the original decision, not by reference to its impact on what decision might be made if the claim were to be retried on honest evidence”.

Conclusion

1. For the reasons I have given, this action succeeds and the order made by Judge Purle on 28^th July 2010 in action number 8BM30468 in favour of the Defendants will be set aside.