BIRMINGHAM DISTRICT REGISTRY
Birmingham Civil Justice Centre
The Priory Courts, 33 Bull Street
Birmingham B4 6DS
Before :
MR JUSTICE NEWEY
Between :
BALBER KAUR TAKHAR | Claimant |
- and - | |
(1) GRACEFIELD DEVELOPMENTS LIMITED (2) DR KEWAL SINGH KRISHAN (3) MRS PARKASH KRISHAN | Defendants |
Mr John Wardell QC (instructed by Thrings LLP) for the Claimant
Mr Avtar Khangure QC (instructed by Wragge Lawrence Graham & Co) for the Defendants
Hearing dates: 16-17 February 2015
Further written submissions: 26 & 27 February 2015
Judgment
Mr Justice Newey :
On 28 July 2010, Judge Purle QC, sitting as a Judge of the High Court, dismissed proceedings (“the 2008 Proceedings”) that the present claimant, Mrs Balber Takhar, had brought against the present defendants, Gracefield Developments Limited (“Gracefield”), Dr Kewal Krishan and his wife Mrs Parkash Krishan. In the proceedings before me, Mrs Takhar alleges that the Krishans obtained the judgment by fraud. The issues that fall for determination now are, first, whether the proceedings should be dismissed as abusive and, secondly, whether Mrs Takhar should be given permission to amend her particulars of claim.
The context
The 2008 Proceedings
The 2008 Proceedings, which were issued on 24 October 2008, concerned various properties in Coventry (“the Properties”). Mrs Takhar was formerly the registered proprietor of each of the Properties, but in 2006 they were transferred into the name of Gracefield, the shares in which were at the time split equally between Mrs Takhar on the one hand and the Krishans on the other.
Judge Purle summarised Mrs Takhar’s case in the 2008 Proceedings in these terms in paragraph 2 of his judgment:
“[Mrs Takhar] claims that the properties were put in to the name of Gracefield as trustee for her, or as a result of the exercise of undue influence, or that the transactions giving rise to the transfers were otherwise unconscionable. She also suggests there has been a failure of purpose giving rise to a resulting trust and that the transfers were not properly executed and therefore void.”
Mrs Takhar and Mrs Krishan are cousins. They lost contact for a number of years, but met again in 2004. In the following year, it was agreed between Mrs Takhar, Mrs Krishan and her husband that the Properties would be transferred to a newly formed company (in the event, Gracefield). At the time, Mrs Takhar had serious financial and other problems, some of which related to the Properties, which were run down and in respect of which there were rate arrears.
In the 2008 Proceedings, the parties differed as to the basis on which the Properties were transferred to Gracefield. As Judge Purle noted in his judgment (at paragraph 7), Mrs Takhar’s case was that:
“the properties were not to be sold, they would still be hers, though they would be done up in the sense that the Krishans would get the properties up and running and let them out. The costs of this exercise would be repaid out of the rents of the properties, though coming in the first instance out of the Krishans’ pockets.”
In contrast, the Krishans’ case (as Judge Purle explained in paragraph 8 of his judgment) was along the following lines:
“Gracefield was set up as a joint venture company, … it was agreed that there would be attributed to the properties a price which in the events which happened was £300,000. That would be repaid to Mrs Takhar after the proceeds of any subsequent sale and the profits would be split 50/50 between Mrs Takhar and the Krishans. All options were open but, without being prescriptive, what the parties had particularly in mind … was that planning permission could be obtained, and the properties could then be developed and sold. This … was why Mrs Takhar had asked … the Krishans to help her in respect of the Coventry properties, because she was aware that Dr Krishan had successfully developed his own medical centre in connection with his practice and therefore had the requisite expertise.”
Judge Purle preferred the Krishans’ version of events. He also concluded that a profit sharing agreement bearing the date 1 April 2006 was “a true reflection of what was agreed between the parties orally in and following November 2005”. The agreement (“the Profit Share Agreement”) provided for a “£100,000 purchase price” to be placed on a loan account with Gracefield and for further sums totalling £200,000 to be paid as “deferred consideration”. The £100,000 and the £200,000 were both to be paid to Mrs Takhar on the sale of the Properties, at which point Mrs Takhar was also to receive “50% of the profits on the sale of each site”. Judge Purle found that, when she transferred the Properties to Gracefield, Mrs Takhar “knew that she was transferring them in return for an attributed £300,000 – a price she was happy with and which no expert evidence has demonstrated was an insufficient price – and 50 per cent of the profits”. This, the Judge commented, was “a fair return for her given that, had there been a forced sale at a time when she was facing bankruptcy, then by the time all her liabilities had been paid off, she might have received very little indeed, if anything”.
Judge Purle noted that, although the Profit Share Agreement was dated 1 April 2006, it was in fact signed later. The Judge recorded that Mrs Takhar’s case was that “she didn’t sign [the document] at all” and had never seen it until the dispute arose, but also that “no case of forgery is advanced”. He said in paragraph 22 of his judgment:
“In the absence of Mrs Takhar giving a coherent explanation as to how her signature came to be on the scanned copy [of the Profit Share Agreement], 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 to sign away, which was returned, probably by her in some way, duly executed to [the firm of Ms Sue Bowdler, an accountant], 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 into Gracefield’s name before the [Profit Share 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 [Profit Share Agreement], which were previously agreed orally.”
In March 2008, the Properties were put up for sale, but Mrs Takhar objected. Judge Purle said this about what then ensued:
“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 all the Krishans’ costs which included the sum of, as I have said, 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 [counsel for Mrs Takhar] 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.”
Judge Purle proceeded to dismiss the claim, explaining that he could not “accede to the suggestion that the deeds giving effect to the transfers (which … were duly executed by Mrs Takhar) were void” (paragraph 33 of the judgment), that the Properties had been transferred beneficially to Gracefield (paragraph 33 of the judgment) and that the case was not one of either undue influence or unconscionable bargain (paragraph 32 of the judgment).
The 2013 Proceedings
The present proceedings (“the 2013 Proceedings”) were issued on 20 December 2013. In their current form, the particulars of claim ask that Judge Purle’s order be set aside on the basis that it was obtained by fraud. The amendments for which permission is sought by Mr John Wardell QC, who appeared for Mrs Takhar, would introduce a claim for damages for conspiracy/deceit.
The 2013 Proceedings are principally founded on evidence from Mr Robert Radley, a handwriting expert. He concluded in a report dated 4 October 2013 that the Profit Share Agreement “was never … physically signed by [Mrs] Takhar”. He explained that a letter of 24 March 2006 “bears an original ‘pen on paper’ signature which is superimposable with the signature on the copy [Profit Share Agreement]” and that that is “conclusive evidence that a copy of the original signature on the letter has been transposed by one of several simple processes onto the [Profit Share Agreement]”. Mr Radley also expressed the view that:
a 2011 account enquiry form was not signed by Mrs Takhar, the signature on that document having been transposed from a 2006 account enquiry form;
there is “strong evidence” that Mrs Takhar did not sign, either, the 2006 account enquiry form (which was completed when a bank account was opened for Gracefield) and that the signature on it was a copy of her general signature style;
there is “limited positive evidence” to support the proposition that the signature on the first page of a stock transfer form relating to Gracefield was not written by Mrs Takhar but is a copy of her general signature style. In this respect, however, the evidence was “far from conclusive” and Mr Radley could not exclude the possibility that this was “an abnormal or unusual signature execution” although he considered this “less likely than the signature being a simulation”.
Mrs Takhar has said this in a witness statement about the circumstances in which Mr Radley came to be instructed:
“It was only after the trial [before Judge Purle] had ended that my son went through the exercise of comparing the signature on the Profit Share Agreement with what he knew to be genuine signatures of mine on documents in the trial bundles. This led him to discover the precise match between my signature on the 24 March 2006 letter and the Profit Share Agreement. … [A]s soon as the match had been spotted, I was able to engage Mr Robert Radley … to give his expert opinion on this key signature as well as other questionable documents.”
On the strength of Mr Radley’s evidence, Mrs Takhar claims that the Krishans obtained judgment in their favour in the 2008 Proceedings by relying on documents (in particular, the Profit Share Agreement) that they knew to have been forged.
It is also suggested that evidence is now available that the Properties were worth much more than Mrs Takhar was told. Prominent among the other documents on which Mrs Takhar relies in support of her allegations of conspiracy and deceit are the Balber Takhar Account and Gracefield Options document to which Judge Purle referred in paragraph 29 of his judgment and an invoice from John Seller Associates Limited which the Krishans are said to have used to reinforce claims that they had spent large sums on the Properties. According to Mrs Takhar, an invoice for £6,010.13 was dishonestly changed into one purportedly for £39,045.25.
Signatures and the 2008 Proceedings
The Krishans served their list of documents in the 2008 Proceedings on 13 July 2009. The list included the Profit Share Agreement and an account enquiry form, and in October 2009 Challinors, Mrs Takhar’s then solicitors, asked to inspect the originals of these documents. Challinors explained in their letter:
“Whilst our client’s case is such that she acknowledges she has signed a number of documents albeit subject to the undue influence of the Defendants, there now appears to be three documents where our client has instructed us that she cannot be sure that the said documents contain her signature.”
Wragge & Co replied on the Krishans’ behalf that they did not hold the originals. In the event, a copy of a signed version of the Profit Share Agreement does not seem to have been produced until it was exhibited to Dr Krishan’s witness statement of 15 December 2009.
Mrs Takhar made a witness statement of her own on 16 December 2009. She said this in her statement about the Profit Share Agreement:
“I do not know anything of [the Profit Share Agreement] beyond reference to it in these proceedings. I had not seen it before the proceedings. I do not recollect signing it or being asked to. I do not have a copy nor have I ever. In summary there was never any such agreement discussed or agreed with me. It was not mentioned to me by [Mrs Krishan] or [Dr Krishan] on any occasion we were together or by any other form of communication.”
As regards account enquiry forms, Mrs Takhar said:
“I have been shown by my Solicitors an ‘account enquiry form’ from NatWest which appears to have my signature upon it…. I do not recollect signing the document but it may well have been one of the many documents I have been asked to sign during my time with [the Krishans].”
Elsewhere in her statement, Mrs Takhar said:
“I was frightened at the prospect of losing the Properties. I just signed what I was told to. I was constantly told that I needed to sign documents and the consequences were spelt out if I did not sign, but said in a caring way.”
On 31 March 2010, Mrs Takhar applied for permission to adduce handwriting (and also forensic linguistic) evidence. The application was supported by a witness statement from a Mr Chauhan of Challinors. The statement explained that Mrs Takhar’s case was that “she was directed to sign a number of letters and documents by the [Krishans] for administrative convenience to assist [them]” but she had a “genuine concern” that the signatures on several documents, including an account enquiry form, “were not hers and could potentially have been forged”. Mrs Takhar also, Mr Chauhan said, wished to examine her original signature on the Profit Share Agreement.
The application was unsuccessful. An attendance note records that Judge Purle “felt the instruction of a handwriting analysis and a forensic linguistic would not assist the Court a great deal and also the timing of the application considering the number of witnesses that would be required at trial is late”.
The transcripts of the trial include an exchange between Judge Purle and counsel about handwriting evidence:
“THE JUDGE: Why did they want a handwriting expert? I cannot remember.
[COUNSEL FOR THE KRISHANS]: At the time, the position of Mrs Takhar was that she had not signed some of these documents.
[COUNSEL FOR MRS TAKHAR]: Well, she could not remember. My lord, if you remember, one of the reasons that it failed–
THE JUDGE: Yes, I do remember now that she could not remember.
[COUNSEL FOR MRS TAKHAR]: Yes. She has never said for sure. That is one of the reasons why it failed.
…
THE JUDGE: That was one of my reasons, was it not? There is no positive case asserted.
[COUNSEL FOR MRS TAKHAR]: My lord, yes. Yes, indeed.”
After Mrs Takhar had given her oral evidence, Mr Avtar Khangure QC (who appeared for the Krishans at the trial as well as before me) said at one point:
“my lord may recall that there was some debate at that stage as to the true construction of the [Profit Share Agreement] and we say the parties entered into and, from her cross-examination now, Mrs Takhar accepts it is her signature on the document.”
The following was said during the closing submissions of Mrs Takhar’s then counsel:
“[COUNSEL FOR MRS TAKHAR]: … The [Profit Share Agreement], my lord, is a very odd document…. Mrs Takhar is adamant that she saw it for the first time in disclosure. My lord noted in the failed application for forensic handwriting experts that Mrs Takhar had been very candid, that she had not suggested that documents had been forged when she was not able to do so, and that is one of the reasons why her application for forensic handwriting evidence failed. She said she could not remember. She may have signed it. It might be her signature. It could not be her signature but on this one it is different. This one, she says, ‘No, I did not see this’ and being the amateur sleuth that I am, I have looked at her signature on this and on others and it does look a bit suspect but we do not have forensic document examination evidence and that is that, but we do have clear evidence from Mrs Takhar. She will not deny and allege a forged signature if she does not feel she is entitled to. She says she saw this for the first time. It is highly believable.
…
THE JUDGE: Your case is that your client did not sign anything?
[COUNSEL FOR MRS TAKHAR]: Did not sign anything, yes. I know. My lord, I am bound by Mrs Takhar’s evidence. Her evidence is that this is the first time she saw it. I have not put things to the Krishans I did not feel entitled to put.
THE JUDGE: Well, you are not bound by her evidence. You are entitled to say she cannot remember it.
[COUNSEL FOR MRS TAKHAR]: Yes. That is what she said.
THE JUDGE: Assuming that she has forgotten it, then what?
[COUNSEL FOR MRS TAKHAR]: Well, happily, it is not a problem for her case because, as you rightly identified, if she was willing to sign the TR1s, she–
THE JUDGE: No. If she has forgotten it, then you say it is just another example of signing whatever is put before her without reading it.
[COUNSEL FOR MRS TAKHAR]: My lord, it is but it just seems so odd….”
In her evidence in the present proceedings, Mrs Takhar accepts that Mr Peter Matthews, from whom she received advice from 2008, suspected fraud. Mrs Takhar goes on to say:
“However, [Mr Matthews] is not a document examiner, nor an accountant, nor a valuer. He was merely a financial adviser. Whilst he had suspicions, he had no proof of fraud, as he was forced to accept in his evidence at the trial. For my part, I too was suspicious but had no proof and could not get any proof until after disclosure and receipt of a copy of the Profit Share Agreement with my signature on it together with the other suspect signatures produced by the Defendants.”
The Challinors litigation
In March 2011, Challinors brought possession proceedings against Mrs Takhar on the strength of a charge that she had granted as security for fees. Mrs Takhar responded by serving a defence and counterclaim in which she alleged, among other things, that Challinors had failed “to procure in good time and deploy as required expert evidence which was necessary for the successful prosecution of the litigation against the Krishans and Gracefield”. Challinors denied any liability to Mrs Takhar, but the issues were compromised by a Tomlin order dated 22 January 2013. The schedule to the order provided, among other things, for Challinors to pay Mrs Takhar £300,000 in settlement of her claims.
The matters before the Court
Two matters are before me: first, the application by Mrs Takhar for permission to amend her particulars of claim so as to add a claim for conspiracy/deceit and, secondly, the trial of a preliminary issue (as directed by Master Bragge) as to “whether [Mrs Takhar’s] claim (both as currently pleaded and as proposed to be amended) amounts to an abuse of process”.
Setting aside a judgment for fraud: legal principles
The principles that govern applications to set aside judgments for fraud were summarised in these terms by Aikens LJ (with whom Maurice Kay and Toulson LJJ agreed) in Royal Bank of Scotland plc v Highland Financial Partners LP [2013] EWCA Civ 328, [2013] 1 CLC 596 (at paragraph 106):
“There was no dispute between counsel before us on the legal principles to be applied if one party alleges that a judgment must be set aside because it was obtained by the fraud of another party. The principles are, briefly: first, there has to be a ‘conscious and deliberate dishonesty’ in relation to the relevant evidence given, or action taken, statement made or matter concealed, which is relevant to the judgment now sought to be impugned. Secondly, the relevant evidence, action, statement or concealment (performed with conscious and deliberate dishonesty) must be ‘material’. ‘Material’ means that the fresh evidence that is adduced after the first judgment has been given is such that it demonstrates that the previous relevant evidence, action, statement or concealment was an operative cause of the court's decision to give judgment in the way it did. Put another way, it must be shown that the fresh evidence would have entirely changed the way in which the first court approached and came to its decision. Thus the relevant conscious and deliberate dishonesty must be causative of the impugned judgment being obtained in the terms it was. Thirdly, 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.”
Mr Wardell and Mr Khangure differed as to whether there is a further requirement: that the new evidence could not reasonably have been obtained in time for the original trial. Mr Wardell maintained that there is no such requirement, Mr Khangure that the Courts will not set aside a judgment if the relevant material could with reasonable diligence have been adduced at the trial.
Mr Khangure relied particularly on the decision of the House of Lords in Owens Bank Ltd v Bracco [1992] 2 AC 443 and that of the Privy Council in Owens Bank Ltd v Etoile Commerciale SA [1995] 1 WLR 44. The issue in the former case was whether a judgment of the High Court of St Vincent and the Grenadines should be registered under section 9 of the Administration of Justice Act 1920. Section 9(2)(d) stated that a judgment was not to be ordered to be registered if, among other things, “the judgment was obtained by fraud”. In the course of his speech, Lord Bridge (with whom Lords Griffiths, Ackner, Goff and Browne-Wilkinson all expressed agreement) said (at 483-484):
“It is not in dispute that if the loan documents were indeed forgeries and the account given by Nano in his evidence in the court in St. Vincent of the transaction on 31 January 1979 at the Hôtel du Rhône in Geneva was a fabrication, the St. Vincent judgment was obtained by fraud. But it is submitted for the bank that the language of section 9(2)(d) must be construed as qualified by the common law rule that the unsuccessful party who has been sued to judgment is not permitted to challenge that judgment on the ground that it was obtained by fraud unless he is able to prove that fraud by fresh evidence which was not available to him and could not have been discovered with reasonable diligence before the judgment was delivered. Here, it is said, there is no such fresh evidence. This is the rule to be applied in an action brought to set aside an English judgment on the ground that it was obtained by fraud. The rule rests on the principle that there must be finality in litigation which would be defeated if it were open to the unsuccessful party in one action to bring a second action to relitigate the issue determined against him simply on the ground that the opposing party had obtained judgment in the first action by perjured evidence. Your Lordships were taken, in the course of argument, through the many authorities in which this salutary English rule has been developed and applied and which demonstrate the stringency of the criterion which the fresh evidence must satisfy if it is to be admissible to impeach a judgment on the ground of fraud. I do not find it necessary to examine these authorities. The rule they establish is unquestionable and the principle on which they rest is clear. The question at issue in this appeal is whether a defendant who is seeking to resist the enforcement against him of a foreign judgment, either by an action on the foreign judgment at common law or under the statutory machinery for the enforcement of foreign judgments, is placed in the same position as if he were a plaintiff in an action seeking to set aside the judgment of an English court on the ground that it was obtained by fraud and can therefore only rely upon evidence which satisfies the English rule.”
Lord Bridge thus thought it a “salutary English rule” that an “unsuccessful party who has been sued to judgment is not permitted to challenge that judgment on the ground that it was obtained by fraud unless he is able to prove that fraud by fresh evidence which was not available to him and could not have been discovered with reasonable diligence before the judgment was delivered”. He went on to conclude, however, that no such rule applied in the context of registration of judgments under section 9 of the 1920 Act.
The Court of Appeal had taken a similar view. Parker LJ, delivering the judgment of the Court, had said that, under domestic English law, an action to set aside a judgment for fraud would not be permitted to proceed unless “the plaintiff would put forward fresh evidence, discovered since the first trial, being evidence which could not have been produced then with reasonable diligence, and which is such that, if it had been put forward at the trial, it would in probability have caused a different conclusion to be reached” (emphasis added). By way of authority, Parker LJ cited a passage in the 11th edition of Dicey & Morris, “The Conflict of Laws”, which had itself referred to Boswell v Coaks (No. 2) (1894) 86 LT 365n (also reported at (1894) 6 R 167) and Phosphate Sewage Co Ltd v Molleson (1879) 4 App Cas 801, at 814.
The judgment of the Privy Council in Owens Bank Ltd v Etoile Commerciale SA echoed the views expressed by the House of Lords in Owens Bank Ltd v Bracco. Lord Templeman, giving the judgment of the Board, said this (at 48):
“An English judgment is impeachable in an English court on the ground that the first judgment was obtained by fraud but only by the production and establishment of evidence newly discovered since the trial and not reasonably discoverable before the trial: see Boswell v. Coaks (No. 2) (1894) 86 L.T. 365n.
The position with regard to foreign judgments is different.”
Boswell v Coaks (No. 2), however, does not in fact seem to lend any support to the view that an English judgment cannot be impeached for fraud in the absence of evidence that was “not reasonably discoverable before the trial”. In Boswell v Coaks (No. 2), where an attempt to set aside a decision of the House of Lords failed, the Earl of Selborne, with whom Lords Watson, Macnaghten, Morris and Shand concurred, referred to the question “whether anything material to disturb (if proved) the judgment of this House had been newly discovered by the plaintiff” and then observed:
“That involves a double proposition; first, that something has been newly discovered, which is all they have attempted to prove, and then that that something is material. And there is a total defect both of allegation and of evidence of that which alone could make it material.”
So far as I can see, nothing in the report indicates that the new evidence has to be such as could not have been reasonably discovered by the time of the trial. Nor is any such suggestion to be found in Birch v Birch [1902] P 130, a Court of Appeal case in which Boswell v Coaks (No. 2) was cited.
Likewise, it seems to me that Phosphate Sewage Co Ltd v Molleson, on which the edition of Dicey & Morris cited in Owens Bank Ltd v Bracco also relied, should not be taken to have decided that, as a matter of English law, a judgment cannot be set aside for fraud unless the fraud could not reasonably have been discovered in time for the trial. In the Phosphate Sewage case, there was an attempt to reopen a decision of the Court of Session. Lord Blackburn explained (at 819-820) that, under Scottish law, a party could avoid a defence of res judicata by starting a fresh “medium concludendi” or by relying on “res noviter veniens in notitiam”, which was “nearly equivalent to saying that you were taken by surprise and have since discovered material evidence”. Neither exception to res judicata was, however, considered by the House of Lords to apply. With regard to whether there was a new “medium concludendi”, Lord Blackburn said (at 821-822) that he was “very clearly of opinion” there was merely “a fresh discovery of evidence, a fresh ingredient tending to prove the fraud upon which they relied”. Lord Hatherley stressed (at 818-819) that the relevant information “was acquired … at a time when the Appellant might have introduced it”. For his part, Earl Cairns LC said (at 814-815):
“As I understand the law with regard to res judicata, it is not the case, and it would be intolerable if it were the case, that a party who has been unsuccessful in a litigation can be allowed to re-open that litigation merely by saying, that since the former litigation there is another fact going exactly in the same direction with the facts stated before, leading up to the same relief which I asked for before, but it being in addition to the facts which I have mentioned, it ought now to be allowed to be the foundation of a new litigation, and I should be allowed to commence a new litigation merely upon the allegation of this additional fact. My Lords, the only way in which that could possibly be admitted would be if the litigant were prepared to say, I will shew you that this is a fact which entirely changes the aspect of the case, and I will shew you further that it was not, and could not by reasonable diligence have been, ascertained by me before. Now I do not stop to consider whether the fact here, if it had come under the description which is represented by the words res noviter veniens in notitiam, would have been sufficient to have changed the whole aspect of the case. I very much doubt it. It appears to me to be nothing more than an additional ingredient which alone would not have been sufficient to give a right to relief which otherwise the parties were not entitled to. But it is unnecessary to dwell upon that, because it is perfectly clear upon the statement of the present Appellants themselves that this fact was within their knowledge before their proof was led in the former action, and they were just as free to have had the record opened and to have had it stated, as if it had come to their knowledge before the record was closed.
My Lords, that being so, it appears to me that it would be contrary to the whole principle upon which litigation under the rule of res judicata is made to be final, to allow this litigation to be reopened upon the ground which is alleged. It appears to me that looking at this, as we must look at it, as a fresh litigation commenced in Scotland, those who are commencing it have nothing upon which they can base it, except an allegation that there was not in the former litigation a mention made of the payment of this £15,000 and of the shares into which it was turned, and that those facts not having been mentioned upon the former occasion, the Phosphate Company should therefore be allowed to have a new litigation in order to introduce those facts. They are met at once by the circumstance that the facts were within their knowledge, and that they might have taken proceedings to have brought them before the Court on the former occasion.”
While, therefore, Earl Cairns spoke of a person wishing to have a judgment set aside for fraud needing to show a new fact that “could not by reasonable diligence have been … ascertained … before”, the case involved Scottish law rather than English and in any event was one where the “new” facts were not new: they had been discovered and could have been deployed in the earlier proceedings. Earl Cairns said (at 814):
“it would have been competent, and almost a matter of course, for the Phosphate Company at any time before the proof was led, on ascertaining this additional fact or these additional facts, if they considered them material, to have applied to open the record and close it again, and led their proof upon the whole of the facts which had thus come to their knowledge.”
Elsewhere in the Commonwealth, it has been held that a judgment can be set aside for fraud even if the new evidence could reasonably have been obtained for the original trial. The point was addressed in depth by the New South Wales Court of Appeal in Toubia v Schwenke [2002] NSWCA 34, (2002) 54 NSWLR 46. Handley JA, with whom Heydon JA and Hodgson JA agreed, concluded (in paragraph 41) that “In an action for fraud, a plaintiff must prove that he was deceived but need not prove that he was diligent”. He went on:
“Where the action seeks the judicial rescission of a judgment, the plaintiff must prove that he and the Court were deceived and he can only do this by showing that he has discovered the truth since the trial. Where this is done, and the fresh facts are material, fraud is established. Lord Buckmaster said [in Hip Foong Hong v H Neotia and Co [1918] AC 888] that if fraud was proved the judgment was vitiated, and he can only have meant that nothing else had to be proved apart from fraud. That means there is no need to prove due diligence as well.”
A little earlier, Handley JA had said:
“37. I would not follow the dicta in Owens Bank Ltd v Bracco, Owens Bank Ltd v Etoile Commerciale SA, and the Federal Court even if there was no High Court decision on the point because, with respect, the dicta are contrary to principle and earlier authority. The assumption is that the Court and the losing party were successfully imposed on by the fraud of the successful party, but relief should nevertheless be denied and the judgment allowed to stand because the defrauded party was careless or lacked diligence in the preparation of his case. Contributory negligence is not a defence to an action for fraud whether the relief claimed is rescission or damages. As Brennan J said in Gould v Vaggelas (1985) 157 CLR 215, 252:
‘A knave does not escape liability because he is dealing with a fool.’
38. Means of knowledge of the falsity of the representation without actual knowledge is no defence and a representee has no duty to make enquiries to ascertain the truth….”
McMurdo J expressed agreement in Hansen Yuncken Pty Ltd v Ercison t/as Flea’s Concreting [2011] QSC 327, a Queensland case.
A similar view was taken in Canada v Granitile Inc (2008) 302 DLR (4th) 40, a decision of the Ontario Superior Court of Justice. Lederer J stated in paragraph 299 of his judgment:
“A failure to exercise due diligence, where fraud might otherwise have been discovered, is not enough to sustain a judgment which resulted from that fraud.”
At paragraph 303, Lederer J said:
“All of this is consistent with and in furtherance of the fundamental proposition that ‘Fraud unravels everything’ …. We are not required to be ‘perpetually on guard’ so that we are looking to discover the fraud of another party …. Where fraud is present, finality will give way to the responsibility of the Court to protect its process ‘so as to ensure that litigants do not profit from their improper conduct’ ….”
The principle that “fraud unravels all” was referred to recently in HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6, [2003] 1 CLC 358. In that case, Lord Bingham observed in paragraph 15:
“For … fraud is a thing apart. This is not a mere slogan. It reflects an old legal rule that fraud unravels all: fraus omnia corrumpit. It also reflects the practical basis of commercial intercourse. Once fraud is proved, ‘it vitiates judgments, contracts and all transactions whatsoever’: Lazarus Estates Ltd v Beasley [1956] 1 QB 702 at 712, per Denning LJ.”
I should also mention Hip Foong Hong v H Neotia and Co [1918] AC 888, on which reliance was placed in Toubia v Schwenke. In Hip Foong Hong, Lord Buckmaster, delivering the judgment of the Privy Council, commented (at 894) that an applicant who alleges fraud does not need to show that the new evidence “was of such a character that it would, so far as can be foreseen, have formed a determining factor in the result”: a “judgment that is tainted and affected by fraudulent conduct,” Lord Buckmaster said, “is tainted throughout, and the whole must fail”. As was noted in Toubia v Schwenke, Lord Buckmaster did not say that there was any due diligence requirement, though it is fair to say that the point at issue before him was a different one.
To my mind, the reasoning in the Australian and Canadian cases is compelling. Finality in litigation is obviously of great importance, but “fraud is a thing apart”. Supposing that a party to a case in which judgment had been given against him could show that his opponent had obtained the judgment entirely on the strength of, say, concocted documentation and perjured evidence, it would strike me as wrong if he could not challenge the judgment even if the fraud could reasonably have been discovered. Were it impossible to impugn the judgment, the winner could presumably have been sent to prison for his fraudulent conduct and yet able to enforce the judgment he had procured by means of it: the judgment could still, in effect, be used to further the fraud.
None of this would matter, of course, if Owens Bank Ltd v Bracco and Owens Bank Ltd v Etoile Commerciale SA provided binding authority that a judgment cannot be set aside for fraud unless there is new evidence which could not have been discovered with reasonable diligence before the judgment was delivered. I do not think, however, that they do. What was said in each case about the domestic rule must, as it seems to me, have been obiter. Neither case was about that rule, and (as I have said) no such rule was held to apply in the context of registration of judgments under section 9 of the Administration of Justice Act 1920 (with which Owens Bank Ltd v Bracco was concerned).
In Re Surety Guarantee Consultants Ltd [2010] EWHC 3172 (Ch), Norris J concluded that an argument that a judgment should be impeached for fraud had no real prospect of success. At paragraph 39 of his judgment, he said:
“Templeton did not obtain its favourable judgment because of the fraud of SGC …. SGC did not deceive the court. If anybody did, it was Templeton, who misdescribed the true transaction in their Particulars of Claim.”
Norris J continued, in paragraph 40:
“Further, on the English authorities, this fraud must be established by fresh evidence not available (through the exercise of due diligence) at the time of the 2007 Judgment: Owens Bank v Bracco … at 483E-F per Lord Bridge. [Counsel] drew to my attention that in Australia Handley JA disagrees with Lord Bridge’s formulation of the common law rule: see Spencer Bower & Handley 4th ed. para 17.05 citing Handley JA in Toubia v Schwenke …. But I must apply the law as stated within this jurisdiction. Reasonable diligence would have brought to light the material within Templeton’s own books and records upon which it now relies for its alternative account of how SGC received $371,498 from it. This is yet another reason why Templeton has no real prospect of being able to set aside the 2007 Judgment.”
However, Owens Bank v Bracco provided merely “yet another reason” for Norris J’s decision, and it is not apparent that he was taken to as much authority as I have been.
In all the circumstances, the better view seems to me to be that a judgment can be set aside if the loser satisfies the requirements summarised in Royal Bank of Scotland plc v Highland Financial Partners LP (as to which, see paragraph 26 above). He does not also have to show that the new evidence could not reasonably have been discovered in time for the original trial.
Should the proceedings be dismissed as an abuse of process?
The proceedings before me are at an interlocutory stage. That means, I think, that I must allow the claim to proceed to trial unless satisfied that (a) there is no real prospect of Mrs Takhar satisfying the requirements summarised in Royal Bank of Scotland plc v Highland Financial Partners LP or (b) the proceedings can be seen even now, in advance of trial, to be abusive for other reasons.
So far as the latter possibility is concerned, Mr Khangure invoked res judicata in more than one of its branches. He argued that the proceedings are open to objection on the basis of cause of action estoppel, issue estoppel, the principle that precludes a party from raising matters that could and should have been advanced in previous litigation, and as involving a collateral attack on an earlier judgment. As, however, Mr Wardell pointed out, the present proceedings involve a direct attack on the judgment in the 2008 Proceedings. Were that attack to succeed, and the judgment to be set aside, issues of cause of action estoppel, issue estoppel and collateral attack would surely fall away. There could no longer be any question of Mrs Takhar’s claims conflicting with the 2010 judgment since that judgment would have been rescinded. A passage from Toubia v Schwenke is relevant here. In paragraph 5 of his judgment, Handley JA said:
“Under the general law a party who claims that an adverse judgment was procured by the fraud of his adversary can bring an action to set aside that judgment. Such proceedings are equitable in origin and nature … and in fact are proceedings for the judicial rescission of the judgment …. Such proceedings, when successful, do not result in ‘the scandal of conflicting decisions’ (Rogers v R (1994) 181 CLR 251, 273, Spencer Bower, Turner and Handley, ‘Res Judicata’, p 50) because if the second action succeeds the first judgment is set aside.”
As regards the principle precluding a party from raising matters that could and should have been advanced in previous litigation, Lord Bingham said this in Johnson v Gore Wood & Co (at 31) about the circumstances in which it will be an abuse for a party to bring a claim which could have been advanced in earlier proceedings:
“The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before…. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party’s conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances.”
What, therefore, is required is a “broad, merits-based judgment” taking account of both “the public and private interests involved” and “all the facts of the case”. I would not wish to exclude the possibility of an application to set aside a judgment for fraud being found to be abusive on this basis even though the conditions outlined in Royal Bank of Scotland plc v Highland Financial Partners LP were met, but I do not think this can be such a case. The matter will not proceed to trial unless I have taken the view that Mrs Takhar has a real prospect of satisfying those conditions. On the assumption that there is such a prospect, Mrs Takhar’s conduct cannot, in my view, be categorised as abusive at this interlocutory stage. I also find it hard to see how it could be so categorised at trial were Mrs Takhar ultimately to establish (as she would have to in order to succeed in her claim) that there was fresh evidence showing conscious and deliberate dishonesty on the part of the Krishans which had been causative of Judge Purle’s judgment being obtained in the terms it was.
Mr Khangure also advanced a submission to the effect that, having elected to pursue Challinors for the totality of her alleged loss, it must now be an abuse for Mrs Takhar to bring proceedings against the Krishans. I do not, however, accept this. After all, Mrs Takhar’s position is that she has suffered loss substantially in excess of the £300,000 she has recovered from Challinors.
I turn, then, to consider whether Mrs Takhar has a real prospect of satisfying the requirements that Aikens LJ listed in Royal Bank of Scotland plc v Highland Financial Partners LP. As to that issue:
Mr Khangure suggested that Mrs Takhar was aware of the material facts before the trial in front of Judge Purle. In that connection, he pointed out, for example, that Mrs Takhar had said in her witness statement for the trial that she had not seen the Profit Share Agreement until she saw it in the 2008 Proceedings. The implication, Mr Khangure said, was that she had not signed the document. As, however, Judge Purle noted in his judgment, no case of forgery was advanced (see paragraph 7 above), and Mrs Takhar’s application to adduce handwriting evidence failed in part for that reason: in the exchange with counsel set out in paragraph 20 above, Judge Purle recalled that Mrs Takhar could not remember whether she had signed the relevant documents and that no positive case was asserted. According to Mrs Takhar, she “was suspicious but had no proof” (see paragraph 23 above). In the circumstances, there is plainly, in my view, a seriously arguable case that Mr Radley’s report represents fresh evidence and that Mrs Takhar did not have knowledge of the points made in that report;
On the available evidence, there is also, in my view, a real prospect of Mrs Takhar establishing “conscious and deliberate dishonesty” (to quote from Aikens LJ) on the part of the Krishans in relation to the signatures on the Profit Share Agreement and other documents. Mr Khangure argued that someone other than the Krishans could have been responsible for the impugned signatures. Mr Wardell responded that, in the context, no one else could have produced them. I am in no position to resolve the dispute. The point can only be determined at a trial;
As things stand, there is, moreover, a real prospect of Mrs Takhar persuading the Court that the Krishans’ dishonesty (were any to be proved) was causative of Judge Purle’s judgment being obtained in the terms it was. Mr Khangure suggested that the Profit Share Agreement was a red herring and of no importance. In that context, he argued that Judge Purle saw the Profit Share Agreement as no more than a reflection of a pre-existing oral agreement, and he drew my attention to, among other things, the fact that Mrs Takhar accepted in her witness statement for the trial that she had received a letter from Ms Bowdler of 15 March 2006 in which there was reference to a profit share agreement being prepared. He also highlighted the fact that Mrs Takhar herself appears to have signed cheques drawn on Gracefield’s bank account. While, however, there is undoubtedly force in points that Mr Khangure made, I do not think I would be justified in concluding at this stage that Judge Purle would have arrived at the same conclusions had Mr Radley’s views been available to him. It is by no means obvious that the Judge would have found in favour of the oral agreement had it been shown that Mrs Takhar’s signature on the supposedly confirmatory Profit Share Agreement was, as is now alleged, forged. Nor, I think, can I dismiss the possibility that Judge Purle would have seen the Balber Takhar Account and the Gracefield Options document as something worse than an “exercise in frustration” had Mr Radley’s evidence been available to him.
All in all, I do not consider it to have been established that the present proceedings amount to an abuse of process or are otherwise unsustainable. The case should, I think, be allowed to proceed to trial.
Should permission to amend be given?
As I have mentioned, Mrs Takhar seeks permission to amend her particulars of claim to introduce a claim for conspiracy/deceit. The Krishans oppose the application on the basis that there is a reasonably arguable case that the new claim is time-barred.
Two questions arise in this context. First, is there, as Mr Khangure maintained, a reasonably arguable case that, CPR 17.4 apart, the new claim is time-barred? Or is it the case that, as Mr Wardell contended, any limitation defence must fail because of section 32 of the Limitation Act 1980? Secondly, does the new claim arise out of “the same facts or substantially the same facts as a claim in respect of which [Mrs Takhar] has already claimed a remedy in the proceedings” so that CPR 17.4 applies?
Section 32 of the Limitation Act 1980 is, so far as relevant, in these terms:
“(1) Subject to subsections (3) and (4A) below, where in the case of any action for which a period of limitation is prescribed by this Act, either—
(a) the action is based upon the fraud of the defendant; or
(b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant; or
(c) the action is for relief from the consequences of a mistake;
the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.
References in this subsection to the defendant include references to the defendant's agent and to any person through whom the defendant claims and his agent.
(2) For the purposes of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty.”
In Allison v Horner [2014] EWCA Civ 117, Aikens LJ (with whom Richards and Davis LJJ agreed) noted the following points as to the construction of section 32:
“[I]n Barnstaple Boat Co Ltd v Jones [[2008] EWCA Civ 727], Waller LJ (with whom Moore-Bick and Moses LJJ agreed) held that the phrase ‘the plaintiff has discovered the fraud’ in section 32(1) refers to knowledge of the precise deceit which the claimant alleges had been perpetrated on him. It follows that knowledge of a fraud in a more general sense is not enough to start the limitation period running under section 32(1)” (paragraph 14 of the judgment);
“[I]n Paragon Finance PLC v Thakerar & Co [[1999] 1 All ER 400] Millett LJ (with whom Pill and May LJJ agreed on this point) held that section 32(1) was concerned with whether the claimant could (rather than should) with reasonable diligence have discovered the relevant deceit at any particular time. This meant that the burden of proof was on a claimant to establish that he could not have discovered the fraud without taking exceptional measures which he could not reasonably have been expected to take. In the business context, this meant ‘how a person carrying on a business of the relevant kind would act if he had adequate but not unlimited staff and resources and were motivated by a reasonable but not excessive sense of urgency’. This point was taken up in the judgment of Neuberger LJ in Law Society v Sephton & Co [[2005] QB 1013]. He concurred with the view of the trial judge in that case (Michael Briggs QC sitting as a deputy High Court Judge) that it followed from Millett LJ's construction of section 32(1) that there must be an assumption that the claimant desires to discover whether or not there had been a fraud committed on him. Not to make such an assumption would rob the word ‘could’ in the section of much of its significance. Moreover, the concept of ‘reasonable diligence’ carried with it the notion of a desire to know and, indeed, to investigate.”
Simon J said the following about section 32 in Arcadia Group Brands Ltd v Visa Inc [2014] EWHC 3561 (Comm) (at paragraph 24):
“(1) Section 32(1)(b) is a provision whose terms are to be construed narrowly rather than broadly, see Rose LJ in [Johnson v. Chief Constable of Surrey (unreported, 23 November 1992)]. In this context Neill LJ referred to ‘the public interest in finality and the importance of certainty in the law of limitation,’ in [C v. Mirror Group Newspapers Ltd [1997] 1 WLR 131] at p.139A.
(2) There is a distinction to be drawn between facts which found the cause of action and facts which improve the prospect of succeeding in the claim or are broadly relevant to a claimant's case. Section 32(1)(b) is concerned with the former, see Rose LJ in Johnson.
(3) The section is to be interpreted as referring to ‘any fact which the [claimant] has to prove to establish a prima facie case’, see Neill LJ in Johnson and in C v. MGN at p.138H, and Rix LJ in [AIC Ltd v. ITS Testing Services (UK) Ltd, The ‘Kriti Palm’ [2006] EWCA Civ 1601] at [323].
(4) The claimant must satisfy ‘a statement of claim test’: in other words, the facts which have been concealed must be those which are essential for a claimant to prove in order to establish a prima facie case, see Rose and Russell LJJ in Johnson, and Neill LJ in C v. MGN at 137B-C. As Buxton LJ expressed it in ‘Kriti Palm’ at [453]:
…what must be concealed is something essential to complete the cause of action. It is not enough that evidence that might enhance the claim is concealed, provided that the claim can be properly pleaded without it.
(5) Thus section 32(1)(b) does not apply to new facts which might make a claimant's case stronger, see Russell LJ in Johnson:
Accordingly, whilst I acknowledge that new facts might make the plaintiff's case stronger or his right to damages more readily capable of proof they do not in my view bite upon the ‘right of action’ itself. They do not affect ‘the right of action,’ which was already complete, and consequently in my judgment are not relevant to it.
Nor does the sub-section apply to newly discovered evidence, even where it may significantly add support to the claimant's case, see Rix LJ in the ‘Kriti Palm’ at [325], nor to facts relevant to the claimant's ability to defeat a possible defence, see Neill LJ in C v. MGN at 139A.
(6) As expressed by Rix LJ in The ‘Kriti Palm ’ at [307], the purpose of s.32(1)(b) is intended to cover the case,
where, because of deliberate concealment, the claimant lacks sufficient information to plead a complete cause of action (the so-called ‘statement of claim’ test). It is therefore important to consider the facts relating to an allegation of deliberate concealment vis a vis a claimant's pleaded case.
(7) What a claimant has to know before time starts running against him under s.32(1)(b) are those facts which, if pleaded, would be sufficient to constitute a valid claim, not liable to be struck out for want of some essential allegation, see for example Neuberger J in [Gold v. Mincoff, Science & Gold [2001] Lloyd's Rep PN 423] at [75] in the different context of s.14A of the 1980 Act, but referring to Johnson and C v. MGN.”
Mr Wardell submitted that it is clear that Mrs Takhar could not have discovered the fraud alleged in the draft amended particulars of claim more than six years ago. In any case, he said, section 32(1) (b) of the Limitation Act 1980 is in point: especially in the light of section 32(2), the Krishans are to be considered to have deliberately concealed a fact relevant to Mrs Takhar’s right of action by forging and then relying on the Profit Share Agreement and other documents. That being so, Mr Wardell maintained, the Krishans do not have a reasonably arguable limitation defence to the claim for conspiracy/deceit.
On balance, however, I disagree. While there is a plausible case for saying that one or both limbs of section 32(1) of the 1980 Act apply in the way suggested by Mr Wardell, I do not think the position is clear-cut. In the first place, it is by no means inconceivable that a Court would hold that Mrs Takhar could with reasonable diligence have discovered all or most of what is alleged in the draft particulars of claim and, hence, any relevant “fraud” by, for example, 19 February 2009, when her particulars of action in the 2008 Proceedings were served. In that regard, Mr Khangure referred, among other things, to the involvement of Mr Matthews, who (as Mr Khangure pointed out) concluded as early as May 2008 that a fraud had been perpetrated, and to letters from Challinors of 24 July and 24 October 2008 in which they alleged that the Krishans had “defrauded [Mrs Takhar] so to obtain legal ownership of the Properties”, that there had been “a calculated Campaign of misrepresentations undertaken by [the Krishans] to obtain these Properties from [Mrs Takhar]” and that Mrs Takhar had “no knowledge” of a profit share agreement. Further, with regard to section 32(1)(b), there seems to be room for argument as to such matters as when Mrs Takhar could with reasonable diligence have discovered that she had not signed the allegedly forged documents, whether the Krishans were responsible for the allegedly forged signatures and whether the supposed forgeries were essential to the claim for conspiracy/deceit or merely supportive of it.
Turning to CPR 17.4, this (so far as material) provides:
“(1) This rule applies where-
(a) a party applies to amend his statement of case in one of the ways mentioned in this rule; and
(b) a period of limitation has expired under-
(i) the Limitation Act 1980; or
(ii) the Foreign Limitation Periods Act 1984 or;
(iii) any other enactment which allows such an amendment, or under which such an amendment is allowed.
(2) The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.”
CPR 17.4(2) reflects (even if not exactly – see Goode v Martin [2001] EWCA Civ 1899, [2002] 1 WLR 1828) section 35 of the Limitation Act 1980, which states that rules of Court may provide for allowing a new claim to be made if the conditions specified in section 35(5) are satisfied. One such condition is expressed as follows (in section 35(5)(a)):
“in the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as are already in issue on any claim previously made in the original action”.
In Mercer v Ballinger [2014] EWCA Civ 996, [2014] 1 WLR 3597, Tomlinson LJ (with whom Lord Dyson MR and Briggs LJ agreed) said this about the meaning of the expression “arises out of the same facts or substantially the same facts”:
“34 Helpful guidance as to the proper approach to the resolution of this question was given by Colman J in BP plc v Aon Ltd [2006] 1 Lloyd’s Rep 549, 558 where he said:
‘52. At first instance in Goode v Martin [2001] 3 All ER 562 I considered the purpose of section 35(5) in the following passage: “Whether one factual basis is ‘substantially the same’ as another factual basis obviously involves a value judgment, but the relevant criteria must clearly have regard to the main purpose for which the qualification to the power to give permission to amend is introduced. That purpose is to avoid placing a defendant in the position where if the amendment is allowed he will be obliged after expiration of the limitation period to investigate facts and obtain evidence of matters which are completely outside the ambit of, and unrelated to those facts which he could reasonably be assumed to have investigated for the purpose of defending the unamended claim.”
‘53. In Lloyd’s Bank plc v Rogers [1997] TLR 154 Hobhouse LJ said of section 35: “The policy of the section was that, if factual issues were in any event going to be litigated between the parties, the parties should be able to rely on any cause of action which substantially arises from those facts.”
‘54. The substance of the purpose of the exception in subsection (5) is thus based on the assumption that the party against whom the proposed amendment is directed will not be prejudiced because that party will, for the purposes of the pre-existing matters [in] issue, already have had to investigate the same or substantially the same facts.’
35 In the Welsh Development Agency case [1994] 1 WLR 1409 Glidewell LJ said, in an often quoted passage at p 1418, that whether or not a new cause of action arises out of substantially the same facts as those already pleaded is substantially a matter of impression.
36 Less well known perhaps is the cautionary note added by Millett LJ in the Paragon Finance case [1999] 1 All ER 400, 418, where he said, after citing the passage from Glidewell LJ to which I have just referred: ‘In borderline cases this may be so. In others it must be a question of analysis.’
37 I would also point out, as did Briggs LJ in the course of the argument, that ‘the same or substantially the same’ is not synonymous with ‘similar’. The word ‘similar’ is often used in this context, but it should not be regarded as anything more than a convenient shorthand. It may serve to divert attention from the appropriate inquiry.”
In the present case, the existing particulars of claim reflect Mr Radley’s report and so contain allegations that the Profit Share Agreement and other documents were forged. The new claim that Mrs Takhar wishes to mount by way of amendment also relies on the alleged forgery of these documents. It is by no means, however, founded on this alone. Paragraph 42, the central paragraph of the draft amended particular of claim, also contains, for instance, allegations that the Krishans falsely represented (a) that the Properties were subject or likely to be subject to compulsory purchase orders, (b) that the Properties were worth much less than their true value, (c) that the Properties needed to be transferred so that the Krishans could liaise with Coventry City Council and (d) that the Krishans had retained Charles Russell to fight compulsory purchase orders.
In the circumstances, I do not think the proposed amendments can be allowed under CPR 17.4. Even if it is right to say (as Mr Wardell did) that the alleged forgeries are at the heart of both the existing claim and the new one, the latter does not appear to me to arise out of “the same facts or substantially the same facts” as the former. It depends also on a range of facts that do not feature in the present pleading.
It follows that I shall not grant permission for the proposed amendments. It may well be, however, that Mrs Takhar has by now issued a new claim form seeking relief on the same basis. Mr Wardell indicated at the hearing that that was in contemplation.
Conclusion
I can summarise my conclusions as follows:
It has not been established that the present proceedings amount to an abuse of process or are otherwise unsustainable. The case should, accordingly, be allowed to proceed to trial;
There is a reasonably arguable case that the new claim for conspiracy/deceit is time-barred. Mrs Takhar should therefore be refused permission to amend.