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Will the Supreme Court’s decision to allow a 'reasonable diligence' appeal change the way we litigate fraud cases?

A recent case has led to the Supreme Court ruling that a judgment on the basis of fraud no longer has to include proof that the fraud could not have been spotted with reasonable diligence.

The case in question, Takhar v Gracefield Developments Limited, arose after a Mrs Takhar claimed she had been defrauded by one of her cousins when she agreed to transfer the ownership of some of the dilapidated properties in her portfolio to a company, a transfer Mrs Takhar claimed had been based on unconscionable conduct.

While the High Court disagreed and rejected the claim in 2010 Mrs Takhar fought on. 

She pushed the court to overturn their initial judgement on the basis she was sure a key signature had been forged.  This claim was strongly refuted by the respondents who argued the document in question was genuine and had been made available well before the original trial.

After a further 5 years the High Court switched support to the claimant. 

The court felt that as Mrs Takhar had applied to have the judgment set aside on the basis it had been obtained by fraud meant she didn’t need to demonstrate that they would not have discovered the fraud by reasonable diligence.  But, to confuse matters further, in 2017 Lord Justice Patten then reversed that decision in the respondents’ favour on the grounds the parties should have been able to advance their case by the first round of litigation. 

And now it’s all change again.  In most recent judgment relating to the case, seven separate Supreme Court justices have agreed to uphold Mrs Takhar's appeal.

Lord Kerr, in lead judgment, was adamant the issue of fraud had not been debated within the first trial and so the appeal could not count as re-litigation saying:

'Where it can be shown that a judgment has been obtained by fraud, and where no allegation of fraud had been raised at the trial which led to that judgment, a requirement of reasonable diligence should not be imposed on the party seeking to set aside the judgment.”

As a result the success of Mrs Takhar’s appeal will ensure the case can go back to trial.

What has interested us about this story is the fact the High Court Every has ruled that in a straight fight between the requirement to find an end to litigation and the long-standing maxim ‘fraud unravels all’, seven Supreme Court justices have decided to support ‘fraud unravels all’. 

Their decision – arguably not the one most would have expected – proves that as every legal dispute is completely individual and therefore finding a resolution depends on what is argued and the way that argument is constructed as much as it is on simply understanding the law.

This means your chance of successfully progressing or appealing a dispute will rely on your lawyers knowing what they could put forward on your behalf rather than what they should put forward.  It means your lawyers need to be completely up to date with developments that challenge traditional legal thinking. 

And, of course, it means you’ll need lawyers willing to break rank and try these things if they feel they will strengthen your case and help you achieve the outcome you want.   

As hugely experienced litigators this is exactly where we can help and guide you. 

We take pride in our attention to detail, in unravelling a case to find the precedents we can use in your favour to construct a strategy that will maximise your chance of success regardless of whether your dispute relates to you, your business or your property. 

 

If you are facing any type of civil or commercial dispute and would like to a fresh take from experienced litigators who know how to build the robust, innovative legal strategy you’ll need to successfully resolve your dispute, please call us today on  020 7792 5649 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

We will help. 

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