The claimant, the former chief executive officer of the defendant company, was summarily dismissed for alleged gross misconduct, re-elected as a director by the defendant’s shareholders, then again removed from office by all his fellow directors. The circuit judge upheld the defendant’s principal claim that it had been lawfully entitled to dismiss and remove the claimant and that its decision to do so had not been taken for any improper purpose. Subsequently, the claimant brought a claim to set aside the circuit judge’s judgment, claiming that new evidence that had been deliberately withheld from the circuit judge would have been highly material to the issues he had decided. The claimant alleged that the evidence demonstrated that certain witnesses had lied to the circuit judge and was consistent with the existence of a premeditated plan to oust the claimant which had been alleged before the circuit judge, and that had the new evidence been disclosed, it would inevitably have changed the circuit judge’s approach to the evidence and the way he came to his decision. The judge dismissed the claim. The claimant appealed, contending that when determining whether the dishonest conduct was material to the original decision, the correct test was whether there was a real danger that the dishonest conduct had affected the outcome.
On the appeal—
Held, appeal dismissed. In a free-standing action to set aside a judgment for fraud, which was quite different from an application to adduce fresh evidence after judgment, both the fraud and the materiality had to be proved. It had to be shown that the judgment had been obtained by the fraud, and that the court had been induced to make a potentially wrong judgment by the fraud. The party that lost as a result of the fraud had to prove the fraud wholly free from any of the matters originally tried. The hurdle of materiality which enabled a party to defeat a final judgment had to be set high. The fresh evidence had to demonstrate that the concealment of documents or previous evidence was an operative cause of the court’s decision to give judgment in the way it did or would have entirely changed the way in which the first court approached and came to its decision. Accordingly, in the present case, which was a free-standing fraud action where the main issue in the first case was whether there had been a premeditated plan, the judge had applied the correct test of materiality (paras 20, 51–56, 59, 60, 61).
Per Sir Geoffrey Vos MR. It may intellectually be possible to separate the question of whether there was fraud from whether that fraud was material, although those two questions often become inextricably linked (para 15).
John Wardell KC and James McWilliams (instructed by Clyde & Co LLP) for the claimant.
Richard Leiper KC and Daniel Isenberg (instructed by Rosenblatt) for the defendant.