A person who applies to set aside a judgment on the basis of fraud does not have to demonstrate that the fraud could not have been spotted with reasonable diligence, the Supreme Court has ruled. The judgment in Takhar v Gracefield Developments Limited and others seeks to resolve a 'bare-knuckle' conflict between two long-standing principles of public law: that fraud unravels all and that there must come an end to litigation. 

The case concerned an allegation that a Coventry property owner, Mrs Takhar, had been defrauded by a cousin in an agreement transferring the ownership of dilapidated buildings to a company. The appellant claimed that the properties had been transferred as a result of unconscionable conduct. However the High Court, in 2010, rejected the claim. Takhar sought to have the judgment set aside on the basis of evidence that a signature had been forged; the respondents argued that the set-aside claim was an abuse of process in that the evidence had been available well before the original trial but not produced in it.

In 2015 the High Court backed the claimant, saying that a party applying to set aside a judgment on the basis that it had been obtained by fraud did not have to demonstrate that they would not have discovered the fraud by the exercise of reasonable diligence. However, on appeal in 2017, Lord Justice Patten, citing the principle that parties must normally advance the totality of their case on the first bout of litigation, ruled for the respondents. 

In today's judgment, seven Supreme Court justices allowed Takhar's appeal. Lord Kerr, in lead judgment, found that the issue of fraud had not been decided by the original trial and therefore did not amount to re-litigation. '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.' He allowed the appeal and said the case should be allowed to proceed to trial. 

Supplementary judgments by Lord Sumption, Lord Briggs and Lady Arden concur. Lord Briggs agreed that in the 'bare-knuckle fight between two important and long-established principles', the 'fraud unravels all' principle should prevail.  

John Wardell QC and Andrew Mold, instructed by Cotswolds business firm Tanners Solicitors, appeared for the appellant; Joseph Sullivan and Tom Dixon, instructed by international firm Gowling LLG, appeared for the respondent.