Can a judgment procured by fraud be set aside against a non-fraudulent party, in circumstances where an innocent party adopted and relied on the fraudulent evidence of another for its own benefit? The Court of Appeal held that it could in the circumstances of the case before it, albeit in a post-script cautioned against an overly expansive interpretation of the principles which apply to setting aside a judgment on the grounds of fraud.

Estate of Euan McIntyre Lindsay & Anor v Outlook Finance Ltd & Anor [2026] EWCA Civ 1005

Background

The claimants are from a family of Scottish dairy farmers (the “Lindsays”). In 2009, they borrowed funds from Outlook, the first defendant, which was owned and controlled by Mr Fradgley. Outlook was granted a Charge over a Scottish and Cumbrian farm. In 2012, Outlook appointed Mr Butcher as Law of Property Act receiver (“LPA”) of the Cumbrian Farm, who caused it to be sold. In 2013, the Lindsays issued proceedings in England, claiming that Outlook had no right to appoint a receiver under the terms of the Charge. The three defendants were Outlook, Mr Butcher, and the buyer of the Cumbrian Farm. As the claims against Mr Butcher and the buyer were parasitic on the claims against Outlook, Mr Butcher adopted the relevant parts of Outlook’s defence and instructed the same counsel.

By judgment dated 2 June 2014, HHJ Bird dismissed the Manchester Action against Outlook, preferring the evidence of Mr Fradgley. The claims against Mr Butcher and the buyer were dismissed as a necessary consequence of the dismissal of the claim against Outlook. Outlook subsequently sought to enforce its security over the Scottish farm, and protracted Scottish proceedings followed. The Scottish Proceedings culminated in a judgment in which the court found that Mr Fradgley had defrauded the Lindsays on a large scale.

The first instance proceedings and appeal

In 2023, the Lindsays commenced the present action against Outlook and Mr Butcher, arguing that the Manchester judgment was obtained by Mr Fradgley’s fraud and seek to have the judgment and consequential order set aside as against Outlook and Mr Butcher. They contended that Mr Butcher’s appointment as LPA receiver and agent was invalid, that his seizure of the farm etc amounted to trespass and conversion, and that the issues should be retried.

In a first instance judgment delivered by Kerr J in October 2025, Kerr J found in favour of the Lindsays.

Mr Butcher appealed Kerr J’s judgment on two grounds, the first being that the judge was wrong to hold that the equitable jurisdiction to set aside a judgment procured by fraud of one person extends to setting aside the judgment as against a non-fraudulent party to the original proceedings. The second ground is not examined here.

Kerr J applied the principles summarised by Aikens LJ in Royal Bank of Scotland plc v Highland Financial Partners LP [2013] EWCA Civ 328, and endorsed by the Supreme court in Takhar v. Gracefield Developments Ltd [2019] UKSC 13. These are:

1. ‘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.
2. The fresh evidence that is adduced after the first judgment has been given must be material, 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.
3. 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.

Both parties agreed that the above principles are the correct ones to apply in setting aside a judgment against a party because of that party’s fraud. However, the parties disputed how those principles should apply when considering the possibility of a judgment being set aside against a party other than the party guilty of fraud, an issue which had not arisen in either Highland or Takhar.

The Court of Appeal discussed three older authorities, which were brought to the Court’s attention only after the hearing of the appeal, namely Boswell v Coaks, an unreported decision of the Court of Appeal dated 5 November 1892, another unreported decision of the Court of Appeal in Odyssey Re (London Limited) v OIC Run-off Limited, 13 March 2000, and Cinpres Gas Injection Ltd v Melea Ltd [2008] EWCA Civ 9, [2008] Bus LR 1157.

Zacaroli LJ derived the following three principles from these authorities:

1. To set aside a judgment on the grounds that it has been procured by fraud, it is necessary to show that the fraudulent evidence was that of the party against whom the judgment is to be set aside.
2. Fraudulent evidence given by a witness for a party is not enough, unless the witness’ evidence is vital to the party’s case and the witness was an integral part of the litigation team.
3. In some circumstances it is appropriate to treat the fraud of party A as that of party B, for example because the two parties adopt a common cause in the proceedings and party B adopts the fraudulent evidence of party A for his own benefit (albeit without knowing it is fraudulent), in which case the judgment may also be set aside against party B.

The Court of Appeal found that the third proposition applied to the facts of this case: Mr Butcher had no separate position of his own and his case was parasitic on that of Outlook. He had adopted and relied on the evidence of the fraudster. Although innocent of the fraud, he had unknowingly reaped the benefit of it. Thus it was appropriate to regard Mr Fradgley’s fraudulent evidence as that of Mr Buthcer, notwithstanding that Mr Butcher was ignorant of its fraudulent nature. Accordingly, the appeal was dismissed.

Analysis

The Judgment is a helpful clarification for victims of fraud that a judgment procured by fraud can be set aside not only against the fraudulent party, but against a non-fraudulent party. It also serves as a useful reminder that parties should exercise caution when adopting another party’s evidence, as they may be exposed if the evidence later proves to have been fraudulent.

However, in an interesting post-script, Zacaroli LJ cautioned against applying an overly expansive interpretation of the principles which apply to setting aside a judgment on the grounds of fraud. In support of that cautious approach, he pointed to the possibility of other routes open to a party seeking to re-open issues determined in previous litigation which do not involve a substantive cause of action to set aside the earlier judgment, such as an application for permission to appeal out of time.