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Matthew Harvey: Fraud and Impecuniosity before the High Court

31 July 2018

Matthew Harvey: Fraud and Impecuniosity before the High Court

Matthew Harvey has published an edition of The Talk Around Chambers.  In it he discusses Fraud and Impecuniosity before the High Court.  The edition is extracted below.

There have been few commercial judgments in the High Court this year.  But there are two unusual cases worth looking at.
 
The first concerns the courts’ power to set aside judgments for fraud.  The second is about a court’s discretion to stay a proceeding where an impecunious plaintiff has breached costs orders.
 
In Clone Pty Ltd v Players Pty Ltd (in liq) the trial question was whether, upon termination of a lease of gaming premises, the tenant had to transfer the gaming licences to the lessor for nothing or a market price.  The original lease had not been discovered but there were multiple copies.  The copies showed a line through particular words which, arguably, supported the landlord’s interpretation.  The tenant’s solicitors produced only some of the copies but were aware of other copies, all of which contained the line. 
 
At trial, the tenant’s interpretation was favoured.  Subsequently, the landlord became aware of the other copies.  It successfully applied to have the judgment set aside on ground that the tenant’s solicitors had engaged in misconduct.  The tenant appealed, saying that the judgment could only be overturned where there was fraud.
 
The High Court unanimously agreed, holding that actual fraud had to be proved in order to set aside a judgment.  The joint judgment at [43] – [60] contains an interesting and useful analysis of the courts’ power to set aside perfected judgments.
 
In Rosenblit v Vainer, on his third attempt, the appellant obtained leave to amend his statement of claim.  But his success was short lived.  Leave was granted but the proceeding was stayed until he paid orders for costs made against him in the previous, unsuccessful applications.  Since the appellant was impecunious, his proceeding had ground to a halt with little or no prospect of advancing further.
 
Despite failing in appeals to a single judge and then to the Court of Appeal, the appellant struck the most remarkable success in the High Court.  Unanimously, their Honours held that the discretion to order a stay in these circumstances miscarried because there was no consideration of the fact that the stay would have the effect of permanently halting the proceeding.  There was an insufficientbasis for the stay.
 
I’m not entirely convinced by the High Court’s reasoning in this one.  I suppose it shows that sometimes persistence pays off.

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