Curtailing the fraud defence as an abuse of process

Though the common law defence of fraud is well established, and despite the unwillingness of the Privy Council to align itself with the criticism sometimes heard, the plea that a foreign judgment was obtained by fraud can sometimes run into a chilly headwind. In House of Spring Gardens Ltd v Waite,™ a novel response was given to a defendant invoking the fraud rule. After the defendant had been sued to judgment in Ireland, he brought proceedings of his own, also before the Irish courts, to have the judgment set aside on the ground of fraud. The action failed. When the claimant later sought to enforce his judgment in England, the defendant was barred from pleading that the original judgment had been obtained by fraud. He had chosen and seised his preferred court (Ireland) in which to allege fraud and ask for a ruling on it; he was

FOREIGN JUDGMENTS AND THE RULES OF COMMON LAW estopped from disavowing the judgment he had obtained in order to try and make the plea all over again. If that estoppel argument was not conclusive, it would in any event have been an abuse of process for him to raise a plea of fraud for a second time; and the fraud defence was disallowable on that ground also.

A court has an inherent power to prevent its processes being used abusively. The doctrine may have developed in equity in response to the technical limitations and shortcomings of common law estoppel; but however that may be, it may be invoked to prevent re-re-litigation. It was applied to this effect by the Privy Council in Owens Bank Ltd v Etoile Commerciale SA.²⁶' It is clear that a way has now been signposted to permit a court to curtail the fraud defence, in some cases at least. Though no case has yet gone so far, it may one day be argued, for example, that it is an abuse of the process of the English court for a judgment debtor to make an allegation of fraud in circumstances where he would have been free to bring separate proceedings to impeach the judgment in the jurisdiction of the adjudicating court and when, therefore, he has elected not to exhaust his local remedies.^[1]

Although there may be something superficially attractive about the possibility that a plea of abuse of process might answer one of fraud, a court should tread cautiously. It cannot always be taken for granted that the court chosen by the claimant will have respected the defendant’s rights: the claimant may have chosen his court with a cynical eye. And it may sometimes be possible to read too much into the fact that the judgment debtor has brought proceedings of his own, to have the judgment set aside, in the courts for the place where the judgment was obtained. If the judgment debtor has made a free and unconstrained election to raise the matter and have it resolved in that court, no doubt he should be estopped from seeking to whistle and walk away from judgment handed down by the court he chose. But it may sometimes be different, for if the defendant has assets in the country in which judgment was obtained by the claimant (as the defendant says, by fraud), and these were threatened with seizure by way of execution, an application to have the judgment set aside on grounds of fraud may have been so constrained that it should not have been treated as his one and only bite at the fraud cherry.

Before a court accepts that the principle of abuse of process may defeat the doctrine of fraud at common law, it should reflect that a defendant may, despite appearances to the contrary, have had a less than proper opportunity for an impartial investigation of his side of the case. If it is argued that it is an abuse of the process of the English court to raise the issue of fraud without first having applied to do so before the adjudicating court, this should not prevail: it will not be an abuse of process to raise an argumentin England unless it could and should have been raised before the foreign court;^[2] and it has never been the law that such a challenge must be made before the foreign court. The argument might very well be different if the original proceedings had been brought in a court to whose jurisdiction the defendant had previously agreed to submit by contract: there would then be a proper basis for the argument that the defence of fraud should be considered as excluded from being available to be raised in the English courts. But in the absence of such additional facts, there is a danger that a slightly impatient dismissal of a plea of fraud, advanced by a judgment debtor, as an abuse of process, will run the risk that insufficient attention is directed to genuinely meritorious defences.

• [1] [1995] 1 WLR 44, on appeal from St Vincent and the Grenadines, which is why issues relating to a French judgment were dealt with under rules of the common law; Desert Sun Loan Corp v HiU[ 1996] 2 All ER 847 (Stuart-Smith LJ; Evans LJ referred to a principle of abuse of justice, which appears to be the same thing). See also, on abuse of process, though not on fraud as a defence, Virgin Atlantic Airways Ltd v Zodiac Seats UK £trf[2013] UK.SC 46, [2014] 1 AC 160; and on Owens Bank as authority in English domestic law, Takhar v Gracefield Developments Ltd [2019] UKSC 13, [2020] AC 450. 2 In the different context of the Brussels/Lugano regime the defendant was expected to pursue his fraud remedy in the foreign jurisdiction and not in England under cover of an argument about public policy: Interdesco SA v Nullifire Ltd [1992] 1 Lloyd's Rep 180; Meroni v Recoletos Ltd EU:C:2016:349, [2017] QB 85. 3 It is unlikely, but not impossible, that this falls within Section 33(1 )(c) of the 1982 Act and, therefore, precludes the argument that the defendant submitted to the jurisdiction of the foreign court, even though he brought the proceedings himself. 4 Though see Mengiste v Endowment Fund for the Rehabilitation of Tigray [2017] EWCA Civ 1326.
• [2] Virgin Atlantic Airways Ltd v Zodiac Seats UK /./¿/[2013] UKSC 46, [2014] 1 AC 160, [24]. 2 A similar principle has been applied in the context of challenges to arbitral awards: Westacre Investments Ltd v Jugoimport-SPDR Holding Co Ltd [2000] 1 QB 288, 309. 3 Especially The Abidin Dover [1984] AC 398. 4 A matter which requires evaluation, not speculation. 5 It was raised but rejected in Maximov v OJSC Novolipetsky Metallurgichesky Kombinat [2017] EWHC 1911 (Comm); it was regarded as arguable and fit for trial in PJSC Rosgosstrakh v Starr Syndicate Ltd [2020] EWHC 1557 (Comm). For a decision rejecting a contention that the nature of the proceedings before the foreign court had so missed the point that the defendant had not had a hearing at all (but which may just suggest that the point may be available in the very rare case in which the facts support it), see Jenton Overseas Investment Pte Ltd v Townsing (2008) 21 VR 241. The defence plays a more prominent part in Canada, as the nature of ‘international jurisdiction’ in Canadian private international law is looser. See USA v Yemec (2010) 320 DLR (4th) 96 for the suggestion that there should be a defence of 'denial of a meaningful opportunity to be heard', which was accepted at first instance but rejected as unnecessary on appeal. 6 Which means given proper notice of the commencement of proceedings; it will be irrelevant that there was a technical irregularity in the mode or manner of service. By contrast, if he has been served at his proper address, but did not bother to pick up the summons, there is no basis for complaint: OJSC Bank of Moscow v Chernyakov [2016] EWHC 2583 (Comm). 7 Cf Maronier v Larmer [2002] EWCA Civ 774, [2003] QB 620 (a case on the Brussels/Lugano scheme).