England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
MR JUSTICE FIELD
HQ07X03533

		Royal Courts of Justice Strand, London, WC2A 2LL
		10/03/2010

See also: [2010] EWCA Civ 284

Lady Justice Smith:

Introduction

1. On 2 September 2003, Mr Mark Noble was seriously injured when his motor cycle was in collision with a car driven by Mr Martin Raymond Owens. Mr Owens admitted liability for Mr Noble's injuries and, on 11 March 2008, Field J assessed damages in the sum of £3,397,766.49 inclusive of interest. The basis of the award was that Mr Noble's mobility was severely restricted and would remain so. He was dependent on crutches and a wheelchair. He would never work again and would require a good deal of assistance with daily living. Mr Owens' insurers did not appeal that judgment at the time and the judgment was fully satisfied.
2. In the autumn of 2008, the insurers received confidential information to the effect that Mr Noble did not appear to be as seriously disabled as he had claimed. They arranged to have him watched and filmed. Between December 2008 and March 2009, Mr Noble was filmed on seven occasions, each time for several hours. He could be seen walking about in a yard on his premises without the aid of crutches or a stick. He drove a dumper truck. He was seen sawing wood and moving a number of items. He was seen to stretch and bend without apparent difficulty. The insurers took the view that the picture presented on these films was so different from that presented at the trial that the only inference to be drawn was that Mr Noble had made a far better recovery than he had claimed and that he had deliberately misled the court as to the gravity of his continuing disabilities.
3. The insurers applied to Field J, without notice to Mr Noble, for an injunction restraining Mr Noble from dissipating the remainder of his damages. It was known that he had bought a substantial property in which he was living with his partner. Field J saw parts of the films and declared that he would not have imagined that Mr Noble would have been able to do the things he could be seen doing on the films. He granted a temporary injunction in respect of £2.25 million on the insurer's undertaking to file an application to appeal to this court out of time relying on the fresh evidence of the films. That injunction, in slightly varied terms, has been extended by consent pending the outcome of this appeal.

The application for permission to appeal

4. Both parties attended the hearing before Moses and Maurice Kay LJJ of the application for permission to appeal, represented by counsel. Mr Andrew Hogarth QC for the appellant insurers submitted that the evidence of the films and other evidence obtained since the films were taken should be admitted as it satisfied the criteria for the admission of fresh evidence as set out in Ladd v Marshall [1954] 1 WLR 1489. In the light of that evidence, it was arguable that the judgment of Field J should be set aside and the assessment of damages should be retried. Mr Clive Freedman QC for the respondent accepted that the fresh evidence of the films should be admitted. His argument was that permission to appeal should be refused because the appellant's proper remedy in a case in which fraud was alleged was to commence a fresh action to set aside the original judgment. The court granted permission to appeal, expressing the view that it seemed likely that the full court would prefer Mr Freedman's submission but that it was arguable that Mr Hogarth was right and that the case might be sent back for rehearing.

The hearing of the appeal - the evidence

5. Before this court, it was agreed that all the fresh evidence should be considered. We saw a compilation of the video evidence and read additional evidence put in by both sides. I do not propose to say much about the fresh evidence because it will not be necessary for me to give more than a broad indication of the impression that it made upon me. I do not wish to do more than that as I might risk influencing the judge who will have to consider this evidence in the future. I will describe the evidence only to the extent necessary to explain the contentions which the parties claimed that it supported.
6. In addition to the video evidence which I have already described, the appellant submitted further expert reports to support the contention that the only realistic explanation for the difference between the degree of mobility contended for at trial and that seen on the films was that Mr Noble had intentionally deceived the court at trial.
7. The respondent put in evidence strongly disputing that he had been guilty of any deception. He said that, although on the films he was seen walking and driving a dumper truck, he could do these things only on 'good days'. He is still gravely disabled and often needs his crutches or wheelchair. He has improved to some extent since the trial because he has worked hard at his physiotherapy and has been determined to do as much for himself as possible. Moreover, the way in which the appellant was now describing his condition at the trial was inaccurate. He had made it plain at the trial that he was able to do some things for himself.
8. We heard detailed submissions about the picture of Mr Noble's disability which had been painted at the trial and that which was now given by the new evidence. Mr Hogarth submitted that the contrast was stark. Mr Freedman argued that Mr Noble's activities on the films were quite explicable and not inconsistent with the account that he had given at trial.

Legal submissions

9. Mr Hogarth accepted that, in cases where a party seeks to set aside an established judgment, there is a tension between two public interests: the need for finality in litigation and the need to ensure that the court is not misled. He accepted that a judgment will not lightly be overturned but, he submitted, where there is evidence that the judge might have been deliberately misled, the need for finality had to give way and the right course is to order a retrial. In support of that proposition he cited the well-known passage from the judgment of Denning LJ, as he then was, in Ladd v Marshall where at page 1491 he said:

"It is very rare that application is made this court for a new trial on the ground that a witness has told a lie. The principles to be applied are the same as those applied when fresh evidence is sought to be introduced. To justify the reception of fresh evidence or a new trial, three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; secondly, the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; thirdly, the evidence must be such as is presumably to be believed, or in the other words, it must be apparently credible, though it need not be incontrovertible."

10. In addition to Ladd v Marshall, Mr Hogarth cited a number of other cases in which this court or the House of Lords had received fresh evidence suggesting either perjury or some other sort of fraud and had ordered a retrial without making an actual finding of fraud. These included Skone v Skone and Another [1971] 1 WLR 812, Roe and Another v Robert McGregor and Sons Ltd [1968] 1 WLR 925 and De Beauville v Swycher and Co and Another [Unreported 22 November 1999]. He relied also on dicta of the Court of Appeal (Lord Phillips MR, Sedley and Hale LJJ) in Hamilton v Al Fayed [2000] EWCA Civ 3012 where, after citing the passage from Ladd v Marshall which I have quoted above, Lord Phillips continued at paragraph 13:

"13. These principles have been followed by the Court of Appeal for nearly half a century and are in no way in conflict with the overriding objective. In particular it will not normally be in the interests of justice to reopen a concluded trial in order to introduce fresh evidence unless that evidence will probably influence the result.

14. Often the fresh evidence relied upon demonstrates that perjured evidence was given at the trial. In such circumstances, provided that the requirements of Ladd v Marshall are satisfied, the practice of the Court of Appeal has been to order a new trial without resolving the issue of whether the alleged fraud in fact occurred."

11. Mr Hogarth's submission was that this line of authority demonstrated that, where the three conditions of admissibility are satisfied, the usual result will be that this court will order a new trial. This court does not have to find that the court below was deliberately misled; it is enough if the evidence shows a good prima facie case that that occurred. He submitted that, in the present case, the fresh evidence now admitted was sufficiently clear that this court should hold that the award of Field J could not stand. This court should set it aside and send the assessment of damages back for rehearing.
12. Mr Freedman for the respondent submitted the correct course was to dismiss the appeal and to leave the appellant to start a fresh action if so advised.
13. He began by stressing the need for finality in litigation. He cited a passage from Mulholland v Mitchell [1971] 1 AC 666 where the House of Lords had to consider whether to reopen an assessment of damages where there had been a very marked change in the injured person's situation shortly after the trial. There was no suggestion of fraud, simply a change of circumstances. The Court of Appeal decided to admit the fresh evidence with a view to reassessing the damages. An appeal from that decision was dismissed by the House of Lords, who were of the view that the circumstances of the case were exceptional. However, at page 681B Lord Pearson explained what the usual position was. He said:

"The normal rule in accident cases is that the sum of damages falls to be assessed once and for all at the time of the hearing. When the assessment is made, the court has to make the best assessment it can as to events which may happen in the future. If further evidence as to the new events were too easily admitted, there would be no finality in litigation."

14. Although, as Mr Freedman noted, it is now open to the Courts in some limited circumstances to make a provisional order for damages and an order for periodical payments rather than a lump sum, the general principle there set out remains good law. The Court of Appeal has a discretion to reopen an assessment of damages to reflect a change of circumstances but will only do where the facts are exceptional. The court will not reopen an assessment merely because the claimant has made a better or worse recovery than had been anticipated.
15. Mr Freedman submitted that, where the allegation is that the court below was deliberately misled, there is a presumption of innocence and the burden of proving fraud falls upon he who alleges it. Fraud must be pleaded and properly proved by the aggrieved party in a fresh action. There is, he submitted, a long line of cases, going back to Flower v Lloyd (1877) 6 Ch D 297 and Jonesco v Beard [1930] AC 298 to support that proposition. He accepted that more recent authority such as Kuwait Airways Corporation v Iraqi Airways Co and Another (No 2) [2001] 1 WLR 429 suggested that the rule was not invariable and that it was possible in some circumstances for the court to order a retrial but it was clear from that case that that course should not be taken where the fraud was not clearly established. In the present case, it was not clearly established; it was hotly contested.

Discussion

16. It appears to me that there is an inconsistency between the two lines of authority upon which the opposing parties to this appeal rely. On the one hand there is Ladd v Marshall which suggests that, where fresh evidence is properly admitted and it appears to the court that it might, if admitted, have had an important effect on the trial, the right course is to send the case back for retrial. That should be done, apparently even if the new evidence suggests that a deceit was practised on the court below: see Hamilton v Al Fayed. On the other hand, Jonesco suggests that, where it is alleged that there was deceit in the court below, the proper course is to leave the aggrieved party to commence a new action, save where the Court of Appeal either determine the issue of fraud itself – in effect where it is admitted or the evidence is incontrovertible. How are these two lines of authority to be reconciled?
17. First, the position is clear where the new evidence does not disclose the possibility of fraud. If the Ladd v Marshall conditions are fully satisfied, the court may send the case back for retrial. The potential problem arises only where the new evidence suggests fraud and in those cases, the authorities are in conflict. I have searched the reported cases for some common feature of those cases where this court has or has not ordered a new trial. I have done this in the hope of identifying a principle which might explain the apparent conflict. For example, have the courts ordered a retrial only where the fresh evidence existed at the time of the trial, as opposed to where it came into existence (as in this case) after the trial? That does not seem to be the case. Have the courts ordered a retrial only where the fresh evidence would, if believed, result in the judge's decision going the other way, as opposed to resulting in, for example, a different award of damages? That does not seem to be the case either. I regret to say that I cannot find any principle on which the courts have consistently acted. I have also come to the conclusion that there is an irreconcilable conflict within the authorities. I will demonstrate that by comparing two cases in which the courts have taken a different course on very similar facts.
18. First, I will consider Roe and Another v Robert McGregor and Sons Ltd one of the cases relied on by Mr Hogarth. In that case, the plaintiff was driving a van at night. He failed to see a 'road closed' sign erected by contractors, drove past it and down a 30 foot embankment causing injury to himself and a passenger. He sued the contractors alleging that the sign was inadequate. The defence did not allege that he was drunk. At the trial, the plaintiff asserted that he had had very little to drink and when counsel for the defendants sought to cross-examine him to suggest that he was drunk, the judge would not allow it. The judge found in favour of the driver and his passenger. Later, the contractors discovered credible evidence that the driver had been drunk. On the contractors' appeal, the fresh evidence was admitted and the judgment below was set aside; a re-hearing was ordered on the basis of an amended defence which did allege that the plaintiff was drunk at the time.
19. Although the substance of the contractors' case on appeal was that the plaintiff had lied and had thereby obtained his favourable judgment, it does not seem to have been argued that the proper course was for the contractors to bring a fresh action to set aside the judgment. The Jonesco line of authorities does not appear to have been cited. The argument appears to have been confined to whether the three Ladd v Marshall conditions were met. If they were, it seems to have been assumed that there would be a retrial. The rationale of the decision is at page 930B where Harman LJ said:

"It is by no means to be taken on these motions that this evidence (of drunkenness) is likely in the end to be believed. These motions are brought for leave to adduce this extra evidence. But in my judgment that would be, in a case of this sort, a hopelessly inconvenient course to take, because quite clearly, if Harrison and the publican are to have their evidence admitted (that is the fresh evidence), evidence to rebut what they say must also be admitted and there must be evidence on one side and the other which will very greatly alter the whole shape of the testimony. The only course, I think, for this court, if it thinks that it should do anything, is to order a new trial and I think that counsel in the end conceded really that that was the proper course to take if the court were moved to take any course."

20. In that case, the court seems not to have asked itself whether it was just for the plaintiff to be deprived of his judgment merely on the allegation that he had lied. The court seems to have been more concerned about what would be a convenient course for the court to take. There does not seem to have been any concern expressed about the need for finality of litigation.
21. I compare that case with one in which the court took a different course in a very similar situation. In Jonesco v Beard, one of the cases relied on by Mr Freedman, the plaintiff sued the defendant for money arising from the allegedly shared ownership of some racehorses. The judge disbelieved the plaintiff and held for the defendant. The plaintiff appealed to the Court of Appeal alleging that the judgment below had been obtained by the fraudulent withholding of relevant documents. Without determining whether fraud had been practised, the Court of Appeal set aside the judgment and ordered a retrial. The House of Lords allowed the defendant's appeal saying that the settled practice of the courts in such circumstances was for the person who wished to set aside the judgment to commence a fresh action for fraud.
22. The rationale underlying the decision was that the defendant should not lose his favourable judgment without clear evidence of fraud. He should not lose it merely on account of a plausible allegation of fraud. The interest in finality of litigation should hold sway unless and until the judgment is shown to have been obtained by fraud. In that case, it is clear that the fraud was not conceded and the evidence was far from incontrovertible. The court seems to have taken its view, even though the course taken would or might increase the costs involved. There would have to be a fresh action and, if the judgment were to be set aside for fraudulent concealment, there would then have to be a retrial.
23. In Jonesco, the court recognised the possibility that, in special circumstances, the appellate court might allow the appeal and order a retrial. At page 301, Lord Buckmaster explained what those circumstances would be. I shall not quote them in full but the gist was that the Court of Appeal could order a retrial only where the fraud was clearly established. If the fraud was disputed, as it was in that case, and the court were to take the unusual course of deciding the issue for itself, it would have to establish the particulars of fraud alleged and examine the evidence in detail; it would have to apply the burden and standard of proof applicable to a fraud trial. It was clear that Lord Buckmaster was not encouraging the appellate court to decide a disputed issue for itself. But it seems to me that Lord Buckmaster was implying that, if the fraud was admitted or the evidence of it was incontrovertible, the Court of Appeal could order a retrial.
24. In both Roe and Jonesco, there was an allegation of fraud or deceit by a party by means of which a favourable judgment was obtained. I cannot distinguish the facts of those two cases and I cannot explain the different decisions of the Court of Appeal and the House of Lords other than by concluding that one must be right and the other wrong. As a matter of jurisprudence, Jonesco being a decision of the House of Lords must be preferred. I am confirmed in that view because in Kuwait Airways, the House of Lords has quite recently affirmed the view it took in Jonesco.
25. Some of the other cases relied on by Mr Hogarth can be distinguished from Jonesco on their facts. For example, in Skone v Skone, the husband petitioned for divorce alleging adultery by the wife with the co-respondent. At the hearing, the husband relied on observations from an enquiry agent from which he asked the judge to infer adultery. The wife did not give evidence. The co-respondent gave evidence denying adultery or even any association with the wife. The judge believed the co-respondent and refused the decree. Later, the husband obtained possession of love letters exchanged between the wife and co-respondent which tended to show that they had committed adultery. The House of Lords admitted the fresh evidence and directed that there should be a new trial on the ground that a strong prima facie case of wilful deception had been disclosed.
26. In that case, there would have been no point in requiring the husband to bring an action for deceit against the co-respondent as a prerequisite of rehearing the husband's petition for divorce. Whether or not the co-respondent were held to have lied, there would have had to be a rehearing so that the content of the letters (assuming they could be proved) could be considered as evidence implying adultery. In a divorce case there is a strong public interest that a petition should not be granted or refused on a wrong basis and less of a public interest in the finality of litigation. So I can see why in that case the House of Lords came to a different conclusion from that in Jonesco.
27. I do not propose to examine in detail the facts and circumstances of every case relied on by Mr Hogarth. In my judgment, the true principle of law is derived from Jonesco and is that, where fresh evidence is adduced in the Court of Appeal tending to show that the judge at first instance was deliberately misled, the court will only allow the appeal and order a retrial where the fraud is either admitted or the evidence of it is incontrovertible. In any other case, the issue of fraud must be determined before the judgment of the court below can be set aside. It follows from this that the observations of Lord Phillips MR in Hamilton v Al Fayed, which I cited above and which were obiter, should be treated with caution. The meaning of his paragraph 14 cited above is not entirely clear. In the first sentence he refers to cases where 'the fresh evidence relied upon demonstrates that perjured evidence was given at trial'. He says that, if the Ladd v Marshall requirements are satisfied, the case will go back for retrial. That first sentence could be taken to suggest that he was referring only to cases in which the evidence of fraud or perjury had been conclusively demonstrated. Yet, the later sentences suggest that he was referring to cases in which the issue of fraud remained undecided. If Lord Phillips MR meant that cases in which fraud was alleged but not conclusively proven should be sent back for retrial, I must respectfully say that I think that was wrong. In cases in which the fresh evidence amounts to an allegation of fraud involving a party and where the allegation is contested, the usual course should be to require that the issue of fraud be tried out before the established judgment is set aside. There may be exceptions to that general rule, as for example where there will be no injustice and good policy grounds for ordering a retrial as there were in Skone.

Application of the law to the facts of this case

28. In the present case, it seems to me that the video film evidence is sufficiently cogent that it is possible that a judge would find that the respondent had deceived the court below. But it is far from incontrovertible and it is hotly contested. I am quite satisfied that it would be wrong in law and unfair to the respondent for the award of damages to be set aside unless and until fraud has been proved. The unfairness can be clearly demonstrated. If a judge were now to assess damages on the basis of all the evidence including the video films, the damages would inevitably be significantly less than the sum the claimant recovered in March 2008 because it would be apparent that the claimant had made a better recovery than was then anticipated. The general principle as explained in Mitchell v Mulholland would have been breached.
29. Although the old cases say that where there is an issue of fraud to be tried that must be done by commencing a fresh action, I do not think that in this day and age that should always be necessary. All that is needed is that the issue of fraud should be determined. That could be done just as well (if not better) by this court referring the trial of the fraud issue to a High Court Judge pursuant to CPR 52.10(2)(b). The possibility that that might be an appropriate course was presaged by Lord Phillips MR at paragraph 21 of Hamilton v Al Fayed. In my view that would be a better course to follow in the present case for two reasons. First, the costs of a fresh action would necessarily exceed the costs of the trial of an issue. If the issue is referred, the matter could be dealt with quite expeditiously. The judge could give directions as to the clarification of the allegations and as to the exchange of evidence. In any event, most of that has already taken place. The matter could be ready for hearing within a very short time. Second, this court would be able to direct that the issue be tried by Field J. Subject to submissions from the parties, my provisional view is that it would be appropriate for him to try the issue in that no other judge could be as well placed as he. When his memory is refreshed he will no doubt have a good recollection of the evidence.
30. I would propose that, for the present, the appeal should be allowed to the extent that the issue of fraud should be referred for trial by a High Court Judge. If the judge rejects the allegation of fraud, the original award will stand. If the judge finds that fraud is proved, he should make a reassessment of the damages.

Lord Justice Elias:

31. I gratefully adopt the analysis of the facts made by Lady Justice Smith. I agree that the appeal should be allowed, in part for the reasons she gives. However, the point is one of some interest, and I would like to express my reasons in my own words.
32. This case raises the inter-relationship of three well-established principles of English law. The first two are exceptions to the principle of the need for finality in litigation. In general, it would undermine the whole system of justice and respect for the law if it were open to a party to be able to re-run a trial simply because potentially persuasive or relevant evidence had not been put before the court. An obligation rests on the parties to adduce any material evidence before the court, and if they fail to do so they cannot require a second hearing to put the matter right.
33. Exceptionally, however, justice conflicts with the principle of finality. Evidence sometimes emerges which suggests that the court may have reached the wrong decision in circumstances where it might be unjust not to reopen the judgment. Hence the courts have developed principles for determining when justice requires a case to be re-opened and a new trial ordered. The jurisprudence is longstanding but the principles were pithily encapsulated over 50 years ago by Denning LJ, as he then was, in Ladd v Marshall [1954] 1 WLR 1489, 1491:

"To justify the reception of fresh evidence or a new trial three conditions must be fulfilled: First, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; secondly, the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; thirdly, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible."

34. The power of this court to receive fresh evidence is now conferred by CPR 52.11(2). Ladd v Marshall is a decision on the former rule which was found in the old Rules of Supreme Court Order 59, rule 10(2). That Order required that "special grounds" had to be established before evidence could be adduced but there is no specific reference to the need to establish such grounds under the new rule. However, this court has indicated in a number of decisions that the Ladd v Marshall principles still underpin the jurisprudence in this area, although the rules must be applied flexibly and in the light of the overriding objective: see for example the observations of Lord Phillips MR in Hamilton v Al Fayed - (unreported 21 December 2000) at paragraph 11.
35. The second principle recognising an exception to the need for finality arises in the context of a challenge to the award of damages. Quantification of damages is inevitably an imprecise science: the court has to make all sorts of assumptions and predictions about future events. Inevitably, hindsight will prove some of these to be wrong to the benefit of one party and the detriment of the other. The general rule, however, most recently authoritatively stated in the decision of the House of Lords in Mulholland v Mitchell [1971] 1 AC 666 is that the assessment, once made, is final. Lord Hodson, with whose speech Viscount Dilhorne and Lords Wilberforce, Pearson, and Diplock agreed, said this (page 674):

"By our law, unlike that of many other countries, the maxim interest reipublicae ut finis litium is, in the usual case, strictly followed. Damages are, accordingly, assessed once for all at the time of the trial notwithstanding that in many cases, and this applies especially to cases of personal injury, uncertain matters have to be taken into account. The court has to make the best estimate it can of the future life of the injured person not only as to his prospects of recovery or improvement but also, as in this case, as to the cost of caring for him either in his own home or in the Institution suitably equipped to deal with his condition. This is the function of the court.

Thereafter, to repeat the words of Lord Loreburn LC in Brown v Dean [1910] AC 373, 374:

"Where a litigant has obtained a judgment in a court of justice……he is by law entitled not to be deprived of that judgment without very solid grounds; …"."

36. Their Lordships also recognised, however, that exceptionally it would be unjust not to admit fresh evidence if there has been what Lord Hodson described as a "dramatic change of circumstances since the learned judge has made his award". That was in fact the case in Mulholland itself.
37. The third principle is that where allegations of fraud are made they should be particularised and established to the appropriate standard of proof. This is a hallowed principle of law which has been repeated by the courts on many occasions. I give some examples in the cases considered later in this judgment.
38. In this case the evidence relied upon by Mr Hogarth QC, namely the video recordings, allegedly demonstrates that the claimant was guilty of fraud. It does not go to liability, which is admitted, but to the quantum of damages. Mr Hogarth contends that it is fresh evidence satisfying the Ladd v Marshall criteria. The fact that the evidence is adduced for the purpose of establishing fraud by the claimant does not, he submits, affect the application of that doctrine. Mr Hogarth does not, however, seek to contend that the evidence demonstrates such a dramatic change in circumstance as to engage the exception to the general rule enunciated in Mulholland v Mitchell. Even if ordering a retrial effectively achieves that result, that is only because it is the consequence of applying Ladd v Marshall principles.
39. Mr Freedman QC submits that the principles of Ladd v Marshall are not satisfied here for two reasons. First, the second condition is not in any event met. I will return to that issue later in this judgment. Second - and this was the primary focus of his submissions - even if it is, Ladd v Marshall is inapplicable where the allegation is one of fraud allegedly perpetrated by the successful party. The appropriate remedy in such circumstances is for the appellant to take separate proceedings to have the judgment set aside for fraud. Save where the fresh evidence sought to be admitted is so probative of fraud that it would be futile to require the appellant to take separate proceedings, the court should never order a retrial without fraud being proved. A retrial involves a fresh consideration of all the evidence. The second judge may conclude that there was no fraud and yet he or she may nonetheless assess the evidence differently from the way it was assessed by the first trial judge. Indeed where, as in this case, damages alone are in issue, a different outcome is inevitable. In this case, for example, at any retrial the video evidence would be material as to the present state of health of the claimant and in all probability it would result in a reduction in damages even if the court were satisfied that there had been no fraud practised at all.
40. Accordingly, Mr Freedman's contention is that Mr Hogarth's submission subverts both the second and the third principles I have set out above. It relieves the appellant from the burden of having to particularise and prove the fraud; and it potentially undermines the principle in Mulholland because if in fact there is no fraud, the claimant would nevertheless be denied the benefit of his judgment, absent solid grounds, merely because grounds potentially capable of establishing fraud had been asserted. Far from ensuring justice, this would defeat it.
41. I find this a compelling argument. The question, however, is whether it is sustained by the authorities. Many cases were cited to us. They do not speak in an entirely consistent voice although, in my judgment, the tenor of the case law strongly supports Mr Freedman's contentions.
42. There is no doubt that it is open to an appellant to take action against the successful party in the litigation to seek to have judgment set aside on grounds of fraud. This is a well-established principle of equity. In Flower v Lloyd (1877) 6 ChD 297 the plaintiffs sought an injunction to restrain the defendant who was infringing their patent. They succeeded at first instance but the order was overturned on appeal. The court relied heavily upon an expert who was sent down to inspect the process carried on at the defendant's works. Subsequently, various employees of the defendant made affidavits which tended to show that, when the expert visited the works, the defendant had fraudulently concealed a part of the process. The plaintiffs sought to have the appeal reheard. The court (Jessell MR, James and Baggallay JJ) rejected the application. They held that, following the Judicature Act 1873, the High Court could exercise the powers formerly conferred on the Court of Chancery and rectify any miscarriage by setting aside the judgment on grounds of fraud. That was the appropriate remedy; reopening the appeal was the wrong procedure. That case differs from this in that it was not a case of an appellant seeking a retrial at the first appeal. However, Lord Justice James made certain more general observations about the proper way in which judgments allegedly obtained by fraud should be established (pp.301- 302):

"I agree with what has been said by the Master of the Rolls, that in the case of a decree (or judgment as we now call it) being obtained by fraud there always was a power, and there still is a power, in the Courts of Law in this country to give adequate relief. But that must be done by putting in issue that fraud, and that fraud only. You cannot go to your adversary and say "You obtained a judgment by fraud and I will have a re-hearing of the whole case" until that fraud is established. The thing must be tried as a distinct and positive issue; "You, the defendants" or "You, the plaintiff" obtained that judgment or decree in your favour by fraud; you bribed the witness, you bribed my solicitor, you bribed my counsel, you committed some fraud or other of that kind, and I ask to have the judgment set aside on the ground of fraud." That would be tried like anything else by evidence properly taken directed at that issue and wholly free from and unembarrassed by any of the matters originally tried."

43. A similar approach was adopted by the Judicial Committee of the Privy Council in Hip Foong Hong v H Neotia & Company [1918] AC 888. Lord Buckmaster, giving the judgment of the Committee, made certain observations on the way in which an appellate court should deal with an allegation that the earlier judgment had been obtained by fraud:

"… Where a new trial is sought upon the ground of fraud, procedure by motion and affidavit is not the most satisfactory and convenient method of determining the dispute. The fraud must be both alleged and proved; and the better course in such a case is to take independent proceedings to set aside the judgment upon the ground of fraud, when the whole issue can be properly defined, fought out, and determined, the motion for a new trial is also an available weapon and in some cases may be more convenient."

44. Flower v Lloyd was not cited to the court, but a similar principle is adopted, save that the Privy Council is recognising that a motion for a new trial may sometimes be more convenient than collateral proceedings. I do not, however, read Lord Buckmaster as suggesting that a new trial can be ordered in circumstances where the fraud has not been alleged and proved to the satisfaction of the court.
45. The matter was considered again by the House of Lords in Jonesco v Beard [1930] AC 298. Lord Buckmaster, with whose speech Viscount Dunedin and Lords Blanesburgh, Warrington of Clyffe, and Tomlin concurred, broadly reiterated the principles that he himself had laid down in Hip Foong Hong. He said this (p.301):

"It is a charge of fraud that is the sole reason supporting the judgment now under appeal. Viewed simply as a matter of procedure, the course taken was irregular. It has long been a settled practice of the court that the proper method of impeaching a completed judgment on the ground of fraud is by action in which, as in any other action based on fraud, the particulars of the fraud must be exactly given and the allegation established by the strict proof such a charge requires."

46. After referring to Flower v Lloyd and Hip Foong Hong, amongst other cases, he continued:

"If, however, for any special reason departure from the established practice is permitted, the necessity for stating the particulars of the fraud and the burden of proof are no whit abated and the strict rules of evidence apply."

47. The principles in Jonesco have been followed in a number of cases, including in recent decisions of the House of Lords and the Court of Appeal. In Kuwait Airways Corporation v Iraqi Airways (No 2) [2001] 1 WLR 429 it was alleged that an earlier order of the House of Lords had been obtained by false and perjured evidence given with the intention of deceiving the court. Lord Slynn, with whose judgment Lords Goff, Jauncey and Nicholls agreed, accepted that there was strong prima facie evidence to sustain the allegation. However, he did not accept that the question was an appropriate one to raise before their Lordships' House. He gave two reasons for this (para 24):

"In the first place there is well-established authority that where a final decision has been made by a court a challenge to the decision on the basis that it has been obtained by fraud must be made by a fresh action alleging and proving the fraud."

He then cited in support of that proposition both Flower v Lloyd and Jonesco v Beard.

48. The second reason, reinforcing the first, was that the House was not a suitable or convenient forum in which to resolve complex factual issues.
49. In Jaffray v Society of Lloyd's [2008] 1 WLR 75 the appellant sought to re-open a decision of the Court of Appeal on the grounds that fresh evidence had emerged which demonstrated, so it was alleged, that Lloyd's had misled the court at first instance. The principles for re-opening an appeal were established by this court in Taylor v Lawrence [2003] QB 528. That case was one where it was alleged that the judge was biased. The court in Jaffray (Buxton and Moore-Bick LJJ) questioned whether that principle could properly apply where allegations of fraud against another party were made because Taylor had said that an appeal should only be re-opened in circumstances where no alternative remedy was available. The court in Jaffray considered that in line with such cases as Flower v Lloyd and Jonesco v Beard there was the alternative remedy, namely a collateral action to set aside the judgment allegedly obtained by fraud. In the course of giving the judgment of the court, Lord Justice Buxton said this (para 20):

"Jonesco v Beard (1930) AC 298 is important, not only because the House approved Flower v Lloyd (1877) 6 ChD 297, but also because it held that complaints of fraud practised on a lower court must be made by way of collateral action and not by way of appeal: that is, not even by an initial appeal, let alone by seeking to re-open an appeal that was already concluded." (emphasis added.)

Later, His Lordship said this (para 27):

"… Unless the case is so clear as to be in effect incontestable, this court is neither equipped to undertake the inquiry nor able to give any immediate remedy if it were to find that the allegations were established. That is why Sir Martin Nourse said, summarising the jurisprudence in the judgment of this court in Sohal v Sohal [2002] EWCA Civ 1297 at 25, and echoing Jonesco v Beard (1930) AC 298, that even a first appeal should be pursued on grounds of perjury only of the trial, as opposed to leaving the matter for a fresh action, if the allegation of fraud "could be clearly established"." (per Lord Woolf MR in Wood v Gahlings (The Times, 29 November 1996) or (which was thought to come to the same thing) the fresh evidence or its effect is not "hotly contested": per Lord Phillips of Worth Matravers MR in Hamilton v Al Fayed (unreported 21 December 2000)."

50. This is a very strong stream of jurisprudence entirely in accord with Mr Freedman's contentions. Even if the appellate court can order a retrial in the context of a fraud action, it should only do so where it can be satisfied to the appropriate standard of proof that the fraud has been established, with the burden on he who alleges the fraud. Plainly it would be futile to require a party to incur the cost and the delay of fresh proceedings where the evidence is overwhelming and therefore incontestable, or where the alleged fraud is not contested. But where the issue is in doubt, separate proceedings in fraud should be pursued.
51. Mr Hogarth has been able to point to a different stream of cases in which the principles in Ladd v Marshall have been applied in cases of alleged fraud by the successful party. He identified a number of Court of Appeal authorities where retrials have been ordered, including Roe and another v Robert McGregor and Sons Ltd [1968] 1 WLR 925 (which Smith LJ has considered in her judgment); Hamilton v Brodie Brittain Racing Ltd. (unreported, 13 December 1995); De Beauville v Swycher (unreported 22 November 1999); Banks v Cox (unreported, 17 July 2000); Daly & Daly v Sheikh [2002] EWCA Civ 1630; Prentice v Hereward Housing Association [2001] EWCA Civ 437 and Cooper v Reed and Atlas Rental Cars.(unreported, 24 February 1997). Cooper is particularly apposite to our case because it was a case concerning quantum. As here, it was alleged that fresh evidence demonstrated that the claimant had exaggerated his injuries and the chance of getting back to work. A retrial was ordered, although both parties had accepted that this was appropriate once the fresh evidence had been admitted in accordance with Ladd v Marshall principles.
52. Surprisingly, in each of the above cases the only issue the court was being asked to determine was whether the conditions in Ladd v Marshall had been met, and if so, whether a retrial should be ordered. In each case the court was satisfied that the conditions had been met and in each they admitted the evidence and determined that justice required a fresh trial. However, in none of these appeals does it appear to have been argued that the appropriate remedy was for the appellant to take an action to set aside the original judgment for fraud, and neither Flower nor Jonesco were referred to in any of these judgments. Indeed, so far is one can tell, it does not appear that they were even cited to these courts. I do not, therefore, read these cases as undermining the authority of the principles established in those cases. In any event, they could not of course depart from the principles enunciated in Jonesco in their Lordships' House.
53. Mr Hogarth also sought support from the House of Lords case Skone v Skone [1971] AC 812. However, for reasons given by Smith LJ, I agree that the case does not support his submissions.
54. Finally, he also placed emphasis on the decision of the Court of Appeal in Hamilton v Al Fayed (Unreported, 21 December 2000.). That was in many ways a curious case. The appellant had conducted an unsuccessful libel action against Mr Al Fayed. He maintained that the defendant had stolen documents which might possibly have enabled him to succeed in defending the action. Further, if the jury had been aware of this dishonesty, it would have told against the defendant's credit. At paragraph. 8 of the decision, Lord Phillips MR said this:

"A party who seeks to set aside a judgment or verdict by adducing fresh evidence to show that the court was fraudulently deceived can adopt one of two alternative procedures. He can appeal to the Court of Appeal and seek, on appeal, to adduce the fresh evidence, or he can bring a fresh action in which the relief sought is the setting aside of the judgment fraudulently obtained. Where the fresh evidence, or its effect, is hotly contested, the latter procedure may prove to be more satisfactory – see the comments of Lord Buckmaster in Jonesco v Beard [1930] AC 2198 at p.299."

55. Mr Hogarth suggests that Lord Phillips was simply recounting the argument of Mr Beloff QC, the defendant's counsel. But I do not think that he was; he was reciting a well-established principle which accords with Mr Freedman's submissions.
56. In the next paragraph Lord Phillips observed that the appellant could not have taken collateral proceedings for fraud since he was not contending that the judgment had been achieved by deceit; he was simply asserting that the evidence might have made a difference. So the fresh evidence either had to be admitted via the Ladd v Marshall route with a retrial being ordered, or it would go nowhere. (In fact the application failed and no retrial was ordered).
57. Lord Phillips then made certain observations on the relationship between fraud and the Ladd v Marshall principles. As Smith LJ has pointed out, they were obiter since collateral proceedings in fraud could not be taken in any event. In a passage strongly relied upon by Mr Hogarth, Lord Phillips said this:

"13. [Ladd v Marshall] principles have been followed by the Court of Appeal for nearly half a century and are in no way in conflict with the overriding objective. In particular it will not normally be in the interests of justice to reopen a concluded trial in order to introduce fresh evidence unless that evidence will probably influence the result.

14. Often the fresh evidence relied upon demonstrates that perjured evidence was given at the trial. In such circumstances, provided that the requirements of Ladd v Marshall are satisfied, the practice of the Court of Appeal has been to order a new trial without resolving the issue of whether the alleged fraud in fact occurred. That issue is best resolved on the retrial.

15. Sometimes an appellant relies upon fresh evidence that there was fraud in relation to the conduct of the trial when this evidence puts the result of the trial in doubt, but does not go so far as to demonstrate that the result was probably wrong. In such circumstances the second requirement of Ladd v Marshall is not satisfied. The authorities indicate, however, that provided fraud affecting the trial below is clearly established, a retrial may be ordered notwithstanding this."

58. I accept that paragraph 14 is not easy to construe. If it is demonstrated that perjured evidence was given at the original trial, the issue whether fraud has occurred would have been determined. It would not need to be resolved at the retrial. I agree with Lady Justice Smith that if Lord Phillips was intending to dilute the Jonesco principles, and to allow a fresh trial without fraud being proved, his obiter observations ought not to be followed.
59. However, I doubt whether Lord Phillips was intending to suggest that a new trial should be ordered whenever the fresh evidence only raises a prima facie case of fraud. That would contradict what he said in paragraph 8. It would also be inconsistent with a later passage in his judgment (paragraph 18) where he cites without dissent the binding passage from Lord Buckmaster's judgment in Jonesco, to which I have made reference, where his Lordship says that, even if the court is considering ordering a new trial rather than requiring the appellant to take collateral proceedings, the need to state particulars and the burden of proof "are no whit abated."
60. I do not, therefore, consider that the authorities relied upon by Mr Hogarth provide him with the support he claims. They do not remove the need for the court to be satisfied that the fraud has been established before ordering a retrial.
61. In this case it is quite impossible for the court to be satisfied to the appropriate standard that fraud has been committed. That can only be established, if at all, after the relevant evidence has been tested at trial. The significance of the evidence is hotly contested. It would therefore be wholly inappropriate to order a retrial at this stage.

Is the second condition of Ladd v Marshall satisfied?

62. I return to the alternative basis on which Mr Freedman seeks to resist the appeal. In practice this is closely related to the main basis on which he defends this appeal, but it warrants being separately treated. The principal ground is the assertion that fraud must be proved and that no retrial should be ordered until it has been. Ladd v Marshall is inapplicable; it does not qualify this basic principle. This alternative ground is asserting that even if, contrary to the primary submission, fraud does not have to be proved, and Ladd v Marshall in principle allows the court to order a retrial if it is satisfied that the evidence supporting the allegation of fraud would have had an important influence on the outcome of the case, that condition is not satisfied here.
63. I agree with that submission also. This case is unusual. Typically in fraud cases of this nature, the evidence relied upon is derived from apparently credible third parties which directly or in large part contradicts the evidence given by the claimant and puts the whole issue of liability in doubt. If the evidence is admitted and believed, then almost certainly the decision on liability cannot stand.
64. Here there are two factors which distinguish this case from that typical situation. First, it is about quantum and not about liability. That does not of itself render Ladd v Marshall inapplicable, but it does potentially engage the Mulholland principle. Second, the reliability of the evidence is not in doubt. It is not disputed that the video accurately records what it purports to record. It strongly suggests that the claimant is in better health and has made a better recovery than was anticipated at trial. The question, however, is what inference can properly be drawn from that evidence. Is it just his good luck that the assessments and predictions made at trial have turned out to treat him generously? If so, Mulholland shows that that is simply too bad for the appellant. Or does the video demonstrate that he misled the judge (and no doubt his own experts) at trial? This requires an analysis of the state of the evidence at the trial itself with respect to the prognosis of the injury and its effect upon the claimant's health, and also subsequent explanations given by experts on the question whether recovery to the extent apparently identified in the video is consistent with the case presented and accepted at trial.
65. So the case is not one where there is strong prima facie evidence of fraud; it is one of evidence raising a question of fraud. I agree with Lady Justice Smith that it does properly raise that issue. It is sufficient to justify pleading a fraud case. Lord Justice Sedley, whose judgment I have seen in draft, has indicated that he had some hesitation in concluding that there is evidence of fraud sufficient to justify a collateral action. I do not share that hesitation, but in my judgment the court is certainly not in a position to say that the fresh evidence raises a strong prima facie case of a kind from which the court could properly conclude at this stage that it will probably have an important influence on the damages to be awarded. A case which may properly be pleaded with respect to a collateral action for fraud may fall well short of the more rigorous criteria which would justify ordering a retrial under Ladd v Marshall. This is recognised by Lord Phillips in paragraph 15 of the Hamilton case, set out above. In my judgment, this is such a case.
66. Accordingly, for these two distinct reasons, in my judgment, the appellant fails to establish that a retrial is an appropriate remedy. The issue of fraud must first be properly determined at trial.
67. The question then is how the fraud issue should now be determined. I respectfully agree that the disposition of the case should be in accordance with the directions proposed by Lady Justice Smith. It enables the issue of fraud to be determined in a way which the authorities and justice require. It is in accordance with the overriding objective to remit the case in this way rather than requiring fresh proceedings to be instigated, and it gives effect to the second and third principles which I identified at the start of this judgment.

Lord Justice Sedley:

68. It is a curious fact not only that two divergent lines of authority on the effect of potentially decisive new evidence have developed, but that no decided (or reported) case appears to deal with the not uncommon situation we have here. At least, it has not been uncommon since the development of the hand-held cine-camera, and it has become both common and simple with the arrival of the video-camera. Surveillance of individuals raises issues of privacy both within and beyond article 8 of the ECHR; but they have not affected this case so far.
69. The situation arises where a damages claim, following judgment for the claimant, has been the subject of an agreed or a contested award based on evidence which subsequent events falsify. This alone cannot be enough to disturb the award. Indeed, it is axiomatic that every award which contains a predictive element is going, barring pure luck, to be wrong: it will have either over- or under-estimated the future effects of the injury. To prove one of these things to have happened is therefore no ground whatever for upsetting an award, whether at the claimant's or at the defendant's instance.
70. It may well be – as Mr Freedman submits it is - that this is all that has happened here. If so, the fact that what is now known would have entitled the claimant to a lower, or for that matter a higher, award than he obtained is neither here nor there. That is what finality in litigation means.
71. If, however, it turns out that the judge was materially and deliberately misled by the claimant's evidence, it is plainly wrong that the award should stand. I stress that it is the award, not the judgment, which is impugned in such circumstances. The claimant's entitlement to appropriate damages is not in issue. Although this situation does not seem to have been the subject of any decided case, it seems to me, as it does to Smith LJ and Elias LJ, that justice demands not one but two things. Simply to follow the words of Ladd v Marshall and set aside the award of damages on production (by either party) of prima facie evidence consistent with the court having been deliberately misled is to give that party an advantage to which it is not entitled – an escape from the principle of finality without proof of fraud to justify it. But to refuse that party any relief unless the fraud is admitted or beyond contest is to deny it the opportunity to prove the fraud it asserts. All of this, I think, was recognised in the judgment of James LJ in Flower v Lloyd (see §42 above).
72. Although the time-hallowed remedy is to let the aggrieved party bring a fresh action to set aside the award, today it seems a costly and circuitous exercise. The course proposed by Smith LJ seems to me more appropriate. In place of counsel's professional obligation not to sign a fraud pleading without solid evidence to support it, this court has had to form a preliminary view as to whether the evidence now before the court is capable – no more - of showing that the trial judge was deliberately misled about the claimant's capacities. Having formed the view (for my part not without hesitation) that it is, we are able to make an order which enables that issue to be properly tried but protects the claimant from the loss of his award unless and until it is proved that he obtained it in some significant measure by fraud.
73. For these reasons, and notwithstanding that we appear to be offending against Professor Cornford's principle that one should never do anything for the first time, I too agree with the disposal proposed by Smith LJ. It seems to me the closest we can come to doing justice to both sides.