William Andrew Tinkler v Esken Ltd (formerly Stobart Group Ltd)

Hearing dates: 24 and 25 May 2023

Sir Geoffrey Vos, MASTER OF THE ROLLS:

This appeal concerns the way in which the court should approach the trial of a claim to set aside a judgment allegedly obtained by fraud. The case concerned a boardroom dispute between Mr Tinkler, the former Chief Executive Officer of Esken (formerly Stobart Group Limited or SGL), and SGL and its other leading board members, his erstwhile colleagues, Iain Ferguson (Chair) and Warwick Brady (Chief Executive Officer), and Ian Soanes (together “the witnesses”). Mr Tinkler was summarily dismissed for alleged gross misconduct on 14 June 2018. After being re-elected as a director by SGL's shareholders, Mr Tinkler was again removed from office by all his fellow directors on 7 July 2018 under a power contained in article 89(5) of SGL's articles of incorporation. The validity of these actions was in dispute at the first trial which took place before HH Judge Russen QC in November 2018. Judge Russen delivered a 958-paragraph judgment broadly upholding SGL's claims and dismissing Mr Tinkler's cross-claims on 15 February 2019.

Mr Tinkler's pleaded case before Leech J (the judge) was that new evidence that had been deliberately withheld from Judge Russen would have been highly material to the issues he had decided. It demonstrated that the witnesses had lied to Judge Russen, and was consistent with the existence of a pre-meditated plan to oust Mr Tinkler, which had been alleged before Judge Russen. Had the new evidence been disclosed, it would inevitably have changed Judge Russen's approach to the evidence and the way he came to his decision. On 7 June 2022, the judge gave a 479-paragraph judgment dismissing Mr Tinkler's claim to set aside Judge Russen's judgment.

The judge described it as common ground that one party was entitled to have a judgment set aside for fraud if three limbs (referred to in the citation at [4] below) were established: (i) the successful party (or someone for whom it must take responsibility) committed conscious and deliberate dishonesty, (ii) the dishonest conduct was material to the original decision, and (iii) there was new evidence before the Court.

Despite this common ground, the primary ground of Mr Tinkler's appeal to this court turned on the correctness of the approach that the judge described at [33]–[35], where he explained why he thought his task had been to evaluate the new evidence to decide if it proved there had been fraud and, if so, to decide whether Judge Russen's judgment could stand in the light of it. It is important to set these paragraphs out in full:

33. In my judgment, Mr Wardell's [counsel for Mr Tinkler] approach involves looking through the telescope from the wrong end. My function was to hear and evaluate the new evidence and then decide whether [Judge Russen's] findings could stand in the light of it. It was not to hear and decide the same issues again with the benefit of both the old and the new material and then ask myself in the round whether the witnesses must have deceived [Judge Russen]. Moreover, there is a real danger of injustice in a second court reaching different conclusions based on hearing part only of the evidence before the Court. In the present case, Mr Tinkler did not give written evidence and was not cross-examined about most of the issues and documents put to SGL's witnesses.

34. I therefore accept Mr Leiper's [counsel for SGL] submission on this issue. As Laws J pointed out in Tuvyahu v Swigi [ 26 October 1998, unreported], there is no burden on SGL to justify the Judgment or to prove that Judge Russen] got it right. In approaching the Judgment, therefore, I am entitled to assume that [Judge Russen] decided the issues correctly on the evidence before him in the absence of a successful appeal. The task for me then was to hear and evaluate the new evidence, decide whether Limb 1 is satisfied and, if so, whether the Judgment could stand in the light of that evidence by applying the test under Limb 2.

35. Mr Leiper did not go so far as to submit that I could not evaluate or assess the overall credibility of the witnesses by reference to the evidence which they gave on the substantive issues or the quality of their answers and, in my judgment, he was right not to do so. I make it clear, therefore, that in evaluating the evidence of the witnesses I have set out below and taken into account their evidence on all issues in deciding whether the test under Limb 1 is met. Mr Leiper's submission (which I accept) was not that I should ignore that evidence but that I should not embark on deciding the substantive issues again and then decide whether to set aside the Judgment because I was tempted to reach different conclusions from the Judge. As he submitted, this would clearly offend against the principle of the finality of judgments.

When the judge came to undertake the exercise that he had described at [33]–[35], he explained what he was doing at [219]–[221]. In essence, he dealt with the 16 primary findings of fact that Mr Tinkler had invited him to make. He acknowledged that four of those findings (numbered 1, 2, 3 and 5) involved him making similar, though not identical, findings of fact to those made by Judge Russen. He recorded, however, that SGL had not submitted he would be wrong to decide them or that there was an issue estoppel. The main factual finding that Mr Tinkler sought was explained by the judge as being: “[t]he existence of a premeditated plan [which] provided the motive which [Mr Tinkler] attributed to the witnesses for their willingness to give false evidence to [Judge Russen]”. Many of the other factual issues asked specific questions concerning the new documents and whether certain witnesses had lied.

Perhaps most controversially, the judge said at [221] that he was going to address all the factual issues in 4 stages: (i) identifying any relevant findings made by Judge Russen, (ii) identifying the new documents or other evidence on which Mr Tinkler relied, (iii) considering whether limb 1 (conscious and deliberate dishonesty) “was satisfied and, in particular, whether the new documents or evidence (including cross-examination), [provided] cogent evidence of dishonest conduct”, and (iv) considering whether the new documents or evidence (including cross-examination) were material. Mr Tinkler submitted before us that this approach was wrong in law. It placed inappropriate reliance on what Judge Russen had decided when the whole point of the fraud action was to demonstrate that his findings were unsafe. It excluded the “old evidence” that was before Judge Russen, when that evidence, taken together with the new evidence, would have established the premeditated plan to dismiss Mr Tinkler that the witnesses had denied.

SGL submitted that, whatever the judge had said, he had appropriately considered the old evidence where necessary, and that the judge had been right to think that any other approach would have been unworkable. Ultimately, he had undertaken a meticulous exercise to ascertain whether Judge Russen's decision was vitiated by fraud, and had decided correctly that it was not.

Mr Tinkler was granted permission to appeal (by Arnold and Snowden LJJ) on the following two additional grounds:

i) The second ground was that the judge had adopted the wrong test for materiality. The judge had wrongly followed Royal Bank of Scotland plc v. Highland Financial Partners LP [2013] EWCA Civ 328, [2013] 1 CLC 596 ( Highland) at [106]. Aikens LJ said there that the fresh evidence (a) must demonstrate that the concealment of documents or previous evidence was “an operative cause of the court's decision to give judgment in the way it did” or (b) “would have entirely changed the way in which the first court approached and came to its decision”. The judge ought to have applied the test adumbrated by Lord Phillips MR in Hamilton v. Al Fayed (No. 2) [2001] EMLR 15 ( Hamilton) at [26] and [34] to the effect that it had to be shown that there was a real danger that the dishonest conduct had affected the outcome.

ii) The third ground was that the judge had wrongly followed [46] of Tugendhat J's judgment in Coghlan v. Bailey [2014] EWHC 924 (QB) ( Coghlan) where he had said:

In an action to set aside a judgment on the ground that it has been obtained by fraud the question is how, if at all, would the conclusions of the trial judge have been affected if the witness alleged to have been fraudulent had given the trial judge the information which the claimant … alleges he concealed? The question is not how would the judge's conclusions have been affected had he known that that witness was not a straightforward and frank witness?

Mr Tinkler submits that the judge ought to have followed Aikens LJ in Highland, where he said that “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”. The judge's approach had been wrongly to consider what decision Judge Russen might have made...