Consequences of Dealing with Late Allegations of Fraud

Close Brothers Ltd and Rooster Trucking Co Ltd. – Court of Appeal (Civil Division)

Hire purchase agreements were concluded between Close Brothers Limited (“Close”) and Rooster Trucking Company Limited (“Rooster”). On Close’s case, Mr Taylor and Mr Luke Taylor gave guarantees in relation to Rooster’s obligations.

Close claimed against Rooster for the delivery up of the items which were the subject of the hire purchase agreements and damages. Close claimed against Mr Taylor and Mr Luke Taylor pursuant to the alleged guarantees.

Close obtained default judgment.

Mr Taylor and Rooster applied to set aside the judgment on the basis that Close had failed to make disclosures regarding payments in respect of the hire purchase agreements. A draft defence was filed which, amongst other matters, pleaded that it was neither admitted nor denied that the guarantees on which Close relied had been executed by Mr Taylor and Mr Luke Taylor.

An employee of Close gave evidence that he had seen Mr Taylor and Mr Luke Taylor sign the guarantees.

The applicants later sought to persuade the Court that they had strong evidence of fraud in respect of the alleged guarantees than hitherto and assert a positive case that they had not signed the guarantees.

Impact of Close

Close shows that the Court will look at the merits of the evidence – in short, does it show a reasonable prospect of successfully setting aside the judgment? In Close, the Court of Appeal undertook a minute examination of the evidence before it. The Court of Appeal concluded that the evidence did not show a reasonable prospect of success and declined to revisit the allegations of fraud.

The most interesting aspect of Close is that it demonstrates how, in an application to rely on late evidence of fraud, there is a review of the merits of the evidence. In Close, the Court of Appeal undertook a review of the strength of the late evidence which the applicants wished to rely upon. The review concluded that the evidence was not plausible enough to suggest that there was a reasonable prospect of successfully setting aside the judgment. Close reaffirms that it is by no means a given that a Court will permit late evidence to support allegations of fraud. 

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