English High Court judge sets aside 2014 judgment against Scottish farmers after finding original decision was obtained by fraud

About this case:

• Citation:
  [2025] EWHC 3100 (KB)
• Judgment:
  External link
• Court:
  England and Wales High Court
• Judge:
  Mr Justice Kerr

The estate of Euan Lindsay and his nephew William Lindsay sought a retrial of their original action against defendants Outlook Finance Ltd and Roderick Butcher, on the basis of fraud by the former and liability in trespass and conversion for wrongful use in respect of the latter. The family had previously succeeded in Scottish litigation relating to fraud in respect of their farm in Lanarkshire.

The case was heard in the King’s Bench Division by Mr Justice Kerr. Jeffrey Bacon appeared for both claimants, and Henry Bankes-Jones for the second defendant. The first defendant did not appear and was not represented.

Infected whole decision

In 2008, the Lindsay family, which had farms in Scotland and Cumbria, experienced financial difficulties leading to the bankruptcy of some family members. The claimants and associated entities obtained loan funds from Outlook, now in liquidation, secured on the two farms and certain livestock. Outlook alleged defaults and appointed Mr Butcher, an insolvency practitioner, in 2012 as “LPA receiver” in relation to the farm in Cumbria and as agent to take possession of the livestock.

The claimants challenged Mr Butcher’s appointment, claiming that a sale and leaseback agreement had been entered into with the wrong entity and that Outlook’s director and controlling mind, Mr Fradgley, had breached an oral agreement and certain oral assurances said to create a waiver, estoppel or collateral contract. At the time there was no challenge to the underlying loan, although during the trial Mr Fradgley admitted that he had deceived the family by telling them he was backed by funding from a bank.

After the claim was dismissed in 2014, protracted Scottish litigation followed, culminating in a trial before Lady Wolffe in the Outer House in 2021. She found that Mr Fradgley had taken advantage of the family’s trust in him and upheld the family’s contention that the loan agreements and mortgages were obtained by lesion, facility and circumvention and by fraudulent misrepresentations as to the amounts due. Lady Wolffe further found that he had falsely overstated to the family the amount they were due to pay in interest and set aside the loans and legal charge over the Scottish farm. Outlook did not pay anything and went into voluntary liquidation.

As neither party could find any case law directly addressing whether a judgment obtained by fraud could be set aside as against another party to the original proceedings who was not party to the fraud, the position of Mr Butcher was that it would be unfair and inequitable for the judgment to be set aside as related to him as an innocent party. The claimants’ position was that the whole decision was infected by HHJ Bird’s acceptance of Mr Fradgley’s evidence in the original trial, and there was no requirement for Mr Butcher to have had knowledge of the fraud.

Tenacity and determination

In his decision, Justice Kerr said of the findings in the Scottish litigation: “I am entitled to regard [Lady Wolffe’s] findings as convincing and persuasive and, in forming my views, to consider the cogency of her reasoning. On the central issue of Mr Fradgley’s dishonesty and fraudulent conduct, there is no real dispute. Lady Wolffe found that he was a dishonest fraudster and Mr Butcher did not seriously suggest I should disagree. Lady Wolffe made damning findings against Mr Fradgley to the effect that he had fraudulently extracted money from the Lindsays systematically over many years, taking advantage of their naivety and lack of business acumen.”

He continued: “It was Outlook’s continued attempts to extract money and land from the Lindsays which eventually provided them with the evidence they needed to unmask Mr Fradgley’s fraudulent conduct. I do not agree that the Lindsays took too long to obtain the fresh evidence and secure the findings of Lady Wolffe in the Scottish proceedings. It was necessary to proceed step by step with dogged tenacity and determination and the Lindsays did so.”

Addressing whether the decision in favour of Mr Butcher could be set aside, Kerr J said: “The vice of the relevant fraud is that it taints the impeached judgment. The setting aside of that judgment is not done to punish the fraudster, but to protect the integrity of the legal process. The tests propounded by Aikens LJ in the Royal Bank of Scotland plc v Highland Financial Partners LP (2013) case are directed not at the parties but at the impeached judgment. They address the grounds for setting aside the judgment, not the identity of the party or parties against whom it must be set aside.”

He concluded: “When he paid over the proceeds of the sale of the farm and the cattle, he took the risk that the validity of his appointment and therefore the lawfulness of his dealings might, at some stage, be challenged. Indeed, they were challenged, in the Manchester proceedings. He took the risk that they would be. It is a business risk of a kind often run by licensed insolvency practitioners, who protect themselves by obtaining indemnities and insurance. He largely aligned himself with Outlook’s defence, though not entirely. He was, presumably, paid by Outlook for his work and thus benefited from its actions in that way. He benefited from Mr Fradgley’s deception of the court because it led to the claim against him being summarily dismissed.”

For these reasons, Kerr J set aside the judgment in respect of both defendants in the present case and ordered a retrial.