Building on recent UK authority, the Hong Kong court has considered the law on setting aside judgments for fraud.
In Mayer Corporation Development International Ltd v Alliance Financial Intelligence International Ltd  HKCA 777 the issue was whether Bumper East Ltd (“Bumper”) and Aspial Investment Limited (“Aspial”) obtained good title on the purchase of shares which Mayer said it had not authorised to be sold. Mayer’s case was premised on the authenticity of a share custody agreement. At the trial in 2012 Reyes J held that the signature of Mayer’s counterparty on the share custody agreement was forged and found against Mayer. There was no expert handwriting evidence. After the trial Mayer obtained handwriting evidence which indicated that the share custody agreement was likely to be authentic. Relying on Ladd v Marshall, the Court of Appeal and Court of Final Appeal refused to admit the fresh evidence and dismissed Mayer’s appeal.
Subsequently Mayer was able to obtain further examples of the signature of the individual who signed the share custody agreement for the counterparty, which enabled them to obtain more definitive expert handwriting evidence . They brought new proceedings to set aside the judgment for fraud on the part of the counterparty. Bumper and Aspial applied to strike out the claim. The judge in the second action, Mimmie Chan J, struck out the second action on four separate grounds.
The Hong Kong Court of Appeal considered the recent decision of the UK Supreme Court in Takhar v Gracefield  UKSC 13 and that of the High Court of Australia in Clone v Players Pty  92 ALJR 399 both of which hold that (unlike the position when fresh evidence is admitted on appeal where Ladd v Marshall is applied) in an action to set aside for fraud there is no requirement of reasonable diligence in obtaining the fresh evidence.
A further issue arose because it was not alleged that Aspial nor Bumper, as subsequent purchasers of the shares, were themselves involved in the fraud. In this regard the Court of Appeal considered the English cases Odyssey Re (London) v OIC Run-Off Ltd  EWCA Civ 71 and Cinpres Gas Injection Ltd v Melea Ltd  Bus LR 1157. Based in particular on Cinpres, the Hong Kong court held it was arguably sufficient that Bumper and Aspial had needed at trial to rely on and adopt the case of the alleged fraudster in order to succeed, even if themselves innocent.
The Court of Appeal thus allowed the appeal and dismissed the application to strike out.
The judgment is here.
Charles Hollander QC acted for Mayer.