High Court Upholds Finality of Judgment in BC Penthouse v Sheikha Hind Case, Dismissing Applications to Set Aside Order

Introduction

In the matter of BC Penthouse Limited v Sheikha Hind Salim Homoud Al-Jaber Al-Sabah, the England and Wales High Court (Chancery Division) considered an application to set aside parts of an earlier order. This case illustrates the application of principles regarding the setting aside of court orders under CPR 3.1(7) and the inherent jurisdiction related to judgments allegedly procured by fraud.

Key Facts

The applicant, BC Penthouse Limited (“BCP”), sought to set aside parts of an order dated November 3, 2015, made by Mr. Justice Peter Smith. Sheikha Hind, the respondent and the Third Claimant, initially brought claims against several defendants including BCP, alleging that they owed fiduciary duties to the estate of her late father. The original judgment was made, in part, due to the previous court’s acceptance that Sheikha Hind was acting as administratrix of the estate.

BCP contended that the order was predicated on misinformation regarding Sheikha Hind’s status and intention to act for the benefit of the estate’s beneficiaries. BCP also highlighted that a more recent court order had determined that Sheikha Hind was not entitled to act as administratrix, although she had been accepted as such at the time of the original hearing.

Legal Principles

Two main legal principles were engaged in this case:

1. Principles Governing Setting Aside a Court Order via CPR 3.1(7): CPR 3.1(7) permits the court to vary or revoke an order under certain circumstances, such as a material change in circumstances since the order was made, or if the original decision was based on misstated facts (innocently or not). The application of this principle is found in the case law Tibbles v SIG plc [2012] and Roult v North West Strategic Health Authority [2010]. However, the consideration for setting aside an order is affected when that order is categorised as final, wherein the public interest in the finality of litigation normally prevails.

2. Inherent Jurisdiction to Set Aside a Judgment Procured by Fraud: This principle permits the court to set aside a judgment if it was procured by deliberate dishonesty that was material to the original decision. This requires that the fraudulent action be shown to be an operative cause of the decision to grant judgment as it was. The principle is articulated in Royal Bank of Scotland plc v Highland Financial Partners LP [2013], and further discussed in Takhar v Gracefield Developments Ltd [2020].

Outcomes

The court held the provisions of the November 2015 Order to be final against BCP. Despite the change in representative from Sheikha Hind to Sheikha Salem, the identity of the representative of the Estate did not alter the merits of the claim against BCP. The November 2015 Order was made with Sheikha Hind acting on behalf of the Estate, and any subsequent change in representation does not affect the validity of that order; the change is not ‘material’ as to impugn the judgment within the scope of RBS v Highland.

Thus, BCP’s applications to set aside the order under CPR 3.1(7) for material change of circumstance and for fraud were dismissed. The Court found that the matters relied upon by BCP neither constituted a material misstatement at the time of the original decision nor were they causative of the judgment being obtained in the terms that it was.

Conclusion

The case of BC Penthouse Limited v Sheikha Hind underscores the challenges in setting aside a final order, particularly one that is not conditional on the claims against other parties involved in the case. The Court’s decision affirms the strength of finality in judgments and the significance of ‘materiality’ when considering applications for setting aside orders, whether grounded in material misstatements or fraud. This analysis serves as guidance for legal professionals in understanding the robust application of these principles within the UK legal system.