Oraki & Anor v Dean & Dean (a firm) & Anor

The court may admit fresh evidence under CPR 52.11(2)(b) where doing so accords with the overriding objective. The criteria in Ladd v Marshall remain relevant guidance but are no longer legal requirements.

A bankruptcy court may go behind a judgment where fraud, collusion or a miscarriage of justice is established. Where the debt supporting a bankruptcy order did not exist when the order was made, that may constitute a ground for annulment under section 282(1)(a) of the Insolvency Act 1986. Annulment remains discretionary and may be made subject to protective conditions for creditors. Costs following annulment are determined by a conventional exercise of discretion, without presumptions or starting points.

The appellants had been made bankrupt following judgment obtained by Dean & Dean for solicitors’ fees and related costs. The original judgment had ordered damages to be assessed and an interim payment, although the claim was for a debt and no properly itemised bill had been served.

The appellants applied to rely on fresh evidence concerning serious professional misconduct by the solicitor who had handled their matter. They also sought permission to appeal out of time against an order dismissing their application to set aside the original judgment, and appealed the dismissal of their application to annul the bankruptcy orders under section 282(1)(a) of the Insolvency Act 1986. The central issues were whether the fresh evidence should be admitted, whether the original judgment could be reconsidered, and whether the bankruptcy orders ought to have been made.

1. Fresh evidence. The application to rely on fresh evidence was allowed. The criteria in Ladd v Marshall remained relevant, but were no longer legal requirements. The governing power was CPR 52.11(2)(b), exercised in accordance with the overriding objective. The evidence was clearly relevant and admission avoided further delay, expense and unnecessary court time (para 6).
2. Appeal out of time and reconsideration. Permission to appeal out of time was granted. The original order was procedurally irregular: a claim by solicitors for unpaid fees was a debt claim, not a claim for damages, and the order for an interim payment had no proper basis under CPR 24 PD 5.1. The court’s general case-management powers enabled the earlier order to be reconsidered in light of the fresh evidence (para 9).
3. Annulment. The appeal from the annulment decision was allowed. The disciplinary findings supported an argument that the solicitor had been misrepresented as duly qualified, entitling the appellants to rescind the retainer. A bankruptcy court may go behind a judgment where there has been fraud, collusion or a miscarriage of justice, as illustrated by Dawodu v American Express Bank. Where the debt supporting a bankruptcy petition did not exist when the bankruptcy order was made, section 282(1)(a) of the Insolvency Act 1986 may provide a ground for annulment, following Royal Bank of Scotland v Farley (para 12).
4. Although the bankruptcy orders ought not to have been made, annulment remained discretionary. The court proposed conditions requiring payment into court of the accepted proofs and an undertaking concerning limitation, with notice to other creditors and an opportunity to seek further protective conditions (paras 14–15).
5. Costs. Costs following annulment were to be determined by a conventional exercise of discretion, without presumptions or starting points, applying London Borough of Redbridge v Mustafa. The costs of the Official Receiver and trustee were ordered to be paid by the appellants, without prejudice to later disputes concerning Dean & Dean or the trustee’s conduct and remuneration (paras 18–20).

• High Court (Chancery Division): Allowed the appeal from the Deputy Registrar’s annulment decision, set aside the order of Judge Oppenheimer dated 11 January 2010, admitted fresh evidence and granted permission to appeal out of time. The court directed that the terms of annulment and consequential costs should be settled by order.
• Lower decisions: Deputy Registrar Cheryl Jones dismissed the annulment application on 9 April 2010. Judge Oppenheimer had dismissed the appellants’ application to set aside the original judgment. The present court reconsidered those matters in light of subsequent evidence and procedural irregularities.