Can Two Wrongs make a Right? Bankruptcy Order from Judgment by Fraud

The case of Oraki v Dean & Dean [2017] EWHC 11 (Ch) is a remarkable bankruptcy case that has already been before the Court in the matter of Oraki v Bramston [2015] EWHC 2046 (Ch).
On this case occasion Mr Robert Ham, QC sitting as deputy judge said for the purpose of the latest application before the Court:
… I am willing to accept that the original judgment was obtained by fraud. But it does not, in my opinion, follow that the bankruptcy orders based on that judgement were void…
The main reasons the Court appears to have given for its position were:
(1) The Insolvency Act 1986 and the rules contain specific provision for getting out of bankruptcy, whether a bankruptcy which ought not to have been made or otherwise, through sections 282 and 375(1) both of which give the court a discretion. It is clear from the terms of section 282(4)(a) that where a bankruptcy order that ought not to have been made is annulled acts done in the interim are valid not void, a conclusion that is in my judgment inconsistent with the Orakis’ case on this point.
(2) In PricewaterhouseCoopers v Saad Investments Company Ltd (Bermuda) [2014] UKPC 35 the Supreme Court of Bermuda made a winding up order it had no jurisdiction to make. The Judicial Committee of the Privy Council nevertheless held at [25] that the winding up order must, at least until set aside by a subsequent order, be treated as effective in law, because an order made by a court of unlimited jurisdiction must be obeyed unless and until it has been set aside by the court. There is no concept of ultra vires in the case of courts of unlimited jurisdiction, such as the High Court.
(3) There is good reason why a bankruptcy order should not be automatically void, even if based on a judgment obtained by fraud, namely the need to safeguard the interests of third parties other than the petitioner and the bankrupt, including the trustee in bankruptcy and other creditors. The legislation achieves this by giving the court discretion under both sections 282 and 375(1).
The full judgment can be seen at
This case appears to suggest a notable state prevails in that even if a bankruptcy order has been obtained following the remarkably flaky foundations of a judgment obtained by fraud, that the Court will not automatically void the Bankruptcy Order. Could that be argued as Two Wrongs making a Right?

The aforesaid is not legal advice and is not to be relied upon as such. No liability is accepted by the writer for any reliance placed on the same. 
If you have a specific query then you should seek independent legal advice on the same.

Leave a Comment