Legal guidance

Set aside a court order or judgment – Is it void, fraud or voidable?

Set aside a void order

In this article we provide the pièce de résistance guide to setting aside void orders, the difference between a void order and one that is voidable, setting aside orders founded by fraud and citing a number of authorities that assist in establishing a motion to set aside a court order or judgment that may be void or voidable. Set aside a court order.

Asking to set aside a court order or judgment is often a big ask. You are challenging the decision of the court in one way or another and generally, they don’t like doing anything that affronts their authority. The UK’s courts of today are often disinclined to explore or identify whether an order is void, and if an order has been made in bad faith, or has been founded by mistake the culture of cover up tends, more often than not to prevail over provision of remedy.

The first step in establishing whether you can set aside a court order is to review the basis of the decision you are challenging.

The difference between a void and a voidable court order

If an order of the court is void, then in law it is a nullity. Something cannot be founded upon nothing and therefore the order, if void, ceases to have legal effect from the outset. Unfortunately, the English courts don’t tend to recognise the doctrine, for until an order is declared void, they tend to allow it to stand without exploring the rationale as to why it is asserted to be a nullity. One must first therefore establish a motion to set aside the order or judgment being challenged.

Here’s the low down from some long established authorities to assist in getting where you need to be:

In Firman v Ellis [1978] 3 WLR 1 page 15 of the 23-page judgment, (paragraphs B – F), Denning LJ expressed that:

B: “Was it a nullity and void ab initio? For in that case everything that followed from it was also a nullity and void

C & D: “I think that the order of July 11, 1973, was a nullity and void ab initio for two reasons: (i) it was made under a fundamental mistake in that the registrar was told and believed that the Smiths agreed to it, when they had not: and (ii) it was made contrary to the rules of natural justice, because no notice of appointment had been given to the Smiths’ solicitor. Such failures make the order a nullity and void ab initio: see Anisminic D Ltd. v. Foreign Compensation Commission [1969] 2 A.C. 147, 171 by Lord Reid, and at p. 195 by Lord Pearce”

Lord Justice Denning’s judgment establishes that a void order (a nullity) originates from a “fundamental mistake” in formulation of the order or judgment, or if it was made contrary to the rules of natural justice.

The right ex debito justitiae to set aside a void order or judgment

If an order is void, a nullity then the party affected by the void order / nullity decision by the judicial or public office holder has the right ex debito justitiae to have the order declared void and set aside accordingly. No court has the jurisdiction to refuse to set aside a void order, for ex debito justitiae means “of or by reason of an obligation of justice / as a matter of right“.

If the order is voidable, not void, then the criteria is different (see: “Tibbles Criteria” below) or criteria for setting aside an order founded by fraud.

The rules of natural justice

“Justice must not only be done, but must be seen to be done”

Originally developed by the courts of common law jurisdiction to control decisions inferior courts, the rules of natural justice means the always evoking doctrine of fair play. The doctrine provides critical rights in administrative decision-making that affects a person’s rights, status or liabilities. Having wide application, natural justice is presumed by the courts to apply in the exercise of virtually all statutory powers.

There are two essential elements to the rules of natural justice ensuring that everyone receives a fair and unbiased tribunal before a decision is made against them. Those elements in lay terms comprise of the right to be heard, to a fair hearing, no bias and adequate notice.

Nemo judex in causa sua & in propria causa

The first rule is the Latin phrase meaning, literally, “no-one is judge in his own cause“. No person can judge a case in which they have an interest (nemo judex in causa sua) and in propria causa means impartiality and no bias. The doctrine may also be described as, nemo debet esse judex in propria causa, nemo judex idoneus in propria causa est, nemo judex in parte sua, nemo judex in re sua or in propria causa nemo judex.

Audi alteram partem

The second rule is known as audi alteram partem, meaning, hear the other side. The rule states that a decision cannot stand unless the person directly affected by it was given a fair opportunity both to state his case and to know and answer the other side’s case.

The legal effect as to any breach of the principles of natural justice renders any decision upon which such breach arose to be void and invalid.

A fundamental mistake equals irredeemable defect

A fundamental mistake rendering a decision by judicial or public officer invalid is one that “goes to the heart of the case”, one that is so severe that such error cannot be remedied by order of the court for the error goes against statute or is such that the omission substantially affects the decision made.

In summary, a void order arises from a fundamental mistake, or from a “fundamental defect in proceedings”, or if such order was made “contrary to the rules of
natural justice”
. In Re Pritchard (deceased) [1963] Upjohn LJ expressed that:

“I do not think that the earlier cases or the later dicta upon them prevent me from saying that, in my judgment, the law when properly understood is that Ord. 70 applies to all defects in procedure unless it can be said that the defect is fundamental to the proceedings. A fundamental defect will make it a nullity

The judgment enforces the fact that a fundamental defect renders the decision a nullity. A fundamental defect must first however be proven to be fundamental to the proceeding and irredeemable for the precedent to take effect.

A fundamental defect arises from failure to apply statute, failure to serve notice where service is required, a without jurisdiction / ultra vires act by the judicial or public office holder, or any fundamental breach of the principles of natural justice.

In MacFoy v United Africa Company Limited [1961] 3 All ER 1169 page 5 of the judgment, Denning LJ famously expressed the difference between a void and voidable order:

“This is the same as saying that it was void and not merely voidable. The distinction between the two has been repeatedly drawn. If an act is void, then it is in law a nullity. It is not only bad, but incurably bad. There is no need for an order of the court to set it aside. It is automatically null and void without more ado, though it is sometimes convenient to have the court declare it to be so. And every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse”.

The authority by Lord Denning in MacFoy is useful in asserting that a void order is a nullity and anything thereafter based on the void act or order, is void ab initio, there is no real order of the court, for “something cannot be founded upon nothing, it will collapse“.

Other circumstances that render a judicial decision a nullity

In Anisminic Ltd v Foreign Compensation Commission [1969] 2 A.C. 147 Reid LJ expressed that “without jurisdiction” has very wide meaning:

I have come without hesitation to the conclusion that in this case we are not prevented from inquiring whether the order of the commission was a nullity. It has sometimes been said that it is only where a tribunal acts without jurisdiction that its decision is a nullity. But in such cases the word “jurisdiction” has been used in a very wide sense, and I have come to the conclusion that it is better not to use the term except in the narrow and original sense of the tribunal being entitled to enter on the inquiry in question. But there are many cases where, although the tribunal had jurisdiction to enter on the inquiry, it has done or failed to do something in the course of the inquiry which is of such a nature that its decision is a nullity. It may have given its decision in bad faith. It may have made a decision which it had no power to make. It may have failed in the course of the inquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. It may have refused to take into account something which it was required to take into account. Or it may have based its decision on some matter which, under the provisions setting it up, it had no right to take into account. I do not intend this list to be exhaustive. But if it decides a question remitted to it for decision without committing any of these errors it is as much entitled to decide that question wrongly as it is to decide it rightly.

The parts highlighted bold, although not exhaustive render the judicial decision void as being without jurisdiction acts, however, the judgment by Lord Justice Reid makes it equally clear that just because a decision has been decided wrongly, this does not automatically render the order or decision void, for the judicial tribunal or decision by a public official can be equally decided wrongly as it can be correctly.

In those circumstances where it is envisaged that the decision is just plainly wrong, the correct remedy is to appeal and not to apply for a motion to set aside on the grounds of nullity or voidability. Bear in mind however, that a decision that is obviously (manifestly) wrong is voidable and can be set aside. Likewise, a decision that has been made deliberately in bad faith is void. It is important to differentiate.

CPR 3.1(7) – Setting aside a void or a voidable order under this rule

Under the English court’s wide case management powers conferred in part 3 of the Civil Procedure Rules (“CPR”), 3.1(7) provides “A power of the court under these Rules to make an order includes a power to vary or revoke the order”.

The discretion to set aside or vary an order under this rule is wide, however, the courts set great store on finality of orders and have tended to generally limit exercise of the discretion to 3 criteria established by case law known as the “Tibbles criteria”.

It is in fact wrong, as a matter of principle, to limit what is intended by statute to be a very wide and more or less unlimited power to set aside or vary an order under rule 3.1(7), however, be warned, the English courts have set out in case law that they seek to limit exercise of jurisdiction to preserve the doctrine of res judicata (finality) in litigation once a decision is reached.

The Tibbles criteria and what that actually means

It was established by the Court of Appeal in Tibbles v SIG Plc [2012] 1 WLR 2591 that exercise of discretion to set aside or vary an order under CPR 3.1(7) was essentially limited to the 3 criteria below established from that judgment:

The Court of Appeal rejected the argument that such an order could be readily granted. There was a detailed consideration of  the relevant principles and Lord Justice Rix stated:

“…jurisprudence has laid down firm guidance as to the primary circumstances in which the discretion may, as a matter of principle, be appropriately exercised, namely normally only (a) where there has been a material change of circumstances since the order was made, or (b) where the facts on which the original decision was made were (innocently or otherwise) misstated”.

“… questions may arise as to whether the misstatement (or omission) is conscious or unconscious; and whether the facts (or arguments) were known or unknown, knowable or unknowable. These, as it seems to me, are also factors going to discretion: but where the facts or arguments are known or ought to have been known as at the time of the original order, it is unlikely that the order can be revisited, and that must be still more strongly the case where the decision not to mention them is conscious or deliberate.” 

In Holyoake v Candy [2016] EWHC 1718 (Ch) at paragraph 21, the former Chancellor of the High Court, Etherton LJ expressed that:

“The starting point in such a case as the present is that the claimants must point to something that has happened since the grant of the original order. They must show something material has changed to make it appropriate to investigate the same issues over again at yet another extensive hearing with even more voluminous evidential material. Absent any such change, the application for a freezing order is not only a disproportionate call on the court’s resources, but an abuse of the court’s process, in effect making successive applications for the same objective but testing the court’s willingness each time to see how far the court will go, each such application involving, to a greater or lesser extent, duplication of issues, evidence and arguments.”

The third of the criteria is due to manifest mistake, which in itself a fairly wide definition which we summarise as a misinterpretation or misstatement by the judge in formulation of the order such that the mistake is easily recognisable without much investigation at all. Conclusively therefore,

Exercise of discretion to set aside or vary under CPR 3.1(7) will usually be exercised in these circumstances:

(i) where there had been a material change of circumstances since the order was made;  (ii) where the facts on which the original decision was made had been misstated; or (iii) where there had been a manifest mistake on the part of the judge in formulating the order.

Applications to set aside or vary under rule 3.1(7) must be made promptly

“Thus it may well be that there is room within CPR 3.1(7) for a prompt recourse back to a court to deal with a matter which ought to have been dealt with in an order but which in genuine error was overlooked (by parties and the court) and which the purposes behind the overriding objective, above all the interests of justice and the efficient management of litigation, would favour giving proper consideration to on the materials already before the court. This would not be a second consideration of something which had already been considered once (as would typically arise in a change of circumstances situation), but would be giving consideration to something for the first time”

Setting aside an order or judgment on the basis that it was originated by fraud

In Takhar v Gracefield Developments Limited and others [2019] UKSC 13 the Supreme Court determined and reinforced the long established doctrine that “fraud unravels all”, even post judgment and that there is no “reasonable diligence requirement” barring a fresh action to set aside a judgment obtained by fraud.

Set aside a court order for fraud. Setting aside a judgment founded by fraud.  How to set aside a court order. Void order. Set aside void order.

The long established case law that fraud unravels all originates from the legal maxim of ex turpi causa non oritur actio (through dishonourable cause an action shall not arise), which sets the precedent that one cannot rely on one’s own wrongdoing to originate remedy / restitution.

In Lazarus Estates Ltd v Beasley [1956] 1 QB 702 Denning LJ famously expressed in his judgment that:

“Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts and all transactions whatsoever

The judgment makes it clear that first fraud must be distinctly pleaded and proven to take advantage of the doctrine. What that means is essentially that conscious and pre-meditated dishonesty originating the judgment must be proven.

The one-stage new test for dishonesty is the same in criminal proceedings as it is in civil. In Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67 the Supreme Court established that the test is that:

What was the defendant’s actual state of knowledge or belief as to the facts; and was his conduct dishonest by the standards of ordinary decent people?

Therefore, to prove conscious and pre-meditated dishonesty one must first evidence at trial the offender’s mindset as to knowledge or belief as to the facts in issue and then objectively, to decide whether that conduct would be considered by the standards of the ordinary, honest informed lay observer.

If the defendant knew what he was doing was dishonest by virtue of the fact that his actual mindset prior to the representation was evidenced to be substantially different from the representation later made, in most circumstances, his / her conduct would be considered to be dishonest by the standards of the ordinary informed lay observer, for it is established that they has prior knowledge that the representation they later made was in fact false.

In the Takhar v Gracefield judgment each of the Lord and Lady Justices approved the statement of principle by Aikens LJ in Royal Bank of Scotland plc v Highland Financial
Partners LP [2013] EWCA Civ 328
at paragraph 106 ( see per Lord Kerr at paragraph 57 and Lord Sumption at 67). Lord Briggs and Lady Arden, who gave separate judgments, appear to have also agreed with this statement of principle: see at paragraphs 76 and 104 respectively. What Aikens LJ said was as follows:

“The principles are, briefly: first, there has to be a ‘conscious and deliberate dishonesty’ in relation to the relevant evidence given, or action taken, statement made or matter concealed, which is relevant to the judgment now sought to be impugned. Secondly, the relevant evidence, action, statement or concealment (performed with conscious and deliberate dishonesty) must be ‘material.

In essence, those above are the essential ingredients which must first be established prior to making good an application to set aside a judgment or order on the grounds it was obtained by fraud.

Going behind a judgment – The doctrine of the Insolvency Court’s duty of inquiry

Within insolvency proceedings, whether corporate or personal it is not res judicata to apply to set aside an order at any time if it be shown that had there been a properly constituted trial of the issue, it would have been found, or likely would have been found, that in fact nothing was due to the creditor / or one claiming to prove in the insolvency.

This doctrine, well established by case law, is known as the insolvency court’s duty of inquiry or going behind a judgment within bankruptcy / insolvency proceedings.

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It is our learned opinion that the judges and many experienced counsel lack the in depth knowledge of the law in respect of when this doctrine can be evoked. We set out below case law which well establishes the position:

In Dawodo v American Express [2001] BPIR 983 the former Master of the Rolls, Etherton M.R said at page 12 of the 20-page judgment that:

“What in my judgment is required is that the Court be shown something from which it can conclude that had there been a properly conducted judicial process it would have been found, or very likely would have been found, that nothing was in fact due to the Claimant. It is clear that in those circumstances the Court can enquire into the judgment and the judgment debt, even though the debtor himself has previously applied to have the judgment set aside, and even though that application has been refused and that refusal has been affirmed by the Court of Appeal see Re Fraser [1892] 2QB 633″.

At page 8 of 20 in Dawodo Etherton M.R refers to Esher LJ in Re Lennox (1885) 16 QBD 315 of which we cite that:

“Nevertheless it seems to me that, upon certain allegations being brought forward, the Court is entitled to enquire into the alleged debt and the Court, exercising a judicial authority, is bound to do so upon a sufficient case being shown. Circumstances may be alleged that would shew that the judgment ought to be disregarded in bankruptcy. Those circumstances must differ in each particular case, and if, when the case is brought before the Court at that stage, the Registrar is of opinion that, even if all the circumstances alleged were proved, they would not be sufficient to induce him to set aside that which is strong prima facie evidence against the debtor, and to disregard the consent judgment, he may stop there and say, I will not hear the evidence; it would be useless to hear it if that is all you can allege. Of course his view would be subject to an appeal. But, if the circumstances alleged before him and offered in evidence are such that, if proved, they would clearly shew that there was no debt at all, and certainly if they would shew that that which was alleged to be a debt was a mere fraud, and a fraud known to the petitioning creditor who had obtained the judgment, and acted upon by him, it seems to me that it would be monstrous to say that the Court of Bankruptcy ought to stop…”

At the bottom of page 9 of the Dawodo judgment Etherton M.R cited Warner J in McCourt v. Baron Meats Limited (1997) BPIR 114 who once again articulated the authority, but in a slightly different, but more detailed way:

(1) A court exercising the bankruptcy jurisdiction (“a bankruptcy court”), although it can treat a judgment for a sum of money as prima facie evidence that the judgment debtor is indebted to the judgment creditor for that sum, may, in appropriate circumstances, go behind the judgment, that is to say inquire into the circumstances in which the judgment was obtained and, if satisfied that those circumstances warrant such a course, treat it as not creating or evidencing any debt enforceable in bankruptcy proceedings.

(2) The reason for the existence of that power of a bankruptcy court is that such a court is concerned not only with the interests of the judgment creditor and of the judgment debtor, but also with the interests of the other creditors of the judgment debtor. The point was succinctly made by James L.J. in Ex parte Kibble, Re Onslow (1875) LR 10 Ch App 373 at 376 377, in the following words:

‘It is the settled rule of the court of bankruptcy on which we have always acted, that the court of bankruptcy can enquire into the consideration for a judgment debt. There are obviously strong reasons for this, because the object of the bankruptcy laws is to procure the distribution of a debtor’s goods amongst his just creditors. If a judgment were conclusive, a man might allow any number of judgments to be obtained by default against him by his friends or relations, without any debt being due on them at all. It is therefore necessary that the consideration of the judgment should be liable to investigation.’

(3) It follows that the grounds upon which a bankruptcy court may go behind a judgment are more extensive than the grounds upon which an ordinary court of law or equity may set it aside.

(4) In particular, a bankruptcy court will go behind a judgment if satisfied that the judgment creditor manifestly had no claim against the judgment debtor on which the judgment could have been founded.

Conclusively, the insolvency court has a duty of inquiry that one can ask it to exercise whenever a prima facie case is made out from which to impugn the debt, even if the debt is affirmed by a judgment and even if there has been multiple (unsuccessful) attempts to set it aside and even if those decisions to sustain the debt have been upheld by the Court of Appeal. The same is the case for orders obtained by consent. It matters not that the debtor himself first consented to the order later sought to be set aside, if it can be proven that the order was obtained improperly, or if in fact it can be shown that in fact nothing is owed to the alleged creditor.

Whilst we like to provide as much guidance and information as possible to those facing complex legal issues, Intelligence UK International offers a range of due diligence and investigation services providing expert analysis of any judgment or decision so that you can maximize your chances of success.

If you are considering setting aside a judgment, let us help you make the right decision by providing expert insight as to how best to go about it to maximise your chances of success. Our services are costs effective and we cut to the chase, getting right to the issues that matter without going around the houses.

Likewise, if you have a fraud issue, our expert investigation services mean the difference between success and failure.

Use our contact form, attaching all relevant information and a member of our team will review and get back to you as quickly as possible.

Help us to help you, like, comment and share this article far and wide. Knowledge is power.

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