Ahmed v Trustees in Bankruptcy of Robina Ahmed

Factual and Procedural Background

The Appellant was made bankrupt on 10 February 2017, purportedly on her own application, although she had neither made the application nor known about it. Trustees in bankruptcy were appointed and incurred costs without any suggestion of misconduct. [1][2]

The purported application was submitted electronically to an adjudicator under the Insolvency Act 1986. The applicable rules did not provide for notification before the bankruptcy order, but required the order to be delivered to the debtor as soon as reasonably practicable afterwards. [2][3]

A District Judge found that the Appellant had not submitted the application and that the bankruptcy order ought not to have been made. The annulment application was adjourned so that provision could be made for the trustees’ costs. After concluding that the Appellant had not demonstrated that such provision would be made, the District Judge refused to annul the order. [4][5][6][7]

The High Court dismissed the Appellant’s appeal on 11 October 2025. The Appellant then sought permission for a second appeal, together with permission concerning a separate costs order and proposed steps involving alleged fraudsters. [8][9][10][11]

Legal Issues Presented

1. Whether the proposed appeal had a real prospect of success and raised an important point of principle or practice, or another compelling reason, as required for a second appeal. [9]
2. Whether the principles governing provision for trustees’ costs on annulment of a bankruptcy order applied where the order had allegedly been obtained fraudulently. [12][13]
3. Whether the bankruptcy order was void from the outset because it was allegedly fraudulently obtained and not served on the Appellant. [14]
4. Whether the trustee, rather than the debtor, was responsible for pursuing the alleged fraudsters. [15]
5. Whether a stay should have been granted in respect of a separate costs order. [16]

Arguments of the Parties

Appellant's Arguments

• The authority of Oraki v Dean & Dean was distinguishable because that case did not involve a fraudulently obtained bankruptcy order. [12]
• The Appellant had received none of the usual safeguards, including a statutory demand, creditor’s petition, service or hearing, creating a structural defect in the adjudicator-based process. [12]
• It would be unjust to require the Appellant to pay the trustees’ costs because she was innocent of the alleged fraud. [12][13]
• The bankruptcy order was void ab initio, and the trustee should pursue the third party responsible for the application. [14][15]
• Enforcement of the separate costs order allegedly prejudiced the Appellant’s ability to pursue the substantive appeal. [16]

Respondent's Arguments

• The applicable rule required the bankruptcy order to be delivered to the debtor as soon as reasonably practicable after it was made, allowing an early challenge before the trustee was appointed and before excessive costs were incurred. [17][18]

Table of Precedents Cited

Court's Reasoning and Analysis

The Court began with the statutory discretion under section 282(1) of the Insolvency Act 1986 to annul a bankruptcy order where, on grounds existing when it was made, the order ought not to have been made. [1]

Although the Appellant had not been notified before the order, the procedural rules required prompt delivery of the order after it was made. This provided an opportunity to seek annulment before the trustee’s appointment and before substantial costs accrued. [26][3][17][18]

The discretion concerning costs was not limited to requiring payment by the Appellant personally. The District Judge had required the Appellant to demonstrate that provision could be made for the trustees’ costs; she had not decided that the Appellant alone must pay them. [6]

The Court applied Oraki: the trustees had acted properly, and the Appellant and trustees were both innocent as between themselves. The fact that the bankruptcy order had allegedly resulted from fraud did not alter the central costs issue—namely, who should provide for the trustees’ reasonable costs. [23][13][25]

The alleged fraudsters might potentially have been ordered to pay if found and brought before the court, but enforcement difficulties could result in the burden returning to the Appellant. The Appellant had not identified an alternative person able to meet the costs. [27]

The argument that the order was void from the outset was rejected. A court order is valid unless and until set aside, and the statutory power to annul assumes that the order remains valid until annulment. [14]

The Court also rejected the contention that the trustee should pursue the alleged fraudsters. On the reasoning attributed to Oraki, responsibility for bringing them before the court lay with the debtor, not the trustee. [15]

The District Judge’s decision was within the proper ambit of discretion, and there was no compelling reason to revisit the settled principles. The proposed substantive appeal therefore failed the second appeals test. [28][29]

As to the separate costs order, the Court held that the argument based on prejudice had not been advanced below, and the fact that the Appellant had pursued the substantive appeal undermined its factual premise. The costs decision was also within the judge’s wide discretion. [10][30]

Finally, the Court declined to permit the Appellant to repair the earlier failure to seek to join or trace the alleged fraudsters. The relevant discretion had to be assessed on the material before the District Judge at the time. [11][31]

Holding and Implications

Permission to appeal was refused, and both applications were dismissed. The Court held that the proposed substantive appeal had no real prospect of success and did not satisfy the second appeals test; the separate costs challenge also failed. [29][32][33]

The direct effect was that the refusal to annul the bankruptcy order and the relevant costs decisions remained in force. The decision applied existing principles concerning trustees’ costs on annulment and did not establish a new precedent. [7][8][28]