Judge questioned by victim of lawyer's "fraud" on High Court
A full 12 years after highly damaging bankruptcy orders by a rogue solicitor were implemented in the High Court, the same High Court is today refusing to annul the orders that a judge has now acknowledged were 'based on a fraud'.
Its victims, Iranian-born academic Dr Sheida Oraki and her husband Mr Ardeshir Oraki, now face more than £1million in costs of satellite litigation. The case against them risks creating a firm precedent that fraudulently-obtained bankruptcies can be left unmitigated by judges.
Mr Leon Hines, Solicitor Advocate for Mr Ardeshir, addressed Deputy Judge Robert Ham QC earlier this month: "I don't believe we have seen before a case where the Court has explicitly accepted that the steps that related to the bankruptcy were tainted with not just misrepresentation ... but actual fraud."
The original bankruptcy petition was brought in 2004 by Shahrokh ‘Sean’ Mireskandari, a well-connected solicitor who has since been struck-off. He brought the spurious proceedings against his former clients, the Orakis, because - as judgments since note - they had been complaining about him to the Law Society.
Since described by Mrs Justice Proudman as "a flamboyant character with powerful friends, such as Mr Keith Vaz MP and Commander Ali Dizaei of the Metropolitan Police", Mireskandari has been notorious in legal and press circles since 2008 thanks to journalists Richard Pendlebury and Stephen Wright's exposure of him in Mail Online, under the headline: "Liar, Crook and Friends of Billionaires and Royalty...".
Dr Sheida Oraki and her husband, Mr Ardeshir Oraki, featured in Pendlebury's and Wright's 2008 exposé. She was among a group of clients who discovered that Mireskandari had failed to declare a prior conviction for fraud in California when he was accepted to the UK Roll of Solicitors.
Four years after Pendlebury and Wright wrote about him, in 2012, the Solicitors Disciplinary Tribunal struck Shahrokh Mireskandari off the Roll of Solicitors for more than 20 proven counts of 'dishonesty', and misconduct relating to client funds. Here is his sanction:
However, neither the Mail's press exposure of Mireskandari, nor the SDT's sanction, have brought relief to the Orakis.
This is their story:
Oct 2017: Dr Oraki confronts the High Court
"It is an insult to my family to be called bankrupt when we have paid all our taxes, when we are paying all our mortgages ... I will put all this in the public domain." Dr Sheida Oraki, Oct 2017
On 11 January 2017 Robert Ham QC, sitting as a Deputy Judge in Chancery Division, accepted in a written judgment that, despite 12 years of litigation, the Orakis' bankruptcies had originally been obtained by fraud.
However, to the shock of the couple, Ham refused to void the resulting bankruptcies, of 2005 and 2006 respectively.
He wrote: '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).'
Dr Oraki believes the judge has erred and should be adopting the Common Law position that 'fraud unravels all'.
On the 6th October 2017, with her family gathered on public benches behind her, she makes an application to Ham QC in the Rolls Building, Chancery Division.
Her application is that both of the invalidly-obtained bankruptcies should be immediately declared void. Her husband Ardeshir was not present but is represented by solicitor-advocate Leon Hines:
Dr Oraki's application to Robert Ham QC, from shorthand
Dr Oraki: "I humbly ask you to set aside the bankruptcy order that was obtained by fraud. I am now asking the court to make an order that the bankruptcy order be set aside."
Ham QC: "What I said in my most recent judgment is that a bankruptcy order is not automatically a fraud even if it is based on a fraud. It is at the court’s discretion."
Dr Oraki: "[Making analogy:] ... If the foundation of the building isn’t good, the building will collapse: they will lose their fees."
Ham QC: "Dr Oraki you are simply trying to re-argue the point … Unless you can direct me to some authority that a bankruptcy based on an invalid judgement is automatically void in fact, I am against you."
Dr Oraki: "A bankruptcy order based on a fraud can exist?"
Mr Ham QC: "Yes. That is what I have decided. ... In the present case, I am willing to accept the original judgment was obtained by fraud but it does not follow-"
Dr Oraki: "But it is in your power. It is in your discretion."
Leon Hines: "I don't believe we have seen before a case where the Court has explicitly accepted that the steps that related to the bankruptcy were tainted with not just misrepresentation ... but actual fraud."
Ham QC: "My decision is that that is not sufficient ... to dispose of the bankruptcy. And if you don't agree with that you will have to go to the Court of Appeal. I am not willing to rescind that in the absence of some clear authority that I've got it wrong."
Mr Hines [to Dr Oraki]: … "the Common Law position re-established itself that fraud unravels all and he’s saying that on this case no, because he decided it."
Ham QC: "I may be wrong, but I am not going to change the judgement."
Dr Oraki: "The court has to assist me, I am a litigant in person … I don’t have any other stress ... except this firm of solicitors gaining money from the fruits of fraud. They cannot. this firm has come to this case when we have seven high court judges saying that we are victims of a miscarriage of justice."
"It is an insult to my family to be called bankrupt when we have paid all our taxes, when we are paying all our mortgages ... I will put all this in the public domain."
Ham QC: "Good, put it in the public domain but let us proceed. Is there any reason why I should not follow the order that the successful party should get his costs? Dr Oraki, sit down."
Mr Hines [solicitor advocate]: "To expand on Dr Oraki’s point - I agree with her. The matters that form the basis of the application dealt with the fraud committed by Dean and Dean there, which you have acknowledged ...".
Dr Oraki: "There was no bankruptcy. … If the court would have done their job properly we wouldn’t have been ... This bankruptcy has ruined my life for twelve years. 'I cannot annul your bankruptcy because there is a judgement' [says] the chief registrar in the bankruptcy court. They cannot steal our property by pen and paper."
Mr Leon Hines, for Mr Oraki: "If there is a fraud the court accepts there is a fraud on the court … the court is almost compelled to find the order void … You have an innocent person, that is a layperson and you have a third party that is a professional. .. It is not just a financial cost that the innocent layperson bears. We cannot compare the stress suffered by someone innocent, fraudulently made bankrupt, with the stress endured by a businessperson. It originally comes from the criminal jurisdiction. It is a status that is endured. It is not just about money. ... The wording of the insolvency act is not sufficiently clear and precise on this occasion to allow you to say that you are not going to follow the case law that fraud unravels all. ... You ought to specify why the order ought to have been made."
Mr Ham QC: "You are saying that the Common Law position folds into the discretion and affects the way that it ought to be expressed."
Dr Oraki: "Mireskandari said that 'if she does not withdraw her complaint to the Law Society I will strip her of all her assets.' A lot of time of the judiciary has been wasted on this. … Case law going back in time is that an order is valid until it is undone. … We want justice … you can bring these invalid proceedings to an end."
Deputy Judge Ham QC calls the hearing to an end. Court rises.
2. 'Mireskandari said if she does not withdraw her complaint ... I will strip her of all her assets'
High Court judgments and letters reveal how, eight years prior to the Orakis' vindication from the SDT, Mireskandari was trying to quash his clients' complaints to the Law Society.
Mireskandari had obtained what Mrs Justice Proudman called 'wrong' judgments. She recounts in 2015: "The Orakis were in what I can only describe as a Kafkaesque situation. Dr Oraki has always stoutly maintained, and so it has proved, that they were wrongly made bankrupt but no-one in authority would listen to them when they said so. Appeal after appeal and application after application were dismissed. ... I note (see  of Floyd LJ's judgment and [3(4)] of Mr Ham QC's judgment) that it was found as a fact that the firm, "refused to accept payment of the full amount of the judgment debt unless the appellants withdrew a complaint to the Law Society."
A trail of documents show how Dr Oraki had reported Mireskandari to the Law Society repeatedly since 2004, and tried to get the police involved. Several years-worth of letters involving the Law Society, the Police, and Dr Oraki's MP, Vince Cable bear this out:
Dr Oraki recalls that at least as early as 2004 she received threats from Mireskandari, which she summed up in front of Ham QC as: "if she does not withdraw her complaint to the Law Society I will strip her of all her assets".
Mireskandari effected this by, she says, 'forging' a retainer to obtain a summary judgment from Deputy District Judge Shelton in 2004 that the Orakis should pay fees to Dean and Dean.
Mireskandari then refused to take the money when she tried to pay. This is substantiated in two judgments:
Robert Ham QC, 2012: "They [Dean and Dean] refused to accept payment of the full amount of the judgment debt unless the Appellants withdrew a complaint to the Law Society. Instead, they petitioned to make the Appellants bankrupt on the basis of their failure to comply with the order for an interim payment and the cost orders made against them. The 2nd Appellant was adjudicated bankrupt on 1 September 2005 and the 1st Appellant on 10 January 2006."
Mrs Justice Proudman, 2015: '... it was found as a fact that the firm, "refused to accept payment of the full amount of the judgment debt unless the appellants withdrew a complaint to the Law Society."'
3. Vince Cable and the watchdogs: Fire and counter-fire
In 2010, as Dr Oraki's MP, Vince Cable wrote to Anthony Townsend at the Solicitors' Regulation Authority (SRA) expressing his disapproval: "this is the third recent letter I have had to write to you about this continuing scandal ... and I confess to feeling exasperated and frustrated at the inability of the authorities to deal with it."
In November of the same year, a reply from the Law Society to Vince Cable MP shows that, despite DC Nelson's earlier statement to the Orakis that the Law Society could 'investigate any wrongdoing or breach of the Solicitors' Act', the watchdog said that its hands were tied when it came to the Orakis' bankruptcies, as these were a private matter between a solicitor and a former client:
Cable wrote back that "You conclude by offering, but discouraging, a meeting. ... At the very least it would establish some of the facts: for example you make the extraordinary statement that Dr Oraki first contact[ed] the SRA in April 2010. To my certain knowledge there has been related correspondence with the Law Society and later the SRA for much of the last decade; and I have twice met Mr Townsend to discuss the matter on Dr Oraki's behalf":
Part 4: The trustees' costs
In 2012, after Mireskandari was struck off the Roll, and after considering new evidence on the case, Ham QC gave conditional permission to annul the Orakis' bankruptcies.
His condition was that the Trustee and other creditors involved in administering those fraudulently-obtained bankruptcies must still be paid - by the Orakis.
It is here that the Orakis have run in to further disputes and costs. Their appeal against Ham's condition to pay costs, and their attempt to sue the trustee for negligence, both failed.
They had gone to the Court of Appeal in 2013, where LJ Floyd said:
"It was now plain, and open to the court to hold, that the debt did not properly exist. Dr Mireshkandari was not a properly qualified solicitor ..."
"The bankruptcy proceedings should, it now appears, never have been brought. They were an abuse of the court's process and what transpired then and subsequently has been described as a miscarriage of justice. There is a stark disparity in the innocence of the Orakis and the apparent guilt of Dean & Dean."
But in that case, who was going to pay the costs of the Trustee, employed to administer the bankruptcy? LJ Floyd continued:
"the court needs to be careful to examine the matter not only from the perspective of the bankrupt, but also from the perspective of the trustee. The court has an unfettered discretion to decide whether, and if so by whom, the trustee's costs should be paid."
"... there were two candidates for the payment of the trustee's costs, on the assumption the trustee had acted reasonably and properly. These were Dean & Dean and the Orakis.
"As the judge [Ham] also recognised however, Dean & Dean were unlikely to be able to pay. It was, in my judgment, perfectly proper for the judge [Ham QC] to take that factor into account in exercising his discretion.
The Orakis attempted to sue the Trustee for negligence, which failed, so they now face complete ruin. Ham QC wrote in his judgment this year: "the bankruptcies go on, well into their second decades; and there have more proceedings ... The costs generated are enormous, and it is no longer clear that the assets of the bankrupt estates are sufficient to discharge all claims and costs that may fall on them."
Last Tuesday Master Whalan in the High Court Costs Office ordered Dr Sheida Oraki and Mr Ardeshir Oraki to pay £572,208.42 in costs.
Dr and Mr Oraki were not present or represented at the Costs hearing, and were given just one week to apply to appeal the bill.
In this way, what several High Court Judges acknowledge is a "miscarriage of justice" has not only persisted in the courts but become mired in expensive satellite litigation, which could yet bankrupt the Orakis again.
Part 5: In her own words, Dr Oraki's conclusion
Dr Oraki has recounted before that Mireskandari "forged a retainer letter to the court and managed to get a summary judgment against me and my husband. Before his firm was intervened by the Law Society, he managed to get an invalid bankruptcy against us."
The couple say they nevertheless tried to pay the forged debt off before they were made bankrupt. Mireskandari, she said, thwarted this, because he instructed his firm not to accept the payment from his former clients. She recounted to me that when she went to his office to pay, Mireskandari made a complaint of 'trespass' to the Met Police, including a second time when she brought a witness with her.
Dr Oraki explains: "We tried before this bankruptcy was made, to pay, and after this order was made, to pay. He [Mireskandari] refused to accept. As a result, they nominated ... a corporate trustee."
Each Trustee has, she says, opposed the Orakis' attempts to annul their bankruptcies: "An invalid petition by a fraudster for £20,052.38 has grown to £1.7 million. Despite seven judges since 2011 having acknowledged miscarriage of justice, they want our home to be sold to cover the costs of proceedings that should never have been brought in the first place.”