Roatan v HP Kasabia Brothers Ltd [2002] FJHC 43; Hba0020j.2001s (5 April 2002)

IN THE HIGH COURT OF FIJI
(AT SUVA)

CIVIL APPEAL NO. HBA 20 OF 2001S

Between:

TEKOTI ROATAN
Appellant

and

H.P. KASABIA BROTHERS LIMITED
Respondent

Seru for the Appellant
E. Shandil for the Respondent

JUDGMENT

This is an appeal by a bankrupt against a refusal by the Suva Magistrates’ Court (Jiten Singh Esq.) to grant him a certificate of misfortune pursuant to Section 28 (5) of the Bankruptcy Act (Cap 48).

A receiving order was made against the Appellant on the petition of the Respondent dated 22 February 1983. On 7 April 1988 the Appellant was adjudicated bankrupt. The amount owed to the Respondent was $4,044.85 however according to the report of the Official Receiver filed on 22 November 2000 eight other proofs of debt were filed amounting together to approximately $454,426.00.

On 20 June 2000 the Appellant applied to the Suva Magistrates’ Court for an order of discharge under Section 28 (1) of the Act. In paragraph 13 of his report the Official Receiver opposed the Appellant’s application.

The application was supported by an affidavit sworn on 20 June 2000. The Appellant deposed that the debt to the Respondent was incurred by a company whose debts he had guaranteed. Although the debt was not disputed the Appellant deposed that the company was not being run by him at the time that the debts were incurred but, in his absence abroad, was being run by his business partner.

On 9 February 2001 the Appellant appeared before the Resident Magistrate. He relied on his affidavit. In a concise judgment the Resident Magistrate rejected the application. His reasoning was that “this was not a case of misfortune but bad management of business affairs”. He also noted that the Official Receiver had reported that the Appellant had “not paid sufficient monies or made satisfactory arrangements to liquidate the debts and the Official Receiver’s costs”.

On appeal Mr. Seru focussed on the refusal to grant a certificate of misfortune rather than on the Courts refusal to discharge the Appellant under the powers given to it by Section 28 (2) of the Act. Mr. Seru did however suggest in ground 7 of the grounds of appeal that the court should not have taken into account the Official Receiver’s report since “he was not a party to the action”. With respect, this submission is not correct since Section 28 (2) of the Act specifically requires the court to take into account the Official Receiver’s report.

Mr. Seru’s principal argument was set out in his written submission. He cited In Re Boulton Brothers & Co. [1927] 1 Ch 79 and suggested that the Appellant had no control over the company at the time it incurred the debts and that therefore the bankruptcy was caused by misfortune. Mr. Seru advanced a similar argument in the Magistrates’ Court but the resident Magistrate rejected it. In my view he was right to do so. In Halsbury’s Laws of England 4^th Edition Volume 3 paragraph 452 it is written that:

A certificate of misfortune will not be granted unless there has been misfortune as distinguished from and unaccompanied by misconduct. Misfortune is an adverse event not immediately dependent on the actions or will of him who suffers from it and of so improbable a character that no prudent man would take it into his calculations in reference to the interest of himself or others;”

Mr. Shandil suggested that the fact that the Appellant knowingly gave the guarantee and then knowingly left the company in the hands of his partner did not bring him within the scope of misfortune. I agree.

Grounds of Appeal 1, 4, 5, 6 and 8 were not argued by Mr. Seru but they are all directed at the particular debt owned to the Respondent. At no stage was any mention made by the Appellant of the other creditors some of whom, as has been seen, were substantial. In my view the first question before the Magistrates’ Court was whether a discharge should be granted at all. Only following a decision to grant a discharge could the question of a certificate of misfortune arise. To advance misfortune as a ground for granting a discharge is in my view to take a mistaken approach.

In the face of the Official Receiver’s Report I am not satisfied that the Appellant has shown that the Resident Magistrate erred in refusing to discharge him and therefore the question of granting a Section 28 (5) certificate did not arise. Even had it done so I am satisfied that the Appellant became liable for his debt not through misfortune but, as found by the Resident Magistrate, by mismanagement.

The appeal fails and is dismissed.

M.D. Scott
Judge

5 April 2002