IN THE RESIDENT MAGISTRATE'S COURT OF FIJI ISLANDS
AT SUVA

Bankruptcy Action No. 14 of 2012

RE: SURYA DEO
JUDGMENT DEBTOR

EX PARTE: NAMADI HEIGHTS BAPTIST CHURCH
JUDGMENT CREDITOR

Counsel for Judgment Creditor : Mr Singh V, Parshotam & Co.
Counsel for Judgment Debtor : Mr S Kumar 

Date of Hearing: 24 April 2012
Date of Ruling: 09 May 2012

RULING

[1]	Bankruptcy Notice seeking payment of $ 2777.33 from the Judgment Debtor was issued on 18th January 2012. Affidavit of Service was filed on 01st March, 2012, showing that the Judgment Debtor was served with the Bankruptcy Notice on 16th February, 2012 at 33-44 Toorak Road, Suva.

[2]	Bankruptcy Creditor's Petition and Affidavit Verifying Petition was filed on 06th March, 2012 and served on the Judgment Debtor on 14th March, 2012. Affidavit as to Petitioning Creditor's Debt was filed on 19th March, 2012.

[3]	Affidavit Opposing Bankruptcy Petition was never filed by the judgement debtor of this case.

[4]	The Judgment Debtor submitted to Court by way of his counsel's oral submission that the order of the small claims tribunal which had given rise to this action had been appealed for a re-hearing and the relief had been granted.

[5]	Hearing on this preliminary application was held on 24th April 2012 and the Judgement Creditor has applied for a receiving order as there is no reply to the bankruptcy petition.

[6]	The parties' solicitors did not file written submissions on the issue. But the counsel for Judgment Debtor submitted a photo copy of the order dated 20th April 2012 by the Small Claims Tribunal.

The Background of this Bankruptcy Petition

[7]	The Petitioning Creditor is seeking a receiving order against the Judgment Debtor.

[8]	The act of bankruptcy relied upon is the Judgment Debtor's failure to pay, secure or compound the amount claimed in the Bankruptcy Notice within the prescribed time.

[9]	The amount claimed is based on a Small Claims Tribunal order dated 02nd November, 2011 in Suva Small Claims Tribunal Action No. 2218 of 2011.

The Judgment Debtor's Opposition

[10]	The Judgment Debtor is opposing the Bankruptcy Petition on the basis that "the order entered on 02nd November 2011 by the Small Claims Tribunal had been entered in his absence and now he has been granted a re-hearing." 

[11]	The Judgment Debtor's contention is, since the Small Claims Tribunal had ordered a re-hearing, this action will be futile.

Small Claims Tribunal Case

[12]	The Judgment Debtor has submitted that his application to set aside the order which was granted in his absence is now listed for re-hearing.

[13]	Counsel for the Judgment Creditor informed Court that the time for filing appeal has expired and that the Judgment Debtor is barred from appealing out of time. Section 32 (3) of the Small Claims Tribunal Decree No 1991 states that an application for a re-hearing should lodge within 14 days of the Tribunal's order.

[14] 	In Chan Long Chong v Yen Yain Kai [1999] FJHC 107; [1999] 45 FLR 217 (10 September 1999) it was held that these statutory limitations can be extended depending on circumstances.

[15]	Section 32 (4) (b) of the Small Claims Tribunal Decree states that 'an order of the tribunal for a re-hearing will cease the effect of its first hearing'.

[16]	For the interest of justice I asked the registry to submit the chronology of the Small Claims Tribunal case. It is as follows,

•	17.10.2011	- the claim was lodged.	
•	19.10.2011	- respondent served with the claim to appear 02.11.11	
•	02.11.2011	- respondent failed to appear and order was made in favour of the claimant.	
•	28.03.2012	- a formal application made by the respondent for a re-hearing after he was served with this bankruptcy notice.	
•	20.04.2012	- matter was heard before both parties and matter adjourned for hearing until the claimant finishes matters with the police.	

[17]	It is inescapable that the Small Claims Tribunal has now decided to re hear the claim.

The Bankruptcy Proceedings

[18]	The Petitioning Creditor has complied with the requirements of the Bankruptcy Act, Cap 48 sections 4, 6 and 7.The Court has been presented with proof of the Petitioning Creditor's debt, proof of service of the Petition and of the act of bankruptcy.

[19]	Section 7(4) of the Bankruptcy Act provides that where the act of bankruptcy is based on non-compliance with Bankruptcy Notice to pay, secure or compound a judgment debt, the Court may stay or dismiss the petition on the ground that an appeal is pending from the judgment.

[20]	In this case there is no appeal pending.

[21]	Section 7(3) provides that if the Court is satisfied by the debtor that he is able to pay his debts or that for other sufficient cause no order ought to be made, the Court may dismiss the petition. 

[22]	The Judgment Debtor has not satisfied this Court that he is able to pay his debts under s 7(3). There is no affidavit evidence before this Court as to the Judgment Debtor's income or assets to show that he is able to pay his debts.

[23]	Section 7(5) states that where the debtor appears and denies that he is indebted, the Court, on such security being given as the court may require for payment to the petitioner of any debt which may be established against him in due course of law, may instead of dismissing the petition stay all proceedings on the petition for such time as may be required for trial of the question relating to the debt.

[24]	On comparison with s 7(4), it is reasonable to infer that s 7(5) is intended to apply to debts that have not been reduced to judgment.

[25]	Since the debt in question has already been re listed for a fresh hearing, there is no point in staying these proceedings for hearing of the question relating to the debt. The decision of the Small Claims Tribunal can be held otherwise.

[26]	Even though, this Court inquired if the Judgment Debtor would be willing to pay the debt into Court, to have the Court stay these proceedings. The Judgment Debtor might refuse to do so. 

[27]	The Judgment Debtor has however succeeded in the attempt to re-litigate the Small Claims Tribunal action in which the order dated 02nd November 2011 was obtained in his absence. There is no authority for this Court to intervene and make any variations to the said order.

[28]	Halsbury's Laws of England, Fourth Edition, Volume 3, paragraph 357 states as follows:-

"357. Court not necessarily bound by Judgment. Where the act of bankruptcy relied on is non-compliance with a bankruptcy notice, the judgment or order is conclusive in the bankruptcy court unless the consideration for it can be questioned. However, for the purpose of determining whether a receiving order should or should not be made, the court may go behind the judgment or order and inquire into the consideration, and on finding that there was no valid or legal consideration, may refuse to make a receiving order."

[29]	Therefore since the Judgment Debtor was not heard during the initial Small Claims Tribunal order it is the view of this Court that the there was no valid consideration given to the Judgement Debtor.

[30]	The Ruling of the referee to set aside the order dated 02nd November 2011will leave the Judgement Creditor alone, without any 'final order' that is required to constitute an 'Act of Bankruptcy' as per section 3 (1) (g) of the Bankruptcy Act.

[31]	The Court is not inclined to grant the relief prayed in the Bankruptcy Petition. 

[32]	This petition is dismissed without cost as per section 7 (3) of the Bankruptcy Act. 

YOHAN LIYANAGE
Resident Magistrate

09th May 2012