Suri v Morris [2001] SBHC 50; HC-CC 172 of 2001 (26 July 2001)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No.172 of 2001

GABRIEL SURI & AEY - GENERAL

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WAYNE FREDRICK MORRIS & BENJAMIN OF GILES PRICE

(AS PURPORTED SPECIAL MANAGERS/TRUSTEES

OF REX FERA & OTHERS)

High Court of Solomon Islands

Before: Frank O. Kabui J.

Hearing: 24^th July /span>

Judgement: 26^th July 2001

class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1"> G. Suri in person as the Applicant

J. Kenipisia for the 2^nd Applicant

J. Sullivan for the 1^st Respondent

C. Ashley for the 2^nd Respondent

p class="MsoNoMsoNormal" align="center" style="text-align: center; margin-top: 1; margin-bottom: 1"> JUDGMENT

(Kabui, J): By Originating Summons filed on 19^th

th July 2001, the Applicant seeks the following declarations and orders-

p class="MsoNoMsoNormal" style="text-indent: .55pt; margin-left: 35.45pt; margin-top: 1; margin-bottom: 1"> 1. A declaration that the Applicant has been lawfully appointed as a Deputy Official Receiver for the Estate of Rex Fera pursuant to section 75 of the Bankruptcy Act [Cap. 3].

2. A declaration that the appointment of Wayne Frederick Morris and Benjamin of Giles Price as Special Managers/Trustees of Rex Fera is contrary to section 15 as read with sections 13 and 75 of Bankruptcy Act [Cap. 3] and is thereby null and void ab initio.

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3. Consequential upon the declarations sought ight in paragraphs 1 and 2 being granted the First and Second Applicant seek the following Orders -

class="Mss="MsoNormal" style="text-indent: .7pt; margin-left: 63.8pt; margin-top: 1; margin-bottom: 1"> [1] that the First Respondentcease forthwith to have pose possession of or deal with, in any manner, the shares in the Estate of Rex Fera.

[2] that the First and Second Respondents do d do deliver possession of all documents, books of full accounts and records, bank accounts and records thereof and statutory registers relating to or affecting the shares, accounts and assets and affairs of the Estate of Rex Fera to the first Applicant who shall have lawful possession thereof.

class="Mss="MsoNormal" style="text-indent: .7pt; margin-left: 63.8pt; margin-top: 1; margin-bottom: 1"> [3t the First Applicant may exercise, in the name of anof and on behalf of Rex Fera, all rights attaching to the shares of the Estate of Rex Fera.

(i) assessing statement of affairs of those companiesan>

(ii) appointing or continuing or removf Directors and Officers ofrs of those companies.

4. Further and other Orders as the deems meet.

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5. Costs and incidental to this application be borne by the First Respondents.

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With the agreement of Counsel for all the parties, only Order 1, above was argued at the hearing, as deciding it first would determine the fate of the other declaration and orders sought above. That is to say, if I decide against the Applicant that would be the end of the matter. If not, there will be need for directions to be made by the Court in terms of what steps to be taken before hearing of the Originating Summons.

Brief Background

The Applicant is Gabriel K. Suri of Vura 1, Honiara. He is a Solicitor and Barrister of the High Court of Solomon Islands. By Gazette Notice dated 28^th May 2001, the Minister of Commerce, Employment and Trade (the Minister) appointed him Deputy Official Receiver of the Estate of Rex Fera with effect from 26^th June 2001. The Minister made the appointment pursuant to section 75 of the Bankruptcy Act (Cap.3).

The arguments on both s/span>

The case for the Applicant is that he was appointed Deputy Official Receiver of the Estate of Rex Fera with effect from 26^th June 2001. The appointment he said was made pursuant to section 75 of the Bankruptcy Act because in my judgment in Civil Case No. 37/2001 I had found that no Official Receiver had in fact been appointed under section 75 of the Bankruptcy Act. He cited section 2 and section 75 of the Bankruptcy Act as being the basis for his appointment. Counsel for the 2nd Applicant, Mr. Keniapisia, supported the Applicant’s case. Counsel for the 2^nd Respondent Mr Ashley also supported the Applicant’s case. He pointed out that there being no Official Receiver in place under section 75 of the Bankruptcy Act, there were obviously a case for the appointment of a Deputy Official Receiver for the Estate of Mr. Fera. He also took up the point that Special Managers should not have been appointed in the absence of the prior appointment of an official Receiver.

The case for the 1^st Respondent is that the appoit of the Applicant was wron wrong in law because it purported to appoint the Applicant under section 75 of the Bankruptcy Act as a receiver for the estate of Mr. Fera. Counsel for the 1^st Respondent, Mr. Sullivan, argued that Gazette No. 82 of 2001 was none other than usurpation of judicial power of the Court in bankruptcy proceedings. This was the main thrust of Mr. Sullivan’s arguments. His other arguments were supplementary in nature though the effect of the combination of all his arguments was for the court to dismiss the Applicant’s application with costs.

Gazette 2 of 2001

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This Gazette Notice contains the appointment of Mr Suri as Deputy Official Receiver of the estate of Mr Fera with effect from 26^th June 2001. It is a rather strange instrument of appointment. Strange in the sense that it was purported to have been signed by the Minister on 26^th June 2001 and then published on 28^th May 2001 retrospectively. It may have been a mistake that it was published on 28^th May 2001 whereas in fact it should have been published in the Gazette sometime after 26^th June 2001. Mr. Suri said in his affidavit filed on 19^th July 2001 that he only received the Gazette on Tuesday 17^th July 2001. The implication is that he had not been consulted and agreed to the appointment before it was made. If this is so, the Minister had clearly acted without prior consultation with Mr. Suri. This is not the correct practice in the Public Service. Always prior consultation is made before any appointment is made in the exercise of statutory powers. However, this is not the issue in this case and no one takes issue on this point.

class="MsoNoMsoNormal" style="margin-top: 1; margin-bottom: 1"> Rather, the issue is whether or not the ter can appoint a person under section 75 of the Bankruptcyuptcy Act to be a receiver of an estate of another person for the purpose of bankruptcy proceedings. Section 75 states -

“(1) Subject to provisions of subsection (2), there may be appointed fted from time to time a fit and proper person to be Official Receiver and such number of Deputy Official Receivers as may be required, and any such appointment shall, if the person appointed is to be a public officer, be made in accordance with the Constitution, but otherwise shall be made by the Minister.

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(2) No person shall b appointed Official ReceiReceiver or Deputy Official Receiver, unless at the date of such appointment, he is a legal practitioner in Solomon Islands.

(3) The Official Rer shall act under ther the general authority and direction of the Minister and shall also be an officer of the court.

(4) Every Deputy Official Receiver shall have all the powers conferred on the Official Receiver under this Act.

ass="Mss="MsoNormal" style="text-indent: .55pt; margin-left: 35.45pt; margin-top: 1; margin-bottom: 1"> (5) Every Deputy Official Receiver shall act under the generaeneral authority and direction of the official Receiver for the time being, or if there be no Official Receiver for the time being, under the general authority and direction of the Minister, and shall also be an officer of the court”.

The Applicant and Counsel f the 2^nd Respondent had urged me to read the Bankruptcy Act as a whole hole to discover its true spirit and intent when construing section 75 of the Bankruptcy Act. The Applicant further argued that under section 75 (3) and (5) both the Official Receiver and Deputy Official Receiver are officers of the Court therefore his appointment as Deputy Official Receiver was not usurpation of the Court’s power under the provisions of the Bankruptcy Act. He urged me to hold that his appointment was a valid one.

Administration of Mr. Fera’s Estate

In my view, the position would become clearer if I begin with Civil Case No. 177 of 2000. In that case, Mobil Oil AOil Australia Ltd. was the creditor which filed for a Petition for Bankruptcy against Mr Fera under section 5 of the Bankruptcy Act. I granted the orders sought by Mobil Oil Australia Ltd on 24^th November 2000. One of those orders was that the Official Receiver be appointed under section 13 of the Bankruptcy Act an interim receiver of the property of Mr. Fera as from that date. These Orders lapsed on my making subsequent Order on 13^th December 2000. Amongst these Orders was an order appointing the Official Receiver under section 5 of the Bankruptcy Act the receiver for the protection of Mr Fera’s property and the other appointing under section 15 of the Bankruptcy Act Wayne Fredrick Morris and Benjamin St Giles Prince as Special Managers. In my judgment delivered on 23^rd May 2001 in Civil Case No. 37 of 2001, I found that no Official Receiver had been appointed under section 75 of the Bankruptcy Act. What then is the effect of the Court appointments made on 24^th November 2000 and on 13^th December 2000 respectively? As regards the first appointment, it is already spent. It is too late to cry over it. As regards the second appointment, it is also spent in that the Special Managers were appointed the same day upon the agreement of Miss Irene Vaukei in Court in the belief that she was the Official Receiver appointed under section 75 of the Bankruptcy Act. She stated in Court that she lacked the accounting experience and office infrastructure to fulfil the duties of the Official Receiver under the Bankruptcy Act. The appointment of Special Managers was done under section 15 of the Bankruptcy Act upon the application of the Creditors and not of the Official Receiver.

My finding in Civil Case No. 37 of 2001 as referred to above does in my view, defeat the lawf lawfulness of the appointment of the Official Receiver as interim receiver on 24^th November 2000 and as receiver on 13^th December 2000 because of the principle that the Order of a Superior Court remains valid until it is set aside or reversed on appeal. Everything done under such order is protected until reversed. (See Reef Pacific Trading Ltd & Joan Marie Meiners v Price Waterhouse, Richard Anthony Barber & William Douglas McClusky (Civil Case No. 164/94 at 10 - 11). The most recent judgment I delivered in Civil Case No. 177 of 2000 was on 13^th June 2001. In that judgment, I granted the Orders sought one of which was to adjudge Mr. Fera a bankrupt. The other Order was the appointment of Wayne Morris and Benjamin St Giles Prince as Joint Trustees of the property of Mr. Fera under section 24 of the Bankruptcy Act upon them being discharged as Special Managers. Where then does the appointment of the Applicant fit in after these events? There is no room for the appointment of anyone else to be the receiver for the property of Mr. Fera. That stage in the procedure has already passed and there is no reason for going back for the recommencement of the procedure. The Orders I made on 24^th November and on 13^th December 2000 have not been set aside nor appealed and reversed. The fact that no Official Receiver has been appointed under section 75 of the Bankruptcy Act referred to above is not relevant as far as Mr. Fera’s estate is concerned. It is not relevant because that fact does not in any way undo the administration of Mr. Fera’s estate up to now. Even if Mrs. Irene Vaukei had been the Official Receiver, her duties and powers had ceased on 13^th December 2001 when the Special Managers were appointed. The appointment of the Applicant as a Deputy Official Receiver for the purpose of the administration of Mr. Fera’s estate is therefore a mistake ill - conceived by the Minister and his advisers. The Applicant was not therefore lawfully appointed by the Minister.

The wording of the Applic appointment also files in the face of section 12 of Bankruptcy Act in that the the Official Receiver or the Deputy Official Receiver for that matter is constituted as receiver of the property of the debtor only upon the receiving order being made by the Court pursuant to section 5 of the Bankruptcy Act. In this case, there is absolutely no evidence to show that any one had appeared before the High Court and as a result of which the Applicant was constituted as the receiver of Mr. Fera’s estate. An appointment under section 75 of the Bankruptcy Act of any person as Official Receiver or Deputy Official Receiver does not constitute that person a receiver of the property of any debtor because any attempt to do so runs counter to section 12 of the Bankruptcy Act. Section 75 above therefore cannot be construed in the manner urged upon me by the Applicant and Counsel for the 2^nd Respondent. As much as I would like to help Mr. Fera in his trouble, the law is against me on this point. The position of the Court is that “most of the proceedings in connection with a bankruptcy are of administrative nature, often involving detailed work with accounts and commercial investigations. These tasks are not appropriate ones for the Court. Bankrupt estates are therefore not administered by the Court but by official receivers and registered trustees under the supervision of the Court and of specially qualified government officials”. (Lewis’s Australian Bankruptcy Law, by Dennis J. Rose, 1970, Sixth Edition at 22). Unfortunately, I must again rule against Mr. Fera’s interest. This application is dismissed with costs.

F.O. Kabui

Judge