Mohamed v Lobo (Civil Appeal No. 3/1935.) [1935] EACA 100 (1 January 1935)

#### COURT OF APPEAL FOR EASTERN AFRICA.

### Before SIR JOSEPH SHERIDAN, C. J. (Kenya); HALL, C. J. (Uganda) and Law, C. J. (Zanzibar).

# JAN MOHAMMED, Appellant (Original Debtor)

## T. B. LOBO. Respondent (Original Creditor). Civil Appeal No. 3/1935.

Bankruptev Practice—Act of Bankruptev—Bankruptev Notice showing only balance due after giving credit for payments on account—Validity of Notice—Bankruptcy Rules, 1927. Appendix of Forms, No. 5.

This was an appeal by a judgment debtor against an order dismissing his application to set aside a bankruptcy notice served on him. The order was as follows:

GAMBLE, Ag. J.—This is an application to set aside a Bankruptcy Notice issued by Lobo against the debtor one Jan Mohamed.

The facts are shortly that Lobo obtained judgment against the debtor for Sh. 22,976 and costs; an order was made for instalments of Sh. 100 per month; subsequently this order was rescinded and this Bankruptcy Notice is served under the provisions of section 3 (1) $(g)$ of Ordinance 32/30.

The affidavit filed with the application to set aside discloses the grounds alleged for setting aside but the applicant has abandoned the third paragraph of his affidavit. This leaves the two following grounds available: 1, that the amount claimed as due under the original decree is incorrect; 2, that execution of the decree has been stayed.

The amount claimed under the decree and in respect of which the Bankruptcy Notice has been served is Sh. 21,540/68. Mr. Modera alleges this is incorrect.

The point raised is as far as I am aware a novel one in this Colony and is not without difficulty.

It is settled practice that amendment of a Bankruptcy Notice is not allowed by the Court except in the case of a merely formal defect; O. C. S. a debtor (1904 2, K. B. 163). It is necessary, therefore, to consider whether the omission to set out in detail how the sum of Sh. 21,540/68 was arrived at is a defect, and if so whether it is a merely formal defect. It was held in In re a debtor (1908, 2 K. B. 684) that the claiming of a sum of £1/5/6 in excess of the amount due was not a formal defect and that amendment could not therefore be allowed.

But the position here is somewhat different: all that the debtor says is: "I dispute the accuracy of the amount claimed". He does not say by how much it is wrong and whether too much or too little is claimed.

I have to consider whether the omission to set out seriatim, principal, interest, costs and credits for instalments is such a departure from the terms of the original judgment as to be calculated to confuse and puzzle the debtor.

A case which has not been quoted to me but which is, I consider, instructive, is that of $In$ rea judgment debtor (1908, 2) K. B. 474), in which the notice required the debtor to pay the balance £50/12/6 due on a final judgment obtained against the debtor. In that case the Bankruptcy Notice was set aside and the reason for setting aside was that the original judgment was that the plaintiffs do recover as partners but the Bankruptcy Notice required that payment should be made to them not as partners but as individuals living in different countries. In other words the Notice was not in accordance with the terms of the No objection was taken to the notice claiming judgment. £50 "balance due on a final judgment" and the inference can only be that no such objection can be taken. I would also in this connection refer to the cases of In re Howes (1892, 2 Q. B. 628), and In re Child (1892, 2 Q. B. 77).

Mr. Modera has contended that an account should be set out in detail either in the notice or in a marginal note. $No$ provision is made in the form (Appendix 5) for setting out an account and I can find no authority for the proposition that a marginal note is essential. In my opinion the proper procedure for the debtor to adopt would be to show that the Bankruptcy Notice claims more than is due. If the debtor satisfied the Court that the wrong amount has in fact been claimed then I consider on the authorities, that the notice would have to be set aside.

In this instance I am of the opinion that the Bankruptcy Notice is correct and that ground 1 of the supporting affidavit fails.

The second ground is that stay of execution had been granted: this can be shortly disposed of. It is true that as long as the order of 20-12-32 was in force (an order granted under O. 19, R. 37), execution was stayed.

The affidavit speaks of the order of WEBB J. which purports to revoke the order of 20-12-32. This order did more than purport to revoke, it did in fact revoke the instalment order and accordingly at the time of the issue of this Bankruptcy Notice execution was not stayed. Mr. Modera has referred me to the case of In re $H. B.$ (1904 1 K. B. 94). I have read that case carefully but cannot find anything therein helpful. That case merely

dealt with a collateral agreement, still existing, to pay instalments. Here there was a Court order to pay instalments which had been rescinded and the creditor gave credit for such instalments as had been paid prior to rescission.

Finally, I am invited to stay these proceedings pending the result of a possible appeal from the order of WEBB, J. rescinding the instalment order. Rule 143 has no application and only prohibits the issue of a receiving order during the pendency of an application to set aside a Bankruptcy Notice. Section 101 (2) of the Ordinance does give the Court a discretionary power of adjournment, but I see no reason to exercise my discretion in these proceedings.

For the foregoing reasons, the application to set aside this Bankruptcy Notice is refused with costs against the debtor.

Held (31-7-35). That so long as the bankruptcy notice does in fact give credit, in the amount claimed, for the amount paid on account of the judgment-debt, it is unnecessary for it to give particulars showing how the amount claimed is arrived at.

(In re Child, ex p. Child (1892 2 Q. B. 77) and In re H. B. $(1904 \ 1 \ K. B. \ 94)$ distinguished.)

Schwartze, for the appellant, referred to In re $H. B.$ (1904) 1 K. B. 94), In re Collier (8 Morrell's Bankruptcy Cases 83).

### - Figgis, $K. C.,$ for the respondent.

A bankruptcy notice may be served for the balance in respect of which execution can issue. (He referred to $Ex$ p. Child (1892 2 Q. B. 77) and In re a Debtor (1908 2 K. B. 684). There was no evidence that the amount stated in the notice was wrong.

SIR JOSEPH SHERIDAN, P.—A bankruptcy notice was issued in this case for a sum of Sh. $21,548/68$ in regard to which the judgment-debtor said: "I dispute the accuracy of the amount claimed", without giving any reasons in support of his contention. It has been argued before this Court that the bankruptcy notice is invalid, because it does not show how the amount claimed is made up, particularly in that it fails to show the amount paid in diminution of the judgment debt. But so long as the bankruptcy notice does in fact give credit, in the amount claimed, for the amount paid on account of the judgment debt, it is unnecessary for the judgment creditor to give particulars of how that amount is arrived at. The amount claimed in the bankruptcy notice must not include sums paid on account of the judgment debt inasmuch as execution could not issue in respect of sums which had already been paid. (Vide the headnote to In re Child ex parte Child (1892 2 Q. B. 77). The sum claimed in the bankruptcy notice is clearly set out and in my opinion that sum must be presumed to be in accordance with the terms of the judgment, i.e. to be the sum due after giving credit for the amounts paid in reduction of the judgment debt until the judgment debtor proves the contrary. This he has made no attempt to do in the present case. I would dismiss the appeal with costs.

HALL, $C. J.-I$ concur.

LAW, C. J.—The question in this case is whether or not the bankruptcy notice was in proper form. It followed Form No. 5 given in the Appendix to the Bankruptcy Rules, 1927. These Rules are still in force by virtue of section 162, Bankruptcy Ordinance, 1930. On behalf of the appellant it is argued that the notice is incomplete and defective inasmuch as it does not show in detail how the amount alleged as due by him is arrived To support this argument, reference has been made to the at. cases of In re H. B. (1904, 1 K. B. 94) and In re Collier (1892, 8 Morrell's Bankruptcy Cases 80). It was observed in these cases that the Rules in connection with the issuing of such notices must be strictly complied with, and that any informality with regard to such notices may not, as a general rule, be treated as merely a formal and curable defect. It appears from the papers before us that the respondent had obtained judgment, on the 15th September, 1932, for Sh. 22,976 and costs. The notice was issued for Sh. $21,548/68$ , with interest at 6 per cent per annum from the 17th January, 1935, a lesser sum than the amount of the judgment. The difference is apparently accounted for by certain payments made by the appellant under an Order for instalments, which Order was subsequently rescinded. In effect, what has to be considered is whether or not the amount Sh. $21,548/68$ , with interest, was due under the final judgment of the 15th September, 1932. Certainly the notice alleges this, and its only meaning can be that the amount mentioned therein is what the respondent claims as unpaid on the judgment debt.

In In re $H. B.$ it was pointed out that the form of the notice there in question could only be justified by reference to a special agreement alleged to exist between the parties, and that it was not founded simply on the judgment according to its terms which had been modified by that agreement. No such considerations arise in the present case, where the amount claimed is claimed to be founded solely on the judgment. In re Collier, does not in my opinion, assist the appellant, and goes no further, so far as the present case is concerned, than to emphasize the importance of notices strictly complying with the Rules in connection therewith. Apart from the fact that no details are disclosed in the present notice, which do not appear to be required, the notice seems to be strictly correct. On behalf of the respondent, we have been referred to the case of In re Child, ex parte Child, (1892, 2 Q. B. 77) in which it was held that

a creditor is not entitled to serve a bankruptcy notice in respect of the whole amount of a judgment debt, where part has been paid inasmuch as he could not issue execution in respect of the part which has been paid. In the present case, the respondent is not seeking to do this. The amount claimed is the lesser amount for which he is entitled to issue execution; consequently the notice should be accepted as correct. The learned trial Judge expressed the opinion that it was for the respondent to satisfy the Court that the amount claimed was incorrect. With this view I would agree.

In the circumstances, I would dismiss this appeal with costs.

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