In Re: Mohamed Bux and Son ((Bankruptcy Cause No. 29/1933.)) [1934] EACA 19 (1 January 1934)

Before HORNE, J.

In Re MOHAMED BUX & SON. (Bankruptcy Cause No. 29/1933.)

Bankruptcy Ordinance, 1930, section 27-Wilful refusal of two persons to attend on subpœna to be examined as witnesses— Whether any order can be made against them for costs, they being merely witnesses—Application by trustee in bankruptcy for costs.

- Held (29-5-34).—That the costs of the examination usually depend upon whether the result, immediate or proximate, is either the recovery of something for the benefit of the estate or the successful resistance to some claim made on behalf of the estate. Whether, therefore, a person summoned under this section is a mere witness and not liable for costs or falls within one of the categories described making him capable of receiving or rendering him liable to pay costs depends upon the facts in each case. - Held further.—That, in this case, no further proceedings were shown<br>to have followed as a direct result of anything disclosed or discovered in the course of the examination, and that the application for an order for costs against two persons who had eventually to be arrested and brought to Nairobi to be examined and whose wilful refusal had caused the trustee in bankruptcy extra expenditrue was premature. Ex parte Waddell 6 Ch. D. 328 and in In re Appleton, French and Scrafton, Ltd. (1905) 1 Ch. 749 referred to.

Modera for Trustee in Bankruptcy.

Phadke for Respondents (examinees).

The facts appear fully from the ruling, which was as follows.

RULING.—The trustee in bankruptcy applies for the costs thrown away by the wilful refusal of two persons to attend on subpœna to be examined under section 27 of the Bankruptcy Ordinance, 1930.

It is submitted on their behalf that no order to pay costs can be made against them on the ground that they are merely witnesses.

A person summoned under this section is in the first place treated as witness; adequate conduct money must be tendered with the subpoena and he is entitled to his expenses during examination.

But his position is not that of a witness called by a litigant party in order that he may be examined by two litigant parties before the Court. He is the witness of the Court, and although it is the established practice for the Official Receiver or trustee or their advocate to put the questions, the conduct of the examination rests with the Court.

If on examination the person examined admits that he is in possession of property of the debtor, he may be ordered to deliver such property to the trustee and to pay costs; or if he admits a debt due to the debtor he may be ordered to pay it to the trustee and to pay costs. If the examination is procured with the intention of taking further proceedings against the person examined, then if such further proceedings are not taken, or if taken fail, the person examined can recover not merely his expenses of attending the examination but the costs of his solicitor and counsel at such examination. If such proceedings are taken and succeed then the party procuring the examination will be entitled to costs of the examination.

From these propositions it would appear that the costs of the examination usually depend upon whether the result, immediate or proximate, is either the recovery of something for the benefit of the estate or the successful resistance to some claim made on behalf of the estate. Whether therefore a person summoned under this section is a mere witness and not liable for costs or falls within one of the categories described making him capable of receiving or rendering him liable to pay costs depends upon the facts in each case.

In Babu Ram and Son in re Kirparam and Sons v. Official Receiver (Court of Appeal for Eastern Africa—Civil Appeal No. 3 of 1931 unreported) the appellant had failed to sustain a preliminary objection that the summons under section 27 was time barred in the Court below and was ordered to attend and be examined and to pay the costs of the hearing of the preliminary objection. He appealed to the Court of Appeal. The Court of Appeal dismissed the appeal and upheld the order made by the Judge in bankruptcy but upon different grounds. The judgment then continues: "Had the question of limitation been decided there and then as it might well have been, on the construction of section 27 I apprehend that the Court would not have mulcted the appellant who had been summoned merely as a witness to pay the costs of the day. The appellants should not have been ordered to pay the costs ... " In that case and at the stage of the proceedings when the costs were ordered to be paid it had not and could not have been decided whether the person summoned under section 27 had passed beyond the stage of being a mere witness and had entered the category of persons who are entitled to recover or be mulcted in costs. Waddell, Ex parte. (6 Ch. D. p. 328), and In re Appleton, French and Scrafton Limited $(1905)$ 1 Ch. p. 749, both support the view that where the person examined is an intended litigant he is entitled to the

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assistance and protection of solicitor and counsel and may recover costs against the party procuring the examination. An examination therefore under section 27 may become a proceeding and the costs in all proceedings are in the discretion of the Court.

In this matter the examination was lengthy and was directed to show that the examinees had had some dealings with the debtor's property. But no further proceedings are shown to have. followed as a direct result or anything disclosed or discovered in the course of the examination. I therefore rule that the application is premature and must be refused.