Jetha v Singh (Civil Appeal 2/1931.) [1931] EACA 1 (1 January 1931)

COURT OF APPEAL FOR EASTERN AFRICA.

Before SIR CHARLES GRIFFIN, C. J. (Uganda); PICKERING, C. J. (Zanzibar), and LAW, J. (Uganda).

MULJI JETHA, Trustee in the estate of Bhagat Singh $(Bankrupt)$ $(Appellant)$

PARTAB SINGH (a Creditor) (Respondent). Civil Appeal 2/1931.

The Bankruptcy Ordinance, 1926, section 101, and Rule 77 of the Bankruptcy Rules, 1927; discretionary power of the Court in regard to the awarding of costs.

Reld (11-3-31):—That the discretion given to the court is a judicial<br>discretion and must be exercised on fixed principles, and not<br>according to private opinion, sympathy or benevolence. The court<br>has no jurisdiction to o principle is thereby involved.

Ishmael for Appellant.

Priestly for Respondent.

Ishmael.—Reads grounds of appeal and order appealed against. Refers to section 27 Civil Procedure Ordinance, 1924. Submits: No reasons given why costs should not follow event; it was not an order made by consent; no application was made to lower court for leave to appeal, but this Court can give leave (Rule 94 of the Bankruptcy Rules, 1927).

Priestly.—The Civil Procedure Ordinance does not apply. Bankruptcy Ordinance, section 101 (1) applies. Bankruptev proceedings are not a suit. Rule 77-costs to follow the event in absence of express direction. Respondent is a creditor of the debtor.

Ishmael.—Bankruptcy Rules in no way alter principles to be followed in civil cases.

PICKERING, C. J.—The appellant is the trustee in bankruptcy of the estate of Bhagat Singh. A creditor, who is the respondent in this appeal, lodged an application under section 79 of the Kenva Bankruptcy Ordinance asking the Court to call upon the bankrupt Bhagat Singh to account for certain moneys. received by him after his adjudication and further that a notice of the application be served on the Trustee. An affidavit was filed by the respondent complaining of acts and decisions of the appellant. When the matter came on for hearing the appellant appeared in person; the respondent and the debtor appeared by advocate. The application was dismissed. The reason given for the dismissal is a little difficult to follow, but the respondent has lodged no cross appeal herein and for the purposes of this appeal it must be assumed that his application was rightly dismissed, as being wrong in form, without any enquiry into the facts. The learned Judge after dismissing the application directed the appellant to pay out of funds in his hands the costs, I suppose being costs as between party and party, both of the respondent and of the debtor. The trustee has appealed against the portion of the order which awarded the respondent his costs of the dismissed application. Courts exercising bankruptcy jurisdiction are authorized to make orders allowing costs by the provisions of section 101 of the

Kenya Bankruptcy Ordinance. By Rule 77 (1) of the Rules made under that Ordinance a Judge may direct that the costs ordered under section 101 of the Ordinance in any particular matter be payable upon the party and party scale, or advocate and client scale, or shall be full costs or a named sum. This Rule limits the methods in which an order for costs, when made, shall be calculated or reckoned. Rule 77 (2) provides that in the absence of an express direction costs of an opposed motion in bankruptcy In the matter before us the learned shall follow the event. Judge failed to state which of the scales allowed by Rule 77 (1) was to be used in ascertaining the amount payable under his order; and Rule 77 (2) is irrelevant by reason of the fact that the Judge purported to give an express direction. This appeal then must be considered simply in relation to the provisions of section 101 of the Ordinance. That section declares that costs shall be in the discretion of the Court. The wording for all practical purposes, is identical with that of Order 61, Rule 1, of the Rules of the Supreme Court in England. Wide though that discretion is it is a judicial discretion and must be exercised on fixed principles, and not according to private opinion, sympathy or benevolence. The English Rule was held to have adopted the jurisdiction of the Courts of Chancery in the matter of costs, and when

exercising a discretion under Order 61, Rule 1, English Courts recognized the same limitations as had been observed in Chancery. One of those limitations is that a Court has no jurisdiction to order a defendant to pay the plaintiff's costs where the defendant has succeeded and shown that the plaintiff has no right to sue. In my opinion that same limitation should be observed by the Supreme Court of Kenya when exercizing the discretion as to costs given by the Bankruptcy It is true that in this case the costs allowed Ordinance.

(assuming that the amount can be ascertained) are payable not by the trustee personally but out of the fund which the trustee holds for the creditors generally; but for myself I can see no difference in principle whether an individual be ordered personally to pay certain moneys or whether each of a group of individuals be ordered to contribute to the payment of those moneys. In my opinion the order made in this matter was one which under section 101 of the Bankruptcy Ordinance the Court was not competent to make, and this appeal should be allowed with costs. As regards the respondent's costs in the Supreme Court, seeing that the trustee appeared in person I would set aside the order made in the respondent's favour and substitute the order "No. costs $\sim$ .

SIR CHARLES GRIFFIN, C. J.-I concur.

LAW, J.-I concur.