Markus v Czeczowiczka (C.A. 36/1933.) [1937] EACA 17 (1 January 1937)

COURT OF APPEAL FOR EASTERN AFRICA.

Before ABRAHAMS, C. J., Ag. P. (Uganda), SIR JOSEPH SHERIDAN, C. J. (Tanganyika), and HORNE, J. (Kenya).

OTTO MARKUS (Appellant) (Original Defendant No. 2)

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BRACIA CZECZOWICZKA (Respondent) (Original Plaintiff). C. A. $36/1933$ .

- Kenya Civil Procedure Rules-Order XIX, Rule 37-Power of Court to commit for failure to pay decretal amount or instalments-Kenya Bankruptcy Ordinance, 1930, section 99-Power of Court to make receiving order in lieu of committal order. - $Hcld$ (10-1-34).—(1) That Order XIX, Rule 37 (1), must be construed to relate to the whole amount of the decree where no order to pay instalments has been made.

(2) That to ground a committal there must first of all be an order to pay that amount which the debtor is shown to be capable of paying coupled with a refusal or neglect to pay the sum so ordered; means to pay having been established.

(3) That in the circumstances of this case there was no power to commit and therefore no power to make a receiving order under<br>section 99 of the Bankruptcy Ordinance, 1930.

Burke (Atkinson with him) for Appellant.

Ross for Respondent.

$Burke$ —Debtor's total income from all sources is £750 per annum. Order XIX, Rule 37, provides that the debtor may be committed if he does not pay the amount ordered. In this case there was no order for payment of instalments, and therefore the whole amount was due. There is no proof of debtor's means to satisfy the Court that he can pay the whole amount (In re Fryer, 55 L. J., Q. B. 473 at 481, and 17 Q. B. D. (1886) 718). Appellant has been insolvent since 1929. The making of a receiving order under section 99 of the Bankruptcy Ordinance was irregular, in view of the provisions of Order XIX, Rule 37, of the Civil Procedure Rules and in the absence of proof of the debtor's means.

Ross replied.

The judgment of the Court was delivered by Horne, J.

HORNE, J.—This is an appeal from a receiving order made: on the 8th November, 1933, by Mr. Justice Webb against the appellant. Otto Markus, a judgment debtor, in respect of the non-payment of a judgment debt under a decree passed against the appellant in Civil Case No. 132 of 1929 on the 20th June, 1933.

An application for execution of the accree by arrest and imprisonment of the debtor was filed by the judgment creditor on the 17th October, and a notice to the judgment debtor to appear and show cause was issued under Order XIX, Rule 34 (1), on 2nd November, 1933.

At the hearing of the notice to show cause, counsel for judgment creditor asked for a committal for a period of six months or in the alternative for a receiving order under section 99 of the Bankruptcy Ordinance, 1930, and applied for leave to examine the debtor as to means and as to reasons for nonpayment.

Counsel for the judgment debtor in reply informed the Judge that a bankruptcy notice had already been served by the judgment creditor and application to set it aside had been refused, and an appeal against this refusal was pending.

The learned Judge then heard the oral evidence given by the judgment debtor, and held, on the authority of In re Fryer (3 Morrell's Bankruptcy Causes 231; 55 L. J., Q. B. 478), that as the Court had a power of committal it had power also to make a receiving order if it were satisfied that the judgment debtor had the means of paying a part only of the judgment debt. Being so satisfied, the learned Judge made the receiving order.

The appellant now appeals to this Court on the ground that there was no evidence before the learned Judge on which he could hold or be reasonably satisfied that the appellant had the means of paying something on account of the amount of the decree, viz. 236,205 shillings 52 cents.

The appellant admitted receiving a salary of £750, and that the only other asset he possessed was a judgment of the German Czechoslovak Mixed Tribunal in his favour against the German Reich, which the judgment creditor had attached in the appropriate Court in Germany; the amount being in excess of the judgment in respect of which the present proceedings were taken. The learned Judge regarded the prospect of the judgment creditor receiving anything under this attachment as illusory, and, directing his mind to the fact of the salary and to the fact that nohing had been paid under the Kenya judgment, came to the conclusion that, as the debtor could have paid some unascertained amount, -a committal order could issue against the debtor.

The real question on this appeal is: Could the learned Judge $\mathcal{A} =$ make a committal order? If he could, then the receiving order was properly made, and cannot be set aside. Now the only committal order the learned Judge could have made under the Civil Procedure Ordinance and Rules would be one in accordance with the application for execution of the decree.

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Section 38 of the Civil Procedure Ordinance permits a Court to order execution of a decree, " $(d)$ by arrest and detention in prison of any person."

Section 42 (1) of Civil Procedure Ordinance provides for the imposition of a period of imprisonment not exceeding six months where the decree is more than £5. This section also provides. inter alia, that the debtor may be released on payment of the amount mentioned in the warrant.

That amount in this case would be the decretal amount. The application is for imprisonment in default of payment of that amount.

If the learned Judge has rightly applied the case of In rc Fryer to the interpretation of the Civil Procedure Ordinance and Rules, a debtor may be committed for six months for not paying $a$ part of a debt and cannot obtain his release until the period expires or he pays the whole.

The learned Judge says (bottom of page two of order): $-$

" In re Fryer it was held by the Court of Appeal that the Court has a power of committal under section $5$ of the Debtors Act. 1869, sub-section 2 of which is to the same effect as Order XIX, Rule 37 (1), if proof is given that he has the means of

paying part of the debt even though he has not the means of paying the whole."

Section 5, sub-section (2) of the Debtors Act contains the following: $\longrightarrow$

"For the purposes of this section, any Court may direct any debt due from any person in pursuance of any order or judgment of that or any other competent court to be vaid by instalments, and may from time to time rescind or vary such order."

There is no provision in the same terms in Order XIX, Rule 37. In Kenva, instalments can be ordered by the Court at the time of passing of the decree—Order XVIII, Rule 11 (1) and after the passing of the decree with the consent of the decreeholder; on the application of a judgment debtor. Nevertheless, the power under Order XIX, Rule 37, to disallow the application on such terms as the Court thinks fit would permit the Court to order instalments.

In In re Fryer, Lord Esher, M. R. (see p. 481, L. J. Report), $savs :=$

"I have no doubt that under section 5 of the Debtors Act, 1869, the Judge was, if the necessary conditions were fulfilled. entitled to deal with the application as made against one who had not paid money which he was bound to pay under an order of the Court. . . . It was shown that he was able to

pay not the whole at once but a part of it. Therefore he was able to pay part and neglected to do so, and that brought him within the jurisdiction of the Court... and if he neglects to pay that part which he was able to pay, the Court has jurisdiction to deal with whatever he was able to pay."

In the report of the same case in 17 Q. B. D., the words are " has jurisdiction under section 5 to deal with that default." That is to say, the Court can order the debtor to pay that sum which he is shown to be in default. The learned Master of the Rolls then made an order for the debtor to pay £100 and £7/10/0 per month until the sum due was paid, and set aside the receiving order from which the debtor had appealed. Are the powers of the Court in Kenya under Order XIX, Rule 37, any different from the powers of the Court in England under section 5 of the Debtors Act?

The nature of the power to commit under the Debtors Act is well explained in a later case, In re Edgcome (1902), 2 K. B. 403, where Vaughan Williams, L. J., at p. 410, says:-

"That an order to commit can only be made where there is a contumacious debtor who has or has had the means and his conduct is in the nature of contempt."

It is clear from that case, if there is any need of authority for the statement, that a committal under section 5 is a punitive order, a punishment for contempt and not merely a means of enforcing payment. There must be something in the nature of delinquency shown before the order should issue.

Now Order XIX, Rule 37 $(1)$ , says that "where it appears to the Court that the judgment debtor is unable from poverty or other sufficient cause to pay the amount of the decree, the Court may, upon such terms as it thinks fit, make an order disallowing the application. . . . "

The inability to pay is in respect of the decretal amount the whole amount. There is no contempt if the debtor has neglected to pay a part, for the order is to pay the whole. That the Court, in considering what order it ought to make on the application, may, under Rule 2, take into consideration the neglect to pay part of the amount, does not, in my opinion, give the Court power to commit to prison forthwith.

In re Fryer was decided under the Debtors Act, section 5 $(2)$ , which definitely gives the Court power to order instalments; and the order in that case was an instalment order. That case is no authority for saying that a neglect to pay a part of a judgment debt where means to pay that part are shown to exist is such a default as to ground an order for imprisonment under that section. In Linton $v$ . Linton, which the Court in In re Fryer professed to follow, a committal order was made (1) because the debtor had the means to pay the actual sum ordered to be paid, and $(2)$ because he was clearly contumacious. Rule 37 of Order XIX uses different words from those used in section 5 of the Debtors Act. but it is clearly intended that imprisonment for debt is to be treated in the same way as it is under the Debtors Act. In applying therefore English decisions in aid of its interpretation, such decisions must not be taken as deciding more than they actually do.

In the Debtors Act the jurisdiction to commit is given by section 5 (1)—in Kenya by the Civil Procedure Ordinance. Section 5 $(2)$ of the Debtors Act limits this jurisdiction to where it is proved to the satisfaction of the Court that the debtor has had the means "to pay the sum in respect of which he has made default".

In Order XIX, Rule 37, the corresponding words are "to pay the amount of the decree". Even if In re Fryer can be said, by reason of the words used by the Master of the Rolls, to have extended the meaning of the words "the sum in respect of which he has made default" in section 5 (2) of the Debtors Act, it would be inapplicable to the interpretation of the Kenya rule, which is in different and more definite terms. But it is clear from the order which was made in In re Fruer that it was never intended that power to commit must necessarily arise on a neglect to pay part of the sum in respect of which the debtor has made default.

To ground a committal there must first of all be an order to pay that amount which the debtor is shown to be capable of paying, and secondly a refusal or neglect to pay the sum so ordered; means to pay having been established.

I think for these reasons the learned Judge was wrong in considering he had jurisdiction to commit, and the receiving order must be set aside.

Appeal allowed with costs.

ABRAHAMS, C. J., Ag. P.-I have had the advantage of reading the judgment of my brother Horne, and I am in complete agreement with it.

SIR JOSEPH SHERIDAN, C. J.-I have had the advantage of reading the judgment of my brother Horne, with which I am in complete agreement. A receiving order was made against the appellant on the authoriv of In re Fryer, 3 Morrell's Bankrupter Reports 231. In that case, it is stated in Lord Esher's judgment, at p. 236: "The co-respondent was ordered to pay £1,000. The evidence showed that he had been able to pay a part of it, and he had neglected to do so, and that brought him within the power of the Court. I abjure and reject entirely the

argument that if the debtor has not had the means of paying all the £1,000, but has had the means of paying a part of it, the Court has not jurisdiction to commit him because he had not had the means of paying the whole. The debtor was bound by the order to pay each pound of the sum which he was ordered to pay, and if he neglected to pay any part which he had the means of paying, the Court had jurisdiction to commit him for the neglect." Then the Court proceeded to make an order for the payment of £100 within one month and monthly instalments of $£7/10/0$ . I am accordingly of the opinion that a receiving order should not have been made in this case preparatory to the making of an instalment order based on capacity to pay and a failure to comply wih such order. I think this becomes clear when one considers the concluding portion of Lord Esher's judgment, as reported in 55 L. J. (Q. B. D.) 478, at 481, where he says: "By the order to pay £1,000, he is bound to pay each single pound, and if he neglects to pay any part of the 1,000 he neglects to pay that part which he was able to pay, and the Court has jurisdiction to deal with whatever he was able to pay." The significant words are "to deal with whatever he was able to pay".

I would allow the appeal and set aside the receiving order, with costs in this Court and the Court below.