Court allows cross-examination and oral evidence in bankruptcy notice proceedings despite lack of affidavit.

[*428] 1984 Jan. 28

(N. NICOLAOU, D.J.)

IN THE DISTRICT COURT OF NICOSIA

In the matter of Stelios Kitromilides,

(Bankruptcy Petition No. 67/83).

Bankruptcy - Notice of “bankruptcy - Allegation by respondent that an agreement was made between him and the applicant for the payment of the relevant judgment .debt by monthly instalments - Whether respondent can compel attendance of applicant for cross-examination - The Civil Procedure Rules, 0.39, r.1 - Whether respondent can be allowed to give oral evidence and call witnesses to support his version - The Bankruptcy Law, Cap. 5, section 87 and 93 - In the circumstances of this case and although the applicant has not filed any affidavit in these proceedings respondent would be allowed to cross-examine him on the crucial issue of the alleged agreement - Furthermore, although the evidence sought to be adduced viva voce could have been adduced by affidavit, the interests of .justice will be served, if respondents request for adducing oral evidence is met.

Bankruptcy - Object and nature of Bankruptcy proceedings.

E. Mitsingas, for Applicant-Creditor.

V. Hji Georghiou, for Respondent-Debtor.

RULING

The following ruling was delivered by:-

N. NICOLAOU, D.J.:- In the course of the hearing of this Bankruptcy Notice issued and served on the above judgment-debtor the following issues were raised by the parties to these proceedings for their determination by the Court. [*429]

(i) Whether the applicant could have “been called upon and/or compelled to be cross-examined following the issue and service upon him of a written notice to this effect.

(ii) Whether the respondent could have given oral evidence himself before the Court in addition to calling any other witnesses to support his allegation as they appear in his opposition.

Perusing the file of the proceedings one could see that after judgment was given against the respondentdebtor who was the defendant in Action No. 6237/82 for the sum of £3,336.- with interest at the rate of 6% as from 10.1.63 till final payment, plus £81.200 mils costs and due to the non satisfaction of the above sum as alleged by applicant, a bankruptcy notice was filed against the respondent pursuant to the Bankruptcy Law, Cap. 5.

The respondent objected to the issue of such notice against him and in support of his case has filed an affidavit dated 3.6.83 by which he has in effect alleged that due to the existence of an agreement between the litigants as to the mode of payment of the above judgment debt, applicant was estopped from taking bankruptcy proceedings against him.

By para. 2 of the above affidavit the respondent alleged that following an agreement between himself and the applicant he undertook to pay off the above judgment debt by monthly instalments of £182.- paying same to the Ktimatiki Bank of Cyprus Ltd to which hank the applicant was indebted himself.[*430]

Counsel for the applicant, argued, that his client ought not, under any circumstances, to “be called upon to be cross-examined, insisting that such proceedure is not available to the respondent and in support of his argument he cited section 5(3)(g) of the Bankruptcy Law, Cap. 5 (which I consider quite inapplicable in the present situation). Relying on the same proviso he has further argued that same do not give any right to the respondent to call any witnesses before the Court to give oral evidence to support his case.

On the other hand, counsel for the respondent argued that it was perfectly proper for his client to proceed giving oral evidence before the Court and furthermore to call other independent witnesses to support his versions beside calling the applicant to be

cross-examined, given that notice to this effect was issued and served on the applicant who in any event happens to be

present in Court.

These are briefly the factual and legal issues raised before me and I now turn to consider the legal aspect of the case.

Object and nature of Bankruptcy proceedings.

Where a person is insolvent i.e. unable to pay his debts as and when they fall due either he or his creditors may petition for the Court to take over the administration of his estate and its distribution among creditors.

Bankruptcy has been defined as the compulsory administration of a person’s estate by the Court for the benefit of his creditors generally; and bankruptcy law is that part of the Common Law and Statute Law relative to that compulsory administration.[*431]

In Cyprus the relevant Bankruptcy Law is Cap. 5 enacted on the 1st of January, 1931. The corresponding Law in England is constituted by the Bankruptcy (Amendment) Act 1926, the Bankruptcy Rules 1915-1965, the County Courts

Act 1959 and by the principles derived from the decisions of the Courts.

In England the bankruptcy proceedings are divided into two categories;-

1. The ordinary bankruptcy proceedings which are instituted on the strength of the Bankruptcy Act 1914, and

2. The Criminal bankruptcies, which can be proceeded upon by the provisions of the Powers of the Criminal Courts Act 1973.

In Cyprus criminal Bankruptcies, within the meaning they are applied in England, do not exist, though several relevant provisions in the Bankruptcy Law, Cap. 5, appear dealing with the punishment of fraudulent bankrupt debtor, punishable upon conviction either with imprionment or a fine, as if the offender was a criminal.

It is evident from the above that the bankruptcy procedure in Cyprus, as it is provided by the Bankruptcy Law, Cap. 5 and the relevant Bankruptcy Procedure Rules issued on the strength of this Law, are civil proceedings and it remains to be seen whether order 39 rule 1 of the Civil Procedure Rules apply in the present situation or whether similar proceedings are available to either side whenever they decide to cross-examine each other.

Williams and Muir Hunter on Bankruptcy 19th ed. by Muir Hunter and David Graham at page 855 under the title [*432] “EVIDENCE”, with reference to the right of either party in bankruptcy proceedings to’ cross-examine the other side’s affiant, states this relevant:-

“EVIDENCE”

“The evidence to be used on the application shall, unless the Court otherwise, orders, be given by affidavit, but any opposite party may require, by notice in writing addressed to any deponent or his solicitor, the attendance, of such deponent for cross-examination”.

And further down under the title “Affidavits by parties other than applicant” states:-

“All affidavits intended to be used by any party to such application, other than the applicant, shall be filed in the Court, and copies served on the applicant not less than four days before the day appointed for the hearing of the application”.

In the same text-book referred to above at page 553 under the title “Affidavits against motion”, it is stated:-

“Where a respondent intends to use affidavits in opposition to a motion he shall deliver copies of them to the applicant not less than two days before the day appointed for the hearing”.

And further down at page 554 under the title “Filing affidavits on motion” it is stated:- [*433]

“Affidavits supporting or opposing any motion shall be filed with the Registrar not later than the day before the hearing.

The practice of the Bankruptcy Court is that where an affidavit has been filed, the opposite party is, in principle, not entitled to crossexamine the deponent on it. until it has been read by the party filing it (ex parte Child (1832) 20 Ch. D. 126). Until an affidavit has been read or used in opening the case it cannot be referred to or used for any purpose whatever, accordingly, where a respondent filed an affidavit, but did not appear at the hearing the applicant was not allowed to refer to it. It is, however, customary for the affidavits of both “sides to be read during the opening, so that the applicant may thereafter open his case in the light of the respondent’s contentions”.

In the Supreme Court Practice (1967) Vol. I at p. 493 under the title “cross-examination upon affidavits” it is stated the following:-

“When an affidavit has once been filed by any party the opposite party is entitled to use statements therein as admissions by deponent.The practice in bankruptcy is different, and such an affidavit if not used by deponent cannot be treated as an admission by him (Re: Cohen (1924)) 2 Ch. 515, following Ex. P. Child 20 Ch. D. 126). [*434]

The affidavit may be allowed to

he used in Court though the .cross-examination is pending (Lewis v. -James, 32 Ch. D. p.33l). The Court may refuse to

act on an affidavit where the deponent cannot be cross-examined. Shea v. Creen, 2 T.L.R. 533, and see The Parisian,

13 P.D. 16) and if the deponent does not appear for cross-examination where notice to cross-examine has been given the affidavit cannot be read in his absence without leave (see Order 38 rule 1). This Rule applies in Bankruptcy (Re Bottomley, 84 L.J.K.B. 1020)”.

From the above it is abundantly clear that either side is entitled to give notice to the opposite side to cross-examine any deponent whose affidavit is before the Court (As to this see order 39 rule 1 of the Civil Procedure Rules, under the title “Affidavits” which reads as follows:-

“39(1) Upon an application evidence may be given by affidavit, but the Court or a Judge may on the request of either party, order the attendance of the deponent for cross-examination”.

As I have stated hereinbefore the respondent has given written notice to the applicant to cross-examine him, however, without stating onto which order or rule he relies and furthermore without stating as to what matter or issues he is needed to be cross-examined given that the applicant has never filed an affidavit in support either of his application or in reply. [*435]

I take it that the respondent’s intention to cross-examine the applicant meant to base same on order 39 rule 1 of the Civil Procedure Rules and I believe it will serve the purpose of justice if I do not dismiss the application for the simple reason that it is not expressly stated on the face of his application onto which order or rule he relies.

Although the applicant has never filed an affidavit in these proceedings to facilitate the Court at least as to the alleged existence or not of an agreement.between the litigants preventing applicant to proceed taking bankruptcy proceedings against the respondent which course as I have stated above is the proper one, I am prepared to allow the respondent to cross-examine the applicant with regard to this crucial issue and I therefore call upon him to attend the Court on 25.2.84 and be cross-examined as prayed.

However with regard to the remaining suggestion put forward by the respondent to give himself oral evidence and call any other witness to support his versions, although I find that same can normally be placed before the Court by affidavit evidence yet relying on sections 87 and 93(5) of the Bankruptcy Law, Cap. 5, mentioned hereinbelow I feel it will serve the purpose of justice if I meet the respondent’s request.

Section 87 and section 93 of Cap. 5 referred to above provide:-

Section 87:-

“The Courts having jurisdiction in bankruptcy shall be the District Courts and in the exercise of such jurisdiction shall subject to the [*436] provisions of this Law have all the powers conferred on District Courts as in the trial of a civil action”.

Section 93(5):-

“Subject to general rules, the Court may, in any matter, take the whole or any part of the evidence either viva voce, or by interrogatories or upon affidavit or by commission abroad”.

I, therefore give the following directions:-

Applicant-judgment creditor to appear before the Court on 25.2.84 to be cross-examined with regard to the issues raised in the present proceedings as suggested by his counsel on 15.10.83.

Respondent is thereafter entitled to give oral evidence himself and call any other relevant evidence.

Applicant’s right to cross-examine the respondent and his witness is preserved.

In the circumstances I decided to make an order as to no costs.

Order as above with no order as to costs.