Re Hassomal Gaganmal Moorjani Alias Tom Moore

HCB000040/1977

IN THE HIGH COURT OF JUSTICE

IN BANKRUPTCY

N0. 40 OF 1977

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BETWEEN

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Coram: Hon. Jones J. in Court

Date of hearing: 11 November 1986

Date of delivery of judgment: 21 November 1986

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JUDGMENT

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1. A receiving order was made against H. G. Moorjani alias Tom Moore (the bankrupt) on the 5th August 1977 on the bankrupt's own petition that war, presented on the 21st July 1977. The Offical Receiver was appointed to be the receiver of the estate. An adjudication order was made on the 3rd October 1977.

2. G. G. Moorjani alias George Moore (the applicant) brother of the bankrupt submitted a proof of debt with the Official receiver on the 18th August 1977 for $180,000 being the balance due in respect of a loan of $200,000 made on the 12th September 1975 by a cash cheque. He claimed that $20,000 of the original loan was repaid on the 26th March 1976. The Official Receiver rejected the proof of debt on the 21st August 1986 on the grounds that insufficient evidence had been produced to substantiate the claim. By the present motion filed on the 9th September 1986, the applicant seeks an order to reverse the decision of the Official Receiver under the provisions of Rule 24 of the Proof of Debts rules Cap. 6.

3. Although the applicant was not officially informed of the rejection of the proof of debt until August 1986, he was told on the 15th September 1977 at the first meeting of the Committee of Inspection of which he was a member, that the bankrupt not only denied liability for he claim but had also alleged that the applicant owed him $20,000. At that meeting, the applicant denied this allegation and stated that he had given a cash cheque for $200,000 which was cashed by the bankrupt who paid out of this sum $70,000 to a person named Wong Tak-shing and had retained the balance. He also said that he would produce the reverse side of the cheque for examination and that, if necessary, he would invite the manager and accountant of the bank to confirm his statement. Subsequently, the applicant produced a photo-copy of the cheque together with photo-copies of two counterfoils dated the 12th September 1975 from his cheque book, one of which related to the cheque in question. The handwriting on these documents apart from the Chinese characters on the reverse of the cheque is that of the applicant." The first counterfoil has written upon it "$200,000" with the words "issued as cross cheque cancelled HGM wants cash cheque". The cheque that was subsequently drawn bears the next number in sequence in the cheque book and upon the reverse side, the following words appear "cheque is issued to H. G. Moorjani as temporary loan against to purchase 200,000 shares of Tai Sang Land at $1 per share." It is common ground that the Chinese characters on the back of the cheque read "Wong Tak-shing". The counterfoil for this cheque has written on it, after the date, "cash loan to Babu H. G. Moorjani $200,000." The applicant said that the bankrupt was known to his family as Babu.

4. The applicant alleged that at first he drew another cheque in favour of the bankrupt which relates to the first counterfoil but the bankrupt requested that a cash cheque be issued instead. After he drew the second cash cheque, he instructed his bank to transfer $200,000 from a fixed deposit that was due to mature on that day to be paid into his current account and said that he had issued a cheque for $200,000 to the bankrupt. On the same day after lunch, he went to the bank where he saw the bankrupt who informed him that he had been unable to cash the cheque. The applicant spoke to the bank's accountant who explained that a Chinese man had tried to cash the cheque instead of the bankrupt. The bankrupt told the applicant that he had an arrangement with Mr. Wong whereupon the cheque was cashed. The $200,000 was handed to Mr. Wong who in turn gave $130,000 to the bankrupt. This evidence though of no material significance conflicted with the statement that the applicant made at the first meeting of the Committee of Inspection that the money was first handed to the bankrupt.

5. On the 8th September 1976, the applicant sent a registered letter to the bankrupt which reads as follows :-

However, no legal proceedings have ever been instituted by the applicant for the recovery of the amount that he claims to be due.

6. Mr. Bell who appeared on behalf of the applicant submitted that there was no evidence to show that the documents produced by the applicant are false whilst he emphasised that they were in existence prior to any dispute arising between the parties and before the bankruptcy petition was filed. He also levelled criticism at the Official Receiver's failure to alert the applicant to the consequences if additional evidence in particular from the bank was not produced. In fact the evidence reveals that the applicant believed that the Official Receiver would tale steps to interview the potential witnesses.

7. It was asserted that the applicant was under the impression that his proof had been accepted in the absence of a positive rejection by the Official Receiver and by his continued membership of the Committee of Inspection.

8. Mr. Bell sought leave to cross-examine Mr. Brown, the officer in charge of this case for the Official Receiver upon the reasons that were given by the bankrupt for his denial of liability. He contended that the Official Receiver was not entitled to rely on a bare denial as a sufficient reason for rejecting the proof. I refused this application which was misconceived. The Official Receiver acts in a quasi judicial capacity when he makes a decision whether a proof of debt should be accepted or rejected. The purpose of this present application is to determine whether or not his decision was right upon the evidence that was presented. The applicant has no right to cross-examine the Official Receiver upon the reasons for his decision.

9. It is abundantly clear that the onus of proof is upon the applicant to establish the debt upon a balance of probabilities. The only evidence that he provided was that of the cheques and counterfoils to which I have referred. There is no evidence to substantiate the truth of the statements in those documents that the money was provided as a loan nor is there any evidence to establish that the signature on the reverse side of the cheque is that of Wong Tak-shing. The applicant also failed to produce evidence from the bank manager or from the accountant who might have supported some of his evidence. It was not the duty of the Official Receiver to interview the witnesses. Indeed it is remarkable that the applicant's solicitors in 1977 or later did not attempt to obtain this evidence on the assumption that it was available. No explanation was given for the applicant's failure to do so.

10. It is apparent that the applicant was aware that liability was in dispute in 1977 since which time he has taken no steps to issue proceedings against the bankrupt despite his threat to do so in his letter of demand. His explanation for his omission to do so because he believed that his proof would be accepted was absurd.

11. Whilst the failure by the Official Receiver to reject the proof of debt after nine years amounts to an inordinate delay, I am not satisfied that it justified the applicant in his belief that his claim had been accepted. Further he took no active steps to press the Offical Receiver for a decision.

12. In my judgment, the evidence put forward was most unconvincing and insufficient to establish liability. I am quite satisfied that the Official Receiver came to the correct decision in rejecting the proof of debt. The application is accordingly dismissed.

Representation:

Mr. A. Bell (Y. K. Foon & Co.) for Applicant

Miss G. McFarlane for Official Receiver