The Judicial Committee of the Privy Council Decisions

 


Stubbs v. Gonzales & Anor [2005] UKPC 22 (25 May 2005)

ADVANCE COPY

Sidney Stubbs Petitioner

 v.

Gina Gonzales Respondent

The Attorney General Intervenor

FROM

THE COURT OF APPEAL OF THE BAHAMAS

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REASONS FOR REPORT OF THE LORDS OF THE

 JUDICIAL COMMITTEE OF THE PRIVY COUNCIL UPON A

PETITION FOR SPECIAL LEAVE TO APPEAL, OF THE

 3rd May 2005, Delivered the 25th May 2005

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Present at the hearing:-

Lord Hoffmann

Lord Scott of Foscote

Baroness Hale of Richmond

 [Delivered by Lord Hoffmann]

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1. On 3 May 2005 Mr Sidney Stubbs, a member of the Parliament of The Bahamas, presented a petition for special leave to appeal against a decision of the Court of Appeal declining jurisdiction to hear his appeal against an order for his adjudication in bankruptcy on 30 March 2004. The Attorney-General appeared by counsel (Dr Barnett) seeking leave to intervene to support the application. No one appeared on behalf of the petitioning creditor as the debt and costs had been paid by a co-debtor within days of the bankruptcy order and the order was annulled on 26 April 2005. Mr Stubbs nevertheless wished to pursue the petition because the making of a valid bankruptcy order might affect his right to sit as a member of Parliament.
2. Their Lordships decided humbly to advise Her Majesty that the Attorney-General should be granted leave to intervene, that the petition should be allowed and the hearing treated as the hearing of the appeal, that the decision of the Court of Appeal declining jurisdiction should be reversed and that in the exercise of the powers of the Court of Appeal the Privy Council should allow the appeal and set aside the bankruptcy order, subject to leave to the respondent to apply within 30 days to vary or discharge this order. Their Lordships now give their reasons for this decision.
3. At the hearing before the Court of Appeal, neither party raised the question of jurisdiction. The Court of its own motion directed argument on the point. It said, correctly, that its jurisdiction was entirely statutory. It went on to say that the relevant statute, namely the Court of Appeal Act cap 52, gave it no jurisdiction to hear an appeal from a bankruptcy order. Their Lordships must respectfully differ. Section 10 of the Act, in Part III (Appellate Civil Jurisdiction) is in the most general terms: the Court of Appeal has jurisdiction to hear appeals "from any judgment or order of the Supreme Court given or made in civil proceedings". In this context, civil proceedings are contrasted with criminal proceedings, which are governed by Part IV of the Act (Appellate Criminal Jurisdiction). Section 11 contains a list of orders in civil proceedings from which there is no appeal. But the list does not include bankruptcy orders. As bankruptcy orders are neither criminal nor excluded by section 11, their Lordships conclude that they fall within the jurisdiction conferred by section 10.
4. The Court of Appeal offered some reasons why bankruptcy proceedings were not truly civil proceedings. First, they said that they had "quasi-penal consequences" and were therefore "sui generis". They were neither civil nor criminal. Their Lordships do not think that there is some hybrid category of proceedings which falls into a black hole between Parts III and IV of the Act. For the purposes of an appeal, proceedings are either civil or criminal. As bankruptcy proceedings are not "in any sense criminal" (Vaughan-Williams LJ in In re X Y, Ex parte Haes [1902] 1 KB 98, 104), it follows that they are civil.
5. Secondly, the Court of Appeal drew attention to the fact that the Rules of the Supreme Court 1978, which govern civil proceedings generally, do not apply to bankruptcy proceedings: see RSC Ord 1, r.2(2). That is true, but they also do not apply to the winding-up of companies, non-contentious probate proceedings or matrimonial proceedings. No one could claim that these were anything other than civil proceedings. Like bankruptcy proceedings, they are excluded from the Rules of the Supreme Court because they are specialised proceedings which need special rules.
6. Thirdly, the Court of Appeal noted that the Bankruptcy Act 1870 conferred no rights of appeal. It did however allow that a possible explanation was that until the Court of Appeal came into existence in 1965, there was no appellate court to appeal to. A more formidable point was that section 59 of the 1870 Act, which remains unrepealed, provides that the Supreme Court —

"shall have full power to decide all questions of priorities, and all other questions whatsoever, whether of law or fact, arising in any case of bankruptcy coming within the cognizance of such court, or which the court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case; and no such court as aforesaid shall be subject to be restrained in the execution of its powers under this Act by the order of any other court, nor shall any appeal lie from its decisions, except in manner directed by this Act …"

7. This is a somewhat mysterious section because it is today unclear which court the legislature thought might otherwise restrain the court of bankruptcy from exercising its powers or which court might hear an appeal. But their Lordships consider that notwithstanding the principle of construction that generalia specialibus non derogant, the jurisdiction conferred on the new Court of Appeal by section 11 was intended to be in the widest possible terms and to take precedence over old provisions like section 59 which were enacted in the context of an entirely different court structure. It would be remarkable if a civil order having such serious consequences as a bankruptcy order were to be excluded from a right of appeal so broadly stated.
8. Being of this opinion on the question of jurisdiction, their Lordships were disposed to advise that leave to appeal be granted. Ordinarily, they would then have proceeded to hear the appeal at a later date and then, if they remained of the same view, remit the matter to the Court of Appeal to hear and determine the appeal on the merits. In the particular circumstances of this case, however, that appeared to be an unnecessary formality. The petitioning creditor, having been paid in full, has no interest in the matter save as to costs and the petitioner indicated that he did not ask for an order for costs in his favour or seek to disturb the orders made below. As their Lordships were firmly of the view that the Court of Appeal had jurisdiction, they decided to hear the appeal immediately and give a final ruling on that question. They therefore declare that the Court of Appeal does have jurisdiction (subject to section 11 of the Act) to hear any appeal from any order in bankruptcy proceedings.
9. For similar reasons, it appeared to their Lordships expedient not to remit the appeal to the Court of Appeal for hearing on the merits but to exercise the powers of the Court of Appeal and for the Privy Council to deal with the matter itself. The act of bankruptcy upon which the petition was founded was that the creditor had —

"served in the prescribed manner on the debtor a debtor's summons … requiring the debtor to pay a sum due…and the debtor … has, for the space of three weeks succeeding the service of such summons, neglected to pay such sum …"

10. Rule 56 of the Bankruptcy Rules 1871 prescribes that a debtor's summons shall be personally served within twenty-one days from the date of the summons. In the present case, the summons was dated 1 December 2003 and according to the affidavit of the process server was served on 24 December 2003. It was therefore served outside the period prescribed by rule 56. It is well established that the ingredients of an act of bankruptcy must be strictly proved. In this case it appears from the petitioning creditor's own documents that service was defective and that there was no valid act of bankruptcy to support the making of an adjudication order.
11. Their Lordships therefore humbly advised Her Majesty that the appeal should be allowed. Since, however, the petitioning creditor had no notice that their Lordships would deal with the appeal summarily in the way they have, she must have leave, if so advised, to apply to vary or set aside the orders of the Privy Council. In order not to prolong any uncertainty about the outcome of this case which may affect the appellant's parliamentary duties, any such application must be made within 30 days from the date of the Board's report.