(COURT OF APPEAL)

ISMAIL BUSHARA v. AGIP COMPANY LTD.

AC-REV-630-1969

Principles

  Civil Procedure—Receiver must be distinguished from manager—Same person may be appointed both receiver and manager

A receiver has no authority to carry on business. A manager, on the other hand has power to continue a business, and so if it is desired that business should not cease, receiver and manager should be appointed. The same person may be appointed both receiver and manager.

Advocate: Abdel Rahim Hag Hamad for the respondent.

Judgment

Tawfik Abdel Mageed J. March 17, 1970 : —The respondent and plaintiff instituted CS-49- (District Court El Obeid) against the applicant and defendant to restore the possession and administration of AGIP petrol station at El Obeid for failure of the latter to perform his duty as agreed. The advocate for the respondent and plaintiff thereafter on January 16, 1969 submitted an amended statement of claim. On the written reply made by the advocate for the defendant and applicant thereto, the learned District Judge, El Obeid, framed the relevant issues. To our surprise the learned District Judge framed an issue on the counterclaim without any application by the defendant in that respect (issue No. 4). To the contrary the advocate for the applicant stated clearly in his statement of defence that he would reserve at present his right to counterclaim (statement of defence paragraph 4 (b)). However this irregularity was remedied when the advocate for the applicant and defendant did submit an amended statement of defence including an application of a counterclaim later1

On May 1, 1969 both advocates for the parties agreed that two receivers be appointed to run the petrol station subject of the dispute. It was concluded that each party had to nominate one receiver. On May 3, 1969 the court passed a decision to that effect and specified the duties of those receivers as follows:

(i) To keep the said petrol station in order and to submit a statement of costs incurred in so doing to the respondent, and plaintiff to pay the same.

(ii) To run the petrol station; to do the business of selling and buying and to keep records of account which they should monthly submit to the court and parties.

(iii) Each receiver was to be paid £S.25 monthly out of the profit to be realized from that petrol station. In accordance with that agreement of parties and decision of the court, the plaintiff and respondent nominated certain Mohamed El Zein Abdel Rahman-a merchant and the defendant and applicant nominated a certain Ismail Mohamed Yassin—an ex-army officer. The court issued letters of appointment as receivers to both nominees on May 13, 19691

(iv) On May 20, 5969 the advocate for the plaintiff-respondent informed the court that Mohamed El Zein, his nominee, refused to act as a receiver and suggested that a certain Mr. Christon, the sale agent of his clients be appointed instead. The learned advocate for the defendant and applicant objected to the suggestion and submitted that in case his objection would be disallowed he also would like to nominate his own client, the defendant-applicant to act as a receiver instead of Ismail Mohamed Yassin. The court, after hearing Mohamed El Zein and Christon, disallowed the objection of the advocate for defendant-applicant; turned down his suggestion and issued an order appointing Christon as the second receiver.

(v) The defendant-applicant submitted an application for revision against the order of appointment of the receiver Christon to His Honour the Province Judge, Kordofan Circuit, who dismissed the application summarily on the ground that it was hopelessly out of time (KN-PC-REV-41-1969).

(vi) The applicant-defendant is now applying to this court to revise the orders of the learned District Judge, El Obeid, whereby he appointed a certain Christon as a second receiver, and that of His Honour the Province Judge, Kordofan Circuit, whereby His Honour dismissed with costs his application for revision to him.

The first point to be determined by this court is whether this court has to accept this application for revision despite the fact that it is out of time? Indeed the court has already decided this issue in the affirmative when it did allow the application for revision by serving a copy thereof upon the advocate for the plaintiff-respondent. This court has done so becauseit was manifestly clear from the records of CS-49-1968 that the applicant-defendant did not at all hesitate in forwarding his strong objected to the appointment of Christon as a receiver. The applicant-defendant who appeared without his advocate on May 29, 1969 did apply to the court to allow him time to apply for revision against its order, for his advocate was absent. The applicant-defendant who is a layman, as far as procedure is concerned, should have made such application for enlargement of time to the Province Court which has the jurisdiction to entertain application for revision from the District Court. He ought to have been advised by the court that be should apply to the appropriate court for enlargement of time, or that an application for revision should be submitted within t days from the date of the order of the court below. The Court of District Judge gave no advice of that sort.

However, the Province Court ought to have noticed at the time of application for revision that the application to it was time-barred. If it did notice that it would have summarily dismissed the application for revision. But His Honour, the Province Judge, instead of adopting that procedure, allowed the application for revision, caused the respondent to reply thereto, and elected to dismiss the application on the ground that it was out of time. His Honour had the records of CS-49-1968 from which His Honour could easily discover the date of the order of the learned District Judge subject of the application for revision. His Honour had the dated application for revision submitted to His Honour by the applicant. Both relevant dates were even mentioned in the body of the application for revision made to him. This court is of opinion that His Honour need not, to have allowed the application for revision, arrive at the conclusion that the application for revision to His Honour was out of time. The logical inference from the fact of allowing an application for revision, when it is apparent to the appellate court from the records that such application is out of time, is that the appellate court has found sufficient reason to extend the time for such application. This court itself, by allowing this application for revision to it, is convinced that the reason given by the applicant is sufficient to make this court decline to dismiss this application on the ground of being out of time.

Nonetheless, this court is of opinion that this application for revision should be dismissed because it is groundless.

There is a point which should be clarified at this stage of this judgment, viz, that the receivers appointed by the court in this case are not receivers in proper sense, but both are receiver-managers.

“A receiver in an action is an impartial person appointed by the court to collect and receive, pending the proceedings, the rents, issues and profits of land, or personal estate, which it does not seem reason able to the court that either party should collect or receive, or for enabling the same to be disturbed among the persons entitled.” Kerr On Receivers (12th ed., 1952), p. 1.

“In broad terms, the main function of a receiver is to collect and preserve the income and the outstanding assets of the property which is subject to his authority.” Snell, Principles of Equity (25th ed., 1960), p. 603.

 However, a receiver must be distinguished from a manager, for a receiver as such has no authority to carry on a business. Hence, if he is appoint a receiver of property which includes business, his function is to stop trading, collect the debts and realize the assets. If the receiver is required to run a business he is then a receiver as well as a manager:

Kerr on Receivers (12th ed., 1952), p. 266; Snell, Principles of Equity (25th ed., 1960), p. 604.

A receiver and manager, though his name is proposed or suggested to the court by the parties, or even nominated, yet on appointment such receiver and manager becomes an officer of the court. “The court” in effect assumes the management into its own hands.

“The mere appointment of a receiver operates as a general injunction restraining any interference with him in the performance of his duty; and such interference may be punished as a contempt and further restrained by an injunction specifically addressed to the person interfering,” Snell, p. 605 and Kerr, p. 284.

Both above cited authorities agree that, as a general rule, the receiver and manager, to be appointed by a court ought to be an entirely indifferent person and must not place himself in a position in which his interest will conflict with his duty. However, this general rule may well be departed from when there is some good reason to the contrary. Snell, p. 607, Kerr, p. 285.

The receiver and manager subject of this objection, namely, Mr. Christon Christoforos, is not the agent of the respondent-plaintiff; he deals in goods produced by the former and he operates one of their petrol stations in the area. This business relation per se is not sufficient to make this court as well as the court of first instance allow the objection raised by the applicant-defendant. This court believes that the fact that this receiver and manager has appreciable experience of management of the business he is appointed to manage makes him the most suitable person for this office. After all the court will have the control of his activities through accounts and reports which he will periodically submit; and the applicant is not fettered from applying to the court against any objection able conduct of this receiver and manager.

This application for revision should therefore be dismissed with costs.

Ramadan Ali Mohamed J. April 3, 1970 : —I agree that this application should be dismissed with costs, as without merits. The order of the District Judge impeached is not improper. Furthermore, the previous application to His Honour the Province Judge was out of time. The applicant’s submission that he was assured by his counsel that applications for revisions are without time limit cannot avail him. If there was any negligence on the part of the counsel the client’s remedy should be against his counsel.