ABC BANKING CORPORATION LTD v. H. L. C.

NG HA KWONG

2017 SCJ 245

Record No. SC/COM/PET/00216/2016

IN THE SUPREME COURT OF MAURITIUS

(BANKRUPTCY DIVISION)

In the matter of:

ABC Banking Corporation Ltd
Petitioner
v.

Ng Ha Kwong Harry Leung Chong

Respondent

Judgment

This is a petition for a Bankruptcy Order pursuant to Section 4(1) of The Insolvency Act
on the ground of failure to comply with a bankruptcy notice [Section 4(2)(a)].

In the affidavit in support of the application it is averred that the respondent has been
domiciled in Mauritius for the past three years. He is indebted to the petitioner in the sum of
Rs 1,132,914.64/- together with interest at the legal rate as from the 20 July 2015 by virtue of a
judgment delivered by the Commercial Division of the Supreme Court.

On 15 January 2016 a bankruptcy notice was served personally on the respondent

requesting him to pay the above mentioned sum together with 10% Attorney’s commission and
VAT as well as costs. The sum claimed is liquidated, due and demandable.

The respondent has failed to comply with the said notice. Hence the petition for the
bankruptcy order.

In his first affidavit in reply, the respondent has admitted all the averments of the
applicant’s supporting affidavit, save for his address, and has averred that he is willing to pay a
monthly sum to be agreed upon with the petitioner.

In his second affidavit dated 04/05/2017 the respondent has averred that the judgment
debt which is the basis of the petition, was against both himself and Mr. C. Li Foo Wing “jointly
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and in solido”. The petitioner is not pressing with its claim against Mr. C. Li Foo Wing in respect
of the other half of the judgment. Any arrangement made between the petitioner and
Mr. C. Li Foo Wing amounts to a “transaction” entered into behind the respondent’s back and
cannot bind him. The respondent has averred that the petitioner cannot apportion the judgment
debt between Mr. C. Li Foo Wing and himself. Nor can it proceed with its present case for half
of the judgment debt against him.

The representative of the petitioner deponed to the effect that the respondent and
Mr. C. Li Foo Wing who were both directors of “Imperial Dragon Ltd” intervened as guarantors in
various lease agreements entered into between “Imperial Dragon Ltd” and the petitioner.
Following the default of “Imperial Dragon Ltd” the petitioner entered a case against both the
respondent and Mr. C. Li Foo Wing to recover the debt and on 20th July 2015 obtained judgment
against both for a total of Rs 2,265,829.29 with Interests and Costs. Following the judgment,
Mr. C. Li Foo Wing negotiated with the petitioner and reached an agreement for a payment
schedule regarding half of the judgment debt and he has since been complying with the said
agreement. The Respondent was not informed about the agreement apportioning the debt. In
fact he never called upon the petitioner to negotiate any repayment schedule, nor has he
effected any payment towards the debt. Hence the present petition against him in respect of the
remaining half of the debt.

The respondent deponed in Court and admitted the judgment debt. He denied any
knowledge of the agreement between Mr. C. Li Foo Wing and the petitioner and maintained that
he was not informed of any such agreement. According to him the petitioner cannot proceed
against him in view of the agreement which it has reached with Mr. C. Li Foo Wing.

It is admitted that both Mr. C. Li Foo Wing and the respondent intervened as guarantors
to guarantee the payment of any amount due by “Imperial Dragon Ltd” by virtue of the lease
agreements. It is not disputed that the petitioner’s claim was for a judgment “jointly and in
solido” against both the respondent and Mr. C. Li Foo Wing. In its judgment delivered on 20
July 2015, the court ordered “the two defendants to pay to the plaintiff company the sum of
Rs 2,265,829.29 together with interest and costs”.

The evidence has revealed that following the judgment, Mr. C. Li Foo Wing negotiated
with the petitioner and reached an agreement with it regarding the repayment of the judgment
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debt. On 17 September 2015 the petitioner wrote to Mr. C. Li Foo Wing agreeing to a “full and
final repayment of your part of liability as guarantor for the sum of Rs 1,200,000” “on the terms
set out in the letter”. Mr. C. Li Foo Wing has been complying with the agreement and has been
making regular payments, the agreed amount is expected to be settled by August 2017.

Counsel for the respondent has submitted that the petitioner’s claim was for a judgment
against both the respondent and Mr. C. Li Foo Wing “jointly and in solido” so that each
defendant was individually bound to pay the full judgment amount.

Counsel argued that the nature of the agreement between the petitioner and
Mr. C. Li Foo Wing is indeterminate. It is an imperfect agreement, it is neither a transaction nor
a compromise and it is not binding upon the respondent. The respondent was not aware of the
agreement reached between Mr. C. Li Foo Wing and the petitioner whereby the debt was
halved, nor was he aware that Mr. C. Li Foo Wing would be discharged of the debt upon his
payment of half of the amount. According to counsel the discharge which the bank gave to
Mr. C. Li Foo Wing, constitutes a discharge of the whole debt due to the petitioner. It is his
contention that the petitioner should have proceeded against either one of the debtors for the
whole debt and it would then have been for that debtor subsequently to sue his co-debtor for his
half share of the debt.

In his reply counsel for the petitioner submitted that the Court gave judgment against
both defendants. As such the petitioner is entitled to claim half of the amount from each
defendant. He added that the agreement between Mr. C. Li Foo Wing and the petitioner did not
extinguish the respondent’s obligation with respect to the debt and the bankruptcy order should
accordingly be issued.

The evidence has revealed that the respondent and Mr. C. Li Foo Wing who were both
directors of “Imperial Dragon Ltd”, signed various lease agreements with the petitioner on behalf
of “Imperial Dragon Ltd”. Judgment has been obtained against both of them with respect to the
amount due on these agreements.

There is no requirement for any fixed or determined formula to establish whether

Mr. C. Li Foo Wing and the respondent are jointly liable for the repayment of the debt. Indeed
“si la solidarité doit être expressément stipulée il n’y a pas ici d’expressions sacramentelles”.
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[Vide Note 279 Dalloz Répertoire Pratique - Tome VIII Vo «Obligations»]. It is beyond
dispute that in the present matter by virtue of the judgment which ordered both defendants to
pay the debt, Mr. C. Li Foo Wing and the respondent were liable “jointly and in solido” to pay the
total amount of Rs 2,265,829.29 to the petitioner.

The joint liability to pay the debt would clearly fall within the purview of Article 1200 of
the Code Civil which stipulates that:

“Il y a solidarité de la part des débiteurs, lorsqu’ils sont obligés à une

même chose, de manière que chacun puisse être contraint pour la
totalité, et que le paiement fait par un seul libère les autres envers le
créancier ».

As a result in line with the provisions of Article 1222 of the Code Civil each one of the
debtors was bound and could be made to pay the whole amount due, since the debt was
« indivisible ».

Article 1222 of the Code Civil reads as follows:

“Chacun de ceux qui ont contracté conjointement une dette indivisible, en

est tenu pour le total, encore que l’obligation n’ait pas été contractée
solidairement.»

Each one of the debtors therefore remains individually liable to pay the totality of the
debt. It was thus open to the petitioner to proceed against either of them for the whole debt or
to claim half of the amount from each debtor as it has chosen to do here.

In so far as the “transaction” entered into between Mr. C. Li Foo Wing and the petitioner
is concerned, this is only enforceable between these two parties. It was designed to put an end
to the litigation between the petitioner and Mr. C. Li Foo Wing only as regards his share of the
debt and not for the whole debt. The wording of the agreement is revealing indeed; it refers to
the agreement for a “full and final repayment of your (Mr. C. Li Foo Wing’s) part of liability as
guarantor”. There is nothing in the agreement from which it can be inferred that the whole debt
would be extinguished upon Mr. C. Li Foo Wing’s payment of half of the debt. The “transaction”
between Mr. C. Li Foo Wing and the petitioner binds only the two signatories and puts an end to
the dispute between them. Further the “transaction” can neither bind nor be invoked by other
third parties as is made clear in Article 2051:
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«La transaction faite par l’un des intéressés ne lie point les autres
intéressés, et ne peut être opposée par eux.»

And

Note 308 of Dalloz (supra):

«… L’article 2051 dispose, en effet, que la transaction faite par l’un des
intéressés ne lie point les autres intéressés et ne peut être opposée par
eux au créancier...»

In any event the agreement reached between the petitioner and Mr. C. Li Foo Wing for
apportionment of the debt between the two debtors, does not have any incidence on the legal
position as stated above. It does not in any way entail that the respondent’s liability for the debt
is extinguished nor does the discharge given to Mr. C. Li Foo Wing upon satisfaction of his
portion of the debt, give rise to a discharge of the whole debt as suggested by Mr. Tsang Man
Kin counsel for the respondent. The following extract explains that in such circumstances, the
“créancier” is perfectly entitled to proceed against any co-debtor and that any “remise partielle”
of the debt does not prevent the petitioner from proceeding against the respondent as a co
debtor in respect of the outstanding amount –

Note 287:

“Le créancier peut vouloir faire une remise partielle, profitant seulement à
l’un des codébiteurs solidaires ; en ce cas, la dette n’est éteinte que pour
la part du codébiteur qui a obtenu sa décharge, et le créancier peut
encore répéter la dette contre les autres, déduction faite de la part de
celui auquel il a fait la remise (Art. 1285 C. Civ)…» - Dalloz (supra)

There is no merit therefore in the argument of counsel that the discharge which the
petitioner gave to Mr. C. Li Foo Wing, constitutes a discharge of the whole debt due to the
petitioner and that the petitioner should have proceeded against only one of the debtors for the
whole debt and it would be then for that debtor subsequently to sue his co-debtor for his share
of the debt.

This is further reinforced by the express provisions of Article 1203 (hereunder

reproduced) which prevents a co-debtor from imposing upon the “créancier” “le bénéfice de
division” –

«Le créancier d’une obligation contractée solidairement peut s’adresser

à celui des débiteurs qu’il veut choisir, sans que celui-ci puisse lui
opposer le bénéfice de division.»
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Article 1204 goes even further by providing that it is open to the “créancier” to proceed
against any other co-debtor until he has been able to recover the full amount of the debt. It
reads as follows:

«Les poursuites faites contre l’un des débiteurs n’empêchent pas les
créancier d’en exercer de pareilles contre les autres.»

The following Note sheds further light on the subject:

Note 297:

« Après avoir poursuivi l’un des débiteurs solidaires, sans avoir obtenu tout ce
qui lui était dû, le créancier peut encore poursuivre les autres jusqu’à parfait
payement (art. 1204 C. civ) ; c’est à ce moment seulement que les débiteurs sont
tous libérés. » - Dalloz (supra)

Notes 333, 334 and 335 further provide the following:-

333 : «La solidarité cesse lorsque la créance est définitivement éteinte ...»

334 : «Il est loisible au créancier de diviser la dette entre tous les codébiteurs
solidaires ...»

335 : «Il se peut aussi que le créancier décharge de la solidarité quelques-uns

seulement des codébiteurs. On dit alors que la remise de solidarité est
individuelle, ou encore, que la renonciation à la solidarité est relative. En ce cas,
le créancier ne peut plus poursuivre que pour leur part celui ou ceux à qui il a fait
cette remise. Quant aux autres codébiteurs, il peut encore les poursuivre
solidairement, mais déduction faite de la part de ceux qui ont obtenu remise de la
solidarité (C. civ. art. 1210) …» - Dalloz (supra)

I accordingly find that respondent’s arguments are totally devoid of any merits
whatsoever. I find that the respondent is indebted to the petitioner in an amount of
Rs 1,200,000 representing his share of the judgment debt in favour of the petitioner, that he has
failed to comply with the bankruptcy notice dated 15 January 2016 and that as such the
bankruptcy order should issue. I accordingly adjudge the respondent bankrupt today Friday 30
June 2017 at 10.30 hours.

R. Mungly-Gulbul
Judge
30 June 2017
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For Petitioner: Mr. D. Dodin, of Counsel

Mr. Attorney Y. Balgobin

For Respondent: Mr. J. Tsang Man Kin, of Counsel

Mr. Attorney G. Ramdoyal