Tappoo Holdings Ltd v Stuchbery [2004] FJHC 301; HBC0355d.2001s (27 July 2004)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 355 OF 2001

Between:

TAPPOO HOLDINGS LIMITED
TAPPOO LIMITED
Plaintiffs

and

ROBERT ARTHUR STUCHBERY
Defendants

Mr. B. C. Patel for the Plaintiffs
Mr. G. Leung with Mr. S. Leweniqila for the Defendants

DECISION
(Applications for Stay and Interim Payment)

Applications

By summons filed herein on 1 June 2004 returnable for 10 June 1994 the plaintiffs seek orders as follows pursuant to Order 34 r. 4 and Order 29 r.10 & 11 of The High Court Rules 1988:

1. That an early date be fixed to hear the Plaintiffs’ quantum and interest claims; and
   
2. That timetable orders be made for discovery, inspection and any other interlocutory applications the parties may wish to make in the meantime; and
   
3. That the Defendants do pay the Plaintiffs forthwith the sum of $2 million or such other sum as the Court shall think fit by way of interim payment and on account of damages in respect of the Plaintiffs’ claim herein; and
   
4. That the costs of this application be costs in the cause.
   

upon the grounds

(a) That judgment has now been entered against the Defendants on liability; and

(b) That it is over 4 years since the cause of action arose and it is the interest of justice that the matter is speedily finalised; and

(c) That it is just and convenient to make the orders; and

(d) Appearing in the affidavit of Kamlesh Tappoo (f/n Tappoo Kanji) filed herein.

On 10 June 2004 both counsel appeared before me. Ratu Joni Madraiwiwi indicated that it is intended to appeal to Court of Appeal and Grounds of Appeal will be filed by the end of the month. I gave a date of hearing of the said summons for 9 August 2004 at 10.00 a.m to 13 August 2004. Further, an order was made that the matter of “interim payment” will be heard on 15 July 2004 at 10.00 a.m.

It was also indicated by counsel on 10 June 2004 that the application for ‘stay of execution’ of my judgment of 19 May 2004 would also be applied for at the time of filing of the Grounds of Appeal.

The Court stated that if that was done then the motion for ‘interim payment’ and ‘stay’ will be heard together on 15 July 2004.

Then on 29 June 2004 the defendants filed a motion for stay returnable for 15 July 2004 seeking the following orders:

1. That Judgment delivered in the within action by Pathik J of this Honourable Court dated the 19th day of May 2004 be stayed pending the determination of the appeal filed by the Applicant against the said judgment on the 29th day of June 2004.
   
2. Such other order as this Honourable Court deems fit.
   
3. Costs be costs in the cause.
   

On this application the defendants intended to read and rely on the second affidavit of John Kirk Hunter Edmond (a Solicitor of Sydney) sworn 28 June 2004 and filed herein on 29 June 2004.

On 29 June 2004 the defendants filed Notice of Appeal and counsel says that that Motion is relevant to the exercise of the Court’s discretion in determining the application for an ‘interim payment’.

Hearing of Summons for Interim Payment and Motion for Stay

Before the hearing commenced Mr. Leung for the defendants applied by summons to have the matter adjourned on the grounds stated by Ratu Joni Madraiwiwi in the affidavit filed in support. After hearing both counsel I did not think that I ought to grant the adjournment sought. The application was refused and I proceeded to hear the applications already set down before me for 15th July, 2004.

The hearing of the summons for interim payment and motion for stay were heard on 15 July 2004 and concluded with decision to be given on notice as early as possible.

I commend both Mr. B.C. Patel and Mr. G. Leung for their hard work in preparing for the case and filing written submissions with all the authorities bearing on the issues and for their excellent presentation.

Both counsel made oral and written submissions. I also have before me for my consideration the two affidavits of John Kirk Hunter Edmond (‘Edmond’) and two affidavits of Kamlesh Tappoo, Company Director in the plaintiff companies.

Dealing with stay

This application flows from my judgment in this action delivered on 19 May 2004 wherein I ordered as follows:

“There will therefore be judgment for the plaintiffs against the defendants for liability for damages. It is ordered that the defendants pay costs to the plaintiffs which are to be taxed if not agreed. It is further ordered that the plaintiffs apply to Court within 14 days from the date of this judgment for the hearing of the determination of the quantum and interest (if not agreed or resolved by the parties)”.

Grounds for stay

The grounds on which stay is sought are: (a) the defendants are appealing the judgment and believe they have ‘strong chances’ of success; (b) further delay will not prejudice the plaintiffs as they can be compensated by an award of interest, if necessary, and (c) a successful appeal will save time and expense of an assessment hearing.

Principles governing stay

Both counsel stated quite clearly and in considerable detail with authorities principles governing ‘stay’ and ‘interim payment’.

The principles relating to stay are fully set out in the Notes to Or.59 r.13/1 (The Supreme Court Practice 1979 p.909). It states, inter alia, that the Court does not “make a practice of depriving a successful litigant of the fruits of his litigation, and locking up funds to which prima facie he is entitled’ pending an appeal. (The Annot Lyle (1886) 11 P.D. at p.116, C.A.; Monk v Bartram [1891] UKLawRpKQB 15; (1891) 1 Q.B. 346). The White Book states that “this applies not merely to execution but to the prosecution of proceedings under the judgment or order appealed from ...” However, it also has to be considered that “when a party is appealing, exercising his undoubted right of appeal, this Court ought to see that the appeal, if successful, is not nugatory”. (Wilson v Church (No. 2) (1879), 12 Ch.D at pp 458, 459 C.A.). Here there is a risk that the appeal will prove abortive if it is successful and a stay is not granted, in that case the Court will normally exercise its discretion in favour of granting a stay [Scarborough v Lew’s Junction Stores Pty., Ltd [1963] VicRp 20; (1963) VR 129 at 130]. Therefore, where it is apparent that unless a stay is granted an appeal will be rendered nugatory, this will be a substantial factor in favour of the grant of a stay (Wilson v Church (No. 2) [1879] UKLawRpCh 233; (1879) 12 Ch.D. 454).

The grant or refusal of a stay is a discretionary matter for the Court [AG v Emberson (1889), 24 Q.B.D., pp 58, 59]. It will be granted where the special circumstances of the case so require. In exercising its discretion the Court will weigh considerations such as balance of convenience and the competing rights of the parties before it [Emberson (supra)]. Also where there is a risk that if a stay is granted and the assets of the applicant will be disposed of, the Court may, in the exercise of its discretion refuse the application.

Furthermore, it was stated in Atkins v G.W. Ry (1886), 2 T.L.R. 400 that:

“as a general rule the only ground for a stay of execution is an affidavit showing that if the damages and the costs were paid there is no reasonable probability of getting them back if the appeal succeeds.”

It was held in Linotype-Hell Finance Ltd v Baker (1992), 4 All ER p.887 that:

“Where an unsuccessful defendant seeks a stay of execution pending an appeal to the Court of Appeal, it is a legitimate ground for granting the application that the defendant is able to satisfy the court that without a stay of execution he will be ruined and that he has an appeal which has some prospect of success.

Determination of the issues

I have already stated hereabove the basis or grounds of the application for stay. It does not include the ground that if the sums payable under the judgment were now paid and if the appeal against the judgment were successful the appellants would be unable to recover the amounts from the plaintiffs.

It is not proposed to go through the evidence in any detail filed in support of the application, namely, second affidavit of Edmond particularly the Notice of Appeal annexed to the said affidavit setting out the grounds. In brief it is this that the defendants’ ‘chances of success on appeal are strong’. Edmond says that grounds ‘demonstrate the error in the judgment’. These grounds are ‘explained more fully in the annexure JKHEI’ to the said affidavit.

To put it in the words of Mr. Patel the ‘defendants have merely regurgitated their earlier defence which has been rejected by the court without anything anew to cast doubt on the correctness of the judgment.’ In effect they are challenging almost every aspect of my judgment.

It is not the Court’s function on an application of this nature to delve into the ‘merits’ of the appeal, but it can consider points raised which appear to have some merit and deserve consideration. In this regard I refer to the following passage attributed to Mahoney J.A in Re Middle Harbour Investment Ltd
quoted at p694 of the report of Alexander v Cambridge Credit Corporation (Receivers Appointed)(1985) 2 N.S.W. L.R. 685:

‘Where an application is made for a stay of proceedings, it is necessary that the applicant demonstrate an appropriate case. Prima facie, a successful party is entitled to the benefit of the judgment obtained by him and is entitled to commence with the presumption that the judgment is correct. These are not matters of rigid principle and a court asked to grant a stay will consider each case upon its merits, but where an applicant for a stay has not demonstrated an appropriate case but has left the situation in the state of speculation or of mere argument, weight must be given to the fact that the judgment below has been in favour of the other party.’

That I consider is the way to approach a stay application.

Stay in ‘special circumstances’

In Federal Commissioner of Taxation v Myer Emporium Ltd (No. 1) [1986] HCA 13; (1986) 160 C.L.R. 220, Dawson J said at pp 222-3:

“It is well established by authority that the discretion which it confers to order a stay of proceedings is only to be exercised where special circumstances exist which justify departure from the ordinary rule that a successful litigant is entitled to the fruits of his litigation pending the determination of any appeal: see e.g. The Annot Lyle [1886] UKLawRpPro 31; (1886) 11 P.D. 114, at p. 116; Scarborough v. Lew’s Junction Stores Pty. Ltd. [1963] VicRp 20; [1963] V.R. 129, at p.130. Special circumstances justifying a stay will exist where it is necessary to prevent the appeal, if successful, from being nugatory: see Wilson v Church (No. 2) [1879] UKLawRpCh 233; (1879) 12 Ch. D. 454, at p.458; Klinker Knitting Mills Pty. Ltd. v L'Union Fire Accident and General Insurance Co. Ltd. [1937] VicLawRp 12; [1937] V.L.R. 142. Generally that will occur when, because of the respondent’s financial state, there is no reasonable prospect of recovering moneys paid pursuant to the judgment at first instance. However, special circumstances are not limited to that situation and will, I think, exist where for whatever reason, there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed: see McBride v. Sandland (No. 2) [1918] HCA 59; (1918) 25 C.L.R. 369, at p.375.” (emphasis mine)

In the present case the defendants have not shown any ‘special circumstances’ for a stay. What are not ‘special circumstances’ have been stated in Monk v Bartram [1891] UKLawRpKQB 15; (1891) 1 Q.B. 346 where it was held:

“Where a stay of execution has been refused by the judge at the trial, an application made to the Court of Appeal for a stay pending an appeal must be supported by special circumstances, and allegations that there has been misdirection, that the verdict or judgment was against the weight of evidence, or that there was no evidence to support the verdict or judgment, are not special circumstances on which the Court will grant the application.”

(emphasis added)

The principles governing a stay has been stated thus in Halsbury’s Laws of England (4th Ed Vol 37 para 699):

“Two principles have to be balanced against each other as to whether a stay of execution pending the appeal should be granted: first, that a successful litigant should not be deprived of the fruits of his litigation, and secondly, that an appellant should not be deprived of the fruits of a successful appeal.”

In the words of G. Mishra J.A in Mohammed Nasir Khan and Tahira Begum (Civil Appeal 36/83), it is to be noted that the plaintiffs “being at this stage the successful litigant, cannot be expected to let time pass by without assurance that the amount owing under the judgment is secure. Her interests have to be fully protected.”

Nothing has been shown that the defendants will be prejudiced if stay was refused. If anything the plaintiffs will be prejudiced and have already been prejudiced by having been kept out of the money for four (4) years if stay was granted.

I see no merit in the defendants’ submission that grant of stay will save time and costs.

Conclusion

To sum up, for the reasons given, upon hearing counsel on their submissions and bearing in mind the principles governing stay applications, I consider that I ought to grant a conditional stay so that neither party is prejudiced with the plaintiffs having the assurance that the judgment is secure. In Mohammed Nasir Khan (supra) p3-4 the Court of Appeal granted stay “pending appeal on condition that “the whole of the amount owing under the judgment i.e. $52,789.00 be paid into Court within 14 days of the date of this decision.”

It has been submitted that if conditional stay is granted by payment into Court, the plaintiffs say that it should be paid out to them upon their providing a ‘bank guarantee’ (in the form to be agreed between the parties) as security for its repayment should the appeal on liability succeed.

In the whole of the circumstances of this case, I am amenable to this proposition as a ‘bank guarantee’ is a sufficient security (Rosengrens Ltd v Safe Deposit Centres Ltd [1984] 3 All. E.R. 198).

On the aspect of security Mr. Patel referred to two cases on the approach of the Courts. The first case is McLeod v N.Z. Pine Co [1892] 11 NZLR 493, 495 and the second in Plowman v Dillon (unreported 11 August 1986, Auckland, A496/83].

In McLeod (supra) William J said at 495:

“The right of the plaintiff... is an absolute right to have his money at once. The right of defendants is the right of appeal, and the right in some way or other to have it made certain by this Court that appeal shall not be fruitless. The duty of this Court is, I think, is to reconcile as far as possible the conflicting rights of the plaintiff and the defendants. The way to do that is to follow the English cases, and to say that an order staying proceedings shall be made on payment by the defendants to the plaintiff of the money in question, the plaintiff giving security for the repayment”. (emphasis added)

And in Plowman, Chilwell J ordered a stay of execution of the judgment until the defendant’s appeal was determined on conditions:

(a) The defendant pay to the plaintiff the amount owing under the judgment together with interest thereon to the date of payment within four weeks; (emphasis added)

(b) The plaintiff give security to the defendant to secure repayment of any amount that becomes due to the defendant as a result of an appeal, such security to be in a form agreed upon by the parties, or failing agreement, to be fixed by the Registrar of the Court;

(c) In the event a satisfactory security not being available, then leave is reserved to either party to apply further.

In view of the order which I propose to make, namely, payment of a certain amount into Court the question of making an ‘interim payment’ order does not arise as it has merged in that proposed order. Therefore, I do not say any more on that aspect.

Orders

For the reasons stated above I make the following orders:

1. The defendants are granted a stay of the said judgment of 19 May 2004 until the determination of the defendants’ appeal upon conditions that:
   
   • (a) the defendants pay the sum of $2,000,000.00 (two million dollars) into Court within 21 days of this Order.
     
   • (b) that such moneys be paid out to the plaintiffs when the plaintiffs have deposited in Court a Bank Guarantee (in a form agreed upon by the parties) in favour of the defendants as security for the refund of those moneys should the defendants’ appeal on liability succeed.
     
   • (c) Liberty is reserved to either party to apply if form of Bank Guarantee cannot be agreed upon by the parties.
     
2. It is further ordered that in the event of the defendants failing to deposit the said sum of two million dollars into Court as ordered, the stay order will lapse and the plaintiffs will be entitled to execute their said judgment together with any costs ordered, without any further order of this Court.
   
3. It is further ordered that in view of the conditional order for stay, dates for the hearing of quantum and interest already set down for 9th to 13th August 2004 are vacated, but if the defendants fail to deposit as ordered in ‘1(a)’ above, the plaintiffs will be at liberty to apply to Court to restore the hearing of quantum and interest to the list.
   
4. And it is further ordered that the defendants pay costs of the applications to the plaintiffs’ solicitors which I summarily assess in the sum of $1500.00 (One thousand five hundred dollars) within 14 days.
   

D. Pathik
Judge

At Suva
27 July 2004