Estate Management Services Ltd v Pagenstecher [2012] FJHC 1175; Civil Appeal 4.2012 (24 May 2012)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

IN THE MATTER of Civil Appeal No. 4 of 2012
(Appeal from High Court at Suva, Civil Action No. 123 of 2010)

BETWEEN :

ESTATE MANAGEMENT SERVICE LIMITED a duly
Incorporated Company having its registered office situated at C/- G H Whiteside & Co, Chartered Accountants, 211 Ratu Sukuna Road, Suva
Applicant/Defendant

AND :

DR. LISING PAGENSTECHER of Dachauer Strasse 173,
80636 Munich, Germany as the Executrix of the ESTATE OF
JOSEF SEVERIN OTTO-HEINRICH AHLMANN late of Sylt-Ost
Morsum, Germany, Retired Company Director by virtue of Re-
Seal Grant No. 48108 dated 4 November 2008.
Respondent/Plaintiff

AND :

MINAMI TAIHEIYO KAIHATSU KABUSHIKI KAISHA a
Company duly registered in Fiji and having a place of business in Fiji at Pacific Harbour.
Respondent/Third Party

BEFORE : Susantha N. Balapatabendi, J
COUNSEL : Mr. Ngamoki Cameron for the Applicant
Mr. N Prasad for the Respondent

Date of Hearing: 12 April 2012
Date of Decision: 24 May 2012

DECISION ON APPLICATION FOR STAY PENDING APPEAL

1. This is an Application to Stay the Execution of the Summary Judgment entered into on 20 January 2012 by Master Deepthi Amaratunga in favour of the Respondent in the sum of FJ $415,086.12 together with interest of 4% from the date of judgment until payment and costs of FJ $1500.
   
2. The Application for Stay was supported by two Affidavits, an Affidavit of Seth Maharaj sworn on 22 February 2012 and the Affidavit of Ro Wainikiti Rotabudro Simpson sworn on 5 March 2012, respectively.
   
3. The Respondent opposed to the Stay of Execution of the Summary Judgment but chose not to file an Affidavit in answer but refer to the two Affidavits filed by the Applicant for the purpose of submission.
   
4. The Counsel for the Respondent in opposing to the Stay Application submitted to Court that his opposition is two-fold and are as follows:-
   

[a] the Stay Application must be declined completely; or

[b] alternatively, a conditional stay be granted.

5. Both Counsel for the Applicant and Respondent filed Written Submissions and made Oral Submissions in support and in opposition to the Stay Application, respectively on 12 April 2012.

Applicant's Grounds of Stay

The grounds on which the Applicant is seeking to Stay of Summary Judgment are deposed in the Affidavit of Seth Maharaj, in summary are as follows:-

[I] If the Stay is not granted, the Company is unable to fulfill its obligations to 3rd parties, no prejudice would be caused to Respondent/Plaintiff, parties responsible for the present predicament is the 3rd party mentioned in the caption on the Statement of Claim and not the Applicant, appeal is wholly meritorious, no specific admission as to the liability in the Statement of Defense, Master acted on hearsay evidence of executrix, limitation defense has not been canvassed at all by the Master, Affidavit in opposition is not required, Master has erred in law in granting damages and compound interest using equitable jurisdiction, initial purchaser never intended to recover the purchase money and intended only to obtain the title, no unjust enrichment to the applicant company and no proper explanation to the grant of interest for 37 years .

I do not wish to assess each and every ground stated above, as it amounts to an assessment of merit of the appeal. However, what is required in a Stay Application for the consideration of the Court will be dealt with, in this decision.

Submission of the Respondent/Plaintiff in Relation to the Grounds of Stay of Execution.

The 1st contention of the Counsel for Respondent/Plaintiff is that summary judgment was on the basis that there is no meritorious defense and no Affidavit in opposition was filed for the Application for summary judgment by the applicant, although several opportunities were granted.

The 2nd contention of the Counsel was that the Statement of Defense filed on behalf of the Defendant has admitted all the paragraphs 1 to 9 including in the 1st and 9th paragraphs.

The 3rd contention was that even in the Written Submissions filed before Master by the Applicant clearly demonstrates that there is an admission of the principal sum of FJ $51,250.00 and the contention was the award regarding the nature and the rate of interest.

Submissions of the Respondent/Plaintiff on a Grounds of Appeal.

In answering to the grounds of appeal on Order 14 Procedure Inappropriate.

1] The facts as presented before the Master were not in dispute. Almost all the paragraphs of the Claim were admitted to and there no Affidavit in answer filed. How can then the Applicant argue that Order 14 (summary judgment) was not the appropriate procedure?

In answering to the claim for Purchase Price and Interest Time Barred

2] These grounds are misconceived. The Applicant's counsel conceded that as a starting point the principal sum of FJ$51,250.00 was payable to the Respondent. The interest component was awarded as compensation as time value of money and not under the statute.

In answering to the Equitable Jurisdiction and Compound Interest not Justified

3] This ground of appeal is clearly misconceived. The award of compound interest was in the form of compensation as time value of FJ$51,250.00. The reasons as contained in paragraphs 8.1 and 8.8 are embarrassing in law.

In answering to the Interest

4] A clear reading of the judgment shows that interest was awarded as compensation as opposed to interest on the sum due and payable. The award was just as the rates applied by the Reserve Bank of Fiji was used to calculate the time value of FJ$51,250.00 which as at the date of judgment stands at FJ$415,086.12. The provisions of Limitation Act were irrelevant to this calculation.

In answering to the Cost

5] This ground of appeal if anything proves that this whole appeal is a farce. Basic principles on award of costs dictate for the Court to award costs to the successful party which the Master rightly did here.

Before I go into the principles governing a Stay Application it is prudent to state the factual background and the claim brought before the Master by the Plaintiff briefly.

The Facts and the Claim before the Master:-

[i] The plaintiff filed the action before the master against the defendant for the recovery of money paid to obtain title for two land parcels in Pacific Harbour. The money was fully paid as per the Sale and Purchase Agreement including an interest at 7.5% per annum as the payment was made on installment basis.

[ii] The Sales and Purchase Agreement was entered into between Plaintiff and

the Defendant way back in 1973.

[iii] Although the full consideration for the purchase of two land parcels was paid by the Plaintiff by February 1974, the title has not been transferred to the Plaintiff by the Defendant.

[iv] Defendant has subsequently without any notice to the Plaintiff, has

transferred the area inclusive of the two land parcels purchased by Plaintiff

to a 3rd party.

[v] The instant action before Master was filed by the Plaintiff against the

Defendant was to recover purchase considerations for the two land parcels

and for compounded interest for the period.

The Principles Governing "Stay"

The principles governing the grant or refusal of a Stay Application pending appeal are well settled.

The principles' governing a Stay has been stated thus in Halsbury's Laws of England (4th Ed. Vol. 37 para 696):

"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 this litigation, and secondly, that an appellant should not be deprived of the fruits of a successful appeal."

The Court considering a Stay should take into account the following questions. They were the principles set out by the Court of Appeal and approved subsequently and applied frequently in this Court. They were summarized in Natural Waters of Viti Ltd v Crystal Clear Mineral Waters (Fiji) Ltd Civil Appeal ABU0011.04S 18th March 2005. They are:

"(a) Whether, if no stay is granted, the applicant's right of appeal will be rendered nugatory (this is not determinative). See Philip Morris (NZ) Ltd v Liggett & Myers Tobacco Co (NZ) Ltd 1977 2 NZLR 41 (CA).

(b) Whether the successful party will be injuriously affected by the Stay.

(c) The bona fides of the Applicants as to the prosecution of the appeal.

(d) The effect on third parties.

(e) The novelty and importance of questions involved.

(f) The public interest in the proceedings.

(g) The overall balance of convenience and the status quo."

Dealing with the Application before the Court

The issues for the Courts determination are whether the Stay of Execution ought to be granted in all the circumstances of this case or not.

It is to be noted that the summary judgment was entered by the Master on the premise inter alia that the entire Statement of Claim has been admitted by the Defendant in his Statement of Defense.

The important paragraph in the summary judgment of the Master in relation to the above, states as follows:-

"Once a claim is established, the evidential; and persuasive burden shifts to the Defendant and if the Defendant has not filed an Affidavit in opposition, but a defense, the court must then direct its mind to the issues raised in the defense to see whether it has merits and is not just a sham defense to delay judgment or avoid the necessity of showing cause by affidavit. (Magan Lal Brothers Ltd v L.B. Masters & Company Civil Appeal No 31/84.)

In the case before me not only that the Defendant has not filed an affidavit in opposition, but also it has admitted the averments from 1 to 11 in the amended statement of claim which comprised only 13 paragraphs. The major part of the claim is admitted by the Defendant and upon the said admissions and the documents filed by the Plaintiff in support of this application that the Defendant has breached the sale and purchase agreements that are annexed to the affidavit in support."

It is not this Court's function to assess the merits of the appeal but 'if prima facie it is obvious that the appeal is wholly unmeritorious or wholly unlikely to succeed then it would be appropriate for me to say so' [Sir Moti Tikaram RJA in Reddy's Enterprises Limited and the Governor of the Reserve Bank of Fiji (Civil Appeal No. 67/90 FCA).

In this regard 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 is pertinent:

'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 stay has not demonstrated an appropriate 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 mere argument, weight must be given to the fact that the judgment below has been in favour of the other party.'

Another contention advanced by the Applicant in favour of the Stay was that the Applicant will be ruined if stay is granted.

I am not inclined to accept this position solely due to lack of independent evidence placed before the Court by the Applicant other than a Statement in the Application for Stay and averment in the Affidavit of Seth Maharaj.

The other contentions advanced by the Applicant was that the limitation difference was not canvassed at all by the Master in his summary judgment, Applicant is not the real purchaser but the executrix who has no personal interest in the claim before the Master, and facts and circumstances do not justify the Master to use the equitable jurisdiction to grant damages and compound interest against the Defendant.

I am not inclined to accept the above contentions for the reasons that limitation defense has been adequately addressed by the Master in his judgment. Merely because the claim was filed by the executrix has no merit, and in law, the executrix is legally bound to take steps to recover any money due to the deceased in any court action.

There is also prima facie material and justification before the court to grant damages and compound interest as the issue is now the time value of money that should be calculated as payment of what it received in 1974. In my view, payment without any interest would be unfair and unjust enrichment to the defendant.

Further the Applicant has failed to adhere sufficient material to establish the grounds in which a stay should be granted as stated in Natural Waters of Viti Ltd v Crystal Clear Mineral Waters (Fiji) Ltd Civil Appeal ABU0011.04S 18th March 2005.

In consideration of all the facts and circumstances of the case stated above, the Plaintiff will suffer greater prejudice than defendant if stay was granted.

However, the court is mindful of the fact that the Plaintiff is a non resident of Fiji and a resident of Germany and being the executrix of an estate, there is a possibility of any money paid to the Plaintiff likely to be distributed to the beneficiaries.

Taking in to consideration of the above contention advanced by the Applicant, I am inclined to grant a Stay on condition by ordering payment of the sum into Court pending the hearing and determination of the appeal.

In the cases of Sheela Wati Bajpal V NBF Asset Management Bank FJCA 7, Ratu Solomone Naqa & Others v The Fiji Electricity Authority [2005] FJHC 377, NBF Asset Management Bank V Charan – Katonivere Holdings Limited [2000] FJHC 111, and Rajendra Prasad Brothers V FA Insurance (Fiji) Ltd. [2004] FJHC 294, court have granted a stay pending appeal on payment of the sum in to the Chief Registrar's interest bearing account pending appeal.

ORDERS

I therefore make the following orders:-

1. An Interim Stay of Execution of judgment entered for FJ $415,086.12 on 20 January 2012 is granted on the following conditions:-
   
   • (i) It is ordered that the Applicant/Defendant pays into Court the said sum of
     $415,086.12 together with interest thereon at 4% from 20 January 2012 to the date of this decision (which interest is to be calculated by counsel for the Respondent/Plaintiff) within 21 days from the date of this Decision to await the outcome of the appeal herein.
     
   • (ii) The said sum to be placed by the Chief Registrar into an interest bearing account.
     
   • (iii) In the event of the Applicant/Defendant failing to deposit the said sum of interest into Court as ordered, the stay order will lapse and the Respondent/Plaintiff will be entitled to execute its judgment together with any costs ordered without any further order of this Court.
     
2. The Applicant/Defendant is ordered to pay the Respondents/Plaintiff's Solicitors the costs of this application in the sum of $1500.00 (one thousand five hundred dollars) within 21 days.
   

Susantha N. Balapatabendi
JUDGE

24 May 2012
At Suva