Deep Sea Plus Ltd v Stinson Pearce Ltd [2012] FJHC 1376; Civil Appeal 25.2012 (3 September 2012)

IN THE HIGH COURT, FIJI ISLANDS
APPELLATE JURISDICTION
Civil Appeal No. 25 of 2012

BETWEEN:

DEEP SEA PLUS LIMITED
1st Appellant
(Original 1st Defendant)

AND:

ALBERT WILLIAM CHAND
2nd Appellant
(Original 2nd Defendant)

AND:

STINSON PEARCE LIMITED
Respondent

Appearances: Mr Ritesh Naidu for the appellants
Mr V. Kapadia for the respondent
Date of hearing: 3rd September,2012

JUDGMENT

1. The 1st and 2nd appellants, by summons filed on 07 August 2012, have moved for stay of an order made by Master Amaratunga, pending the hearing and determination of an appeal to the High Court,from the said order. An interim stay of execution of the order for vacant possession, pending the outcome of the stay application, was also sought.
   

The respondent is the registered proprietor of the land and building situated at Carnavon Street, Suva described in Certificate of Title Nos. 4176 and 6056. The respondent had entered into a tenancy agreement with the 1st appellant, to lease part of the respondent's property situated at Carnavon Street, Suva, for a period of 6 years commencing from 1st October, 2009, to 30 September, 2015,with an option to renew the agreement. The 2nd appellant was the proprietor of the 1st appellant company and had operated a night club, a bottle shop and a restaurant at the said premises.

The 2nd appellant contended that he had entered into a business management agreement with Lo Kin Ho, Meijing and Micheal Chung to manage the 2nd appellant's bar and grill business for a term of one year. This agreement had expired on 31 July, 2011.

On 11 August, 2011, the respondent had given the 2nd appellant, one month's notice to vacate the said premises, alleging that the 2nd appellant had breached the tenancy agreement, by sub-letting part of the said premises to Lo Kin Ho and by permitting illegal activities to be carried on the said premises. The tenancy agreement between the parties provided that the tenant could not sublet the premises or any part thereof, without the prior written consent of the landlord.

On 20 July, 2012, Master Amaratunga, on a summary judgment application, had ordered the 1st and 2nd appellants to vacate the said premises, on the ground that the business management agreement violated the relevant clause of the tenancy agreement.

2. The hearing
   

At the hearing, Mr Kapadia counsel for the respondent submitted at the outset, that the decision of the Master was an interlocutory decision and hence leave must be obtained in the first instance, in order to file appeal under Or 59 r11. Counsel for the appellant Mr Naidu, in reply, submitted that a final order had been made by the Master, upon an application for summary judgment.

Mr Naidu, in support of his application for stay, submitted that the appeal will be rendered nugatory, if the respondent is granted immediate vacant possession of the property and that valid defences were raised before the Master. The appellant had entered into a business management agreement with a third party. The balance of convenience, it was submitted, was in favour of granting the stay.

Mr Kapadia's response to the argument advanced by Mr Naidu, was that eviction proceedings were instituted, since the appellant had sub-let the premises, in breach of the tenancy agreement. The respondent would be deprived of the fruits of his litigation, if the stay was granted. Finally, it was submitted that the proposed grounds of appeal have no prospects of success.

3. The determination

I will first deal with the preliminary point raised by Mr Kapadia, that the decision of the Master was an interlocutory order and therefore leave to file appeal was required, in the first instance.

I refer to the following passage from the judgment of Master Amaratunga:

"The Plaintiff also seeks damages in the summons for summary judgment. Neither Plaintiff nor Defendant dealt with this issue at the hearing of this Summons.. Since the defendant has broken the contract the plaintiff should be entitled to damages, but whether that is nominal damages or not cannot be decided from the material available to me, specially when neither party addressed it at the hearing".(emphasis added)

In my judgment, it is axiomatic that a final order had been made by the Master, upon an application for summary judgment. The substantive issue has been adjudicated upon. I am of the view that the order made by the Master, as a final order. That sufficiently disposes of the objection taken by Mr Kapadia.

I turn to the application for stay pending appeal. The principles governing the grant or refusal of a stay application pending appeal are well-settled.

The law on stay pending appeal was stated by His Lordship Chief Justice Gates(as he then was) in Native Land Trust Board v Shanti Lal,(2012 ) FJSC 1; CBV0009.11 (20 January, 2012) as follows:

" 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 summarised in Natural Waters of Viti Ltd v Crystal Clear Mineral Water (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 Phillip 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 bond 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 proceeding.

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

(emphasis added)

In Chandrika Prasad v Republic of Fiji,(No 5), (2000) 2 FLR 115, Gates J (as he then was) referred to the following cases:

"It is well known that the litigant once successful should not lightly be deprived of the fruits of his successful litigation: The Annot Lyle [1886] UKLawRpPro 31; (1886) 11 P D 114 at 116CA; Monk v. Bartram, (1891) 1 OB 346. The power of the Court to grant a stay is discretionary: The Attorney-General v. Emerson & Others (1890) 24 OBD 56; and it is all unfettered discretion Winchester Cigarette Machinery Ltd. v. Payne and Anor. (No. 2) (1993) TLR-64-at648.

The phrase "nugatory" was used by the Court of Appeal in Wilson v. Church [1879] UKLawRpCh 233; [1879] 12 Ch. D 454. The head note summarises the position taken by Cotton and Brett LJJs:

"Where an unsuccessful party is exercising an unrestricted right to appeal, it is the duty of the Court in ordinary cases to make such order for staying proceedings under the judgment appealed from as will prevent the appeal, if successful, from being nugatory. But the Court will not interfere if the appeal appears not to be bona fide, or there are other sufficient exceptional circumstances". (emphasis added)

The Court of Appeal in Attorney-General of Fiji and Minister of Health v Loraine Die (unreported Misc. No 13 of 2010 delivered on 17 February, 2011) stated:

"The most important consideration in respect of whether a stay of execution should be granted is whether there are strong grounds of the proposed appeal:.. That hurdle is higher than that of chances of success." (emphasis added)

The appellant, has raised the following nine grounds in his notice of appeal; namely;

(i) The Master was wrong in law and in fact in not finding on the totality of the evidence and the pleadings that the appellants had a defence to the respondent's claim and that, in any event, there were serious issues or questions in dispute which ought to be tried.

(ii) The Master erred in law by trying the proceedings on affidavit evidence, hence finding that the appellants breached clause 3 (n) of the tenancy agreement and that the appellants granted the third party (Lo Kin Ho, Meijing and Michael Chung) exclusive possession of part of the premises.

(iii) The Master erred in failing to give the appellants leave to defend when there was a fair question to be tried as to the meaning or scope of words contained in the business management agreement and their legal effect. In the circumstances of this case it is necessary for a trial judge to examine extrinsic evidence of actual intention, pre-contractual negotiations and the surrounding facts and circumstances of the business management or subsequent conduct for the purpose of construing the words in the business management agreement and to assist in interpreting the business management agreement.

(iv) The Master erred in law in making findings of credibility on a summary judgment application when the statement of defence and the affidavits gave rise to serious disputed facts.

(v) The Master erred in law in awarding damages to the respondent without hearing the parties on this issue and when neither party dealt with this issue at the hearing of the summary judgment application.

(vi) The Master erred in law in awarding damages to the respondent to be assessed by the court, on a summary judgment application.

(vii) The Master erred in interpreting the business management agreement in light of the relevant surrounding circumstances.

(viii) The Master erred in law by granting summary judgment for vacant possession when the material before the Master demonstrated that the action should go to trial in the ordinary way as the material gave rise to serious and important issues calling for detailed argument as to the proper construction of the business management agreement.

(ix) The Master erred in law in not holding that paragraph 11 of the respondent's affidavit in support did not comply with Order 14, rule 2 (1) of the High Court Rules 1988 and that the preliminary objection by the appellants was irregular, belated and without merits.

The above grounds of appeal overlap and are principally concerned with the interpretation of the agreement entered into by the 2nd appellant and Lo Kin Ho, Meijing and Micheal Chung, which was at the forefront of the appellant's defence . It was strongly contended by Mr Naidu that the 2nd appellant had entered into a business management agreement. Mr Kapadia' s riposte was that this agreement clearly constituted a sub-letting, in breach of the tenancy agreement, and not a business management agreement.

I found Mr Naidu's interpretation of the business management agreement totally unconvincing. Master Amaratunga, in his judgment, refers to the affidavit in answer filed by the 2nd appellant, which stated that Lo Kin Ho, Meijing and Micheal Chung paid him a two month bond deposit as management fee. I find Master Amaratunga had considered the material provisions of the business management agreement and correctly came to a conclusion that the third party derived all the income of the business and paid only a fixed monthly sum to the 2nd appellant, while he retained all the profits derived from the business. He found that the agreement did not provide for a payment of management fee.

On 3rd September,2012, I declined the application for an interim stay sought at the conclusion if the hearing, by Mr Naidu, for the reason that I was not satisfied that the appellant has an arguable case, on a perusal of the proposed grounds of appeal.

I have considered the matter anew and revisited the proposed grounds of appeal. I am not satisfied that the proposed grounds demonstrate an arguable case. I am satisfied that the respondent will suffer prejudice, if the stay is granted. In my view, the appeal does not appear to be bona fide.

4. Orders
   

For the aforesaid reasons, after considering the submissions advanced by counsel and the principles governing an application of this nature, in the exercise of my discretion, I do not consider this to be a proper case to grant the stay sought, pending the hearing and determination of the proposed appeal.

The application for stay is dismissed with costs summarily assessed in a sum of $ 1500 payable by the appellant to the respondent within 07 days of this judgment. The appellants are ordered to grant to the respondent, possession of the property occupied by them, within 07 days of this Order.

18th October, 2012

A.L.B.Brito-Mutunayagam
Judge