Motil v North (Fiji) Group Ltd [2014] FJHC 958; Civil Action18.2009 (20 May 2014)

In the High Court of Fiji
At Labasa
Civil Jurisdiction

Civil Action No. 18 of 2009

BETWEEN:

Gary Scott Motil and Laurie J Motil
Plaintiff

AND:

North (Fiji) Group Limited
First defendant

Appearances: Mr. A.Sen for the plaintiffs
Mr. A. Ram for the first defendant
Date of hearing: 20th November, 2013

JUDGMENT

1. This is an application by the first defendant for stay of execution of my judgment pending the determination of its appeal and an order for the plaintiffs to deposit into Court security for costs of the appeal. The application was made by motion dated 7th November, 2013
   
2. The plaintiffs claimed they were induced to purchase a land belonging to the first defendant company by fraudulent representations made by the second defendants,(as directors of the first defendant company)that they would have access to amenities of the Narewa Club and Resort.The consideration paid for the land was US $400,000.I found that fraudulent representations were made. I awarded the plaintiffs damages in a sum of $ 580966.10. I also awarded the plaintiff costs of obtaining electricity and digging a bore well for water in a sum of $ 103,000. I declined the counterclaim for damages.
   
3. Affidavit in support
   

In an affidavit in support of the stay, the first of the second defendants states that:

(a) The appeal has reasonable prospects of success.

(b) The first defendant is incorporated in Fiji. It is able to satisfy any judgment from the sale of its properties.The value of its properties is worth more than the judgment sum. The subject residential subdivision on DP 9307 has eight lots.Two have already been sold for US$400,000 and US$250,000.There are six titles remaining in the sub-division. Lot 3 has been valued at $484,000, as per the valuation annexed.Copies of the six certificate of titles and stamped transfers for the sale of Lots 1 and 2 are annexed.

(c) The first defendant undertakes to deposit the six original certificate of titles in Court, if an order is made to that effect. In the event of a sale,the first defendant undertakes to substitute the titles with a money deposit to the value of the judgment. Presently, the first defendant is unable to make a money deposit.

(d) The first defendant will expeditiously prosecute the appeal and has deposited security for costs of the appeal.

(e) It will be difficult to recover any judgment sum paid, in the event of the appeal being successful, as the plaintiffs are resident overseas and their address or location of their assets are unknown. The first defendant verily believes that the plaintiffs no longer reside in the address in USA, as stated in the writ of summons. They changed their address, before issuing the writ of summons. In the circumstances, the first defendant prays that the plaintiffs be ordered to deposit security for costs for this action and the appeal.

(f) The plaintiffs have issued a notice under section 221 of the Companies Act, to wind up the first defendant company. The solicitors for the plaintiffs have written to the first of the second defendants advising him not to dispose of any assets.

(g) The plaintiffs are unlikely to be injuriously affected, by the grant of the stay.

(h) Any execution of the judgment will render the appeal nugatory.

4. The proposed grounds of appeal
   

The proposed grounds of appeal attached to the affidavit in support provide that I erred in my judgment, as follows:

1. in holding.. at paragraph 6.1.7 that "representations were made to the Respondent by the 2nd Defendant, in so far as it accords with the link pages referred to in paragraph 6.1.4 of the Judgment."
   
2. in holding that other representations had been made by the Appellant to the Respondent.
   
3. in holding that the loss of financing was not a promising start.
   
4. in holding that the Respondents case on deceit succeeds and that the fraudulent misrepresentation was made out when such finding was against the weight of evidence and the pleadings did not assert the same.
   
5. in holding that the appellant did not have the will or the ability to put their intention into effect, at the time the statements were made."I conclude that the 2ndDefendants made false representations, as agents of Appellant company, in the Derry v Peek sense, and this included the Respondent to purchase the land," as such conclusions cannot be upheld in the face of the evidence tendered.
   
6. in holding that the clause in the Memorandum of Terms of Sale attached to the sale and purchase agreement, which acknowledges that the purchaser "has caused the property to be inspected and the same is being purchased solely in reliance upon his own judgment and not due to any representation or warranty made be the Vendor" did not apply to the case of fraud.
   
7. in holding that the Respondents had suffered detriment and that an enforceable agreement existed.
   
8. in holding that the Respondents were entitled to damages for loss suffered arising from the fraudulent representation by the 2nd Defendants when the 2nd Defendants were absolved from liability.
   
9. in referring to subsequent events to determine the bona fides and truthfulness of representations, if any, alleged to be have been made some years before as the basis of fraud.
   
10. in incorrectly assessing damages, which was based on a flawed valuation report, amongst other irrelevant considerations.
    
11. in awarding damages for electricity in the sum of $89,000 and water borehole for $14,000 when the same was not adequately proved nor was it an appropriate remedy in the circumstances.
    
12. in holding that the appellant had accepted the breach of restrictive covenants when it had in fact not done so.
    
13. in dismissing the appellant's counter-claim as unfounded when the respondents'breaches and the damages flowing from the respondents' breaches were proved.
    
14. when the appellant was denied natural justice and its witness was prevented from giving evidence in full on numerous occasions, the right to be heard being curtailed or cut short.
    
15. in falling to hold that the respondents had not proved their claim to the standard of proof required, thus entitling the appellant to a dismissal to this action with costs to the appellant.
    
16. in not holding that the respondents'statement of claim, evidence and proof were inconsistent and had not proved the claim and that this action ought to have been dismissed with costs.
    
17. in not distinguishing between residential blocks on DP 9307 with resorts blocks on DP 9306 with their respective entitlements and privileges and further not distinguishing the Narewa Club entitlements and who were entitled to the same.
    
18. in not placing sufficient weight and importance to the sale and purchase agreement entered into between the appellant and the respondents.
    
19. in arriving at his conclusion and orders without taking into consideration the lack of circumstantial and corroborative evidence, especially when the alleged representations were said to be oral.
    
5. The affidavit in opposition
   

The plaintiffs, in their affidavit in opposition state:

1. The first defendant company is incapable of satisfying the judgment, as they have no means or any funds to do so, as apparent during the hearing of this action. The first defendant company should pay half the judgment sum to the plaintiff and the balance to the Chief Registrars' interest bearing account.
   
2. The valuation carried out by a registered valuer of the plaintiff, as attached to the affidavit in support is a sham. The defendants have sold land through gross misrepresentation by the defendants.
   

100. The titles that the first defendant intends to deposit is of very little value. The defendants have other titles of some value. These have not been brought to the attention of the Court confirming that the defendant's claim is not bona fides.
     

4. They require the judgment sum to be satisfied immediately, as they have to construct a road access and connect electricity and water. The property they purchased is of little value without the amenities claimed in the writ of summons, in respect of which an award has been made.
   
5. The first defendant is a paper company. It must be wound up to satisfy the judgment.
   
6. The plaintiffs do not have any intention to sell their land, which has been substantially developed and therefore there is no risk of recovery, in "the unlikely event the defendants are successful".
   
7. The directors of the first defendant company are residents of the US. The land they purchased has been " substantially developed".
   
8. Upon a winding up order being made, the assets of the first defendant company will vest in the official liquidator.The defendants will therefore, not be prejudiced.
   

6. The reply
   

The first of the second defendants, in his reply, states:

1. The first defendant company has invested substantial sums of money in the project. He presently, does not have the cash flow to make a money deposit. This action has had adverse effect on the sales of the lots in the sub-division resulting in the company having substantial assets, but little cash flow. The first defendant company will face financial ruin, if an order is made for a cash deposit.
   
2. The valuation annexed to the application for stay had been done by a reputable registered valuer. The deponent to the affidavit in opposition is a law clerk and unqualified to call the valuation a sham.
   

100. As regards the plaintiff's contention that the defendants have other titles not brought into Court, the first defendant states that there is a further agricultural lot and lots on DP 9306 which is a resort subdivision and totally separate and independent of the subdivision lot purchased by the plaintiff. The titles offered for deposit by the first defendant are adequate.
     

4. The prejudice caused to the first defendant far outweighs the prejudice that may be suffered by the plaintiffs.
   
5. The claim of the plaintiffs is not bona fide. There is a serious risk that the first defendant would not be able to recover the judgment sum, if it is paid to the plaintiffs. The plaintiffs have not disclosed their address or the location of their assets, albeit the first defendant alleged that the permanent address and location of their assets are unknown. The address on the affidavit of opposition is not the present address of the plaintiffs. A search is attached in support.
   
6. If a stay is not granted, third parties who have purchased lots in the subdivision, would also be affected.
   
7. The first defendant has an arguable appeal. The overall balance of convenience lies in the court granting a stay and maintaining the status quo, until the final determination of the appeal.
   

7. The determination
   

7.1 The cardinal principle governing the grant or refusal of a stay pending appeal is that a successful "litigant should not be deprived of the fruits of his successful litigation": The Annot Lyle,[1886] UKLawRpPro 31; (1886) 11 PD 114 at 116 as referred to in Prem Singh v Krishna Prasad,(CDV 001/2002).

7.2 The law on stay pending appeal was stated by His Lordship Chief Justice Gates in Native Land Trust Board v Shanti Lal,[CBV0009.11, 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). SeePhillip 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 proceeding.
(g) The overall balance of convenience and the status quo. (emphasis added)

7.3 The first test requires the court to consider whether the applicant's appeal will be rendered nugatory, if no stay is granted, albeit this factor "is not determinative".

7.4 In Wilson v. Church,[1879] UKLawRpCh 233; [1879] 12 Ch.D 454 it was held that where an unsuccessful party is exercising an unrestricted right to appeal, it is the duty of the Court ordinarily, to stay the proceedings of the lower court, in order not to render the appeal, if successful, from being nugatory. It was further held that the Court would not interfere if the appeal appears not to be bona fide, or there are other sufficient exceptional circumstances.

7.5 I turn to the grounds of appeal. The grounds of appeal primarily take issue with my finding that the second defendants made fraudulent misrepresentations to the plaintiffs, at a meeting on 23rd September, 2006. This meeting between the parties was undisputed. On revising the first plaintiff's evidence as a whole, I accepted that representations were made to the plaintiffs by the second defendants, in so far as it accorded with the link pages referred to in the statement of claim.

7.6 Next, it is contended that I erroneously reached a finding that the lack of financing was not a promising start. It is urged that this has no bearing on the representations made earlier. I reached this finding for the compelling reason that no cogent evidence was produced in the form of a proposal, an approved plan,an application for a loan or commitment from a financial institution, in order to establish that the defendants had the intention of developing a resort, as stated in my judgment.

7.7 My interpretation of a clause in the Memorandum of Terms of Sale attached to the sale and purchase agreement is under attack, as well as that I did not place sufficient weight and importance to the sale and purchase agreement. The relevant clause acknowledged that the purchaser"has caused the property to be inspected and the same is being purchased solely in reliance upon his own judgment and not due to any representation or warranty made be the Vendor".

7.8 On that point, I held the relevant clause had an exclusionary effect on statements of existent facts relating to the property purchased and further, does not apply to a case of fraud.

7.9 It is also argued that I relied on a "flawed" valuation report. In my view, it was for the defendants to rebut the evidence of the valuer called by the plaintiffs and his report, as I so held in my judgment.

7.10 That takes me to the ground of appeal on the plaintiff's second cause of action, as regards the failure to provide water and electricity. The first of the second defendants, in his evidence, admitted that the defendants failed to provide these amenities. I accordingly, held there was breach of the relevant covenant of the sale and purchase agreement.

7.11 Finally, it is contended that I erred in dismissing the counterclaim for general and special damages. The defendants claimed that their land had diminished in value, as a direct result of the construction of substandard and unauthorised structures by the plaintiffs. In this regard,I accepted the independent evidence of the valuer. He said that the houses were well structured and the workmanship was good.

7.12 As I have pointed out, I arrived at my findings on the evidence presented. It is trite law that an appellate court will not interfere easily with findings of fact based on the credibility of the witnesses. The ground I have discussed in paragraph 7.8 above is however, arguable. The FCA in AG and Minister of Health v Loraine Die,(Misc. No 13 of 2010) 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)

7.13 The next factor to be considered is whether the plaintiffs will be injuriously affected by the stay, as laid down in the Natural Waters of Viti Ltd case. The plaintiffs aver that they require the judgment sum to be satisfied immediately, as they have to construct a road access and connect electricity and water. I held that the plaintiff has road access. I awarded a sum of $ 103,000 as costs of obtaining electricity and digging a bore well for water. The plaintiffs state that the land they purchased is substantially developed.In my view, the plaintiffs will not be injuriously affected by the stay.

7.14 I am satisfied as to the bona fides of the first defendant, as to the prosecution of the appeal.

7.15 The fourth, fifth and sixth tests laid down in Natural Waters of Viti Ltd v Crystal Clear Mineral Water (Fiji) Ltd,(supra)do not apply to the present matter. In my view, there are no novel or important questions of law involved in the application before me.

7.16 The final test is the overall balance of convenience test. This requires me to consider whether there are special circumstances for the grant of the stay.

7.17 Halsbury's Laws of England,Vol 17, (4th Ed) at para 455:

The court has an absolute and unfettered discretion as to the granting or refusing of a stay, and as to the terms upon which it will grant it, and will, as a rule, only grant a stay..if there are special circumstances, which must be deposed to an affidavit unless the application is made at the hearing.(footnotes omitted)

7.18 The first defendant submits that the plaintiffs are resident abroad and their address, as well as location of the assets are unknown. I find that the plaintiffs have not depicted their ability to pay back the judgment sum, in the event their appeal is successful.

7.19 In Barker v Lavery,[1885] UKLawRpKQB 32; (1885) 14 QBD 769, the Court of Appeal held that execution for costs pending an appeal will not be stayed, unless evidence be adduced to show that the respondent would be unable to repay the amount levied.

7.20 The affidavit filed in support of the stay avers that the first defendant will face financial ruin, if an order is made for a cash deposit to be made. In Linotype-Hell Finance Ltd v Baker, (1992) 4 All ER 887 at pg 888 as referred to by Mr. Ram, counsel for the first defendant, Staughton LJ stated as follows:

..it seems to me that, if a defendant can say that without a stay of execution he will be ruined and that he has an appeal which has some prospect of success, that is a legitimate ground for granting a stay of execution.

7.1 On a consideration of all the factors, I am of the view, that the overall circumstances favours the first defendant.

7.2 In the exercise of my discretion,I allow the application to stay execution of my judgment on the condition that the first defendant company shall deposit in court, its six certificates of title 37279,37280,37281,37282, 37283 and 37284 within 21 days.

8. Security for costs
   

The first defendant has moved for security for costs. Or 23, r1 (1) provides that:

Where, on the application of a defendant to an action or other proceeding in the High Court, it appears to the Court-

(a) that the plaintiff is ordinarily resident out of the jurisdiction, or... then if, having regard to all the circumstances of the case, the Court thinks it just to do so, it may order the plaintiff to give such security for the defendant's costs of the action or other proceeding as it thinks just

In Furuuchi Suisan Company Limited v Hiroshi Tokuhisa and Others,(Civil Action No. 95 of 2009), Justice Byrne relied on what Sir Nicolas Brown Wilkinson V.C said in Porzelack KG v Porzelacj (UK) Limited, (1987) 1 ALL ER 1074 at p. 1076:

The purpose of ordering security for costs against a plaintiff ordinarily resident outside the jurisdiction is to ensure that a successful defendant will have a fund available within the jurisdiction of the court against which it can enforce a judgment for costs. It is not, in the ordinary case, in any sense designed to provide a defendant with security for costs against a plaintiff who lacks funds.The risk of defending a case brought by a penurious plaintiff is as applicable to plaintiffs coming from outside the jurisdiction as it is to plaintiffs resident within the jurisdiction.

In the present case, the plaintiffs are resident out of the jurisdiction of this Court. In my judgment, this necessitates an order being made for security for costs of the appeal.

9. Orders
   

I make order as follows:

1. I grant the application to stay execution of my judgment dated 27th August, 2013, until the hearing and determination of the appeal on the condition that the first defendant deposits in Court, its six certificates of title 37279,37280, 37281,37282, 37283 and 37284.
   
2. The plaintiffs shall deposit in Court, security for costs of the appeal in a sum of $ 5000.
   

100. I make no order as to costs.
     

20th May, 2014

A.L.B. Brito-Mutunayagam
Judge