Shell Company (Pacific Islands) Ltd v Morris [2003] SBHC 142; HCSI-CAC 005 of 2003 (18 July 2003)

CAC No 005, 2003, HC

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Appeal Case No 005 of 2003

SHELL COMPANY (PACIFIC ISLANDS) LIMITED

-v-

WAYNE FREDERICK MORRIS AND BENJAMIN ST. GILES PRINCE (as Trustees)

In the Court of Appeal of Solomon Islands
(KABUI, J)
Civil Appeal No. 005 of 2003

Date of Hearing: 15th July 2003
Date of Ruling: 18th July 2003

Mr. C. Hapa for the Appellant
Mr. J. Sullivan for the Respondents

RULING

Kabui J: By Notice of Motion filed on 9th May 2003, the Appellant seeks the following orders-

1. that execution and all further proceedings on:

(a) the judgment of the High Court delivered on January 24,2003 and perfected, signed and sealed on January 27 2003; and

(b) the judgment in default of compliance dated December 2, 2002 and perfected on December 4, 2002,

be stayed pending the hearing and determination of the appeal; and

2. costs of this application be costs in the appeal.

The brief background.

On 4th December 2003, I made an order the effect of which gave judgment against the Appellant for the sum of SBD$2,049,913.66 together with interest thereon at the rate of 5% from 13th June 2002. It was a default judgment in that the Appellant had failed to comply with the terms of a guillotine order by agreement of the parties in the form of a consent order. I later refused an application by the Appellant to set aside the order I made against the Appellant on 4th December 2002. The present application therefore is seeking an order to stay the execution of the order I made on 4th December 2002 as read with the order to dismiss the application of the Appellant, which I subsequently made on 27th January 2003.

The Appellant’s Case.

Counsel for the Appellant, Mr. Hapa, had urged me to follow the legal position as enunciated by the New South Wales Court of Appeal in the case of Alexander v. Cambridge Credit Corp. Limited (Receiver Appointed) and Another (1985) 2 NSWLR 685. At page 694 of the Court of Appeal’s judgment, the Court said,

“......In our opinion it is not necessary for the grant of a stay that special or exceptional circumstances should be made out. It is sufficient that the applicant for the stay demonstrates a reason or an appropriate case to warrant the exercise of discretion in his favour .....”

This quote represents the Appellant’s case. That is to say, so long as the applicant for a stay can show by evidence that a reason or an appropriate case exists, the Court may exercise its discretion in favour of the applicant. The Appellant in this case relied upon the affidavit evidence flied by Mr. Noka in this regard. That is, in the absence of an order for stay, the chances of the Appellant of being able to recover the judgment sum if it succeeds in its appeal would be almost nil in practical terms for the money would have been paid out to creditors and gone.

The Respondents’ case.

Counsel for the Respondents, Mr. Sullivan, did not dispute the legal position as enunciated by the New South Wales the Court of Appeal but did say that the general rule that the creditor was prima facie entitled to the fruits of his judgment remained intact. He said the position in the State of Queensland was the same as in the old English cases. He comprehensively set out the principles at play in any application for stay pending appeal in any given case. In the essence, he was in favour of applying the old rules refined by the decision of the New South Wales Court of Appeal. That is how I understood his approach to this case.

The decision of the court.

I start with the undisputed position that the Court does have an unfettered discretion to grant a stay or not to do so. (See Attorney-General v. Emersion [1889] UKLawRpKQB 190; (1890) 24 QBD 56). I also restate the principle that a judgment creditor is entitled to reap the fruits of his judgment. (See The Annot Lyle [1886] UKLawRpPro 31; [1886] 11 PD 114). As against that principle is the contrary principle that the Court may order a stay where refusing to do so would render the appeal nugatory (pointless). So, there has to be a balance between the rights of the judgment creditor and the rights of the judgment debtor. The scale is likely to tip in favour of the judgment debtor if he can prove special circumstances in his favour. A case of special or exceptional or exceptional circumstances would be where serious injury would be done to the judgment debtor if execution takes place pending an appeal especially where the appeal has got merits to it. Counsel for the Respondents, Mr. Sullivan, cited two instances showing serious injury arising in this regard. The first is where execution would ruin the judgment debtor beyond simply causing hardship. He cited Linotype-Hell Finance Ltd. v. Baker [1993] 1 W.L.R. 321 for that proposition. The second is where there is no reasonable prospect of recovery of moneys expended under the judgment and the appeal succeeds. He cited three authorities to support that proposition. Clearly’ the Appellant’s case falls within the second category of cases cited by Mr. Sullivan above. The Appellant is very concerned that it will not be able to recover its moneys back if execution proceeds and moneys are paid out by the Trustees to the creditors and gone. That concern can only be valid if the Appellant is sure that its appeal has some prospect of success otherwise its application may be viewed as a delaying tactic to await the result of its appeal and prevent the Respondents from reaping the fruits of their success. Any appellant will always argue that his appeal has got merits pending the determination of the appeal. This point was emphasized forcefully by Mr. Sullivan in that the appeal had no prospect of success at all and so the need for an order for stay would not arise. He said my order refusing to set aside a judgment regularly entered was a valid one. Also, he said that my finding was that the Appellant had failed to make out a case for an arguable defence to the point of conviction. Mr. Sullivan’s argument clearly shows the hallmark of Alexander’s case cited above. Whilst the New South Wales Court of Appeal decision in an interesting one and worthy of note, I do not feel that I am bound by that decision. Mr. Sullivan did raise another argument quite allied to the issue of lack of a prospect of success of the appeal. It is that the issue whether or not my ruling/order on 24th January 2003 was interlocutory lies in a balance until the Court of Appeal decides it at a later date so that the Appellant’s right of appeal is yet to be established. This issue again bears the hallmark of Alexander’s case cited above in that it dwells upon the prospect of success of the appeal at the end of the day. I will not allow that argument to influence me in the exercise of my discretion in this case. I will dwell simply on the consideration of the Appellant’s main argument that its fear is the unlikely recovery of moneys following their departure into the hands of the creditors. This fear or concern is a real one for the Appellant. Whilst it is true that the Appellant does have a good financial base and may well pay up without any difficulty, its concern is not a matter of being simply a busybody meddling in other people’s business. It has a stake in the appeal. Whilst Mr. Sullivan has given an undertaking on behalf of the Trustees not to payout the moneys to the creditors, none of the Trustees had flied any affidavit to that effect. I need to hear from the horse’s mouth on this matter. I am not at one moment suggesting that Mr. Sullivan in not a man of his words, quite to the contrary. I was prepared to consider an undertaking signed by the Trustees in writing and filed in Court in the normal way. There being none, I must take it that there is no such undertaking in this case. Whilst the Trustees may well have good financial standing and can repay the Appellant if the Appellant has paid the moneys to the Trustees and then wins its appeal at the end of the day, there is no evidence to confirm the Trustees’ financial standing. Again, having said that, I am not for one moment suggesting that the Trustees dot not have financial ability to meet their legal obligations as they arise. Lack of evidence is the issue. I have therefore come to the conclusion that the Appellant has demonstrated a case of special circumstance in that to refuse a stay would be detrimental to itself. Mr. Sullivan did concede this point on page 3 of his written submissions. I therefore grant the application for stay sought by the Appellant. Costs will be costs in the appeal.

F.O. Kabui
Judge