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High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
CIVIL ACTION NO. 205 OF 2001
Between:
RAJENDRA PRASAD BROTHERS LIMITED
Plaintiff
and
FAI INSURANCES (FIJI) LIMITED
Defendant
Mr. B. C. Patel for the Plaintiff
Mr. F. Haniff for the Defendant
DECISION
Application
By summons filed on 23 June 2004 returnable for 15 July 2004 the defendant seeks orders that:
[1] The execution and all further proceedings to enforce the judgment of the Honourable Mr. Justice Pathik delivered on 19 May 2004 and entered herein on 3 June 2004 in High Court Civil Action No. 205 of 2001 be stayed pending the determination of the appeal by the Defendant to the Court of Appeal.
[2] That all other proceedings in High Court Civil Action No. 205 of 2001 be stayed pending the determination of the appeal by the Defendant to the Court of Appeal.
[3] Such further or other order as the Court sees fit.
The orders of 19 May 2004
The Orders that I made on 19 May 2004 read as follows:
“It is ordered that the defendant pay to the plaintiff the admitted sum of $2,445,203.00 with interest thereon at 9.25% from 19 September 2000 to the date of payment And it is further ordered that the defendant pay to the plaintiff costs which is to be taxed unless agreed. Judgment is therefore entered for the plaintiff generally.
I shall now hear counsel to set a date for hearing to determine the balance of quantum claimed.”
An affidavit in support of the application has been filed by John Hunt, a Director and Principal Officer of the defendant insurance company on 23 June 2004. A reply thereto was filed by Rajendra Prasad, the Managing Director of the Plaintiff company on 8 July 2004 followed by a Response thereto by Hunt on 16 July 2004.
I also have for my consideration the written and oral submissions of both counsel. I must commend counsel for reducing their comprehensive submissions to writing in the very short time available to them to present their arguments.
The summons was partly heard in the afternoon of 15 July and completed the next day with decision on notice as soon as possible.
This application arises out of the judgment I delivered herein on 19 May 2004. It was sealed on 3 June 2004.
The defendant has appealed to Court of Appeal against the said judgment.
Defendant’s grounds of stay
The grounds on which the defendant is seeking a stay of the judgment and of the proceedings are: (a) that it believes that it has ‘good prospects’ of success; (b) that the defendant will be prejudiced if a stay is refused because the plaintiff may not be able to repay the judgment sum and interest should the appeal be successful and (c) that a successful appeal will save time and expense of an assessment hearing.
The learned counsel for the plaintiff has raised a point that the judgment is an interlocutory judgment and the time for appealing expired on 24 June 2004. Counsel submits that as no leave to appeal was obtained in terms of s12(2)(f) of the Court of Appeal Act, the appeal filed on 17 June 2004 is invalid and of no effect.
Be that as it may, Mr. Patel does not expect the Court to deal with this matter on this application but he is content to leave it to be decided on the Summons to Fix Security for Costs on appeal which is pending before the Appeal Court.
So the parties are agreeable that I proceed to determine the stay application as if the appeal is proper.
Defendant’s submission
(i) Arguable case for appeal
I shall state briefly the submissions of the learned counsel for the defendant.
He submits that the defendant has made out an ‘arguable case’ for appeal mainly because “had the learned Judge given sufficient weight to the overt acts and the conviction of George Speight for treason the Court should have found that whatever damage suffered by the plaintiff was occasioned by or through” etc as alleged in its Defence in the trial of the action.
(ii) Defendant fears that Appeal would be nugatory if it succeeds
The defendant fears that its appeal will be nugatory if it paid the judgment sum to the plaintiff because it has no prospect of recovering this sum from the plaintiff in the event of its appeal succeeding.
The reasons given for this proposition are: (a) the plaintiff has assigned the insurance proceeds to the Fiji Development Bank (“F D B”) and to the Westpac Banking Corporation (“W B C”) about which the defendant has notice of; (b) if the Court orders that judgment sum to be paid to the two assignees the defendant will not be able to recover as the assignees are the mortgagees of the plaintiff and they would have priority over the insurance proceeds; and (c) the plaintiff is heavily in debt to both the assignees as well as to ANZ Banking Group Limited.
The defendant submits that because the judgment sum does not belong to the plaintiff, the defendant therefore should not be ordered to pay the judgment sum to the plaintiff.
Also counsel submits that if the judgment is ordered to be paid to the assignees the appeal would be rendered nugatory if it is successful on appeal.
He further submits that the plaintiff has not put the true liquidity position of itself. If the said sum is paid to plaintiff it will be used to pay the plaintiff’s debts and hence the defendant will not be able to recover if it is successful on appeal thereby rendering its appeal nugatory.
(iii) Stay of Proceedings
The Court has already set down 3rd, 4th and 5th August 2004 to determine the balance of the quantum claimed by the plaintiff.
It seeks a stay of this hearing from the reasons that: (a) in the event the appeal is successful the costs associated with the hearing on the above dates would have been wasted; (b) there will be no prejudice to the plaintiff as any award for further damages would not go to the plaintiff because of the said assignments and the defendant will not be able to recover from the assignees.
Plaintiff’s submission
After stating the principles governing a stay application the learned counsel for the plaintiff made his submissions on the various grounds argued by Mr. Haniff.
On the defendant’s statement that the defendant has ‘good prospects’ of success on appeal, Mr. Patel stated that the defendant has ‘merely regurgitated their earlier defence, which has been rejected by the Court without adding anything new to cast doubt on the correctness of the judgment’. He says that this is no help to the Court in determining the issues before it. Weight should be given to the judgment of the Court.
On ‘prejudice’ counsel submits that there will be no prejudice to the defendant if ‘stay’ is refused as its concern is adequately answered by the Affidavit of Rajendra Prasad showing plaintiff’s ability to repay and in any event that concern is taken care of by the plaintiff’s offer to provide Bank quarantee as security for the repayment.
On ‘saving of time and costs’ he says that there is no merit in this ground because it could equally delay assessment of the claim and cause extra cost of a second appeal if the first appeal fails.
There has to be also ‘special circumstances’ to justify a need to depart from the normal rule that the plaintiff is entitled to the fruits of the judgment. The defendant he says has not shown any special circumstances to make out a case for a ‘stay’.
It is the plaintiff’s submission that if the Court were to grant a stay in the exercise of its discretion then it should be on terms.
Consideration of the issue
(i) Principles governing ‘stay’
In the decision delivered this morning in the case of Tappoo Holdings Limited and Tappoo Limited v Robert Arthur Stuchbery (Civil Action No. HBC0355 of 2001/s) where a similar application was made, I dealt with the principles governing ‘stay’. For the sake of completeness and at the risk of being lengthy I reproduce hereunder what I said therein on the principles as it is pertinent to this application.
Both counsel stated quite clearly and in considerable detail with authorities principles governing stay and interim payment.
The principles on 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”.
(ii) Dealing with the application
The issues for the Court’s determination are whether ‘stay of execution’ and ‘stay of proceedings’ ought to be granted in all the circumstances of this case or not.
I have considered the arguments put forward by both counsel.
It is to be noted that the judgment in this case has been given for the amount which has actually been admitted by the defendant after a long trial of the action in which the Court held that the exclusionary clause in the Policy in question did not apply in favour of the defendant.
I agree with Mr. Patel that nothing new has been introduced in the Grounds of Appeal which has not been thoroughly argued and adjudicated upon by the Court.
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 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.
It is my view that the defendant has not made out a case that it has ‘good prospects’ of succeeding on appeal.
Stay in ‘special circumstances’
A ‘stay’ will be granted where the special circumstances of the case so require.
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 added)
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.”
On the question of prejudicial effect on the defendant if the judgment sum was paid out to the plaintiff, I have considered the financial standing of the plaintiff not ignoring at the same time its alleged indebtedness to various Banks as stated by the defendant. The plaintiff says that it has the ability to pay back if the defendant is successful and is prepared to give a Bank Guarantee as security.
There is no doubt that if the defendant was successful on appeal and moneys have been paid out there is always that danger that it may not be recoverable. It is a large sum of money to pay out without adequate security.
The defendant’s counsel has laboured the point that recovery will be difficult if payment is ordered to be made thereby resulting in the appeal rendered nugatory. I take note of his arguments in this regard particularly the point that he makes in regard to the assignment of insurance monies to the Banks he mentioned.
Mr. Haniff when asked by the Court whether the defendant is in a position to deposit the sum into Court, he was non-committal.
Although Mr. Haniff has painted a gloomy picture of the plaintiff’s financial position as if to say that it is up to the neck in debt to various Banks, he should not forget that it is the plaintiff who wants to enjoy the fruits of the judgment in its favour which it has been deprived of for four years and on top of that the judgment is for an amount admitted by the defendant.
Mr. Haniff neither admits nor denies that the defendant is in a position to pay the judgment sum in Court. In the circumstances I can only presume that it is capable of paying the said sum in Court. There is a mention however in Rajendra Prasad’s affidavit at page 3 item 8 that the ‘defendant has ceased trading in Fiji having sold its business to Queensland Insurance (Fiji) Limited. The defendant has not disclosed its ability to meet the judgment debt and interest if stay is granted and the appeal is unsuccessful.’
In all the circumstances of this case the plaintiff will suffer greater prejudice than the defendant if stay was granted.
To allay the fear that the defendant has about recovery of the sum if paid out, 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 circumstances of this case I do not favour payment out of this sum to plaintiff upon furnishing a Bank Guarantee as submitted by Mr. Patel.
Conclusion
To conclude, for the reasons stated by me, upon hearing both counsel on their submissions and applying the principles governing ‘stay’, I consider that I ought to grant a ‘conditional stay’. This way after doing a balancing exercise and bearing in mind the facts of this case particularly the ‘liquidity’ aspect of both the companies which has been highlighted so much, neither party will be prejudiced with the plaintiff having the assurance that the judgment in its favour is secure and the defendant will have the peace of mind that it will be able to recover the money if it is successful on appeal.
In all the circumstances of this case it is intended to order payment into Court the judgment sum of $2,445,203.00 with interest thereon at 9.25% from 19 September 2000 to the date of payment. This type of order was made in Mohammed Nasir Khan and Tahira Begum (Civil Appeal No. 36/83, FCA) where it was stated 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”. There a stay was granted pending appeal on condition that “the whole amount owing under the judgment i.e. $52,789.00 be paid into Court within 14 days of the date of this decision.”
The learned counsel for the plaintiff has urged on me that if payment into court is ordered, a further order be made that it be paid out to plaintiff upon the plaintiff giving a Bank Guarantee that the money would be paid back if the dependant is successful on appeal.
I do not look at this proposition with any favour in the circumstances of this case although payment out in this manner is quite in order in the Court’s discretion [Rosengrens Ltd v Safe Deposit Centres Ltd [1984] 3 All E.R 198, McLeod v N.Z. Pine Co [1892] 11 NZLR 493 at 495 and Plowman v Dillon (unreported 11 August 1986, Auckland, A496/83].
Orders
I therefore make the following orders:-
(v) It is further ordered that if the defendant fails to deposit the said sum as ordered in 1(i) above the plaintiff will be at liberty to apply to Court to restore the hearing of the ‘balance of quantum’ to the list.
D. Pathik
Judge
At Suva
27 July 2004
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