IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

CASE NUMBER: HBC 8 of 2007

BETWEEN:

VUNIMOLI SAWMILL LIMITED
FIRST PLAINTIFF

AND:

BASHIR KHAN
SECOND PLAINTIFF

AND:

MOHAMMED SAMSHOOD and ROZEENA BANO
(T/A SAM CIVIL SERVICES)
DEFENDANTS

Appearances: Mr. F. Vasarogo for the plaintiffs.
Mr. A. Ram for the defendants.

Date/Place of Ex-tempore Ruling: Tuesday, 26 June, 2012 at Suva.

Date/Place of Written Ruling: Tuesday, 31 July, 2012 at Suva.

Judgment of: The Hon. Madam Justice Anjala Wati.

RULING ON STAY

CATCHWORDS: 

STAY OF EXECUTION OF JUDGMENT - ORDER FOR SPECIFIC PERFORMANCE OF A SALE AND PURCHASE AGREEMENT- PRINCIPLES OF STAY- STAY GRANTED ON CONDITION THAT A PORTION OF THE JUDGMENT SUM BE PAID IN COURT PENDING APPEAL.

CASES REFERRED:

NATURAL WATERS OF VITI LTD. V. CRYSTAL CLEAR MINERAL WATER (FIJI) LTD. (UNREPORTED) CIVIL APPEAL ABU 0011 OF 2004S.
______________________________________________________________________________

The Cause

1.	On 15 December, 2011 the Court gave judgment in the following terms:-

(a) "The plaintiffs' have breached the sale and purchase agreement by terminating the same on the 23rd day of December, 2006. The said termination was unlawful and of no legal effect. As such, the only remedy that the plaintiffs' are entitled to is the purchase price which calculates to $795,000. 

(b) The defendants' must pay this sum of $795,000 to the plaintiffs', in lump sum, in exchange of the transfer of all the properties agreed to be sold vide the sale and purchase agreement. 

(c) The settlement must take place within three months from the date of the order, that is, on or before the 15th day of March, 2012. 

(d) The parties to work out a suitable date for settlement within the given time frame.

(e) All other claims of the parties are unsustainable and are thus dismissed.

(f) The High Court Registry must forthwith pay to Mr. Bashir Khan the remaining sum of $50,000 deposited in the High Court Registry.

(g) Each party to bear their own costs".

2.	The defendants have appealed against the said orders and by an application filed on 02 February, 2011 seek to have those orders stayed pending appeal.
3.	The defendants sought an unconditional stay and the plaintiffs say that stay should be granted on the condition that the entire judgment sum should be paid in Court.

The Grounds of Appeal

4.	Succinctly, the grounds of appeal states that the Court should not have ordered lump sum payment for the purchase of the subject mill pursuant to the sale and purchase agreement but ordered instalment payments over 40 months at a monthly rate of $18, 625 pursuant to clause 2.7 of the sale and purchase agreement and that a rebate of $5,000 per month should have been allowed for payment of $18,625 per month as provided for under clause 2.8 of the sale and purchase agreement. It is contended that the total rebate should come to $200,000 and that that amount should have been deducted from the sale price. 

5.	The appeal also states that the Court having found that the plaintiffs had breached the agreement, should have awarded damages for breach of the agreement, interest on the damages and costs for the trial.

The Grounds/Submissions/Law and Analysis

6.	The general rule is that a successful litigant is entitled to the fruits of the litigation but the realization of the same may be deferred or stayed pending appeal if there are special circumstances. 

7.	What constitutes special circumstances was outlined in Natural Waters of Viti Ltd. v. Crystal Clear Mineral Water (Fiji) Ltd. (unreported) Civil Appeal ABU 0011 of 2004S.

8.	The special circumstances were outlined as:-

"(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 proceeding.

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

9.	To be able to determine whether stay should be granted and if so whether there should be conditions attached to the grant, I will first of all take each factor and assess whether the defendants have been able to establish the same in their favour.

10.	It is convenient if I deal with factors (a) and (d) together, that is, whether, if no stay is granted, the applicant's right of appeal will be rendered nugatory and the novelty and importance of the questions involved in the appeal.

11.	Mr. A. Ram, appearing for the defendants', stated that if stay is not granted than the appeal would be rendered nugatory. He argued that the order was to attend to payment of the sum of $795,000 by 15 March, 2012. He stated that the time has lapsed and the defendants' are already in breach of the order so they ought to be granted an interim stay.

12.	It was further argued that the defendants' are unable to raise such a large sum of money as they do not have any security to offer for the loan as no assets that have been purchased have been conveyed or transferred to the defendants'.

13.	Mr. Ram also stated that his appeal grounds are arguable and important to decide the rights of the defendants'. 

14.	Mr. Vasarogo, appearing for the plaintiffs', stated that the defendants' have failed to give evidence of their impecuniosities. In the same breath, the counsel argued that the defendants' have not shown any ability to pay the judgment debt. 

15.	It is so naive and hilarious of the defendants' to argue that they are entitled to stay on the basis that they are already in default of the order. Stay is not automatic on default of compliance with the orders or upon filing of the appeal.

16.	The defendants' basic contention is that instead of the lump sum payment, the order ought to have been made under option B to pay a monthly instalment of $18, 625.00 over a period of 40 months under clause 2.7 of the sale and purchase agreement. At no point have the defendants' stated that they are not able to pay the monthly instalments.

17.	3 months time for the compliance of the order was given so that the defendants' could arrange finance. If the order was for the instalment payments, the defendants' would not have enjoyed the time period otherwise granted to them. The payment would have been made effective forthwith. On their own argument, the defendants' ought to have started making arrangements for payment of $18, 625.00 monthly. If that payment was arranged, by now, the defendants' would have collected some $130,000 and by the time the appeal is heard, close to half the judgment sum would be collected, on my calculation.

18.	There is no indication by the defendants' that they have collected such monies and are ready to pay in Court. They are asking for an unconditional stay. On their own argument, the appeal will not be rendered nugatory if they were ordered to pay at least half the judgment sum in Court as a condition precedent to the appeal. 

19.	I do not find any novelty or any important question arising in the appeal.

20.	Specific performance was ordered of the sale and purchase agreement. Under clause 2.7 of the sale and purchase agreement, the defendants ' had 40 months to pay from the year 2007 because in 2006, it was clear to all that payment under option A was not possible. The instalment payments then had to run from the subsequent year. 

21.	The order for payment of lump sum was made because the obligation for payment under the agreement arose from 2007. All the payments under the agreement should have been completed in 40 months, that is, before June, 2010.The agreement was neither modified nor changed. It is most unfair that the defendants' want payment to run from the date of the judgment. The payment should run from the date of the agreement as it is specific performance of the agreement that has been ordered.

22.	This is the same argument that the defendants' intend to rely on, that payment should run from the date of Court of Appeal judgment. The time for payment thus will always be deferred whilst the defendants' continue to enjoy possession and use of the mill.

23.	On the aspect of being entitled to a rebate under clause 2.8 of the sale and purchase agreement, let me examine the specific clause. It reads:-

"A rebate on the purchase price shall be calculated at $5,000.00 (five thousand dollars) plus VAT if any per month if the total purchase price is paid in full before the term of forty (40) months".

24.	The provision on rebate is clear. The defendants' were obligated to pay within 40 months from the year 2007. If they paid all the money before the 40 months then they were entitled to rebate or even if they deposited the monies in Court within 40 months from year 2007, it would be equitable for them to have asked for a rebate.

25.	At this stage, the defendants' are demanding a rebate without having complied with the agreement. I find the question of rebate neither novel, nor important but wholly unmeritorious. 

26.	There is also this assertion that the defendants' are entitled to damages on the plaintiffs' breach of the agreement, interests and costs.

27.	Under the sale and purchase agreement, the only damages the defendants' are entitled to, is for an order for specific performance, and that is what they have been granted. The question of interest therefore does not arise. On the subject of cost, I would no more than say that the court had exercised its discretion, and amongst many other matters the overriding consideration was the conduct of the parties, which led to the Court to arrive at a decision that each party was to bear its own cost. 

28.	All the arguments indicate that the appeal does not involve novel or important questions.

29.	I reiterate that the defendants' do not dispute that they ought to pay for the sawmill and that they ought to pay in instalments. They do not argue or refute that they are not able to pay monthly instaments. It is on this basis that the defendants' at least should be ordered to pay half the judgment sum in Court and be able to prosecute their appeal. If they are successful in their appeal, their money is safely secured in Court, which they can recover at any time. 

30.	The payment of the monies would at least give some hope to the plaintiffs' that if the defendants' are not successful in their appeal, their rights of recovery is not going to be impossible. 

31.	The second factor to consider is that whether the successful party will be injuriously affected by the stay. 

32.	The defendants' counsel stated that the plaintiffs' will not suffer any prejudice because the plaintiffs' have already received $190,000.00 which they are not presently entitled to. They have title to the sold assets when the time for settlement has not arrived. 

33.	The plaintiffs' say that they are entitled to the fruits of the litigation and if it is not now, than the defendants' must pay the entire sum in Court, as there is no evidence that they will honor the judgment sum.

34.	It was further argued by the plaintiffs' that the defendants' have had the benefit of possession and use of the mill and for them to state that they have no ability to pay is not enough. The plaintiffs' have waited for the money for so long and any further delay will be prejudicial.

35.	The plaintiffs' have also submitted that they have received a rental arrears notice dated 7 February 2012 being a notice for a fundamental breach being the non- payment of $17,059.62 rental lease. It was averred that this is indication that the defendants' are not able to pay the judgment sum and that they are not desirous of continuing with the business. The sawmill is in a dilapidated condition. It is likely that the plaintiffs' may not be able to recover anything from the judgment, neither the money nor the mill. If the ILTB decides to terminate the lease than the plaintiffs' would end up at more loss.

36.	On the aspect of prejudice, I appreciate that the defendants' ability to prosecute the appeal may be hindered if they do not pay the entire $795,000 in Court. They argue that they cannot raise such a big amount on a property, title of which is still retained by the plaintiffs'. However, it would be most prejudicial to the plaintiffs' if stay is granted without any conditions as the defendants' conduct is neither promising nor indicative of being genuine to raise and pay any monies under the judgment.

37.	The plaintiffs', indeed, may only have the judgment good on paper and unable to enforce it, as indisputably, the mill is not worked on for sheer neglect on the part of the defendants' who have had the possession of the mill and its use and benefit. The plaintiffs' at the most would have to keep the title to the vacant land and a shabby building. 

38.	I do not accept the defendants' argument that the plaintiffs' will not be injuriously affected because they have the benefit of $190,000 and the title of the property even though they were not entitled to the same. Even if the defendants' are to pay the purchase price in instalments, than in lump sum, the plaintiffs' are entitled to $250,000 on settlement before the instalment payments start. The plaintiffs' have now received the sum of $200,000 and a balance of $50,000 is still left. I do not see how the defendants' would be prejudiced, even if they were successful in their argument. The plaintiffs can transfer the assets once the balance of $50,000 is paid.

39.	The next factor is the bona fides of the applicants as to the prosecution of the appeal. 

40.	The defendants' counsel argued that they are serious about and in prosecuting the appeal. They have paid the security for costs and that the defendants' have every chance of success and the appeal cannot be classed as an appeal merely to delay.

41.	I find that the request by the defendants' not to pay any money even in Court shows lack of bona fides to honour the judgment but to buy more time for payment and hence the appeal. However, for whatever the reason the appeal is brought, there is diligence and the intention to proceed with the same.

42.	I also need to consider whether any third party will be affected by the grant or refusal of the application for stay and the question of public interest in the proceeding.

43.	I agree with both the counsel that no third party will be affected by the stay and there is no question of public interest.

44.	Finally, I need to consider the overall balance of convenience and the status quo. I find that the overall balance of convenience is in granting the stay with a condition for payment in of at least half the judgment sum in Court which is in the sum $350,000. This will not stifle the defendants' ability to proceed with the appeal and will also protect the plaintiffs' from being injuriously affected since there would be some chance of recovering the monies ordered to be paid.

Orders

45.	For the above reasons, I order that the orders granted on 15 December, 2011 be stayed on the condition that the defendants' pay in Court a sum of $350,000 within 14 days from the date of the ex- tempore ruling.

46.	In the event that payment is not made within 14 days as stated, there shall be no stay and the plaintiffs' shall then be entitled to execute the judgment of 15 December, 2011.

47.	Each party shall bear their own costs.

48.	Orders accordingly.

Anjala Wati

Judge

31.07.2012