BANK OF INDIA v. BHAGWANDAS KEWALRAM MURJANI AND OTHERS

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J U D G M E N T

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Kempster, JA :

1. On 27 April 1989 in chambers Barnett J entered summary judgment under RSC Order 14 in favour of the plaintiffs, Bank of India, in actions Nos. A1404 and A1045 of 1989 for US$10,798,955.91 together with interest. In the first action judgment was entered against all but the 3rd of the seven defendants namely against Bhagwandas Kewalram Murjani, Lawful (Holdings) Limited, Lucky Pierre Limited, Murjani Industries (HK) Limited, Murjani Macau Limited and Murjani Designs Limited.

2. In the second action judgment was entered against two defendants; Murjani Industries (HK) Limited and Mohan Bhagwandas Murjani. Murjani Industries (HK) Limited, who are in liquidation and were defendants in both actions, were sued as the principal debtors and the other defendants as guarantors.

3. On the same occasion, in each action and without the reception of further evidence, the learned judge ordered that execution be stayed until the determination or "otherwise disposal of any appeal which the (relevant) defendants may bring from this order and that there be liberty to apply". No conditions were imposed on the defendants but, pursuant to the judge's direction given on 28 July, the orders were not drawn up until 13 May. Meanwhile on 1 May the plaintiffs had issued summonses for the variation of the orders for stay. They sought directions:

"(a) that the said stay of execution shall not cover application for injunctive or other relief in aid of or in connection with the judgment; or,

(b) to any proceedings to be issued by the Plaintiff under RSC Orders 48 or 49B".

On 3 May Barnett J made orders in the terms of those summonses following which an injunction in the Mareva form was granted as against all the defendants by Sears J and a prohibition order made against one of the personal defendants by Master Perrior. On 29 May summary judgment was entered in the plaintiffs favour as against the 3rd defendants, Murjani Ltd, and stayed in similar terms to the earlier judgments.

4. Now the plaintiffs appeal against the orders for stay of execution and the defendants, save for Murjani (HK) Ltd, against the qualifications added on 3 May. This judgment covers only the plaintiffs' appeals.

5. In each action, as we have seen, Barnett J made two orders, one called "the judgment", on 27 April, another on the 28th and a concluding order on 3 May; the first two and the last being subsequently drawn up. He should have made one order dated 27 April to embody his more mature consideration of the matters canvassed before him as it is questionable whether he had jurisdiction to make fresh orders in this context without a change in circumstances. While this is not a point which was taken by any of the parties it may be appropriate here to emphasize that it is the responsibility of judges to ensure that their orders are drawn up in proper form.

6. Why a stay was granted on 27 April does not appear from the brief notes before us save for the judge's concern, expressed on May 3, that execution might break up the Murjani Group. However, we have before us the reasons advanced in favour of a stay by Mr Rodway, on behalf of the defendants, to which the judge had adverted on the earlier date.

7. The stay was not expressed to run until the trial of any counterclaim persuant to O 14 r 3(2) nor, looking to the terms of O 47 r (1)(i)(b), was it apparently contended that the defendants were unable to satisfy the judgment. It must have been submitted, as it was to us, that there were special circumstances which rendered it inexpedient to enforce the judgment within the meaning of O 47 r (1)(i)(a). However, since the defendants were not offering to bring monies into court or to pay by instalments it is appropriate to consider the terms of O 59 r 13 since the stay was granted pending appeal. In the light of its wording the grant or refusal of a stay was a matter for the trial judge's discretion to be exercised judicially on the particular facts of the case as explained in Attorney General v. Emerson [1889] 24 QB 56 and The Ratata [1897] P 118.

8. In exercising his discretion a judge will normally weigh the well recognised principle that a successful litigant is not usually to be deprived of the fruits of his litigation against the complementary principle that an appellant should not usually be deprived of the fruits of a successful appeal.

9. As to costs an order is generally made that they shall be taxed and paid to the solicitors for the successful party upon their undertaking to repay in the event of a successful appeal.

10. When approaching the exercise of discretion this court is guided by a well known passage in the speech of Lord Diplock, when considering the grant (if an interlocutory injunction, in Hadmor Productions v Hamilton [1983] AC 191 at p 220 :

"It may set aside the judge's exercise of his discretion on the ground that it was made upon a misunderstanding of the law or of the evidence before him .... There may also be occasional cases where even though no erroneous assumption of law or fact can be identified the judge's decision is so aberrant that it must be set aside upon the ground that no reasonable judge regardful of his duty to act judicially could have reached it. It is only if and after the appellate court has reached the conclusion that the judge's exercise of his discretion must be set aside for one or other of these reasons, that it becomes entitled to exercise an original discretion of his own".

11. The reasons advanced by Mr. Rodway on behalf of the defendants, upon at least some of which the exercise of the judge's discretion must have been based, were:-

(1) That the defendants had a potential claim against the plaintiffs for damages arising on the cross-undertaking which the plaintiffs had given when an order was made in their favour for a Mareva injunction in relation to the defendants' assets and which was subsequently discharged on the basis that it had improperly been granted.

12. As to this no direction for an inquiry had or has been sought and, since the injunction was drawn in the usual form permitting the defendant corporations to carry on business as usual and the personal defendants to maintain their accustomed life style the only damage that, prima facie at least, could have befallen the defendants would be such as resulted from their being unable to dispose of or conceal assets pending trial. That does not count.

(2) That by reason of the Mareva injunctions still current when the orders for stay of execution were made the plaintiffs could suffer no prejudice from a deferment of their right to execute on the judgment.

13. But being delayed in recovery of monies owed inevitably constitutes prejudice.

(3) That if the defendants' appeals were successful they would have suffered irreparable loss; it being their case that the actions were premature by reason of agreement that no repayment of the sums admittedly owing should commence before April 1989 when an instalment schedule would be negotiated.

14. The irreparable loss would therefore constitute such interest as might be earned on the sum outstanding between 27 April and the date or dates when repayment would be made according to the agreement to agree. In the meanwhile equivalent interest would run on that sum in the plaintiffs' favour. This submission is also of a paradoxical nature since it would put a party who admits a debt in a better position than one who denies it. As was explained by this court in Kazan Properties & Investment Ltd v Kings Dyeing and Weaving Factory Ltd (in liquidation) Civil Appeal No. 13 of 1988 (unreported) at p 11 :

"..... as a general rule the only ground for a stay where damages and costs have been ordered to be paid is affidavit evidence showing that if the money is paid there will be no reasonable probability of recovering it even if the appeal, succeeds".

15. This is not suggested in the instant case. In Atkins v. G.W. Railway [1826] 2 TLR 400 and in Kazan it was held also that the fact that there might be strong grounds for appeal, only faintly suggested as Mr. Rodway's last submission to the judge below, was no reason for granting a stay.

16. Finally I turn to the ground specifically mentioned by the judge namely that if the plaintiffs proceeded to execution then the Murjani Group of companies might be dismantled causing damage which it would be difficult to rectify. As regards the defendant corporations, which apparently had and have few assests remaining, this was a proper consideration to be weighted in the balance but as regards the two personal defendants it was wholly irrelevant. They were not liable to be dismantled. Further, being jointly and severally liable for the judgment debt together with the other defendants, there was no evidence or plea of inability on the part of either of them to satisfy it. The suggestion that they personally had paid over US$17 million or more to relieve the financial exigencies of the corporations was withdrawn.

17. The question was raised by the court as to whether the defendant's conduct in seeking clarification or amendment of the order originally made on 27 April precluded an appeal against the stay as a whole. I believe that Mr Tang, for the plaintiffs, provided the answer by reference to a passage in the speech of Lord Atkin in Lissenden v. C.A.V. Bosch Ltd [1940] A.C. 412 at p 429:

"The doctrine of election could have no place in the present case. The applicant is not faced with alternative rights: it is the same right that he claims but in larger degree. In Mills v. Duckworth [1938] 1 A11 ER 318, 321 a plaintiff who had been awarded damages for negligence had taken the judgment sum out of a larger sum paid into Court and then had appealed against the quantum of damages and was met by a similar objection to his appeal. Lord Fairfield in overruling the objection pointedly said: "The plaintiff said 'I am not going to blow hot and cold. I am going to blow hotter'." Here the applicant is not faced with a choice between alternative rights: he has exercised an undisputed right to compensation: and claims to have a right to more. You have not lost your right to a second helping because you have taken the first".

18. The plaintiffs here have not blown hot and cold. They have blown hot and hotter.

19. I am satisfied both that the judge misunderstood the evidence as regards the effect of the judgments on the personal defendants and that, in the circumstances already outlined and after an over-long day, his decision to grant a stay to include the personal defendants could not have been made had he been mindful of his duty to act judicially. This court is entitled to exercise its own discretion. I would allow the appeal to the extent of lifting the stay as against Mr Bhagwandas Kewalram Murjani and Mr Mohan Bhagwandas Murjani. The stay as against the corporate, defendants I would order to stand.

Clough, JA:

20. I agree.

Mortimer, J :

21. I also agree and would only add that the onus is always upon the defendant to establish the special reasons upon which a judge will grant a stay. So far as the individual defendants were concerned here there were no such special reasons ever advanced. I agree that the appeal should be allowed to the extent suggested.