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AJ & E Ltd v FC Nichols (Wholesales) Ltd [2006] TOLawRp 8; [2006] Tonga LR 78 (23 February 2006)

IN THE COURT OF APPEAL OF TONGA

AJ & E Ltd

v

FC Nichols (Wholesales) Ltd

Court of Appeal, Nuku'alofa
Webster CJ
AC 8/2005

23 February 2006

Practice and procedure – leave to appeal out of time – refused

Practice and procedure – stay of execution application – refused

This was an application for leave to appeal out of time against the decision of the Supreme Court dated 10 June 2005. An appeal must be lodged with the Registrar within 42 days after the date of the judgment (by 22 July 2005). This application for leave to appeal out to time was not lodged until 29 November 2005, over five months after the date of judgment. It was accompanied by an affidavit by one of the second defendant's directors and a draft Notice of Appeal. Although such an application could be heard ex parte a note of opposition to the application was filed on 30 January 2006 and the application was heard inter parties in chambers on 10 February 2006. Further, the second defendant applied for a stay of execution.

Held:

1. The basic principle in deciding an application for leave to appeal out of time was that it was entirely in the discretion of the Court. The Rules of Court have to be observed and must not be disregarded or ignored.

2. There was not a point of principle affecting others involved, and there was no suggestion that the appeal could be allowed to proceed while preserving the plaintiff's position. Leave to appeal out of time was refused.

3. There was no evidence to show that without a stay of execution the second defendant would be ruined. The second defendant's application for a stay of execution was refused.

Cases considered:

Atkins v Great Western Railway (1886) 2 TLR 400

Bank of Tonga v 'Alatini & Muti [1990] Tonga LR 153 (CA)

Barker v Lavery [1885] UKLawRpKQB 32; [1885] 14 QBD 769

Linotype-Hell Finance Ltd v Baker [1992] 4 All ER 887 (CA)

Revici v Prentice Hall Inc [1969] 1 All ER 772 (CA)

Samuels v Linzi Dresses Ltd [1980] 1 All ER 803 (CA)

The Annot Lyle (1886) 11PD 114 (CA)

'Uta'atu v Free Wesleyan Church of Tonga (No 26/90, 12 August 1994)

Rules considered:

Court of Appeal Rules 1990

Ruling on Application for Leave to Appeal out of Time

This is an application for leave to appeal out of time against the decision of Thomas J in the Supreme Court dated 10 June 2005. Under Order 5, Rule 2(1) of the Court of Appeal Rules 1990 an appeal must be lodged with the Registrar within 42 days after the date of the judgment, ie in this case by 22 July 2005.

This application for leave to appeal out to time was not lodged until 29 November 2005, ie over 5 months after the date of judgment. It was accompanied by an affidavit by one of the 2nd Defendant's Directors, Mr John Sullivan, and a draft Notice of Appeal. Although such an application can be heard ex parte under Order 7, Rule 1, a note of opposition to the application was filed on 30 January 2006 and I heard the application inter parties in chambers on 10 February 2006.

The basic principle in deciding an application for leave to appeal out of time is that it is entirely in the discretion of the Court (Bank of Tonga v 'Alatini & Muti [1990] Tonga LR 153 (CA)). Of course the discretion has to be exercised judicially.

My starting position in considering this application is that it is important that there should be finality in litigation so that parties know where they stand and matters taken as decided are not later re-opened at the whim, as it were, of the losing party. I have found that there is a tendency in Tonga to regard time limits as unimportant, but ultimately laxity on this works to the disadvantage of litigants as a whole.

The principle is therefore that the Rules of Court have to be observed and must not be disregarded or ignored: Halsbury's Laws (4th Ed) Vol 37 para 25; Revici v Prentice Hall Inc [1969] 1 All ER 772 (CA); Samuels v Linzi Dresses Ltd [1980] 1 All ER 803 (CA), at 812. Any failure to comply calls for a full and proper explanation (the White Book (1997) Para 59/14/8); and it should not be taken for granted that the Court will exercise its powers to enlarge time: Revici.

In this case the application came 4 months after the appeal period had expired, and it very much looked as if the time limit for appealing was simply ignored until the issue of the writ of distress on 16 November 2005 after repeated unsuccessful attempts by the Plaintiff's major shareholder Mr Nichols to contact the 2nd Defendant's Managing Director Ms Sullivan. It appears from the accompanying application to stay execution that that may have been done on the basis that there would be no injustice as long as the appeal was filed in time for it to be heard at the Court of Appeal session later this year, but that cannot justify such a lengthy delay, and it matters not that there will be no injustice to the other side (Revici).

No real explanation was offered for the delay other than Counsel's statement in chambers that it was his failure, but he had no follow-up diary system to avoid such mishaps. In any event, while it is unfortunate if a litigant suffers through the fault of its Counsel, the 2nd Defendant may have a remedy against him in respect of that failure, so, regrettably for the 2nd Defendant's Counsel, in the circumstances that cannot be a good reason for extending time.

I consider that the issue of whether or not the appeal is likely to succeed is a neutral matter. If the appeal has strong merits, one would have expected it to be lodged promptly and it is difficult to see why it was not lodged promptly and there has been such a long delay – not just a few days' forgetfulness or pressure of business, but 4 months beyond the specified appeal period of 42 days.

The 2nd Defendant's Counsel withdrew his submission about the possibility of criminal prosecution [of the Plaintiff]; and although this may be an important case for the 2nd Defendant, it is not of the same nature as in the Bank of Tonga case, there is not a point of principle affecting others involved, and there is no suggestion that the appeal could be allowed to proceed while preserving the Plaintiff's position.

I therefore refuse leave to appeal out of time, with regret at the embarrassment this may cause the 2nd Defendant's Counsel.

Application for stay of execution pending appeal

The 2nd Defendant on the same date applied for a stay of execution of the judgment on the basis that there were reasonable grounds for the appeal; it will be able to pay the judgment amount and costs if the appeal is unsuccessful and the Plaintiff will not be deprived of the fruits of its litigation, as at that time there were only 8 months to the Court of Appeal sitting.

That application was also opposed by the Plaintiff on the principle ground that the ability of the 2nd Defendant to pay the judgment amount is questionable.

Order 9 of the Court of Appeal Rules provides.

"Order 9: Effect of Appeal

Unless otherwise ordered by the Court or the Supreme Court, an appeal shall not operate as a stay of execution or of proceedings in the court below."

Two principles have to be balanced against each other as to whether a stay of execution pending appeal should be granted: first, that a successful litigant should not be deprived of the fruits of his litigation (The Annot Lyle (1886) 11PD 114 (CA), at 116); and secondly, that an appellant should not be deprived of the fruits of a successful appeal. Whether to grant or refuse a stay is within the Court's discretion. (Halsbury's Laws (4th Ed) Vol 37 para 699).

The Plaintiff's Counsel also drew my attention to the decision of Ward CJ in 'Uta'atu v Free Wesleyan Church of Tonga (No 26/90, 12 August 1994), although that appeared to be a case where an appeal had been filed timeously. Ward CJ refers to two possible tests for granting a stay, the stringent test from Atkins v Great Western Railway (1886) 2 TLR 400:

"As a general rule the only ground for a stay of execution is an affidavit showing that if the damages and costs were paid there is no reasonable probability of getting them back if the appeal succeeds"

and the more relaxed test from Linotype-Hell Finance Ltd v Baker [1992] 4 All ER 887 (CA), at 888:

"... 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."

However the 2nd Defendant's problem is that there is no evidence to show that without a stay of execution it will be ruined – on the contrary Mr Sullivan's affidavit says it is able to pay and has arranged financing from the bank. Nor is there evidence that if the judgment amount is paid, the Plaintiff will be unable to repay it so as to deprive the 2nd Defendant of the fruits of appeal if successful (see Barker v Lavery [1885] UKLawRpKQB 32; [1885] 14 QBD 769 referred to by Ward CJ). As was said in Barker v Lavery, those who apply for a stay of execution must come before the Court prepared with all 130 necessary materials.

I therefore also refuse the 2nd Defendant's application for a stay of execution.

Costs

Costs of both applications as agreed or taxed to the Plaintiff.