VS Cargo Management Services Limited v Labadee Trust (CAZ/08/377 /2022) [2023] ZMCA 383 (29 June 2023)

IN THE COURT OF APPEAL FOR ZAMBIA HOLDEN AT LUSAKA (CIVIL JURISDICTION) CAZ/08/3 77 /2022 BETWEEN: VS CARGO MANAGEMENT SERVICES LIMITED Appellant AND u'tillC OF l AMBt-'1 ~ f APPE;1.1 LABADEE TRUST t 2 S JUN 2C23 Respondent IS For the Appellant: Mr.'. K. Wishimanga of Messrs AMW Legal and Ms. M. Nkunika of Messrs Milner & Paul Legal Practitioners For the Respondent: Mr. E. Mwitwa of Messrs Mwenye & Mwitwa Advocates RULING Legislation referred to: 1. Court of Appeal Rules, 2016 2. Rules of the Supreme Court of England (White Book) 1965, 1999 Edition Cases referred to: 1. Mulenga and Others v lnvestrust Merchant Bank Limited (1999) ZR. 101 2. Nyampala Safaris Zambia Limited and Others v Zambia Wildlife Authority and others SCZ 8/ 179/2003 3. Wilson Nkandu Bawa v Fred Mubiana and ZESCO Selected Judgment NO. 11 of 2012 4. Linotype-Hell Finance Limitedv Baker {1992} 4 ALL E. R. 887 Rl This is a ruling relating to an application brought by VS Cargo Management Limited ('VS Cargo') on 16 February 2023 for an order to stay execution of the judgment of the High Court of 30 August 2022 pending the determination of an appeal before this Court. The facts pertaining to this case are that on 30 August 2022, a Judge of the High Court entered judgment for US $393,792 in favour ofLabadee Trust ('Labadee') with interest at 15% per annum. The Appellant being dissatisfied with the entry of judgment against it, lodged an appeal against this decision on 12 September 2022. The Appellant subsequently brought an application pursuant to Order X Rule 5 of the Court of Appeal Rules 1 and Order 59 of the Rules of the Supreme Court, White Book2 • The affidavit in support was sworn by Alesasandra Claudio Valeza, a Director in VS Cargo, who states that the Appellant is desirous of obtaining a stay execution of the High Court judgment pending an appeal to this Court on the basis that their appeal has high prospects of success and their business will be ruined if the Respondent is allowed to execute the judgment. The particulars of the grounds of appeal are that: (i) The High Court erred in holding that a business agreement subsisted between the parties contrary to the evidence showing an oral joint venture agreement between Boss Logistics Limited and the Appellant for the purchase and sale of cement. R2 (ii) The Court erred in finding that there was an agreement between the parties for Boss Logistics to transport cement from Durban to the Appellant's warehouse in Ndola as per the Rates Schedule. (iii) The High Court erred in awarding the Respondent interest on amounts unpaid as penal interest is illegal and unenforceable in Zambia. (iv) The lower Court erred in finding that the Appellant's claim for storage charges only arose through pleadings as the Appellant had earlier claimed for these charges. (v) That the Respondent failed to discharge its burden of proof against the Appellant to the required standard as set by the law. The Respondent did not have locus standi or any cause of action against the Appellant as the cession agreement was expunged in the lower Court. The Appellant stated that if the stay of execution is not allowed, the appeal would be rendered nugatory and an academic exercise. Further, if execution was occasioned on the Appellant, the monies may not be recovered from the Respondent as it is a 'trust ' without any presence or property in Zambia. In addition, the Appellant will suffer irreparable injury as it deals with several International Mining Companies and transporters offering security escorting of various high value products such as copper cathodes, copper concentrates and cobalt hydroxides. The Appellant's trucks and their products belonging to various customers are normally parked at the Appellant' s garage while in transit to various destinations in Africa. R3 That any execution occasioned on these trucks and products will cause huge losses to the businesses and result in legal suits and claims against the Appellant. Additionally, the Appellant stated that it provides bonded warehousing services and leases warehouses to third parties for storage of clients' goods which can only be released once duties and taxes are paid to the Zambia Revenue Authority. Any execution on goods in the bonded warehouses would result in huge liabilities in respect of third parties and ruin the business of the Appellant, and its goodwill and reputation. The Appellant added that potential financial ruin would be occasioned to it if execution was levied and potentially lead to subsequent actions by its clients and the Zambia Revenue Authority. The Appellant also stated that it will have to terminate with immediate effect the employment of the 3 75 personnel in its employment if this happened. The Appellant reiterated that it had demonstrated good and sufficient reasons and special circumstances to warrant the grant of a stay of execution of the judgment pending determination of the appeal. Further, that the Respondent will not be prejudiced if a stay of execution is granted by the Court as the Respondent will have its rights fully and finally determined by this Court. On the other hand, if any prejudice would be occasioned on the Respondent, the same could be sufficiently compensated for by an award of this Court. The Respondent filed its affidavit in opposition on 3 March 2023 , deposed to by Clara Isabella Van Schalkwyk, a trustee in the Respondent. She stated that the arguments and grounds advanced in the Appellant's affidavit are not factual, were argumentative and inappropriate for content in an affidavit. R4 Further, that the Appellant had not demonstrated how they would suffer injury or the appeal be rendered nugatory if a stay of execution was not granted assuming the appeal succeeded. The deponent further undertook, on behalf of the Respondent, that if the Appellant succeeds in its appeal, the Respondent will pay the judgment sum to the Appellant. The Respondent further added that this Court had inherent power to order the Appellant to pay the judgment sum of US$393,792.00 into Court pending determination of the appeal by this Court so that the judgment debt is preserved and both parties' interests are secured in the interim. The Respondent further deposed that the Appellant had not provided any evidence of the location of its garage and business to warrant the validity of its assertions. The Respondent suggested that the lease agreements that the Appellant was attempting to rely on relates to a company called "VS Cargo Limited" and not the Appellant which is "VS Cargo Management Services Limited". Also that the said lease agreement in the Appellant's affidavit marked as "ACV/8" does not reflect the name of the tenant and the address of the alleged bonded warehouse belonging to VS Cargo Limited or that indeed it was a bonded warehouse in its name or control or that it held any license or permit in its name from the Zambia Revenue Authority. The Respondent also pointed out that the exhibit marked "ACV/9" in the Appellant's affidavit m support which showed the Appellant's alleged employment register also referred to VS Cargo Limited and not VS Cargo RS Management Services Limited, the Appellant. The Respondent summed up that based on all the foregoing, the Appellant had not demonstrated good and sufficient reasons and special circumstances to warrant the grant of the stay of execution of a money judgment of the lower Court pending the determination of the appeal before this Court. The Respondent stressed that to the contrary, if the stay of execution is granted, the Respondent will be denied the immediate enjoyment of the fruits of the judgment in this longstanding matter. The Respondent also highlighted that the matter was commenced over 13 years ago in 2009 before the Commercial List of the High Court, hence the Respondent would be prejudiced if the Appellant is granted a stay of execution of the judgment as there was no evidence provided to show that the Appellant will be in a position to honour the judgment appealed against in the event that the intended appeal is dismissed by this Court. The Respondent further invited this Court to take judicial notice of the fact that going by this Court's workload, it was unlikely that the Court of Appeal would hear the appeal in the current year or the following year 2024, a situation that would prejudice the Respondent. The Respondent further stated that any prejudice the Appellant will suffer if a stay of execution is not granted and execution is carried out may be sufficiently compensated for by an award of compensation but that though this Court had the power to order the payment of the judgment debt into Court, the said order would have the effect of arresting the accumulation of the interest on the judgment debt. R6 The Respondent reiterated that the power to grant a stay of execution is discretionary adding that in exercising the said discretion, the Court could attach conditions upon which a stay maybe granted. The Respondent also stated that the Court has inherent power, in the alternative to ordering the Appellant to pay judgment debt into Court pending determination of appeal, to order the Appellant to provide guarantees from its directors, shareholders, financiers or bankers that the guarantors or the Appellant' s bank will pay to the Respondent the judgment debt forthwith if the appeal is eventually dismissed by the Court of Appeal. The Appellant filed an affidavit filed in reply on 8 May 2023 in which it was deposed that the grounds of appeal and heads of arguments demonstrate that the appeal had high prospects of success and that the affidavit in support has sufficiently demonstrated how the appeal will be rendered nugatory if the stay of execution was not granted. The Appellant also asserted that the evidential burden to show that the Appellant can recover the judgment sum from the Respondent if execution was occasioned on it and the appeal succeeds lies with the Respondent as the said information is within the peculiar knowledge of the Respondent. The Appellant further added that the Respondent had not demonstrated that the Appellant would be able to recover the judgement sum if execution was occasioned on it as the Respondent is a foreign Trust without any presence or property in Zambia adding that it would be impossible for the Appellant to recover the judgment sum if the appeal succeeds. The Appellant stated that the deponent of the Respondent's affidavit has no authority as sole trustee of the Respondent to undertake on behalf of the Trust that R7 it will pay the Appellant if the appeal succeeds. That the letter of authority and the purported Trust resolutions of the Trustees of the Respondent do not give the said Clara Isabella Van Schawalkyk authority to bind the trust as she chooses. The Appellant further contended that the extent of the resolution by the other Trustees only includes pursuit of legal matters under the purported cession agreement, and to sign legal documents or affidavits but not to make undertakings on behalf of the Respondent that will bind the Trust. The Appellant also dispelled that the judgment of the High Court awarded the Respondent a specific sum to be paid to it and it was not a judgment or order for payment of money into Court. The Appellant added that though granting of a stay of execution is discretionary, the same should be exercised within the tenets of the law and that this Court can only impose conditions upon which a stay can be granted if the Respondent provided evidence that it will not be able to recover the judgment sum if the appeal is not successful. The Appellant charged that Respondent has not demonstrated why conditions should be given if the Court grants a stay as the Appellant has not alleged failure to pay judgment sum but is contesting the sum and interest awarded by the High Court as shown in the affidavit in support and the heads of argument. The Appellant also deposed that it is not a requirement or condition that that the judgment sum should be secured before granting of a stay. That the Respondent has not indicated its own willingness to provide security for the sums which may be paid into Court as nothing precludes the Respondent from paying out the judgment sum once it is paid into Court, especially that the Respondent is a foreign Trust. R8 The Appellant deposed that if the Court exercises its discretion to impose conditions for payment into Court, the Respondent should equally be ordered to pay a sum ofUS$393,792.00 and interest thereon as security so that if the appeal succeeds, the Appellant will not be prejudiced in any way. The Appellant also emphasized that the affidavit in support had demonstrated how and why it would suffer irreparable injury if a stay of execution is not granted. The Appellant further clarified that following an application by its directors, an application was made to the Patents and Companies Registration Agency for change of name from VS Cargo Management Services Limited to VS Cargo Limited adding that P ACRA printout exhibited in the affidavit in reply sufficiently demonstrated the nature of business it undertakes. The Appellant stated that as had been shown in the P ACRA printout exhibited under the affidavit, among its business is warehousing which it has prerequisite license to lease warehouses to third parties as bonded warehouses. The Appellant further stated that the appeal has prospects of succeeding as demonstrated as it had shown through evidence that the only balance which remained unpaid and due to Boss Logistics Limited at the material time was US$28,206.00 and not the sum of US$393.792.00 plus interest as the exhibited invoice from the company. The Appellant contended that the interest imposed on the Appellant by the judgment of the High Court is illegal as it contravened statutory law adding that such interest is not allowed in this jurisdiction and warranted the setting aside of the judgment on appeal. R9 The Appellant advanced that it could not be compelled to prosecute the appeal promptly through a condition to pay judgment sum into Court as the Appellant had no control over the publishing of cause lists and allowing for the execution of the judgment on that basis would be unjust. The Appellant added that setting of such conditions would cripple its constitutional right of appeal. The Appellant also advanced that the cardinal consideration in stay applications are the grounds of appeal and the prospects of success of the appeal and not delving into the financial position of the Appellant. The Appellant further advanced that the imposition of conditions is premised not on the concerns of a successful party but on the merit or lack of merit of the appeal and the irreparable injury the party may suffer if a stay is not granted and the chances of recovering the judgment sum from the Respondent, should the appeal be successful. The Appellant dispelled assertions that the appeal may not be heard this year or next year adding that some appeals are cause listed immediately upon compliance of both parties and the ultimate demand of the Courts is to ensure that justice is served in any case. The Appellant repeated that this is a proper case to grant a stay of execution of judgment. The Appellant also argued that the application before Court is for grant of a stay of execution of judgment pending appeal and not one to pierce the corporate veil of the Appellant. Hence, the Court cannot be made to order the Appellant to provide guarantees from its directors, shareholders, financiers, or bankers as asserted by the Respondent. R 10 The application came up for hearing on 29 May 2023. The parties were duly represented as earlier indicated. The Appellants' Advocates relied on the affidavit evidence and arguments filed before Court. The Respondent's Advocate also relied on the affidavit in opposition and the arguments filed in support but went further to augment that the Appellant had not demonstrated the second requirement for grant of a stay, which is that it would suffer irreparable injury if the stay were not granted. The Respondent's Advocate argued that setting of conditions upon which the Court can grant an order for stay of execution is founded under marginal notes for Order 59/13/7 of the Rules of the Supreme Court of England (White Book), 1965, 1999 Edition. He argued that the Appellant had not demonstrated or argued on how the order to pay judgment debt or part thereof into Court in Kwacha equivalent would affect its business, if such a condition was a conditionality for granting of a stay being sought. Counsel also submitted that the Appellant has not shown that by the time the appeal is detennined, it will have the means and assets to pay the judgment debt if the appeal goes in the Respondent's favour. It is for this reason that the Respondent seeks from this Court a conditionality that the Appellant be ordered to pay the judgment debt into Court if stay is granted. Mr. Wishimanga responded on behalf of the Appellant that there is evidence exhibited in the affidavit that speaks to the fact that the Appellant conducts warehousing business. He submitted that the lease exhibited as "ACY /8" in the affidavit in support shows a lease it has with a third party whose goods are likely to be affected by the execution of the judgment if a stay is not granted, a situation R 11 which will lead to irreparable injury on the Appellant by way of a dented business reputation among its clients. The Appellant' s Advocate further submitted that the total sum recoverable plus interest on the said judgment sum is K30,000,000 which would cause the Appellant's business to sink resulting in the loss of employment of the list of employees exhibited under exhibit marked "ACV/9" in the affidavit in support. The Appellant's advocate further argued that there is no need for such conditionalities as suggested by the Respondent for a stay of a money judgment adding that the only balancing act is met by the award interest to a successful party. He argued that any attempt to order the Appellant to pay money into Court would render the appeal to be an academic exercise. Further, that the issues before Court relate to the quantum that is due to the Respondent, and if it is ordered that the judgment sum be paid into Court, it would entail that the Appellant will not have access to the use of such money in its business while the appeal is pending. Counsel however conceded that if any sum is to be ordered to be paid into Court, it ought to be the reconciled amount of US$28,000 based on the invoice shown under exhibit marked "ACV3". Counsel urged the Court to grant an order for stay without any conditions attached. I have carefully considered the affidavit evidence, the list of authorities and submissions made by both sides on this application. The application for a stay of execution of the High Court Judgment of 30 August 2022 had been brought pursuant to Order X Rule 5 of the Court of Appeal Rules and Order 59 Rule 13 (1) (A) of the Rules of the Supreme Court. R 12 Order X Rule 5 of the CAR sets one of the fundamental principles of the relationship between a pending appeal and a stay and provides that: 'An appeal shall not operate as a stay of execution or of proceedings under the judgment appealed against unless the High Court, quasi Judicial body or the Court so orders .... ' The mere fact that an Appellant has exercised its constitutional right and appealed against a judgment of the High Court does not automatically warrant a stay of execution of the judgment. There ought to be something more to its case than a mere fact of appeal. The Supreme Court affirmed this notion in the case of Mulenga and Others v Investrust Merchant Bank Limited 1 , when they stated that: " ... In terms of our rules of Court, an appeal does not automatically operate as a stay of execution, and it is utterly pointless to ask a stay solely because an appeal has been entered. More is required to be advanced to persuade the Court below or this Court that it is desirable, necessary, and just to stay a judgment pending appeal. The successful party should be denied immediate enjoyment of a judgment only on good and sufficient grounds." It is trite law that a stay of execution is a discretionary remedy and that the parties are not entitled to it as a matter of right. R13 Order 59 Rule 13 (2) of the Rules of the Supreme Court Practice, 1999 Edition, White Book is instructive on the circumstances in which a Court should exercise its discretion to grant a stay when it provides that: 'Neither the Court below nor the Court of Appeal will grant a stay unless satisfied that there are good reasons for doing so. The Court does not 'make a practice of depriving a successful litigant of the fruits of his litigation and locking u funds to which prim a facie he is entitled.' The Courts must be satisfied that there are satisfactory reasons to grant a stay of execution before depriving a successful litigant of the fruits of its judgment. The Supreme Court also pronounced on the principles for the grant of a stay in the case of Nyampala Safaris Zambia Limited and others v Zambia Wildlife Authority, and others2 when it held that: 'A stay of execution is granted on good and convincing reasons. The rationale of this position is clear. Which is that a successful litigant should not be deprived of the fruits of litigation as a matter of course. The application must therefore clearly demonstrate the basis of which a stay should be granted. ' These authorities demonstrate that a stay of execution should only be granted for good and sufficient grounds. In considering whether to grant or not to grant a stay, the Court is faced with a consideration of whether the applicant has demonstrated good and compelling reasons to justify the grant of a stay of execution. R 14 To start with, I have noted that the parties' arguments appear to be anchored on the prospects of the appeal succeeding given the Appellant's Heads of Arguments. The Respondent' s rebuttal has been centered on refuting the appeal ' s prospects of success and in the alternative, that if a stay is granted, it be granted with condition that the Appellant pays judgment sum or portion thereof into Court while the appeal is pending. When an appeal is already lodged and set in motion for determination, it would be prejudicial to determine prospects of success of the appeal at interlocutory stage before the appeal decision is made. This might be the case when leave to appeal applications are made but should not be the case for applications for stay where appeal is already lodged. A party applying for a stay of execution of a judgment while the appeal has been lodged and pending must show special circumstances to justify the Court' s exercise of its discretion in that regard. The Supreme Court narrowed down the factors for the Court's consideration in an application for a stay of execution in the case of Wilson Nkandu Bowa V Fred Mubiana and ZESCO3 where they stated that: 'In an application for the stay of execution pending appeal, the considerations are the prospects of the appeal succeeding and the irreparable damage if a stay is not granted and the appellant's appeal succeeds.' R 15 Further, Straughton L. J stated in the case of Linotype-Hell Finance Limited v Baker4 that: 'It seems to me that if a defendant can say that without a stay of execution he will be ruined, and that he has his appeal which has some prospects of success, that is a legitimate ground of granting a stay of execution.' From the foregoing, I am of the view that, in this case, the real test which fonns the basis for deciding the application for a stay of execution of judgment, is whether irreparable injury is likely to result if execution is allowed to proceed pending an appeal or whether the defendant stands to be ruined if an execution is occasioned, while an appeal with some prospects of success is pending. In the present case, having considered the facts and issues for determination in the appeal, the judgment sum awarded against the Appellant is US$393.792.00 plus interest at 15% per annum from 28 September 2007. This amount is in fact at the center of contention in the pending appeal before this Court. The appeal will determine the actual sums owing between the reconciled invoiced amount of US$28,206.00 and the sum of US$393.792.00, and whether the Rates Schedule can be used as the premise for determining the sum due and owing under the oral agreement of the parties. The basis of the appeal seems to be that the Appel !ant wants to demonstrate that the sum due to the Respondent is in fact the reconciled amount of US$28,206.00 and not the sum as adjudged by the High Court Judgment being appealed. R 16 .. There also appeared to be no firm contest from the Respondent when the Appellant submitted that the actual payment due to the Appellant as per the contested judgment of the High Court is more than K30,000,000.00 with interest added. This is a relatively large amount of money and it is plausible as the Appellant submits, that there is a risk to the Appellant company as a result of the loss of such colossal sums of money. I acknowledge that allowing the Respondent to execute this judgment sum against the Appellant would probably disrupt its operations, put the property in the Appellant's warehouses at risk and cause irreparable injury to the Appellant company. It is also convincing that this will hamper the Appellant's ability to continue to operate as a going concern, thereby risking the employment of the 375 personnel on the Appellant's payroll. These issues in my view present special circumstances to warrant a stay of execution of Judgment of the High Court. I must also add that if execution is allowed to proceed pending appeal, the appeal decision is likely to be rendered nugatory as the Appellant company might be out of business because of the risk of loss and damage to the entity as a going concern and inevitable loss of all its employees that is likely to follow the execution if not stayed. I am mindful that the mere financial disposition of a judgment debtor is not a sole basis to merit a grant of stay of execution against such judgment debtor in the circumstances of this case. However, the totality of facts of this case presents unique and special circumstances to warrant the grant of stay of execution of the High Court Judgment. The injury that the Appellant is likely to suffer should the appeal succeed would be irreparable. R 17 ' . Conversely, there is no such injury that is likely to be caused to the Respondent which cannot be adequately atoned for in damages if the Appeal is not successful, but a stay is granted. Further, the fact that the Respondent has had this purported claim outstanding against the Appellant since September 2007 and has waited for justice through the due process of this litigation, I do not see any prejudice that it would suffer that cannot be adequately compensated for if a stay of execution is granted and the appeal fails to succeed. For the foregoing reasons, the application for stay of execution is allowed. I accordingly grant an order for stay of execution of the High Court judgment delivered on 30 August 2022 pending hearing and determination of the appeal before the Court of Appeal. I order that the costs of this application be in the cause. Dated at Lusaka this 29th June 2023 ~~p e -Ph i r i r-- COURT OF APPEAL JUDGE R 18