Court stays execution of summary judgment pending determination of a larger counterclaim.

[*544] 1982 July 8

(BOYADJIS, P.D.C. AND A.IOANNIDES, D.J.) IN THE DISTRICT COURT OP NICOSIA

Thorn Domestic Appliances (Export) Ltd.,

Plaintiffs,

V.

Alpan (Takis Bros) Ltd.,

Defendants,

(Action No. 5248/79)

Civil Procedure - Stay of execution pending appeal – And stay of execution generally - Order 35 rule 18 and Order .. 40 rule 7(b) of the Civil Procedure Rules - Discretion of the Court - Principles on which it is exercised same in both instances - Summary judgment by virtue of bills of exchange - Appeal - Defendants counter-claiming for a bigger amount for breach of agency agreement - Plaintiffs a foreign company having no assets within the jurisdiction - Order that payments by defendants in satisfaction of the judgment debt be deposited in Court and remain so deposited until the determintion of the counterclaim - Plaintiffs entitled to withdraw any sums upon furnishing security in the form of a bank guarantee.

K. Michaelides, for the applicants-defendants.

R. Stavrakis, for the respondents-plaintiffs.

Parties absent.

RULING

The ruling of the Court was delivered by:

BOYADJIS, P.D.C.:- Alpan (Takis Bros) Limited,[*544] of Nicosia, have applied for an order of the Court "staying the execution of the summary judgment issued in the present action, and/or staying the execution of the writ of sale of movables issued aginst them until the final determination of their counterclaim raised in the present action, and/or until the determination of their appeal filed against the aforesaid.summary judgment". We shall hereinafter refer to the applicants as the "local company".

Thorn Domestic Applicances (Export) Limited is a company registered in England. It has no assets in Cyprus. We shall hereinafter call it "the foreign company".

The history of events that led to the present application is this: On December 10, 1979, the foreign company sued the local company claiming (a) £9,851.- plus interest, balance due on two bills of exchange, and (b) £470,- value of goods sold and delivered.

On January 21, 1980, the local company filed in Court a memorandum of appearance whereupon the foreign company applied to the Court for judgment without trial under order 18, r.1 of our Civil Procedure Rules. The local company opposed the application. In a lengthy affidavit filed in support of the opposition, although execution of the bills of exchange is admitted, allegations were raised to the effect that the local company was during all material times the sole agent and/or distributor in Cyprus of the foreign company's "Tricity" products; that [*546] the consideration of the bills of exchange was the value of Tricity goods bought by the local company in its aforesaid capacity; and that in breach of the existing agreement between the parties the foreign company unlawfully terminated the aforementioned sole agency and distributorship status of the local company in Cyprus, in consequence whereof the latter has sustained damage amounting to £45,000,- for which it had a legitimate counterclaim.

During the trial of the application for summary judgment Mr. Michaelides argued on behalf of the local company that unconditional leave to defend ought to be granted and that, in the event of the Court exercising its discretion in favour of the foreign company, it should stay execution of the judgment pending the determination of the local company’s counterclaim.

On May 13, 1981, the trial Court delivered its reserved ruling on the matter as follows:

"Regarding the second part of the claim for goods sold and delivered we consider on the material before us that there is a triable issue and the defendants have a right to defend and raise a counterclaim.

“For the reasons stated above we find that the plaintiffs/applicants are entitled to judgment in their favour regarding their claim on the bills of exchange without any stay of execution".[*547]

The local company has appealed against the said ruling of the trial Court and the appeal is now pending before the Supreme Court. Also pending awaiting trial before the Nicosia District Court stand the claim for £470.- by the foreign company against the local company and the latter’s counterclaim for £45,000.-.

In as far as the local company prays for an order staying the execution of the judgment pending the determination of the appeal, the application is based on Order 35, r.18 of the Civil Procedure Rules which reads:-

"18. An appeal shall not operate as a stay of execution or of proceedings under the decision appealed from except so far as the Court appealed from or the Court of Appeal, or a Judge of either Court, may order; and no intermediate act or proceeding shall be invalidated, except so far as the Court appealed from may direct. Before any order staying execution is entered, the person obtaining the order shall furnish such security (if any) as may have been directed. If the security is to be given by means of a bond, the bond shall “be made to the party in Whose favour the decision under appeal was given".

This Rule has been the subject of judicial consideration and interpretation by the Supreme Court

in a number of recent cases, cited to us by both counsel, where [*548] guidelines have been laid down for the proper exercise of

the discretionary power of. the Court to grant or refuse stay of execution of judgments pending appeal.

In Katarina Shipping Inc. v. The Cargo on Board the Ship "Poly" (1978) 1 C.L.R. 355, it was held that it is not the practice to deprive a. successful litigant of the fruits of his litigation pending an appeal. The Court, however, must bear in mind that an appeal, if successful, ought not to be rendered nugatory and, where the special circumstances of the case so require, a stay of execution pending appeal should be granted. The same principles were re-iterated by Malachtos

J. in London and Overseas (Sugar) Co. and Another v. 1. Tempest Bay Shipping Co.Ltd. and others (1978) 1 C.L.R. 367 at p.373.

In Scheepswerf' Bodewes - Gruno v. The Ship "ALGAZERA" (1960) 1 C.L.R. 595, after reviewing several English and Cyprus authorities on this matter, Demetriades,J. summarised the principles governing a stay of execution pending an appeal as follows:-

(a) The Court, in granting or refusing a stay, has a discretion depending on the particular circumstances of each case.

(b) The Court should not deprive a successful litigant of the fruits of his litigation pending an appeal.

(c) When there is an appeal about to be prosecuted, the litigation is to be considered as not at an end; that [*549] being so, if there is reasonable ground of appeal and if by refusing to make the order, it would make the appeal nugatory, the right of the successful litigant should be suspended.

The above three authorities refer to stay of execution pending appeal in Admiralty proceedings. The same, however, principles apply to stay of execution pending appeal in other civil proceedings (See in this respect The Annot Lyle (1886)

11 P. 114, 116), and Katarina Shipping etc. (supra).

The only question for us to answer is, therefore, whether, in the light of the above principles and in the context of the particular circumstances of the present case, we should exercise our discretion in favour of the local company or. not. Mr. Michaelides has urged us not only to stay execution of the judgment against his clients but also to abstain from imposing any condition whatever on such stay. He laid particular emphasis on the allegation that his appeal, if successful, will be rendered nugatory in as much as the foreign company has admittedly no assets within the ; jurisdiction, and on the fact that the transaction upon which judgment has been given in favour of the foreign company as well as the counterclaim of the local company are closely related in the sense that they are based on and were the result of the alleged sole agency or sole distributorship agreement between the parties.[*550]

Mr. Stavrakis for the foreign company referred the Court to paragraph 5 of the affidavit filed in support of the opposition where it is deposed that on payment of the amount of the judgment in it’s favour, the foreign company is ready and willing to furnish security in the nature of bank guarantee. He also referred us to the judgment of Triantafyllides P. in."Phoenix" Greek General Insurance Co.S.A. v. Al Khalaf Exhibition delivered on November 4, 1981, in Civil Appeal NO.6306, where the application of the judgment debtor for stay of execution pending appeal was dismissed, the. foreigner - judgment creditor having furnished bank guarantee securing against the danger of the appellants irretrievably losing any funds in case they were successful in their appeal in whole or in part.

In our opinion there are not any special circumstances in this case other than the fact that the foreign company has no assets within the jurisdiction, justifying the exercise of the Court’s discretion in a way which will interfere with the right of judgment creditors to reap the fruits of their judgment. Such interference, however, should be limited to the extent which is absolutely necessary to avoid rendering the appeal nugatory in case it is successful. We must see that the local company shall not irretrievably lose any funds in case it is successful in its appeal in whole or in part. This [*551] danger may be adequately guarded against by requiring the foreign company to give security for repayment in whole or in part.

We shall abstain for the moment to make our order in the matter in the exercise of our discretion under 0. 35 r. 18 until we examine the application also in so far as it is based on 0. 40, r. 7(b) of the Civil Procedure Rules, less the local company be entitled under this latter Rule to a more favourable relief than the one to which it is entitled under 0. 35, r. 18.

Order 40, r. 7(b) reads:-

"7. Every person to whom any sum of money or any costs shall be payable under a judgment or order shall, so soon as the money or costs shall be payable, be entitled to apply for the issue of writs to enforce payment thereof, subject nevertheless as follows

(b) The Court or Judge may, at or after the time of giving judgment or making an order, stay execution until such time as they or he shall think fit.”

Mr. Michaelides has argued on behalf of the loca company that under 0. 40, r. 7(b) the Court is possessed with wider discretion than under 0. 35, r. 18 (supra); that under 0. 40, r. 7 the Court may stay execution of a judgment ignoring the principles governing the exercise of [*552] the Courts’ discretion under 0.35, r. 18 as enunciated hereinbefore; and that, under 0. 40, r. 7(b) the only consideration of the Court should be whether in each particular case it is just and equitable to stay execution of a judgment or not. He admitted, however, that he could not cite any authority in support of this proposition. In fact no authority whatsoever was cited to us by either counsel regarding the exercise of the discretion of the Court under 0. 40, r. 7(b).

Our Order 40, r. 7(b) copies almost verbatim the corresponding English R.S.C. Order 42, r. 17* before it was replaced in 1966 by R.S.C. Order 47, r. l(l)(a) which empowers the Court in England nowadays to stay execution of its judgments either absolutely or subject to such terms as the Court think fit whenever “there are special circumstances which render it inexpedient to enforce the judgment or order." [*553]

Even before, however, express reference to "special circumstances" was first made in R.S.C. Order 47, r. l(l)(a), though the matter was one in the absolute discretion of the Court, an order for stay of execution was not made in the absence of special circumstances shown. (See in this respect Becker v. Earles Court Ltd., (1911), 56 Sol. Jo. 206, C.A.). It should be remembered in this connection that as the authorities cited hereinbefore show, special circumstances must also be shown before execution of a judgment is stayed under 0. 35, r.18 (supra).

Having given the matter our best consideration we are of the opinion that the principles governing the exercise of the discretion of the Court under 0. 35, r. 18 do govern by analogy the exercise of the discretion of the Court under 0. 40, r. 7(b), in as much as both these Rules refer to stay of execution of judgments, they both confer upon the Court a discretionary power, and the words employed in both Rules are sufficiently similar to permit this Court to derive guidance in deciding cases under 0.40, r. 7(b) from cases decided under 0.35, r. 18. We may, therefore, say that in the present case, where the local company asks for stay of execution of the judgment against it for about £10, 000.- until the determination of its counterclaim which is. for an amount of about £45,000.-, and which we do not think that it is merely sham, the Court should bear in mind on

the one hand that the foreign company being the successful litigant is [*554] entitled to the fruits of its litigation in the absence of

special circumstances, and on the other hand, the local company, by paying to a foreign company the amount of the judgment before the determination of its bona-fide counterclaim for a larger amount, should not lose irretrievably any funds so paid in case it succeeds on its counterclaim in whole or in part.

In the circumstances of the present case both Rules serve the same object and their application is governed by the same principles and considerations.

In the result, and in the exercise of our discretion we make an order in the following terms:-

Any payment by the local company in full or part satisfaction of the judgment in favour of the foreign company and the proceeds of any proceedings to be taken by the foreign company against any property of the local company in execution of the judgment in this action, to be deposited in Court and remain so deposited until the final determination of the counterclaim raised in the action by the local company. The foreign company shall, however, be entitled to the immediate withdrawal of any sum or sums so deposited upon furnishing security in the nature of a bank guarantee for an amount equal to that which it wishes to withdraw. The amount of costs may be withdrawn on the personal undertaking of counsel for the [*555] foreign company to repay same in case the local company succeeds in their counterclaim.

The costs of this application to be born by the local company and, unless they are agreed between counsel, they are to be assessed by the Registrar.

Order and order for costs accordingly.

R.S.C. Order 42, r. -17(1)(b) "Every person to whom any sum of money or any costs shall be payable under a judgment or order shall, so soon as the money or costs shall be payable, be entitled to sue out one or more writ or writs of fieri facias or one or more writ or writs of eligit to enforce payment thereof, subject nevertheless as follows

(b) The Court or a Judge may, at or after the time of giving judgment or making an order, stay execution until such time as they or he shall think fit."