Roads Authority and 1 other v AL-Abdulhadi Engineering Consultancy (Civil Appeal 22 of 2023) [2024] MWSC 7 (14 March 2024)

IN THE SUPREME COURT OF APPEAL

SITTING AT BLANTYRE

CIVIL APPEAL NUMBER 22 OF 2023

Before Justice of Appeal Dingiswayo Madise

[Being Commercial Case No. 459 of 2022]

BETWEEN:

ROADS AUTHORITY 1ST APPELLANT

ROADS FUND ADMINISTRATION 2ND APPELLANT

-AND-

AL-ABDULHADI ENGINEERING CONSULTANCY RESPONDENT

Coram; Hon Mr. Justice D Madise JA Mr. P. Likongwe for the Appellants Mr L. Gondwe for the Respondent Mr K, Chimkono Clerk

Ruling

Madise JA

Introduction

This matter came before me as a single member of the Court pursuant to Section 7 of the Supreme Court of Appeal Act hereinafter referred as the Act as read with Order I Rule 18 of the Supreme Court of Appeal Rules. Section 7 of the Supreme Court of Appeal Act states: “A single member of the Court may exercise any power vested in the Court not involving the hearing or determination of an appeal: Provided that –

(a) in criminal matters, if a single member refuses an application for the exercise of any such power, the applicant shall be entitled to have his application determined by the Court; (b) in civil matters, any order, direction or decision made or given in pursuance of the powers conferred by this section may be varied, discharged or reversed by the Court.” (emphasis added)

The Respondent (then Claimant in the Court below) commenced these proceedings in the High Court (Commercial Division) Blantyre Registry on 9 th December 2023 but served the summons on the Appellants (then Defendants) on 11 th January 2023. The Respondent also obtained a Freezing Injunction ex-parte, freezing all the Appellants’ assets. All the Appellants’ bank accounts were also frozen. The Appellants filed an Application to set aside the Freezing Injunction. On 8 th February 2023 the Respondent filed an Application for a Default Judgment and the Court below issued the Default Judgment on the same day 8th February 2023. The Default Judgment ordered NBS Bank plc to immediately pay the sum of US$1,481,948.30 to the Respondent. NBS Bank paid the sum of US$1,481,948.30 to the Respondent’s lawyers, Ritz Attorneys on 9th February 2023.

The Appellants (Defendants in the Court below) filed an application for stay of execution of the Default Judgment. At more or less the same time the Financial Intelligence Authority (FIA), on its own initiative for other reasons on 10 th February 2023 issued a Freezing Directive against the bank account of Ritz Attorneys at Ecobank. Thus, the money remained at Ecobank. On 10th February 2023 the Appellants (then Defendants) filed an Application to set aside the default judgment on the grounds of irregularity and on the further ground that the Defendants (now Appellants) have defences on the merits. The Defences were exhibited in the sworn statement in support of the application. The Appellants (then Defendants) also filed skeleton arguments in which the defences were also highlighted. On 24th February 2023 the Appellants (then Defendants) filed a without notice aplication to vary the order for stay of enforcement to include a paragraph that the sum of US$1,481,948.30 that NBS Bank plc sent to Ecobank Malawi Ltd be preserved by Ecobank Malawi Ltd until the determination of the Application to set aside the default judgment. The Order adding a paragraph on preservation of the funds was issued on 29th March 2023.

The Appellant s’ applications to set aside the Freezing Injunction and to set aside the Default Judgment were heard on 21 st February 2023. After the hearing, both parties filed and served their Submissions on both applications. The Ruling on the two applications to set aside the Freezing Injunction and to set aside the Default Judgment is dated 4 th May 2023. The Ruling dismissed the

Defendants’ (now Appellants’) two applications with costs. The Ruling however maintained the Order for the money to be preserved by Ecobank for a further 7 days. On 5th May 2023, the Appellants filed a without notice application in the Court below for leave to appeal and stay of proceedings pending appeal. The Court below granted the leave to appeal but declined the application for stay of execution.

The Appellants obtained leave to appeal and have appealed to the Malawi Supreme Court of Appeal against the ruling of the Court below dated 4th May 2023. The Respondent filed an application in the Supreme Court of Appeal to have the money preserved at Ecobank paid out to the Respondent. The Appellants also filed an application for stay of execution of the ruling of the Court below. Both applications were opposed. The Single Member of the Supreme Court of Appeal heard both applications together on 20th June 2023 and dismissed the Respondent’s application to pay the money out to the Respondent, granted a stay of execution of the ruling of the Court below and ordered that the money at Ecobank be paid into Court. Meanwhile the funds remain in Court. The Appellants processed the record of appeal in the High Court and the record of appeal which contains the Appellants’ Skeleton Arguments was filed in the Supreme Court of Appeal and served on the Respondent.

Respondent’s arguments for discharge of stay of execution. The Respondent stated that he is not looking for much in this application. That he is not saying the Appellants cannot continue to prosecute their appeal. The Respondent has considered on a clear conscience that there is in fact no appeal properly before the Court. That the Respondent is simply asking the Court to discharge its orders which it granted on the pretext that there is a proper appeal logged with the Court. As true verification of the Court would have it, there is none and the status quo should remain that which obtained when the Appellants had not filed a purported appeal.

Legal issues Whether discharge of the stay is the most appropriate remedy for failure to file skeleton arguments within the prescribed period.

Whether a stay should be discharged in favour of a party who does not have establishment in Malawi.

What guarantees are there that if the discharge is granted and later the Default Judgment is set aside, the Respondent will pay back the Judgment Sum?

Law, analysis and submissions

The Respondent argued that a successful party to litigation must enjoys fruits of litigation. He cited Kadzipatike & Others v Zhejiang Communications Construction Group Company Limited (MSCA Misc. Civil Application No. 29 of 2023, Being High Court, Commercial Division, Lilongwe Registry, Commercial Case No. 78 of 2020) [the Zhejiang case]. That the old position remains that : fruits of litigation vs appeal being rendered nugatory should be considered. The old cases state that the general rule is that the court does not make a practice of depriving a successful litigant of the fruits of litigation, and locking up funds to which prima facie he is “entitled” pending an appeal. This principle has been repeated by the courts in Malawi with approval on several occasions without number.

That where a justifiable reason emerges negating the need for stay, the right of a successful party to enjoy the fruits of litigation will be upheld and stay will be deemed unjust or unnecessary in the circumstances. That a stay in favour of an appellant is not as of right. The right is for the Respondent to be entitled to fruits of litigation. The only exception to this rule is where if a stay is not granted, or where it was granted, is subsequently discharged, the Appellant ’s intended appeal will be rende red nugatory. That i t is important to emphasise that the Appellants herein are beneficiaries of not a general but merely an exception to it. He submitted that the Court should be slow to deny a party fruits of litigation. Parties who benefit from this exception must be only those who are willing to pursue their appeal in good faith and in compliance with law. That where damages can adequately compensate the Appellants in the event of a successful appeal, a stay should be refused or if it was granted and there is a good reason it must be discharged. As i such as in the present case where it is clear that the Appellant has not followed applicable procedural law in prosecuting the appeal, the stay should be discharged and the Respondent should be allowed to exercise his right to enjoy fruits of litigation.

That not to discharge the stay where there is glaring breach by the Appellants of procedural rules will be to recognise that the stay was granted as of right and to refuse to discharge the stay when clearly the Appellants have breached what was required of them is to further deny a Respondent fruits of litigation. That this will be in contravention with the general principle that a stay is not as of right and that an appeal does not operate as a stay. On this aspect, the Court is further invited to consider the principles of stays of judgments of the Court in determining whether to discharge or maintain the stay. He submitted that at any time in the proceedings, the principles for grant of stay also guide Courts in our jurisdiction when they are faced with applications for discharge of stay. He cited the remarks of the Honoura ble Justice Tambala in the case of The Anti- Corruption Bureau v Atupele Properties Limited (MSCA Civil Appeal Number 27 of 2005) [the Atupele Properties case] are quite key in the present matter. The Court said;

I must now revert to the law relating to stay of execution of Court’s judgements. There are clearly four principles. The first is that it lies within the broad discretion of the court to grant or refuse an application for stay of execution. The second principle is that as a general rule the court must not interfere with the successful party’s right to enjoy the fruits of litigation. The third principle is an exception to the general rule and states that where the losing party has appealed and is able to demonstrate that the successful litigant would be unable to pay back the damages, in the event that the Appeal succeeds, execution of the court’s judgement may be stayed. The fourth principle is that even where the party appealing is able to show that the successful party would be unable to pay back the damages if the appeal succeeds, the court may still refuse an application for stay of execution of a judgement if upon examination of the facts of the case, an order of st ay of execution would be utterly unjust.” [emphasis by underlining ours].

That the remarks of this Court in the Atupele Properties case (supra) should be examined very closely in the present case. In terms of the first principle expounded by the Court, it is conceded that grant or discharge of stay is in the discretion of the Court. The Court may grant or discharge stay in exercise of its discretion but on the guidance of the other three principles. That in terms of the second principle, the Court recognises that the right to have a judgment stayed is not for the appellant. It is for the party who obtained the judgment in its favour and that Courts should protect the successful party’s right to enjoy fruits of litigation. It is submitted that the Court should look at the facts and consider that the Respondent has been kept out of its Judgment Sum for over a year now. The Respondent has not been able to access its money even where it is now clear that the Appellants are pursuing their appeal in breach of rules of procedure while enjoying existence of a stay of execution.

That the third principle for grant or discharge of stays is, as expounded by the Court, that where the losing party has appealed and is able to demonstrate that the successful litigant would be unable to pay back the damages, in the event that the Appeal succeeds, execution of the court’s judgement may be stayed. It is observed that the third principle is not a standalone principle. It is merely an exception to the general rule which is that a successful party must enjoy fruits of litigation and Courts are dutybound to protect the successful party’s right. The exception to the said general rule is not to be exercised in favour of an appellant unconditionally. There is a condition to the third rule. The condition is that the Appellant must demonstrate that the successful litigant would be unable to pay back damages if the appeal succeeds. Conversely, in the context of determination of an application for discharge of a stay, he submitted, that the third principle imposes an obligation that over and above simply being a foreign entity without establishment in Malawi, the Respondent has no capacity to pay back damages to the Appellants should their appeal succeed.

That the Respondent’s ability to pay lies outside of the consideration of fact of their lack of local presence in Malawi. It is further submitted that in determining whether the Respondent will most likely be able to pay damages , the Court must look at the facts of the case. The Court is invited to holistically look at the relationship between the Appellants and the Respondent. The Respondent was an entrusted consultancy contractor for Government of Malawi. The Respondent was assessed by the Appellants and deemed liquid, fit and proper enough to execute high value contracts in Malawi. It is a fact that the Respondent has been working in Malawi and ably so. He submitted that the Respondent has every ability to pay damages to the Appellants should their appeal succeed after the judgment sum is paid to the Respondent. That the burden, he submitted, lies on the Appellants to demonstrate very clearly and most satisfactorily that the Respondent whom they entrusted with a high value contract is now unable to pay them damages in the event that their appeal succeeds.

He further stated that issues of lack of local presence in Malawi have very little to do with the Respondent’s ability to pay damages. In any case, he submitted, that the issues of lack of local establishment can easily and most successfully be taken care of by rules of enforcement of foreign judgments in Kuwait. He submitted that, the Respondent being an entity which has capacity to pay the Appellants damages, and which the Appellants have not demonstrated to be unable to pay the damages, the Appellants should not at all worry about their lack of local presence if they diligently follow the rules of recognition of enforcement of foreign judgments in the country where the Respondent is based. The rules are there.

That States generally agree in comity that foreign judgments are enforceable against their citizens and the applicable rules avenues of enforcements in such contexts should be available and capable of being pursued by the Appellants. Suffice to state that the Appellants themselves are agents of Government of Malawi. They will surely be able to follow the Respondent and enforce against it should need arise in future. That they will manage to follow the Respondent the same way they managed to locate it and award it the contract that is the subject matter of the present litigation.

That it is evidence from the record of the Court that the Appellants have adequate details of the Respondent such as official addresses, emails, information as to country of origin. It is also clear from the preamble of the Consultancy contract that both the Appellants and the Respondent deal very closely with entities in Kuwait. For instance, according to the contract, the Appellants obtained loan meant for the project the subject matter of the contract. The Appellants obtained the loans from the Kuwait Fund for Development (KF). That it is clear that the Appellants deal with Kuwait banks. It is possible, therefore, to enforce any judgments in Kuwait through banks with which the Respondent keeps its money , subject to applicable rules of enforcement of foreign judgments and orders in

Kuwait. He stated and respectfully invited the Court to take judicial notice of the fact that Kuwait is actually a member state to, among other treaties helpful to the Appellants, The Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters [the Hague Judgments Convention]. That Kuwait is bound by the convention to recognise and enforce judgments from non -Arab and non -Asian countries . It is submitted that the fact of the Respondent being a foreign entity alone cannot and should not be a sole consideration for the Court to not discharge the stay.

That the Court should take into account that the Respondent has already been kept out of its fruits of litigation for about a year now. The appeal is not a stay. The stay was obtained when it was expected that the Appellants would prosecute their appeal expeditiously and in compliance with rules. At this point, the Appellants having filed skeleton arguments in contravention with rules, there is no reason to preserve a stay. There is no more reason to keep the Respondent out of its judgment sum. That in any case, as advanced and submitted below, damages are an adequate remedy to compensate the Appellants should their appeal succeed and the Respondent has capacity to pay the Appellants.