[1955] EACA 13

## ORIGINAL-CIVIL

# Before CRAM. Ag. J.

$\mathcal{L}$ $\cdots,$ $\overline{\mathcal{L}}_{\mathcal{M}}(\mathcal{L})$

$\mathbb{C}^{\ast}_{2}$

#### w/o HUSSEIN ALIBHAI PIRANI AND ANOTHER. Plaintiffs GULBANU $\boldsymbol{\nu}.$

# CHANAN SINGH s/o HAZARA SINGH, Defendant Civil Suit No. 16 of 1955

i se 🕯 Civil Procedure and Practice—Civil Procedure (Revised) Rules, 1948—Order 41, rule 4 (1)—Application for stay of execution pending appeal—Special cause -Poverty of successful plaintiffs-Whether sufficient cause-Defendant without substantial asset-Payment of principal sum into Court ordered failing acceptable security—Payment of taxed costs—Undertaking by advocate to repay—Costs of the application—General rule—Discretion of Court-When rule departed from-English practice-Interest on principal sum and costs—How dealt with—Civil Procedure Ordinance, Cap. 5, section 91 $(1)$ .

The Supreme Court found for damages and costs in favour of two plaintiffs, husband and wife. The defendant appealed. The defendant's advocate wrote to the plaintiffs' advocates to stay execution offering security of the defendant's own bond with surety and stated that the defendant owned immovable property. The reply was that if the principal sum and costs were not paid execution would follow. The defendant then applied under the provisions of Order 41, rule 4 (1) for an order for stay of execution averring by affidavit that the plaintiffs had no assets; were in receipt of a small monthly income and that if the defendant were forced to pay and the decree reversed it would be difficult for him to recover his money. The plaintiffs, in a replying affidavit, did not deny their financial condition but countered with the averment that the defendant's immovable property was heavily mortgaged. The defendant did not traverse this. The Court considered the development of English practice under three heads (1) the principal sum. $(2)$ the taxed costs and $(3)$ the costs of the application.

Held (6-8-55).—(1) The salutary practice is to bring the application before the trial Judge whenever possible.

(2) The defendant was not entitled to a stay of execution as of course and, in the absence of special cause shown, the Court would not order stay, Evidence must be adduced to show special circumstances and might be tendered by affidavit. The precarious economy of the plaintiffs shown amounted to a special cause and satisfied the Court that if they received payment of the damages they would not be in a position to repay the money if the decree were reversed on appeal.

(3) The defendant not showing any asset the Court ordered payment of the principal sum into Court, within seven days unless satisfactory security were found, with liberty to either party to apply on the issue of the sufficiency of any security proffered.

(4) The unrebutted evidence of the poverty of the plaintiffs was sufficient cause for the Court to intervene to stay execution for payment of costs to the plaintiffs<br>direct but these circumstances did not extend to the plaintiffs' advocates, who, as officers $\sim$ of the Court, were subject to any order for repayment the Court might make.

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(5) The Court will not order an advocate to give an undertaking that he will repay costs paid to him in the event of a successful appeal but it can make the payment of costs to him contingent upon the advocate consenting to give such an undertaking.<br>If the advocate refuses to give the undertaking then the Court may, in the alternative, order payment of costs into Court. If the plaintiffs' advocates were prepared to give a written personal undertaking within seven days so to repay the costs then, so soon<br>as the undertaking were given, the costs were to be paid. If the undertaking were not<br>given within seven days the costs were to be paid i (6) A logical method of disposing of the costs of the application seemed to be<br>to order that they follow the event of the appeal but the Court would adopt the<br>customary English practice and order the applicant to pay the c special circumstance. The Court retained a discretion and, in the present instance, would exercise that discretion in favour of the applicant because of the obduracy of the plaintiffs' advocates who had neither considered application nor offered to repay the costs if paid to them. Costs therefore were ordered to follow the event of the appeal.

(7) Any claim for interest eventually due on the principal sum or costs could conveniently be postponed until after the appeal and dealt with on application to the Court under the provision of section 91 (1) of the Civil Procedure Ordinance, Cap. 5.

Cases cited: Burdick v. Garrick, (1870) L. R. 5 Ch. App. 453; Merry v. Nickalls,<br>(1873) L. R. 8 Ch. App. 205; Cooper v. Cooper, (1876) L. R. 2 Ch. 492 C. A.; Morgan<br>v. Elford. (1876) L. R. 4 Ch. D. 352 C. A.; Barker v. Lavery, ( 603: Walford v. Walford, L. R. 3 Ch. App. 812.

Authority cited: Annual Practice, 1955, p. 1283.

D. N. Khanna for applicant.

Oulton for respondent.

RULING.—The plaintiffs claimed damages from the defendant and were successful before another Judge of this Court. The defendant now applies for stay of execution pending appeal, under the provisions of Order 41, rule 4 (1) of the Civil Procedure (Revised Rules, 1948. According to the *Annual Practice*, 1955, at page 1283 the practice under Order 58, rule 16 of the Supreme Court, in England, is that, both in the Chancery and Queen's Bench Division, the application is either made to the Court below at the time of trial or, subsequently, on notice of motion to the Judge who tried the case, and, in my view, the reasons for this practice being obvious and salutary an identical practice ought to be pursued in this Court. I have entertained this application solely because the trial Judge happened to be unavailable.

The rule runs: $-$

"(1) No appeal $\ldots$ shall operate as a stay of execution $\ldots$ under a decree ... appealed from, except in so far as the Court appealed from may order, but the Court appealed from may for sufficient cause order stay of execution of such decree...

(2) No order for stay of execution shall be made under sub-rule (1) unless the Court making it is satisfied—

- (a) that substantial loss may result to the party applying for stay of execution unless the order is made: - (b) that the application has been made without unreasonable delay; and - (c) that security has been given by the applicant for the due performance of such decree or order as may ultimately be binding upon him."

The applicant supports his motion with an affidavit that the sum in the decree amounts to Sh. 11,631 50cts. and that there are, in addition, costs, the amount of which remains to be discovered on taxation. He avers that the plaintiffs, who are husband and wife, are not possessed of any valuable assets or property; are in receipt of a small and precarious monthly income; that if the defendant has to pay out the sum in the decree and is ultimately successful on appeal, it would be difficult for him to recover his money; that he has offered to pay the sum in the decree, against adequate security by the plaintiffs to refund,

if the appeal succeeds, but the plaintiffs have refused; that he has filed his notice of appeal and the necessary copies of the record are under preparation; that he offers to give security for the due performance of the decree and had already offered to do so to avoid the costs of the application and that he had been in correspondence with the plaintiffs' advocates, which correspondence he attached to his affidavit. The correspondence reveals that before the application was made the defendant's advocates wrote to the plaintiffs' advocates offering security for payment of the sum in the decree and tendered the defendant's own bond with a surety and stated the defendant owned immovable property. The replies of the plaintiffs' advocates were that they proposed to execute; that if an application for stay were made they would resist it; further that on refusal to pay the taxed costs there would be execution.

The defendant then filed this motion for stay, and asked that "costs of this application be made the applicant's costs in the appeal". The male plaintiff filed, in reply, an affidavit stating that the defendant's immovable property was a single plot burdened with three mortgages and that he believed that by the time the appeal had been heard and determined the defendant would not be in a position to pay the sums due in the decree, the costs and the costs of the appeal. That is on the one hand the plaintiffs do not deny the statements made by the defendant to support his application and the defendant does not deny that his immovable property is mortgaged as stated.

It would seem therefore that the plaintiffs have no assets beyond small monthly earnings. It is not inconceivable, therefore, if what must seem a very large sum is paid over to them as damages and costs and were the decree reversed on appeal, that the plaintiffs might be unable to refund and might have a strong inducement to put any balance out of the defendant's reach. The topic of the merits of the appeal is of course not relevant to the decision in this application. Further, the one asset mentioned by the defendant, I must accept, is so mortgaged as to present no ready method of realizing any money. The defendant has offered payment subject to security. My endeavour must therefore be to see that the plaintiffs are not defeated in their damages and costs, if ultimately successful and further to see that the defendant is not prejudiced by being unable to recover any payment he may be ordered to make.

I think I may accept the English rule cited as being in pari materia with the Kenya rule, so that cases decided under the former rule are instructive and if in the Court of Appeal, ought to be followed.

In *Burdick v. Garrick*, (1870), L. R., 5 Ch. App. 453, an unsuccessful defendant applied for stay of execution, pending appeal to the House of Lords, on the grounds that the plaintiffs were residing out of the jurisdiction and, if the decree were reversed, the money ordered to be paid to them could not be recovered. The money, it was submitted, ought to be retained in Court or, at all events, the plaintiffs ought to give satisfactory security for its repayment. Giffard, L. J., said that it would not be right to stop the taking of accounts or the taxation of costs but the plaintiffs must give security for the repayment of any money which would be payable to them and the solicitor must also give security for the repayment of the taxed costs in case the decree should be reversed or else the money be retained in Court. The plaintiffs then stated that with respect to the taxed costs of the suit the solicitor was willing to give personal security or an undertaking to refund them in case the decision should be reversed. Giffard, L. J., $said: -$

"... the plaintiffs are out of the jurisdiction and if no security were given for the repayment of the fund it would practically amount to a denial of the right to appeal. I cannot therefore permit the plaintiffs to receive

the money without giving good security. The solicitor must also give satisfactory security—his personal security or undertaking will not be<br>sufficient—for repayment of the costs. But I cannot stay the taking of accounts or the taxation of costs, and if the plaintiffs are unable to give security the money must be paid into Court."

A few days later the motion was again mentioned, counsel for the plaintiffs stating that the plaintiffs were unable to give security for the money which would be payable to them, but that their solicitor was prepared with security for the costs due to him. Giffard, L. J., then ordered: -

"The order will be that the amount which may be found due by the plaintiffs, on taking the accounts, be paid into Court within ten days afterthe Chief Clerk's certificate, the defendants undertaking to abide by any order as to interest which the Court may make. The taxed costs of the suit to be paid to the plaintiffs' solicitor on his giving satisfactory security."

Authority, from which modern practice seems to spring, is *Merry v. Nickalls*. (1873), L. R., 8 Ch. App., 205. There, the defendant had been ordered to pay to the plaintiff about £1,100 and the costs of the suit. The defendant then applied for stay of payment pending appeal and offered to bring the money into Court. The plaintiff objected that he would have to pay his own costs and be out-ofpocket pending the appeal. The Court ordered that proceedings be stayed; the defendant to pay the plaintiff, the plaintiff giving security for repayment if the defendant succeeded on the appeal; or the defendant, if the plaintiff preferred that course, to pay the money into Court. The costs of the suit to be paid according to the decree, on the solicitor undertaking to repay if the Court so direct.

In *Cooper v. Cooper.* (1876) L. R., 2 Ch., 492, C. A., an unsuccessful defendant, who had lodged an appeal, applied for stay of execution of costs. The Court ordered stay on the applicant paying into Court the costs already ordered. There was no objection to this being done instead of the costs being paid to the plaintiff.

In Morgan v. Elford, (1876), L. R., 4 Ch. D., 352, C. A., an unsuccessful defendant, who had appealed, applied for stay of execution of costs. The order was that costs must be paid, on the solicitor for the plaintiffs personally undertaking to refund if the order should be reversed. The plaintiff had offered to pay the costs into Court. The solicitors giving the necessary undertakings the motion was refused.

In Barker v. Lavery, (1885), 14 Q. B. D., 769, an unsuccessful defendant applied for stay of execution for costs pending an appeal to the House of Lords. He offered to pay the amount in dispute into Court. Brett, M. R., remarked that the Court had on previous occasions refused to stay execution pending appeal without evidence of special circumstances. Selborne, L. C., stated:

"The defendant is not entitled to have the application granted as a matter of course. Evidence ought to have been adduced to show, that the plaintiff would be unable to repay the costs if he should be unsuccessful before the House of Lords."

As there was no evidence of the plaintiff's means, the application was dismissed, the Court refusing to grant time to file an affidavit of means.

That case, therefore, differs from the present one where there is a good deal of evidence, not denied, about the precarious economy of the plaintiffs.

In the case of *The Annot Lyle*, (1886) 11 P. D., 114 C. A. was an Admiralty cause, where damages and costs had been awarded after a maritime collision. The unsuccessful defendants moved for a stay of execution pending appeal to the House of Lords. No affidavits were filed in support of the application, but it was said in support that, as in Admiralty cases bail was given and the fruits of the litigation secured, it was reasonable even in the absence of a special reason that the defendants should not be obliged to pay over the damages before their appeal had been heard. Lord Esher, M. R., after stating that bail had been granted and interest was payable on the amount of the damages said:—

"Although this may be so, yet the respondents would not receive either<br>the principal or the interest till the decision of the appeal. I see no sufficient reason why they should thus be kept out of their money... We are asked to depart from that rule (i.e. that an appeal shall be no stay of proceedings except the Court may so order) although it is admitted that there are no special circumstances in this case which afford a ground for so doing. If in any particular case there is a danger of the appellants not being repaid if their appeal is successful, either because the respondents are foreigners, or for other good reason, this must be shown by affidavit and may form a<br>ground for ordering a stay. To grant the present application would in the absence of special circumstances clearly be to act contrary to the provisions 'and intention of the Rules of Court."

## Bowen, L. J., said: —

"An unsuccessful litigant comes to ask us to deprive a successful one of the fruits of his success, until a further appeal is determined. No affidavit has been made on behalf of the applicants and we must therefore assume that if the money is paid over to the respondents, and the appeal is successful, the applicants will be able to get it back... We cannot assume that it is a matter of small importance to a successful party to go without his damages for a long time...."

Fry, $\dot{L}$ . J., said: —

"I am also of opinion that in the absence of special circumstances the application must be refused....

I cite this case to illustrate the practice in the Court of Appeal to refuse applications for stay of payment of damages unless on special cause shown. One of these special circumstances plainly in the minds of the learned Lords Justices was the probability that the party receiving the payment would not be in a position to repay the money if the decree was reversed. Further that such special circumstances could be proved by an affidavit.

The Native Guano Co. v. Sewage Manure Co., (1888) 4 T. L. R. 438, was a case where an unsuccessful plaintiff appealed and applied for an order for stay of proceedings for costs. The plaintiffs had offered to pay the taxed costs to the defendant's solicitor on his giving a personal undertaking to refund the amount due in the event of the appeal being successful, but he had declined to give that undertaking and the plaintiffs were compelled to make the application. The defendants urged that it was not the practice to order a stay of the payment of costs alone and that no sufficient case had been made out for stay. The Court considered that a sufficient case was shown by the evidence and said that if the defendant's solicitor would not give the undertaking, the only alternative would be that the costs must be paid into Court. The defendant's solicitor thereupon gave his undertaking.

In Monk v. Bartram, (1891) 1 Q. B. D., 346, C. A., a verdict and judgment had been passed in a jury trial in favour of the plaintiff and the defendant

applied for stay of execution pending an appeal, the ground of the motion being misdirection. The Judge at the trial having refused stay, Esher, M. R., said: —

"It has never been the practice... to stay execution after the Judge at the trial has refused to grant it, unless special circumstances are shown to exist. It is impossible to enumerate all the matters that might be considered to constitute special circumstances; but it may certainly be said that the allegations that there has been a misdirection that the verdict was against the weight of the evidence, or that there was no evidence to support it, are not special circumstances on which the Court will grant a stay of execution. No special circumstances being brought forward in this case, the only ground for the application being that a motion is to be made for a new trial on the ground of misdirection. The application must therefore be refused."

This principle was affirmed by North, J., in *re Queensland Mercantile Agency Company*, (1892) 61, L. J. (N. S.), 48. I mention these cases for I am of the view that denial of stay in the absence of special cause tends to affirm the principle that where there are special circumstances the Court will order stay.

In Swyny v. Harland, (1894) 1 Q. B. D., 707, C. A., the Court of Appeal granted stav for execution of costs on the solicitors of the successful party giving their personal undertaking to repay the same should the appeal be successful. The undertaking was as follows: -

"Pursuant to the order of the Court of Appeal dated the 2nd day of August last, we hereby personally undertake to repay the taxed costs herein should the appeal pending be successful."

After such success, the solicitors were subjected to a summary application to repay. Lord Esher, M. R., said:-

"I think this undertaking was given by the solicitors to the Court. They were not obliged to give the undertaking, but they elected to give the undertaking as a condition under which they were paid their costs. The only question is what was the undertaking. . . ? The event on which the solicitors were to repay the costs had happened and therefore the obligation to repay has arisen.

Lopes, L. J., said: $-$

"We frequently have before us applications for a stay of execution." which we grant on terms. One term that is sometimes imposed is, that the costs shall be paid by the applicant to the solicitor on the other side, on his personal undertaking to repay them in the event of the appeal being successful. A solicitor is not bound to give such an undertaking; it is a voluntary action on his part. ... He is an officer of the Court, and as such voluntarily gives the undertaking and the Court on the faith of his doing so, makes an order. The undertaking is given in the face of the Court and for all practical purposes the case is the same as if it were given to the Court. If so what are the consequences if the solicitor fails to carry it out? It is open to the other party to apply either to commit or to attach him. That course has not been taken in the present case, but the application is made for an order that the money should be paid. The appeal to the Divisional Court was successful and consequently the event has happened to which the undertaking applied. . . I think therefore that the defendant has a right to have the costs repaid to him at once."

I mention these judgments to show that the Court does not order a solicitor to give an undertaking that he will repay costs paid to him in the event of a successful appeal. But it can make the payment of costs to him contingent upon the solicitor consenting to give such an undertaking. If he the solicitor refuses to give the undertaking then the Court will, in the alternative, usually order payment of costs into Court.

In Hood Barrs v. Heriot, (1896) 1 Q. B. D., 610, C. A., after taxation, costs were paid over to solicitors who, although knowing a second appeal was pending, had not given any undertaking to repay. Lord Esher, M. R., ruled that the amount of the costs was paid to the solicitors, not in their own right, but as agents for the defendant and that payment was really to the defendant through the hands of her solicitors. The successful appellant then applied not that the defendant should be ordered to repay these costs but that in default of her doing so the solicitors should be ordered themselves to repay them out of their own pockets. Lord Esher commented: "No such order ever appears to have been made in England". He refused the application.

Apart from the costs of this application what order ought justly to be made here, looking at one and the same time to the poverty of the plaintiffs and to the fact that the defendant's asset is heavily mortgaged? Kenya rule 4 (2) enjoins that no order for stay shall be made unless the Court in satisfied that substantial loss may result to the party applying for stay unless the order is made. In mv view, there is unrebutted evidence that if successful on appeal, the defendant may lose both the money damages and the costs when they are taxed if they are now paid to the plaintiffs. Secondly, I think, looking to the correspondence, that this application has been made without unreasonable delay. Thirdly, I have to be satisfied that security has been given by the defendant for the due performance of the decree as may ultimately be binding upon him.

No doubt remains, looking to the authorities, what I should order as to the costs after they are taxed. If the plaintiffs' advocates—who are the equivalent of solicitors in England rather than barristers-at-law—are prepared to give a written personal undertaking within seven days that they will repay the costs if the defendant is ultimately successful then, so soon as the undertaking is given, the costs are to be paid. If the undertaking is not given within seven days then the costs are to be paid into Court. The principal sum, I consider I must order to be paid into Court unless satisfactory security is found by the defendant with seven days. On compliance with these orders there will be stay of execution. There will be liberty to either party to apply on the issue of the sufficiency of any security tendered. The subject of interest may be dealt with after appeal by this Court on application made under section 91 (1) of the Civil Procedure Ordinance.

As regards the costs of the application, an early authority is Earl of Shrewsbury v. Trappes, (1860) 2 De G. F. & J., 172, where, on an application to stay writs of elegit, the order having been made, the respondent submitted that it was the course of the Court in such cases to make the applicant pay the costs of the application as he was asking for an indulgence. Knight Bruce, L. J., $said :=$

"I have often heard it said that in such cases the costs of the application are necessarily to be paid by the person making it, but I have never acquiesced in that view. The costs often are so given and often ought to be; but in my judgment there is no inflexible rule on the subject. In the present instance I am for reserving the costs." and a Some

In Topham v. Duke of Portland, (1863) 1 De G. J. & S., 603, the order was that the applicant was to pay the costs of the application to stay. But in Walford. v. Walford, L. R., 3 Ch., App. 812, the Court made no order as to costs. The. respondent pleaded (as here) that the order for stay was an indulgence to the

defendant, but Wood, L. J., replied that he did not think it was an indulgence and that he thought it was the right of the party on giving an undertaking to repay.

In *Burdick* $v$ . *Garrick* (*supra*) it was submitted that the respondent was entitled to the costs of the application as the usual practice of the Court, settled in. Topham v. Duke of Portland; Walford v. Walford (supra) was an appeal motion and did not bear upon the question. Giffard, L. J., said: -

"I should have though the reasonable rule was that the costs should" follow the result of the appeal but I cannot depart from the rule laid down in Topham v. Duke of Portland by the same Judges who decided Earl of Shrewsbury v. Trappes and therefore overrules that case unless there is somesubsequent authority to the contrary and the applicant must therefore pay them. The costs cannot be heavy and the rule has this advantage, that it shows that the application is made *bona fide.*"

On further hearing, the applicant again raised the issue of costs and argued that in *Walford v. Walford* (supra) the reason given by the Court for allowing. no costs was that the costs were at the discretion of the Court. Giffard, L. J., $said: -$

"In the absence of authority it would appear to be the most reasonable rule that the costs of such an application should abide the result of the appeal. It seems from what was said in Walford v. Walford that notwithstanding Topham v. Duke of Portland they did not consider that there was any settled rule that the costs should be paid by the applicant. And I cannot forget that one of the same learned Judges who decided Topham v. Duke of Portland said in the case of Earl of Shrewsbury v. Trappes that there was no settled rule as to the payment of costs in an application of this kind; and the same opinion appears to have been held by the Judges in Walford' v. Walford, I feel myself at liberty to act upon what I consider the fair and reasonable rule, namely, that the costs should abide the result of the appeal."

In Merry v. Nickalls (supra) the applicant, having obtained an order for stay, asked that the costs of the application might be costs in the cause and cited Burdick v. Garrick (supra) but the Court considered that there must have been some special circumstances in that case. Since the defendant had come to ask a favour he must pay the costs of the application.

In Cooper v. Cooper (supra) the Court ordered stay on the appellant paying $\frac{1}{2}$ the plaintiffs the costs of the application and considered that there was no alteration in the practice as to the payment of costs in such cases, and Merry $v$ . Nickalls ought to be followed.

In The Native Guano Co. v. Sewage Manure Co. (supra) the Court took the view that costs of the application would be made costs in the action. The usual course, it was said, was to order that the costs of any such application was to be paid by the applicant, in any event, but it was not usual (as in that case) for a solicitor to decline to give an undertaking to repay.

Reviewing these authorities, it is to be observed that practice is not consistent but the general rule seems to emerge that, although costs are at the discretion of the Court, in the ordinary course, the applicant is ordered to pay these in any event, although, from a logical point of view, an obvious method of dealing with costs would be to make them follow the result of the appeal. However, the Court retains a discretion and where the conduct of the respondent justifies it the ordinary rule may be departed from. An instance of such a departure is revealed in the last-cited case where when the solicitor for the respondents refused to give the customary undertaking whereupon the costs became costs in the cause.

Looking to the facts in this :application, I am of the view that, while the plaintiffs might be entitled to test the mind of the Court as to execution for damages by refusing to offer security and even although security was ordered might still be entitled to costs in any event, the proper attitude of their advocates was to have offered to repay the· costs in the suit if the .decree were reversed on appeal but instead they remained obdurate and showed no cognizance of the practice in the Court of Appeal in England which. with a small amount of research ought to have served them as a guide. In the result I order that the costs of this application do follow the event of the appeal.