Caribbean Cement Company Ltd v Freight Management Ltd

• Jurisdiction: Jamaica
• Judge: Lawrence-Beswick JA (Ag)
• Judgment Date: 02 October 2013
• Neutral Citation: JM 2013 CA 103
• Court: Court of Appeal (Jamaica)
• Docket Number: SUPREME COURT CIVIL APPEAL NO 12/2013 APPLICATION NO 14/2013
• Date: 02 October 2013

[2013] JMCA App 29

JAMAICA

IN THE COURT OF APPEAL

SUPREME COURT CIVIL APPEAL NO 12/2013

APPLICATION NO 14/2013

Between

Caribbean Cement Company Ltd

Applicant

and

Freight Management Limited

Respondent

Emile Leiba and Miss Gillian Pottinger instructed by DunnCox for the applicant

Mrs Susan Risden-Foster and Mrs Trudy-Ann Dixon Frith instructed by Grant Stewart Phillips & Company for the respondent

CONTRACT - Damages for breach of contract - Promissory estoppels - Whether claimant entitled to damages for loss of contract - Whether appellant had some prospect of success

IN CHAMBERS

Lawrence-Beswick JA (Ag)

1 On 8 July 2005, Freight Management Limited (FML) instituted a claim against Caribbean Cement Company Limited (CCCL) for damages and/or compensation based on either a breach of contract and/or promissory estoppel. The trial commenced on 24 September 2012 and continued over several days until 24 January 2013 when Sinclair Haynes J, delivered a judgment in favour of FML. On 11 February 2013 CCCL filed a notice appealing the judgment and also this notice of application for stay of execution of the judgment pending the determination of the appeal.

Background

2 In August 2002 CCCL invited tenders for the transportation of cement by sea from its plant in Rockfort, Kingston to its warehouse in St James. FML submitted a tender to CCCL and maintains that it was verbally advised that it was accepted. FML signed a contract document which was attached to the tender document and submitted it to CCCL but it was never signed by CCCL. CCCL for its part regarded FML as the preferred bidder. Both parties meanwhile discussed details of the transportation, including pricing.

3 Based on its understanding of the discussions, FML moored a vessel at the Rockfort Pier of CCCL on 7 July 2003, and it remained there until 6 October 2003 when CCCL informed FML that it was no longer interested in transporting the cement by sea. During that time the vessel left the pier for two brief charters and returned.

4 FML thereafter filed suit to recover damages for what it initially claimed to be mobilization costs of the vessel and general damages for loss of contract. Later during the trial, it amended the claim to be one for damages for loss of use of the vessel during the period whilst it was moored at CCCL's pier.

5 The judgment which Sinclair-Haynes J delivered on 24 January 2013 was in the following terms:-

• ‘1. Judgment for the Claimant in the sum of US$330,000.00.

• 2. Costs to the Claimant to be agreed or taxed.

• 3. Interest at the rate of 6% per annum awarded from the date of the service of the Claim Form to the 21 ^st day of June 2006; and at the rate of 3% per annum from the 22 ^nd day of June 2006 to the 14 day of December 2012.

• 4. Stay of execution of judgment granted for 42 days from the 14 ^th day of December 2012.

• 5. Stay of execution of judgment extended and granted for a further period of 20 days from the 24 ^th day of January 2013.’

In her judgment, the learned trial judge indicated that FML had not justified its claim for loss of contract but she awarded a sum for loss of use of the vessel.

Submissions

6 Mr Leiba, counsel for CCCL, submitted that the execution of the judgment should be stayed because CCCL's appeal has a good prospect of success and there is a greater risk of injustice to CCCL if it were not stayed, than there is to FML if it were stayed. Counsel accepted that if the execution of the judgment were not stayed it would not stifle the appeal. However, he pointed out, FML had not provided evidence of its means and ability to repay the judgment if CCCL paid the sum, succeeded on appeal and it became necessary for FML to repay the amount. If the appeal succeeds, he argued, it would be difficult or costly to recover the judgment from FML.

7 Mr Richard Lake, managing director of FML, had offered to give a guarantee for repayment, but counsel submitted that such a guarantee would not be enforceable since Mr Lake himself was not a party to the contract between CCCL and FML. He relied on Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065 to support his argument that if the company itself has insufficient funds to secure repayment, then the fact that the owners will stand behind the company to repay the debt does not rectify that situation. His submission was that a refusal to stay the execution of the judgment would therefore result in injustice to CCCL.

8 Mrs Dixon-Frith, counsel for FML, countered that Mr Lake's guarantee would in fact be enforceable under the ordinary rules of contract. Her concern was that if the judgment were not executed pending the determination of the appeal, there was a likelihood that CCCL may go into liquidation and that it would not be able thereafter to satisfy the judgment debt. Additionally, the reasoning and findings of the trial judge were sound and therefore FML should not be deprived of the benefit of the judgment which had been in its favour.

The law

9 An appeal does not operate as a stay of execution of the orders of the lower court (Court of Appeal Rule 2.14). However, discretion lies in the appeal court or the lower court to order otherwise. The Court of Appeal Rules empower a single judge of the court to stay the execution of any judgment or order against which an appeal has been made, pending the determination of the appeal (rule 2.11 (1) (b)).

10 In Polini v Gray 1873 P 162 and Sturla v Freccia [1879 12 Ch D 438] the court accepted the principle that it could suspend the declared right of a litigant, pending an appeal to the House of Lords, but warned that that discretion should be very carefully exercised so as not to encourage anyone to present an appeal for the mere purpose of delay. The wisdom of that warning is obvious.

11 The principles guiding the exercise of the judge's discretion to stay the execution of a judgment have been examined by the courts in several authorities. In Linotype-Hell Finance Ltd v Baker [1992] 4 All ER 887, the Court of Appeal held that:

‘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.’ [Staughton LJ at p 888]

There the court regarded as being too stringent, the principle that had been enunciated in the 19 ^th century in Atkins v Great Western Railway Co 1886 TLR 2 400, that the only ground for staying the execution of a judgment was if there were evidence that if the damages and costs were paid there was no reasonable probability of getting them back if the appeal succeeded.

12 In Flowers Foliage and Plants of Jamaica Ltd et al v Jamaica Citizens Bank Limited SCCA No 42/1997 delivered 29 September 1997, the Court of Appeal of Jamaica approved of the principle as stated in Linotype-Hell and granted a stay of execution of the judgment. There, the court accepted that the applicant would be ruined financially if the judgment against her were not stayed and also accepted that there were triable issues which had not been determined in the judgment of the learned trial judge (page 10).

13 In Beverley Levy v Ken Sales Ltd SCCA N0 81/2005 delivered 22 February 2007 Harris JA referred to Flowers and stated that any applicant seeking to have a judgment stayed must demonstrate that he has a realistic prospect of success on appeal and that he would be ruined if the stay is not granted. She referred to what she described as a general rule that a successful litigant should not be deprived of the fruits of his litigation whilst the appeal is pending (page 8). The learned judge of appeal refused to stay the execution of the judgment but imposed a condition on the respondent to repay the costs if required so to do, because the liabilities of the respondent and the value of their assets were unknown.

She stated that:

‘A court, taking into account all the circumstances of the case, ought to conduct a balancing test by weighing up the intrinsic dangers in granting or refusing a stay.’ (page 9)

The learned judge of appeal referred to Hammond Suddard Solicitors where Clarke LJ said:

‘Whether the court should exercise its discretion to grant a stay will depend upon all the circumstances of the case, but the essential question is whether there is a risk of injustice to one or other or both parties if it grants or refuses a stay.’ (par.22)

14 In Jamalco (Clarendon Alumina Works) v Lunette Dennie [2010] JMCA App 25 McIntosh JA (Ag) (as she then was) examined some of the current authorities including Linotype-Hell and Flowers and stated that she had found ‘no authority establishing that the ruin approach is to be followed to the exclusion of other legitimate grounds’ (para [42]). The learned judge of appeal concluded that:

‘[f]inancial ruin or inability to repay the judgment sum on a successful appeal, after enforcement, are but factors for consideration in seeking to determine where the justice of the particular case lies.’ [par.42]

15 In that case the learned judge granted the stay of execution based, inter alia , on her findings that the applicant had some prospect of success in its appeal, and that there was a greater risk of injustice to the applicant than to the respondent if the stay were refused as there was a real risk that the appeal would be rendered nugatory (at para [48]). She accepted as true, the affidavit evidence that there was a risk that the respondent would be unable to repay the judgment sum if it were paid to her and she were required to repay it if the applicant were later successful in its appeal. At the time of the application, the respondent, a subsistence farmer, was not earning an income from her occupation.

16 These authorities show that in determining whether to grant or refuse an...