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SDV Transmi (Tanzania) Limited v M/S STE DATCO (Civil Application No. 97 of 2004) [2005] TZCA 9 (3 February 2005)

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IN THE COURT OF APPEAL OF TANZANIA
AT DAR ES SALAAM
CIVIL APPLICATION NO. 97 OF 2004
In the Matter of an Intended Appeal
BETWEEN

SDV TRANSMI (TANZANIA) LIMITED……………………………. APPLICANT
AND
MS STE DATCO……………………………………………………… RESPONDENT

(Application for Stay of Execution from the decision of the High Court of Tanzania ? Commercial Division at Dar es Salaam)

(Dr. Bwana)
dated the 25th day of May, 2004
in
Commercial Case No. 46 of 2003
-------------
R U L I N G

KAJI, J.A.:

         In this application, the applicant, SDV TRANSMI (TANZANIA) LIMITED, is seeking, under Rule 9 (2) (b) of the Tanzania Court of Appeal Rules, 1979, an order for stay of execution of the decree passed by the High Court (Commercial Division) in Commercial Case No. 46 of 2003, pending the determination of the then intended appeal (now already registered as Civil Appeal No. 125 of 2004). It is supported by an affidavit deponed by JASON REYNARD who is the applicantfs General Manager.
         The background to the application may briefly be stated as follows:
         In April 2002, the parties entered into an oral agreement whereby the respondent, M/S STE DATCO, engaged the applicant as its agent to release from the port of Dar-es-Salaam, handle and deliver to the respondent in Bukavu, the Democratic Republic of Congo, goods that were to be imported through Dar-es-Salaam.
         In September, 2002 the respondent imported some containerized cargo. In two of those containers there was supposed to be milk. In one container there was supposed to be soap. Under the agreement the containers were supposed to be cleared by the applicant who would ensure their transportation to the exit point in Tanzania (i.e. Kigoma). The applicant did all the clearance documentation. The said containers were stored in an open place at the Tanzania International Container Terminal Services where they remained for about one month. They were later ferried by Tanzania Railway Corporation wagons to Kigoma. In the said wagons they (containers) were placed door to door, thus making it difficult or almost impossible to open the doors without first lifting them from the wagons which would entail deployment of a heavy lifting equivement, an exercise that would hardly go unnoticed.
         Upon reaching Kigoma the said containers were found to be empty.

         The respondent sued the applicant for payment of a total sum of US $ 372,274 being compensation for the value of the undelivered goods, loss of profit, damages and expenses incurred in pursuing the whereabouts of the undelivered goods. The trial court awarded the respondent a total sum of US $ 117,782.90. The applicant was aggrieved.
         On the very day of delivery of judgment, that is, on 25th May, 2004, the applicant lodged a notice of appeal and requested for copies of proceedings, judgment and decree for appeal purpose.
        
While the intended appeal which at the time of hearing this application had already been filed as Civil Appeal No. 125 of 2004, is pending, the applicant, under certificate of urgency, is moving the Court for an order that the execution of the judgment and decree of the trial court and any orders made subsequent to the said judgment be stayed pending determination of the appeal on the grounds that:-
a)      
If execution of the decree is not stayed, the applicant will suffer a great economic loss and the operations of the applicant will be seriously paralysed,
b)      
The appeal raises serious legal issues for determination of the Court, and same has overwhelming chances of success, and if an order staying execution is not made, the entire appeal will be rendered a nugatory.
c)      
The respondent is a foreign company with no physical existence in Tanzania, and has no assets to satisfy any decree if the appeal succeeds.
d)      
The balance of convenience lies in favour of granting the order for stay.

At the hearing of this application, the applicant was represented by Mr. L.J.S. Mwandambo from Epitome Advocates, and the respondent by Mr. W. Chipeta from Law Offices of Chipeta and Associates. The application was argued by way of written submissions.
         Elaborating on the ground of irreparable economic loss Mr. Mwandambo, learned counsel for the applicants submitted that the applicantfs General Manager Mr. Jason Reynard has demonstrated in paragraph (a) of the affidavit that if an order for stay is not granted the applicant will suffer irreparable loss which will seriously affect its business, especially that part of the money to be attached by way of a garnishee order of the trial court, belongs to its customers for
payment to various institutions including the Customs Department of the Tanzania Revenue Authority. The learned counsel further stated
that if that money which is held in trust for its customers is withdrawn from the applicantfs account in execution of the decree, the applicant will fail to perform its contractual and statutory obligations as a Clearing and Forwarding Agent. As a result the applicantfs business goodwill will be eroded, and that that loss of business goodwill is not easily quantifiable nor can one estimate with certainty the proper compensation if the appeal succeeds. It is the learned counselfs submission that the Court should uphold the first ground as sufficiently proved in favour of the applicant.
         On whether the appeal has overwhelming chances of success, the learned counsel submitted that, although the Court has said in numerous cases that this per se is not a good ground for granting a stay order, yet there are also a good number of cases in which the Court has considered the overwhelming chances of success on appeal as a good ground depending on the peculiar facts of each case. To
support his argument he cited the case of THE EDITOR SANIFU NEWS PAPER v. MRS. CAROLINE WHITESIDE ? Civil Reference No. 1 of 2002 (unreported), and MUHIMBIL MEDICAL CENTRE
v. TANZANIA ELECTRIC SUPPLY CO. LTD. & ANOTHER ? Civil Application No. 126 of 2001 (unreported). The learned Counsel equated goverwhelming chances of successh with an garguable appealh and submitted that on the basis of the facts deponed in the affidavit, the applicant has an arguable appeal and should be protected by a stay order so that its appeal is not rendered nugatory.
         On the status of the respondent, the learned counsel submitted that, the respondent is a foreign company with no assets in the jurisdiction of the court to satisfy any decree that can be made against it in the event the appeal succeeds. The learned counsel further stated that there is no assurance that the respondent will be available and be able to satisfy a decree on appeal. In that respect it is the learned counselfs submission that justice and common sense dictate in favour of granting an order for stay because it is unsafe to
let the respondent who has no assets and ability to pay to enjoy the fruits of its decree before the appeal is conclusively determined.
        
On his part Mr. Chipeta, learned counsel for the respondent, submitted that the fact that part of the money sought to be attached belongs to the applicantfs customers for payment to various institutions and that if attached the applicant shall fail to perform its contractual obligations, and as a result its business goodwill will be eroded, is not sufficient ground for granting a stay order. The learned counsel further submitted that it is not enough merely to assert that part of the money belongs to the customers. The applicant ought to have particularized sufficiently the irreparable loss which it would suffer. The learned counsel cited the following cases of the Court:-
-       
TANZANIA COTTON MARKETING BOARD v. COGECOT COTTON CO. SA (1997) TLR 63
-       
IGNAZIO MESINA & ANOTHER v. WILLOW INVESTMENT ? Civil Reference No. 8 of 1999 (unreported)
-       
ERNEST MAGANA v. MUGETA MANGILI ? MZA Application No. 4 of 1998 (unreported)
-       
KAMPUNI YA UCHUKUZI TABORA LTD. v. PRAXEDA PAULO & ANOTHER ? Civil Application No. 43 of 1999 (unreported)
The learned counsel strongly opposed the applicantfs assertion that overwhelming chances of success is one of the grounds to be taken into account when considering an application for stay of execution. He submitted that the same used to be a ground for consideration, but it has since ceased to be so. He cited the case of Ignazio (supra) as an authority on this.
The learned counsel conceded that the respondent is a foreign company registered in Bukavu in the Democratic Republic of Congo. But he said that the mere fact that the respondent is a foreign company cannot be the basis for depriving the respondent enjoyment
of the benefits of its judgment. The learned counsel further stated that the respondent is able to repay the money in the event the applicantfs appeal succeeds, and that the Democratic Republic of Congo is just next door. In that respect, he said, the applicant can easily take legal action against it in the event the appeal succeeds. The learned counsel doubted the applicantfs ability to pay in the event the appeal fails. He therefore suggested that in case the Court deems fit in the circumstances of this application to grant stay of execution, then on the balance of convenience, common sense and justice, the applicant should be ordered to furnish security to meet the decree should the appeal fail. He said further that if the court decides to take this approach, then it should take into consideration the rate of inflation, and a fact that it may take four to five years up to when the appeal shall be conclusively decided. In that respect he
suggested the security amount to be in the range of 150% of the principal decretal sum awarded by the trial court.
        
I have carefully considered the submissions by the learned counsel of both parties. I have also carefully considered the overall circumstances surrounding the application. It is common knowledge that the Courtfs power to grant or to refuse a stay order under Rule 9 (2) (b) of the Court Rules, 1979 is unfettered and discretionary which however, must be exercised with a judicial mind guided by the established principles and common sense. The immediate question is gwhat are those principles?h
         In IGNAZIO MESSINA & NATIONAL SHIPPING AGENCIES v. WILLOW INVESTMENT & COSTA SHINGANYA Civil Reference No. 8 of 1999 (unreported) this Court spelt out the principles for consideration when considering whether to grant or to refuse a stay order. It said:-
gIt is now settled that
i)      
The Court will grant a stay of execution if the applicant can show
that refusal to do so would cause substantial irreparable loss to him which cannot be atoned by any award of damage

ii)     
It is equally settled that the Court will order a stay if refusal to do so would, in the event the intended appeal succeeds, render that success nugatory
iii)    
Again the Court will grant a stay if, in its opinion, it would be on a balance of convenience to the parties to do so.h

(iv) In TANZANIA ELECTRIC CO. LTD. & TWO OTHERS v. INDEPENDENT POWER TANZANIA LTD. ? Consolidated Civil
Applications Nos. 17 and 27 of 1999, the Court added another principle when it held that it would grant a stay if it is demonstrated that the intended appeal has prima facie likelihood of success, it appearing on the face of it that the court handing down the decision being appealed against, lacked jurisdiction to order the award it did.
         Currently these are the principles which guide the Court in deciding whether or not to grant stay of execution, which an applicant is required to satisfy the Court that the facts and circumstances of his case bring that case within the ambit of one or more of those principles, and where he succeeds to do so this Court will grant a stay.
         The crucial issue, therefore, is whether the applicant has satisfied the Court that the facts and circumstances of its case bring this application within the ambit of one or more of these principles.
         I will start with the issue of girreparable lossh. It is the applicantfs contention that part of the money sought to be attached
belongs to its customers for payment to various institutions including the Customs Department of The Tanzania Revenue Authority; and
that if the money held in trust for its customers is with drawn from its account in execution of the decree, it will fail to perform its contractual and statutory obligations as a Clearing and Forwarding Agent. And that as a result its business goodwill will be eroded, and that that loss of business goodwill is not easily quantifiable and cannot be adequately compensated in the event the appeal succeeds. I have carefully considered the learned counselfs submissions on this. But I have the followings to say.
         First, in my view, I think good business administration dictates that customersf money should be kept in a separate account for various reasons including avoiding the possibility of being garnisheed on a liability which is purely of the master as in the instant case. But where there is no separate account and the money is garnisheed by a court order, the affected customers can file objection proceedings before the High Court pursuant to the provisions of ORDER XXI Rules
57-62 of the Civil Procedure Code, 1966 as was held by the Court in THE EDITOR SANIFU NEWSPAPER & M/S BUSINESS
PRINTERS LTD. v. MRS CAROLINE M. WHITESIDE ? Civil Reference No. 1 of 2002.
         Second, the applicant did not particularize as to how much is the customersf money.
         Third, in my view, loss of business goodwill is just an ordinary loss to which every judgment debtor is necessarily subjected when he loses his case and is deprived of his property in consequence, as stated by Bose, AJC in ANAND PRASHAD v. GOVINDA BAPU ? AIR 1934 Nag 160 quoted in the Editor Sanifu Newspapers case (supra). In view of what I have stated above, it is my holding that on its first ground, the applicant has failed to satisfy the Court that if execution is not stayed it will suffer irreparable loss.
On the issue of balance of convenience, I think, if execution is stayed the respondent will be more inconvenienced than the applicant. The respondent has been denied of the use of the
proceeds of its lost goods since September 2002. It is therefore my holding that, if execution is stayed, the respondent will be more inconvenienced than the applicant.
         On the issue of gprima facieh case it is not easy to say with certainty that the pending appeal has, gprima facieh a likelihood of success, because the issue involved in the appeal does not appear to be either jurisdiction or time limitation.
         Lastly, is whether, if the Court refuses to order a stay, in the event the appeal succeeds, the refusal will render that success nugatory. Suppose the application is refused and the decree is executed and the decretal amount is paid to the decree-holder, the respondent. But at the end of the day the appeal succeeds and the respondent is ordered to repay the money and fails to do so. Will the applicant be able to recover its money or execute its decree easily?
As pointed out earlier, the respondent is a company based and registered in the Democratic Republic of Congo. There is nothing
indicating that it has assets in Tanzania which can satisfy the decree in the event the appeal succeeds.
It is common knowledge that currently the Democratic Republic of Congo is a war-torn country, and there is no real guarantee whether it will be peaceful soon or at the time the appeal is determined. In Editor Sanifu Newspapers (supra) the Court observed with some concern how difficult it is to recover a property situate in a foreign jurisdiction. In that case the property in issue was situate in the United Kingdom. In the instant case the situation can even be more difficult because, unlike the United Kingdom where there is a reciprocity with Tanzania for execution of decrees as stipulated under the Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap 8, there is nothing of the kind with the Democratic Republic of Congo. In that respect, if execution is not stayed, in the event the appeal succeeds, that success will be rendered nugatory. For that reason, justice and common sense dictates that it is safer to grant a stay.

In view of this, and for the interest of justice, I allow the application. The execution of the judgment and decree of the High Court (Commercial Division) dated 25th May, 2004 and any order made subsequent to the said judgment, is hereby stayed pending determination of the then intended appeal which is now Civil Appeal No. 125 of 2004. Costs to follow the event.
DATED at DAR ES SALAAM this 3rd day of February, 2005.
S.N. KAJI
JUSTICE OF APPEAL
         I certify that this is a true copy of the original.
( S.M. RUMANYIKA )
DEPUTY REGISTRAR

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