RULING (PDF) by gyvwpsjkko


                      AT BLANTYRE
           MSCA CIVIL APPEAT NO. 45 OF 2OO9
      (Being Commercial Court Ciuil Case lfo. 38 of 2OO9)



                            AND _

ULALO TELECOM     LTD                     ......   2ND   APPELLANT

                            AND   -

DEVELOPMENT FUNDING ...                     .... RESPONDENT


          G. Kaliwo, of Counsel for the Appellants
          M. Msisha, SC, of Counsel for the Respondent
          Balakasi, Court Official
          Ethel Matunga Chisale (Ndunya), Typesetter


     Before me is an application by the Appellants for stay of
execution of the judgment of His Lordship Justice Katsala of
the Commercial Division of the High Court handed down on
the 16ti' day of June 2OO9. Leave to appeal was sought soon
upon judgment and was granted by the Judge. A related
application for stay of execution was however declined
prompting the Appellants to bring the present application.

     Before   I   deal.   with the substantive issues let me   observe
and agree with Mr Msisha SC, that the application is brought
under a wrong provision of the Rules of the Supreme Court.
According to the summons the application is brought under
Order 45 rule 1 1. The short of it is that Order 45 rule 1 1
relates to applications before the Court of judgment and in
respect of matters occurring after judgment. Stay of execution
sought below a Court of Appeal is provided for under Order 59
rule 13.
      I did not think there was any real argument advanced by
Mr Kaliwo to explain this lapse. Ironically in the skeleton
arguments the application is said to be premised on Order 59
rule 13 of the Rules of the Supreme Court. Ordinarily this
development should holt further discussion of this application.
It seems to me though, and listening to the comments of Mr
Msisha SC, we could consider this a slip and grudgingly move
on to the substantive application.

     The most brief back ground of this matter is captured on
page 3 of the lower Court judgment. It is there stated that the
respondent is a private equity fund incorporated in the State
of Delaware, IJnited States of America. It provides equity or
loans to small and medium enterprises in the Southern Africa
Region. The 1ut Appellant is an investment holding company
incorporated in 2OO7 in Malawi. The Respondent and the l"t
Appellant are shareholders in the 2"d Appellant. According to
the arrangement the Respondent would hold 49 percent and
the 1"t Appellant would hold 51 percent of shares.

      The 2"a Appellant Company was incorporated in 2007 as
well in Malawi. The idea was that the 2"d Appellant would be a
special purpose vehicle for the acquisition of equity in MTL
Mobile Limited, a company that owned Telecom Net Works
Malawi Lirnited,      a cellular telephone network provider in
Malawi. on the 30th August 2007 the three parties herein
executed a Shareholder Agreement. The agreement provided
for the issue and transfer of shares in the 2"d Appellant
Company. 49OO shares were to be issued and transferred to
the Respondent and 5100 were to be issued and transfered to
the l"t Appellant representing a shareholding of 49 percent
and 51 percent between the l"t Appellant and the Respondent.
The agreement also provided for the delivery of the respective
share certificates to the shareholders, the Respondent and the
l"t Appellant by the 2"o Appellant Company. It also provided
for the execution of a Term Loan Agreement and Deed of
Cession and Pledge under which the Respondent made
available to the l"t Appellant a loan in the sum of U$
528,000.00 for investment in the 2nd Appellant. The
Respondent in turn invested U$ 472,OOO.OO in the 2"d
Appellant for its shares.   A11   this money was invested in MTL
Mobile Limited.

      The substance of the case before the lower court was that
the 1"t Appellant had failed to deliver to the Respondent the
security for the loan of U$ 528,000.00 as provided for in the
Loan Term Agreement and the Deed of Cession and Pledge and
further that the 2"a Appellant had failed or refused to deliver to
the Respondent the share certificates for the 49OO shares
allotted to the Respondent. For those reasons the Respondent
sought an order compelling the 1"t Appellant to deliver to the
Respondent the share certificates for the 5100 shares issued
to the 1"t Appellant in the 2"a Appellant Company and paid for
with the loan the Respondent had advanced to the               1't
Appellant. An order was also sought requiring the Appellants
to deliver to the Respondent share certificates for the 49OO
shares allotted to the Respondent in the 2nd Appellant
Company in consideration of the U$ 472,000.00 invested in
the 2"d Appellant under the Shareholder Agreement. A further
order of injunction restraining each of the Appellants from
holding on to the share certificates was also sought.

     It should only be repeated that the lower Court found for
the Respondent and granted all the orders sought. It is to
these matters and other specific submissions in the context of
the present application, which I will allude to soon, that this
application refers.

     We are now all too familiar with of the principles that
regulate applications for stay of execution pending appeal.
order 59 rule r3l L has set out a couple of specific cardinal
considerations which our courts have closely followed. They
could be summarized as follows:

          (i) The Court does not make a practice              of
               depriving a successful litigant of the fruits of
               his litigation, and locking up funds to which
               prima facie he is entitled pending an appea-l.
          (ii) But the Court is likely to grant a stay where
               the appeal would otherwise be rendered
               nugatory or the appellant would suffer loss
               which could not be compensated in damages.

          (iii) Where the appeal is against an award of
               damages, the long established practice is that
               a stay will normally be granted only where the
               appellant satisfies the Court that if the
               damages are paid, then there will be no
               reasonable prospect of his recovering them in
               the event of the appeal succeeding.

    Order 59 rule 13 itself refers to a number of cases
    reinforcing each one of these considerations. Over the
    yea-rs our owrr courts has made a couple of instructive
    decisions some of which have been brought to my
    attention by Counsel in this matter. I will not go very far
    myself than refer to some extracts from those cases.

    The general parameters were stated by Tembo, J.A. in
Bakili Muluzi - Vs - The Director of the Anti-Corruption
Bureau, MSCA Civil Appeal No. 17 of 2005 where he said:
          U on applicant tuishes to haue a stag of execution, he
          or she must make express application for one.
          Neither the Court belou nor the Court of Appeal utill
          grant a stag unless satisfied that there are good
          reasons for doing so. The Court does not make a
          practice of depriuing a successful litigant of the fruits
          of his litigation. A Court is liketg to grant stag where
          an appellant would suffer loss which tlould not be
          comp ensated in damag es.

In City of Blantyre - Vs - Manda and Others, Civil Cause No.
1131 of 1990 the Court went further and said:

          I think it is alwaAs proper for the Court to start from
          the uiew point that a stlccessful litigant ought not to
          be depriued of the fruits of hls litigation and
          withholding moneg to uhich he is entitled. The Court
          should then consider uhether there are special
          circumstances which militate in fauour of granting ttrc
          Order of stag and the onus will be on the applicant to
          proue or show such special circumstences.

     In all these cases what the Court said in Nyasulu -Vs-
Malawi Railways Ltd [i993] 16 (1) 394 was perhaps more
instructive. In that case Unyolo JA summa-rrzed the
considerations as follows:

          In Barker -Vs- Laaery (1885) 14 QB 769 it u)as held
          that the euidence showing that there u)as no
          probabilitg of getting back tlrc moneg awarded under
          the judgment uould constitute special circumstances
          uthich would influence a court to grant stay of
          execution. But again, that is not a closed nile. AII
          the facts must be considered, for euen in such
          situation the court would, in its discretion, stilt refuse
          to grant a stay if on the total facts of the particular
, it utould be utterlg unjust or unconscionable to
          make sucLt en order. Equallg, the fact that o"
           successful litigant would be able to pay back the
            damages auarded Ltim, utould constitute special
            circumstances. But here again, euen in suclt a
            situation, the court would properlg grant a stag if it
            tl)o.s of the uiew it is expedient to do so, regard being
            had to all the facts.

     Mr Kaliwo submits that the considerations have now
widened and urges the Court to also bear in mind what is
described as the current thinking. In that regard the Court
should be directed by two major considerations; that is
whether the applicant would be ruined without stay and
secondly whether there a-re prospects of success of the
applicants appeal. Counsel is guided by the case of Linotype-
Hell Finance Ltd. - Vs - Baker lI992l ALL. ER 887 which I
have had occasion to look at. Unfortunately the judgment of
Staughton L J. is very brief and does not refer to or cite any
cases    on the current practice. The thinking sounds
persuasive and worth to be explored further. The real
difficulty I have myself is where the opinion advocates some
prospect of success and wondered how far a court can go in
that respect bearing in mind always that there is at the time a
binding judgment which even the Court of Appeal must
respect until set aside or otherwise modified. In Nyirenda -
Vs - A.R Osman and Co. [1993] 16 (1) MLR 400 Chatsika J
thought the prospects of success of the appeal is not a
consideration at this stage. This is what he said:

            I utould like to sag uhat I lmue said in other cases of
            this nature, that uhether or not an appeal had good
            cLtances of success ls not a ground upon uhich a
            court maA order stag of execution of a judgment. A
            judgment of a court of competent jurisdiction remains
             enforceable regardless of the fact that there are good
             grounds that an appeal against the judgment utill be

     It       to me that the old approach, if I were to call it,
in response to Mr Kaliwo's submission, still holds, for the
sanctity and authority of a valid judgment of the court.
     As to the factual and circumstantial basis of the present
application the Appellants have asked the Court to look
beyond the agreements executed between them and the
Respondent. It is submitted that the Court will notice traces
of bad faith manifest atl over the Respondent whose motive
was to displace the 1"t Appellant. Counsel Kaliwo states that
the motive came to bear in the fact that immediately upon the
lower court judgment the Respondent changed management of
the 2"d Appellant and constituted a new Board of Directors. It
is submitted that it was always the intention of           the
Respondent to take over the 2"0 Appellant. Secondly, it is
submitted that the action itself was also in bad faith because
the 1.t Appellant was in a position to and ready to repay the
loans to the Respondent. Thirdly it is submitted that unless
stay was granted the Appellants would be ruined.

    I have carefully read through the judgment of the Court
below. It is very clear that the first two submissions above
were really the basis upon which the case was determined.
The lower Court specifically dwelt on these matters at some
length in paragraphs 7 and 8 of the judgment. On the facts
and evidence the learned Judge found that these arguments
were not tunable. The lower Court having specifically
determined these issues it is not in this application that I
should, in any attempt or by any indication, disagree with
those findings. Perhaps the issue is with the Appellants being
ruined after the Respondent has virtually taken over all the

     The facts of this case speak for themselves. The source
of support for both the l"t Appellant and the 2"d Appellant is
the Respondent. It is the Respondent who has financed
virtually the entire enterprise. There is no suggestion that if
the appeal was successful the Respondent would not be able
to put back in damages as he may be ordered. It is
appreciated though that in the end issues of good will and the
inconvenience of setting up all over might be at stake even
were damages were fully paid; but this is not the same as
saying the Appellants would be ruined;       let alone ruined

     I am therefore of the clear view that this ls not a proper
case where this Court should stall execution judgment. The
application is therefore dismissed.

     MADE     in   Chambers   this 2oth dav of July, 2OO9 at

                     JUSTICE OF APPEAL

To top