20100924 TZHC Dar es Salaam

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION)

AT DAR ES SALAAM COMMERCIAL CASE N0.7 OF 2010 . THE ATIORN:EY GENERAL .................. ~ .............................. PLAINTIFF

VERSUS M/S DENGARD SYSTEM (T) LTD ..................................... DEFENDANT Date of last order: 13/05/2010 Date of exparte hearing - 13/05/2010 · Date of exparte judgment - 24/09/2010 )UDGMENT EX PARTE MAKARAMBA, J.: On the 8th day of February, 2010, the Plaintiff, the chief legal advisor of the Government, and by virtue of law responsible for instituting suits on behalf of the Government, filed a Plaint in this Co.urt against Defendant. In thiS suit, the .Plaintiff.! claims that on the. t st day. of February 2005, the then Ministry of Works (now Ministry of Ministry of Infrastructure Development) . entered into a contract with the Defendant, M/S Dengard Systems (T) Ltd., a body corporate established under the Company Act [Cap.212 R.E. 2002], for the installation of ticket vendihg and validating machines at the Mago_goni/KigambonL Ferry in Dar es. Salaam (hereinafter"·the Contract). In 1 .... ,,.. . this suit, the Plaintiff ·js. suing the Defendant for sums of monies, specific damages, interest and general damages which the Pl'aintiff claims- to have suffered due to delay in completion by the Defendant of the Contract, and. for failing to complete the obligations stipulated in the Contract and hand over the project to the Plaintiff. In the Plaint fil~d in this Court on 8th day of February. 2010, the Plaintiff prays for J\Jdgn:,ent and Decree against the Defendant for

the following. orders, namely: a) A payment of Two Hundred Two, Six Hundred and Eighty United States Dollars (USD 202,680) being advance payment made to the Defendant, b) Interest on the sum of Two Hundred Two, Six Hundred and Eighty United States Dollars (USD 202,680) at the rate . of 30% per annum from the date of filing this suit untiljudgment, c) Interest on the decreta/amount at the Cpurt rate from the day of Judgment to the day of full payment, d} General damages to be assessed by the Court e) Costs of this suit be provided for~ f) Any other or further reliefasthis Honourable Coutt shall deem fit and just to grant As it turned. out, efforts by the Plaintiff to serve the Defendant did . . not bear any fruits whereupon the Plaintiff prayed to serve the Defendant by way of substituted service by publication in the local newspapers which prayer this Court duly· granted on the 4 th day of March 2010. The Plaintiff · then proceeded to publi'sh the substituted service in th·e MAJ.IRA: and MWANANCHI newspaper respectively, both of 1th day of March 2010.· 2 i; '\ ·' On the 29 th day of March 2010, this Court granted the prayer by the Plaintiff to proceed by way .of exparte proof; which the Plaintiff did on the· 13 th day of'May 2010 and hence this judgment. In· this suit the Plaintiff was represented Mr .. Gabriel Malata, learned State Attorney. The Plaintiff presented only one

witness, Engineer Dr. John Ngunguru (PW1), a Director of Technical Services in the Ministry of Infrastructure Development (then Ministry of Works) since 2000, entrusted with among other tasks, supervision of mechanical engineering works and government buildings. The Plaintiff tendered in evidence a total of six documents. In his testimony while being lead by Mr. Malatal PW1 stated that on the 1st day of February 2005, he witnessed the signing of a contract between the Ministry of Works (now Ministry of Infrastructure Development) and M/S Dengard Systems (T) Ltd., for the supply and installation of ticket vending machines at Magogoni/Kigamboni Ferry (hereina~er the Contract). PW1 testified further that, Engineer Kijazi signed the Contract on the part of the Plaintiff, and Mr. Deus Nyanza on behalf M/S Deng rad Systems (T) Ltd. A copy of the Contract dated 1st day of February 2005 was tendered in evidence by PW1, which Mr. Malata learned State Attorney prayed that it be admitted under section 68 of the Tanzania Evidence Act [Cap.6 R.E. for the reason that the original of the Contract is still with the Controller and Auditor General for other official business. This Court duly admitted the Contract and marked it as Exhibit Pl. PW1 testified further that the Contract sum was for USO 225,200 and its performance period was for eight weeks. PW1 testified further that the 3 Contract

specified that 10% of the 'Contract sum, to the tune of USD 22,520, was to be paid by the Plaintiff to the- Defendan~ on the 9th day of February 2005, which sum PW1 testified further that it was duly paid by the Plaintiff to the Defendant in March 2005 after, the Plaintiff having received a request in writing by a letter dated 1st day of February 2005 from the Managing Director of Dengard Systems (T) Ltd to the Director, Electrical and Mechanical Division Ministry of Works. (now Ministry of Infrastructure Development). The said letter was tendered in evidence by PWl and admitted and marked as Exhibit P3. PWl testified further that the Contractor, M/5. Dengard Systems (T). Ltd, through its letter dated 13 th day of March 2005, which was addressed to the Ministry of Infrastructure Development (then Ministry of Works), in which the Defendant requested from the Plaintiff an advance payment to the tune· of USO 40,000, which request was considered by the Ministry and was du_ly paid. The letter dated 13 th day of March 2005 by M/S Dengard Systems (T) Ltd applying for the advance. payment of USO 4U,000 was tendered in evidence by PWl and admitted and marked .as Exhibit P4. PWl testified further that in April, 2005, the Contractor, M/S Dengard Systems (T) Ltd submitted a Bill of Lading for the vending machines. PWl testified further that as per the contractual term, the Contractor, M/S

Dengard Systems (T) Ltd, was paid the balance of the contract sum, to the tune of USO 140~168. PWl tendered in evidence payment vouchers in respect of the said payments,. which this- Court admitted and marked collectively as Exhibit P2 to- substantiate the payment of the advance of USO 40;000 and that of the: balance of USO 140,168. PWl testified further· that in total; the Plaintiff is 4 claiming froni the Defendant USO 202,.680 .and .further that. the service provider,. Den~irad ·systems (T) L~d, which is the Defendant, is. not .claiming . ,. . ariything,fro·m the :Plaintfff. . .. Earlier, PWl in his testimony had · ina:dvertently stated that the t_ ~ .4 • • Contract . yvas. ·supposed -_· . . . ..' to have been _finalized by end of June 2005, which - . ' statement PW1 later retracted by correcting that the Contract was to have •• • • • ~ • 0 ended on the 1 day of April 2005, reckoning from the 1st day of February st -: . ' 2005, which means eight weeks· for the contract period. PWl testified "" "', ,·· l fu~her t~~t th~ c6ntractor, M/S Dengrad Systems (T) .Ltd, did not perform the contract . within . the agreed , ,_' period, . consequently, due '•, . to delays, the ' Plaintiff was forced to write the Contractor several ·reminders.. The ' .. . reminder le~ers dated 21/09/2-007; 21/04/2008 and 08/06/2009 authored by P~l himself (Engineer J.S. Ngunguru), were tendered in

evidence and ··- . . " admitted marked collectively as Exhibit PS. PWl testified further that despite these reminders; still the Defendant did not respond. :·. .• ! . . ,.. • .o ~ . : PWl testified further dting but only a few of several instances of failure· by. the Defendant to finalize the Contract including the Defendant not finalizing a radio link between Kigamboni and Magogoni, Dar es Salai;im;. not providing warrant and spare parts for the machines he provided to the Plaintiff; and not conducting training for the workers who were stipposed_ · to operate the machines.. Consequently; PWl further testified, as a result of the Defendant failure to finalize the Contract the· Plaintiff termini:lted the Contract and resorted to court action against the Defendant· to. recover the total cost. of the· contract. PWl. tendered in S· evidence·. a letter dated 26/06/2009 ·authored .by Engineer Omar Sham~o . . but not PW1, which Mr. Mala.ta prayed. that it be admitted as exhibit under.· section 34(a)(i) of the. Janzania Evidence. Act. This Court duly admitted .it _ and marked it- as, Exhibit. Pij.· PW1 wound up his testimony· in chief ·by- stating .that the Plaintiff is claiming from the Defendant for t_he following: First the Defend?Jnt to pay USD 202,680 which was paid as advance payment by the Plaintiff to the defendant. PW1 testified that the envisaged services have not been.

enjoyed by the intended clients as tfle Defendant . . . did n:ot hand: civer the project. PW1 testified, further that the s.um of USD 202,680, the Plaintiff is· claiming from the Defendant was paid by the Plaintiff to the Defendant as evidenced by the vowchers PWl tendered in evidence .. "Secondly, intereston the sum ofUSD 202,680 at the- rate of 30% per. annum from the date of filing this suit until judgment. Thirdly; interest on-the decr:etal amount at court's rate ·from the date · of judg.ment till full payment Fourthly, general damages to be assessed by the Court. PW1 . contended that the purpose of the project was the intention of the Plaintiff to control leakages in the collection of revenue at.the Magogoni Ferry and therefore in the a_bsence of the 07achihes, the Government has· continued to incur ·1osses in revenue coUectibrn; PW-1 contended further that on average they are collecting around Tshs.6,00D,,000/= a day without the machines and the target was to coll.ect Tshs.10,000,000/= a day. PW1 fr conte.nded. further that failure •by the Defendant to complete the project has caus·ed di'scortifort to the paying: ferry passengers since the· Plaintiff ·· could ·not utilizethe 'intended modern technology; PWl contended further. that the Plaintiff intended th.rough ·use of the machines to 'be able to know· . the number of people using the ferry so that the Plaintiff ·could

ascertain- . the actual ~evenue collected per day_. PW1 surmised· that if all had gone well -the:.Pla intiff wou Id ·have started to enjoy the services from O1/05/2005, which-turne0 out not to be the case as a result of the Defendant's failure to • • 0 • ' complete: . and. hand. over. th_e project. as per the ' ' . contractual agreement. . PW.1 also prayed .. for costs . of . this suit and any other relief deemed fit and •' . just. · rn, this suit, the first issue for consideration is whether there. was a contract between the Plaintiff and the ·Defendant and· what-were th~ terms · of the contract. The second issue is. whether th~ Defendant has breached th·e terms of the contract. The- third issue is whether the Plaintiff' has suffered general damages and the fourth issue is to what: relief(s) is the Plaintiff entitled to. On. the first issue whether there was a contract between the Plaintiff and, the. Defendant, the: testimony of PW{ has amply established that the Plaintiff, the then- Ministry of Works (now Ministry of Infrastructure Development) on the 1st of February; 2005 entered into a Contractual· Agreement with the Defendant for .the . supply and installation of ticket vendi'ng and validating· machines at M~gogonilKigarnboni Ferry ... this is-•. evidenced by ·a copy. of the said Contra:ctual . . Agreement. . . \. titled ·''Contract . " .- . for t .Supply and Installation

of Ticket Vending Machines at Magogoni/Kigamboni Ferry Dar es Salaam' (hereinafter the Contract) which was. tendered in · evid_ence by PW1 and admitted and marked as Exhibit Pl. The date indicated as the date for its conclusion is- the 1s1: day of February 2005. In that Contract (E:X:h.P1), the Permanent Secretary; Ministry of Works, is the . ·"Purchaser" on the one hand,.· and M/S Dengard System (T) Ltd, the · Defendant~ is- the ''Supplier", on the other hand .. The Contract was for the supply and installation of ticket vending ma<:hines at Magogoni/Kigamboni Ferry Dar es Salaam at a sum of USO 225,000 (say Two hundred twenty five thousand two thousand only), the "Contract Price." As PW1 testified the Contract was signed by John Kijazi, Permanent Secretary, Ministry of Works in the presence of John S. Ndunguru, Director (PW1), and Deus Nyanza for Dengrad System {T) Ltd in the presence of Alvin B, Director · OPA. The Contract (Exh.P1) had General Conditions of Contract (GCC) supplemented by Special Conditions of Contract (SCC). In the Bid Form and Price Schedules dated· 27 th October 2004 to the Director of Electrical and Mechanical in the Ministry of Works, which is annexed to Exh.Pl, the Managing Director of the Defendant's company, having examined the bidding document including Addenda offered to supply and deliver Ticket Vending Machines at Magogoni/Kigamboni Ferry Dar es

Salaam. in conformity with the said bidding documents for the sum of US$ 225,200 undertook, if the BID is accepted, to deliver the goods in accordance with the delivery schedule specified in the Schedule of Requirements and that if 8 the·s1D-:is accepted, to obtain the guarantee of a bank in a surn equiva_lent . to ter1 (i0°/~) perterit of the Cbntract·Price .for the due Performance of the C0ritrae;(-·(n the for'.11· prescribed -by the Purchaser. Acc0rding to Clause- .1.1 • · of-the·sct as rSer'.GCC Clause. lTl, prices were•to be in Tanzat1ian shillings . and conversion. to be rTtade by application of exchange rate prevailing on the date-,of payment _ . The first payment of US Dollar was made by the Plaintiff to the Defendant. vide Payment Voucher 3260/2 for a su·m of US 22,520 .. . .' " ~ . . . ' (equivalent. to Tshs.25,292,662.40 at an exchange rate of L 123.12 (Exhibit P3). This was in response to the request ·by the Defe.nd.ant ' ~ .' . through its. letter dated 01/02/2005 to the Plaintiff for payment of 10% advance of the contract sum. The second payment of USD 40,000 (equivalent to Tshs.44,706,400 at exchange rate of 1.117.66 (Exh.P2 collectively) was made by the Plaintiff to the. Defendant following a request by:the. Defendant through its letter dated 13th of March 2005 for funds to . facilitate· the· equipment ·importation. as ·per performance bond· dated 11/03/2005.

The third payment was for USO 140,160 (equivalerit to Tshs.157, 791,637.40 at exchange· rate of 1.125. 79) (Exh. P2 collectively). Tne.,evideric:e on record therefore snows that. in total the Plaintiff made payments:to·.t11e Defendant amounting to· uso·.202,680, comprising of . USD 22~520 (Exh■-P3); USD 40,000 · and .USD 140,160 (Exh.P2 collectiv·ely), which is_90% of the.contract su.m of USO 225,200. The 'first .i.ssue whether there was a contract between- the Plaintiff and> . the Defendant is therefore answered in the affirmative. I The second issue is whether there was breach of the terms. of the . ' Contract by the· Defendant. . According to . the testimony of PWl and the . evidence tendered in court, the Contract was for the installation of ticket . vending and validating machines at the Magogoni/Kigamboni Ferry ih. Dar es Salaam. The Contract which was signed on 1st of February 2005 was to have· ended on the 1st day of April. 2005; reckoning from the 1st day of . . February 2005, which. means eight weeks for the: contract period. As per · the testimony· of PWl the Contractbri M/S Dengard Systems (T} Ltd, 1 despite having collected almost 90% of the contract sum did not perform · the contract within the agreed period. As a result of the delay in completion of the contract by the Defendant, the Plaintiff was forced to write to the Contractor several reminders as evidenced

by the letters dated 21/09/2007; 21/04/2008 and 08/06/2009 authored by PWl himself (Engineer J.S. Ngunguru) (Exhibit PS collectively), which the Defendant does riot seem to have ever responded to. PWl testified on the particular breaches· of the Contract which the Defendant committed which· included in the Defendant not providing. warrant and spare parts for the machines the Defendant provided to the Plaintiff; and the Defendant not conducting training for the workers who · were supposed to operate the vending machines. As testified by PWl, clearly the services that the Plaintiff envisaged would. have been enjoyed by its intended clients using the Magogoni Ferry were not realized as the Defendant did not hand over the: project to the Defendant. If all had gone. well as PWl testified, the. Plaintiff would have started enjoying the services 10 fro·m 0i/05/2O05, whi'ch turned out not to· be the case as a· result of the .· Defendant's failure to complete and hand over the project as per the· . contractual. a·greement.· The second issue is therefore answered in the affl rrnative. ': · The third issue is whether the Plaintiff has suffered any general damages. PWl testified only generally wit~out ,giving any· concrete evidence to substantiate the damage the Plaintiff suffered as a result of the failure by the_ Defendant ·to complete the ·project which PWl claimed in

his testirnony .• that it has caused .discomfort to the paying ferry passengers due to the Pl_aintiff not being able to utilize the intended modern technology. Furthermore, ascording to the testimony of PWl, the Plaintiff intended, . . through use of the modern vending machines at the Magogoni Ferry, to establishthe number of people using the ferry daily so as to enable t~e Plaintiff ascertain the actual revenue collected per day; which PWl put only generally at Tshs.10,000,000/- per day with the n~w vending machines· instead w·ithout which· the Plaintiff was only collecting Tshs.1,000,000/- per day but without providing the basis for the calculation of the said am·ount. In my view the general statements by PWl as to the discomfort the Plaintiff suffered· as a result of the delay by the Defendant to complete the project as agreed to do not constitute a sufficient ground for this Court to· exercise its discretion to award general damages. The third issue· is answered negatively. The fourth issue is what relief(.s} the Plaintiff is entitled to. It has been amply established during the- exparte hearing vide both the testimony 11 . of PW1 and the documentary evidence tendered that the Defendant has received from the. Plaintiff payments to the tune of USO 202,680, constituting 90%. of the contractual sum of USD '225,200 but the Defendant has failed to· hand over the project to the

Defendant and this despite severah reminders. by the Plaintiff which the Defendant has never .. bothered to respond to. · · In the event and for the foregoing. reasons, judgment and decree· is hereby entered for the Plaintiff against the Defendant as follows: a) The Defendant shall pay the Plaintiff USD 202/680 (Say Two Hundred Two1 Six Hundred and Eighty United States Dollars only) being advance payment made to the Defendant,· b) The Defendant shall pay interest on the sum of USD·Z021 680 (Say rwo Hundred Two1 Six Hundred and Eighty United States Dollars only) at the rate of 30% per annum from the date of filing this swt until judgment,: c) The Defendant shall pay interest on the decreta! amount at· the rate of 12%. per annum from· the date ofJudgment to the date of full payment; · d) The Defendant shall pay the costs of this suit. It is accordingly ordered. .-R.\t. MA,KARAM'BA, JUDGE- 24/09/2010 . 12 . t · -Judgment delivered .this 24th day, of September, 2010 in the presence of Mr. Chidowu; • State Attorney for the Plaintiff ·and Ex-pa rte for the - Defendant •~ · • {~ .... R.V. MAKARAMBA

JUDGE 2_4/09/2010 Words count: 3,097 13