20150703 TZHC Dar es Salaam

.. ~ · . IN··,THE HIGH COURT O,F. TANZANIA J ·, ' '. ~ ' .... : , • • • • (COMMERCIAL DIVISION). /;\ A~ DAR ES SALAAM COMMERCIAL CASE NO~ 79 OF 2014 ABDALLAH ALLY SEI!,EMAN t/a OTTAWA ENTERPRISES (1987) .....• ~······················PLAINTIFF VERSUS GAPCO TANZANIA LIMITED ........ ~ ................... ~DEFENDANT JUDGMENT Mansoor, J: Date of Judgment- 3rd July 2015 Abdallah Ally Seleman, herein referred to as "Abdallah" is the owner of the premises known as plot No. 12, Industrial Ate.a, Msalama, Songea, corp.prised in a Certificate of Title No.· 8091- ""l\1BYLR, herein shall be referred to "the Property". On: 1?~:. day.. of March·2002; Abdallah:·Ally Selc1nai1 -entered ·into·•· a long terrri · lease agreement with Gapco ·Tanzania Limited, · formerly known as GAPOIL TANZANIA LIMITED, herein referre·d to ·as "GAPCO". "The Te.rm of the-Lease was 20 years from the date of the Agreement. The use of the premises or land leased was fpr business of selling fuel and petroleum products. It was agreed that Abdallah would operate the. business and GAPCO would supply Abdallah with its own fuel and petroleum products. Abdallah was required to deposit with GAPCO the Certificate of Title for this Property. It is claimed. by· Abdallah that contrary to the terms and conditions · of the Lease Agreement, GAPCO - used the Certificate of Title to tpe Property _to obtain financial and economic benefi.t. That GAPCO had m·ortgaged the Certificate of Title as security for the loan it obtained from Barclays Bank PLC, to the tune of US$ 75,000,000. That GAPCO mortgaged Abda.llah's Certificate of Title to the Bank Vvithout the consent or even the knowledge of Abdallah. Abdallah found out about the mortgage when the Certificate of Title was returned· to him by GAPCO follov1ving the Compromise Agreem.ent entered between them in settling a case at Songea. Abdallah saw a - stan1p at the -back of the Certificate by the Registrar of Titles showing that the mortgage was registered with the Registrar of · Titles on 5 th February 2007 and it . was discharged after -1. 2 · months i.e. on -17 th January 2008. That the Certificate of Title 2 .... .was us~_tj. ..-by: G~'PCO as security for a 1oa.ft!of US$'75,GO0,0<90 from _Barslays Bank Plc, -'the Ban:k". . . I.• ..~ ; \ _.:{ .:". The plai:qtiff claims· that GAPCO have breached the tetms of the lease agr~ement and have unjustly enriched themselves using his property, and he lodged this s11it claiming for geheral damages, and a declaration that GAPCO are liable for breach of agreement, trust and undue enrichment. The defendant denied to have used the Certificate of Title to obtain any ijnancial benefits, and averred that it had 20 years lease agreement and could acquire or obtain any financial and economtc benefits, advantages or interest accorded to it by virtue. of its. registrable· interest under the long te:r:n1 lease. The defendant denies to have ever mortgaged the plaintiffs title and states. that the mortgage endorsement on the ·plaintiff's title was an error, and that upon discovering the error, the,. ,.- defendant immediately rectified the error by having the · title endorsed . as ".discharged" on 17 th January 2008. The defendant. avers further that it was legally impossible ·.to··~.- mortgage the plaintiffs title without involving the plaintiff; .and that tp.e: value .of the plaintiffs land did. not· and does. ·:not presently suffice to secure a mortgage of US$ 75,000,00Q·. The defendant states that since the endorsement on the plain.tiff's·. title ·was·· an.· error, 1:h.e defendant could .not h.ave · notified· the . plaintiff of the,·mortgage, as there .was no a.ny 1:nortgage that·. :. 3 . - .·...... · ·• ·.· .. ·existed,-. i:t.r \vas· · ·simply. an' error, ...,•.which-- ,vas · ·rectified::-:: ac~oxdingly. Generally, the d€:!fendant denies to have bteached·i .. theJease agreement, and thus pr:ayed for the dismissal of the.· - . suit. The followi:rJg issues were recorded:· 1. Whether the Defendant was cap·able. of mortgaging the Plaintiffs property; 11. ·Whether the Plaintiff's property was erroneously mortgaged; 111. · Whether the title on Plot No. 12. Industrial• Area, Msamala Songea, was kept by the. Defendant.in trust; 1v. Whether the plaintiff suffered any damages as a result of the erroneously mortgage of the Property; v, To what reliefs are the parties entitled. . .. . 1. Whether the Defendant was capable of mortgaging the · · Plaintiff's-Property: . .. . ... Clc1use 2.8 of the Lease Agreement is a covenant not.to-assign .:.· •,• ,, . . ..... . ·•· '· or sub-let or part . v.rith the possession of the· said demised 4 -· .11-~~~J4h't:1-r..•;i~~.,(./~~"'..;"'""J;~.it14~ar~.--;,,~x,~n1~~~~i~~~o)1.~_~;;;~~'l.'fo::~.:1.'-l;(.~::-~~~\~~:4r.. 1 -,·"'· ~.::1A-,,~1;~piJt.lPf'~:t:.~~~~"°'~~1~..,_:t.~.1~)tpr.:tl'.~~'.lii.,,~~- ' . 1.-= •. ··_pre:q1Jses~withonLthe_~consent:in writing:0f ttie lessors'.firsfhadt~;-: ~- .,,:'""l · , · I' ,, .. an:-d .obtained, but s:u;ch consent, shall not be linreasbnably 0: ,-:: • I·'. withheld. A lease was for 20 years but a lease consisted in a right to the possession and use of the property owned by the Lessor, ·' i.e ' Abdallah. Apart from that right of· the Lessee. to only · possession. and use of the property, clause 2.8 of the Lease, the Lessee was restrict~d not to sublease, assign or part with. the possession of the said premises without the consent in writing of th~ lesso~. A Lease as defined in the Land Act, Cap 113 R: E 2002 1s "lease" means a lease or sublease, whether registered or unre_gi~tered,. of a right of occupancy and includes a short-te'(m .· - lease_ and agr~ement to lease;" A lease of immovable property is a transfer of a right to enjoy such property, made for a c~rt~n. time; _express or . implied, or 1n perpetuity, 1n · ... consideration of_ a rent payable periodically. From this definition of word "lease". It is clear that lease creates an interest in the property and the lessee gets the right to remain in occupation of the premises on payment of rent . ... • • • t.l ,. ,, • • +-i' • ~ • • • • ~ • • • • -~ • '• ... • • I ._ " •-f, • .. . . . 1' ~ r• . • Section 113 of the Land Act provides that· the: interest.'.of the Les~.ee may be mortgaged to. secure the payment of an e_:~dsting ·~· __ ;t.. ~:-. :: ·. . . .- ,_ . .·. ~· . .. . . _, • .. : ~ •.,. ... ·· .'" - . . ":' .,· ••.: ~- ..•-_t_:,_. or_ f1+ture or a cont~ngent debt or other m.oney or II3:0ney's ;f~ worth or the 'rulfilrnent a't a c'on.dltion, if reads: "',I•• --.•~. , ' • :~ '.•• ..;_-•--••-.,-,., · -- .~-., ·.,.,,.,·:,::.-~ 1 5 -1. l..3, .( 1) .. - ..qn _occupier of la.rid under a right-of.occupancy .and :a· · .t. ; ••..•.• , -.les_see may, -by_ an instrn-ment in the prescribed form, with su..ch variations and additions, if _any, a.s . the circumstances may require, mortgage his intetest in the land or a part thereof to secure the payment of an existing or a future or a coritingent debt or other .. money or money's· worth or the fulfilment of a condition." Thus the Land Act provides that an interest ·of a Leseee in the property under the lease . may be transferred, subject to Lessor's consent as provided 1n Sectio·n 84 of the Land. Act, which provides as follows: 84: A Lessor's cons~nt to dealing with.lease (.1) Where a· lease contains a·condition, express-or implied, by the lessee that he 1.vill not tran.sfer, sublet or m.ortgage or part 1.vith the possession of the land leased or any part of it without the written consent oj the lessor, no dealing with the lease shall be registered until the consent of the lessor has been produced to, and authenticated to the satisfaction of, the Registrar." Under the Land Act the lessee· rnay transfer absolutely or by way of mortgage or sub-lease the whole · or an.y pait of his ,Qt'.•. interest iri" the. property, however, that dght · shot11d·- be. exercised in accordance with the restrictions in~posed under 6 ----•··~·-~~-,....._,_,_ ·.,,.....- ......... --. ·--~--------- ------- ' . :: .,.E- ··.~Jhe Jeas~.·.-~A.gr~~:m:ent. a:·s.:· welt :_as.• under.· -Secti6rri:'.84~·{1). bf-· tHe;:_"~t :. -... ,; ,Land .i\.ct., , ..iJ :· ·-. ·" ; •• ~- ·'i _,· ·. , ' ~- \~ ~ ·.. -~.. ,.. . ! ''.· Thus _.in thi~· c~se, GAPCO, the )Jessee, and. as restricted 1n Clause 2.8 of the Lease Agreement, and in Section 84 of the Land Act, could not sub-let or transfer or give on license · or . . mortgage its interest in the Lease without the written conse1it of Abdallah. Under the law for the time being in force, it is not lawful for any tenant to sub-let or give on _license or mortgage the whole or any part of the premises let to him or to assign or transfer ih. any other manner his . interest therein . contrary to the provisions of"Section 84 Qf the Land Act, i.e. without the· written consent of the Lessor: Section 113 of the Land Act does not absolutely prohibit or tota).ly forbid the tenant to mortgage or assign or transfer in any other manner whole or ·any part of the premises let to him . but he must do this with the written consent of the landlord. . . - , In other . words, the. landlord . is always at liberty to permit . the ' tenant to • sublet or give, on license or assign or. transfer in any ~•• . I • • .• • • . other manner whole or any part of the prernises let to him . ... '.... :- - . ~ . . . . ~, ' Thus, legally, even if it were true. that. GAPCO did mortgage , . its ---• . interest in the property to secure the loan, that rnortgage . - would not: . have: been. effective in the absence ·of,'. a ,_written:. . . . . consent of Abdallah. Thus, GAPCO could np~Jegaj\y.mortgage · the! Pr.b.perty _of~ Abdallah to . obtain· any ·financial: benefits.: without the: written. consent .of Abdallah.: •. · · · .; . ~. . ..... ". . ,· 1 . • ,. •, ~ 7 •.:, ; . ii. Whether the< .Pla:intiff's -property was erro.neously mortgaged; . There was proof adduced by the plaintiff that the Certificate of Title for the Property was endorsed by the Registrar of Titles, Mbeya Sub Registry. This endorsement showing that the Title was mortgaged as security for the loan of US$ 75,000,000 . . given to GAPCO by Barclays Bank PLC. The Certificate of Title · therefore remained with the Bank for eleven months holding it . as security for the said loan. The defendant denies to have mortgaged this Property, but admitted however, the existence of the stamp or e~dorsement at the back of the Certificate of Title. They said, this was an error. That GAPCO had indeed taken the loan from Barclays, and placed before· the Bank a number of its assets as security for this loan, but this property was not one of them. The witness. of the defendant did not however tell the ~.ourt how did the title of this property ended with the Registrar of Titles, and why was it endorsed as mortgaged for 11 months. He sin1ply said, this was a mistake, and the mistake was rectified 11 months later. On this r take the view of the plaintiff that, there ·was no error, a:nd if there was such an error, which error was · not· .e~tablished by ·the defendants to the required standard of proof, the error was not rectified,- as the endorsen1ent at tr1e 8 back · of.:. the• _.certfficate.•<shows-.. that,- the.; mortgage·· was discharged, there was,.no any- record or proof adduced to. the •• • 71 • .. • -~•.; • ~• .. •. • I • ,,. Court. bythe defendant to show that indeed _this . was an error, . . . and that the error was rectified or the stamp. showing that the property was mortgaged was cancelled. The burden of proving . • ••· • .. 'l . (:';,, ., ,. . • that this was an error shifted, and lied on the defendant. On the face of the records, discharge . means the mortgage of US$ . 75,000,000 had been fully paid, and that is why the certificate · of titl_e . was endorsed as discharged. If this was an error, the· . Registrar would have simply cancelled the original stamp showi.,ng j:ha~ t}:le. certificate qf title w~s erroneously mortgaged, .. but _since the stamp shows that the mortgage was discharged, thi_s, _on the. face of it, clearly indicates t]:iat the certificate of . title. was . used. to secure the loan, and. 11 months· later, the ~ mortgag~ was_ discharged. It is not clear however if the . . . ., discharging of the mortgage was a result of paying the loan, or the Bank r:~alised th~t the property did not belong to GAPCO, - thus tp.e mortgc}.ging of_ this property was un-procedural and of.- no effect. . This . . . was not . proved. by the defendant. ~ There was no evidence produced by the defendant prov~ng tha~ this was an error, and since the Certificate bore a st~p or an endqrsement by the Regist_rar of 'J)tles she-wing .. that_ the • ..., , ., ~ ; • ,- • I • ~ • • . ' < - Certificate . . of. Title . was,· used to secure a. loan., .and . later :. . on the . : ' - . . ', mortg~g~ ~?-.S disc4,arged, this, prirna facie, fs eyiden~e JhaJ . . . . . ·~ ' .• ·· indeetj. GAPG9J~~d_:giortgaged thi_s Pr?perty.to ~ecure aJoa.11. of., . .. . . - . . 9 US$ 75,0.QO.,OOO. 1n favour of Barclays.,_ ·-Bank -PLC,·- it1· contraventiol}: of Clause· 2.8 of the Lease ~greement, also in· contravention of Section 84 of the Land Act.~ I therefor_e. hold GApco in breach o_f the Lease Agreement. · · iii. Whether the title on Plot No. 12 Industrial Area, Msamala Songea, was kept by the Defendant in trust; This issue need not detain us. It is clear from the records and from the testimonies of PW 1 that the dcfcndan t did not keep the Certificate of Title in trust for the plaintiff.. This was a condition fixed in the Lease Agreel!rent,. and the - Plaintiff complied with the condition of depositing the· Certificate· of Title to the Defendant since the Lease Tenn was long: This wa:s even pleaded by the plaintiff in paragraph 5 of his plaint, he averred: 5. "that, in February 2002, the plaintUJ and GAPOIL TANZANIA LIMITED, entered into a Ju.el supJJly agreement by which GAPOIL TANZANIA Lll\.tl.I1~D u1as required to supply the plaintiff with oil and petroleurn products on · ·credit and the plaint(ff was required to deposit with · GAPOIL TANZANIA .LIMITED certificate of title No. 8091-· MBYLR.a.nnexed hereiui{h o.nd rncirked .AA_S-2 to forrn part---- of the plaint.,; 10 · Tp.us ·-as"per. 'paragraph 5 d( the.-J1laint,.:the· depositing o( the -/• - · - Certifi~ate bf title with-the- defendant was nof ~or the purpose·s of° creating a trust·· thereof, but the .title was' deposited_ as. security for the. credits taken by the plaintiff for the ·fuel supplied.· This was also confirmed by PW 1 during cross examination saying that there were never any trust deed created. between ther_n for keeping of 1:he title by the defendant as trustee for the plaintiff. Since there ~as no trust legally created, or the intention of the parti~~ t<? keeping. the c<::r~ificate _of title was not for creation :of any trust or _h~lding the title of this property in trust, and a~ there was no express or implied agreement, this certificate was not held by GAPCO in trust for the benefit of Abdallah, and, therefore GAPCQ cannot be held in breach of any trust or in exc;ess of any ,;;authority and to the _detriment of the trust or wrongful . . ..omissjon . =-· . . .. of.any ... ~ act. required of. GAPCO by the tenns of any .trust,_ as _there_ was· no, ~uch trust legally crec~.ted . and . ent¢r<::d., wheth.er. expressly or impliedly . . iv. Whether the · plaintiff suf~e,~ed. any dam3:ges ,as a . ,·. ·.r:esu_lt -~fthe err'?l!~~usly·mortgage of the -~rop~s~ty; .... 11 Thy __ pJaintiff .. cla.im~d ;general q._9mages:.of such suin.·._as · this honourable {2.ourt would deem fit and~ jµ$t to grant: Jie did· not howev_('?r establish as·to what dainages he has s:uffered and· to ' what extep.t. ~During CI"<?SS examination_, f\bdallah, who was the' PW_ 1 admitted to have not suffered any tangible loss but he simply said_ he is entitled to damages because, if the mortgage ' . was not discharged, he would have suffered a great loss. His property could have been sold by the bank, if GAPCO defaulted paying the loan. But this did not happen,· the mortgage was discharged, and the property became free of encumbrances. Damag~s are awarded ·for the actual loss suffered, .and not for the loss which is contemplated. The plaintiff was duty bound . to establish in evidence the loss suffered to enable this court to a,vard him dainages for breach of the contract. The plaintiff has averred that he has never really suffered any tangible darnages, but he contemplated that had the loan not being discharged, he would have suffered datnages. Again, sirice he was not in possession of the Certificate of Title he cannot say that he missed an opportunity. to use the Certificate for . oqtaining any financial benefits from anybody or fro;rn the· fin?Ticial _institutions._ There is n_o such evidence given by -the plaintiff to this Court to show th~t the plaintiff has suffered any damages. During cross examination, the plaio.tiff adrriitted . . --- that he would not have been able to take a loan from the bank 12 . . . . . .. ; .,~:.- .- u~:i11g t_hjs.rPr.qpettybecause·. tb.re-::Certificate,of ititle-:was-wifh,the;;.< , . ·. ,d.€fend:ant,i he ·=.also -admitfed,sthat he had never .. 'Intended · to -- ,/ r . .. take/any loan using this :Cert:ificate of Title. The plaintiff also ad.mitted to have never asked for the return of the Certificate so as to use it for .obtaining any finartcial -benefits. The. Certificate qf Title was ·returned to him, after the case in Songea·was finalised by an amicable settlement. Since there are no ac;tual damages suffered by the plaintiff, the short question for consideration thus is to what damages is the plaintiff entitled to for_t~e l?r~ach of tile. Lease :'\greement by the defendant, in the circumstances: The· .term 'damage' means the harm ·for loss suffered or presu~ed to be suffered by a person as a result of some wrongful act of another and in common phrasing, the sum of money awarded by the Court to compensate damage is called,: 'damages': Damages are pecuniary compensation recoverable by a person· who has suffered loss, detriment or injury to his person, property or rights, consequent to any" wrongful act or omission· .. or' ·. negligence of another. These · may be compensatory or punitive, depending up·on whether -these a.re awarded - for actual loss suffered or . as - punishment' · or f' contemptable cohduct-and to deter future transgression. · ·., ·. · · . .. . . . ... .,,_ . . . ' ' . ....... . ~. ... . , .' - .... . t -- ... I ~ • ·• ' •• •• 13 ,I D~ages., fallr:j.n..,.vatio1.:i."S'. categories. These' may be nominal-; · actqal or compen.satory, consequential or exemplary. s. ' • Not.ninal-damages are awarded merely to · vindicate a right. • Actual or compensatory damages. are. awarded to compensate the_ loss or injury actually suffered. In a way it is a re-compose to loss or injury suffered by a person at the hands of another. In extent and quantum these are calculated to equate the loss or injury actually suffered. Compensatorx or actu~ damages consist of both g~neral and special damages. • General damages are the natural, necessary or the usual result of the wrongful act or occurrence in.. question, ·. which the law implies 1n every breach of contract or violation of legal rights. a Special damages are compensation for special damage which is presumed by law to be natural but not n·ecessary and inevitable result of the wrongful· act,· to he · proved strictly and are not too remote. • .· Cons_equential. damages do -· · not flow directly or iinmedia.tely from the act of the party-,· but only fron1 some of the consequences or results of such acts. 14 @ • Exemplary damages= ;a,r_e· punitive--in natur.e, incr~ased ;1fii! <' ., . . :,.' scale, awardable:=.; over and above what will barely' compensate the injured party where the wrong done:>to .him was aggravated by circumstance of violence, oppression, malice, fraud or wanton or wicked conduct of ~ the wrong ~oer. These are intended to solace the plaintiff for mental anguish etc. If it is proved that a defendant has acted wilfully, malicibusly _or fraudulently, the . _ plaintiff_ :i;nay be awarded such damages. The plaintiff 1n this case 1s therefore entitled to General damages, which are the usual result of breach of contract by . the defendant.. . . ... . The . plaintiff cannot . . be awarded - . actual or ' compen:satory damages as there is no loss which-was suffered. The;re is n<?thing to compensate. There is no loss or injury actually suffered . .. v. . To ·Wh~t reliefs are the parties entitled .. . " . Th;~ plain.tiff is ~herefore entitled to the following: , . ·. 1. A declaration that GAPCO is· in breach of Clause 2.8 of the Lease Agreement dated 1st March 2002; .~.. . . . ' . ..... ·.' 15 " .... -.·,..2 ,. l1fl.yrne·;nt: _::_of:· general: '.dainage·s · to ·the sum .. of THz . . . . ~. ·. ~" .. •.~~-~~.:.('., ·--~Jr;-~- 0 , 10,000,000 (Tanzanian· Shillings ·Ten Million Only) .for breach of the Lease Agreement; · 3. Costs of the s.uit. · It is so ordered. DATED at DAR ES SALAAM this 3RD day of JULY, 2015 . MANSOOR. JUDGE 3~ JULY, 2015 COURT: Judgment delivered in the presence of Advocate :~annonyele holding brief for Advocate Mbogoro. The_ Defendant was absent. MANSOOR JUDGE 16 '. ' .· _,.. ·. :~ .,_, -:"_,..,. l: .,. 17