african banking corporation t ltd vs national investment co ltd 2010 tzhccomd 32 21 december 2010

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT DAR ES SALAAM COMMERCIAL CASE NO.60 OF 2010 AFRICAN BANKING CORPORATION (T) LIMITED.......................... PLAINTIFF VERSUS NATIONAL INVESTMENT COMPANY LIMITED................................DEFENDANT Date of last order: 24/09/2010 Date of final submissions: 11/10/2010 Date of ruling: 21/12/2010 RULING MAKARAMBA, J.: This is a ruling on the preliminary objection the Defendant raised against the suit the Plaintiff lodged in this Court on 12th July 2010 that the suit is objectionable on account of the doctrine of res sub judiceand in the alternative the suit is an abuse of procedure as it has been instituted as a substitute to or in place of a written statement of defence and or a counter claim in Civil Case No.47 of 2010. The preliminary objections by consent were disposed of by way of written submissions. HERBERT H. NYANGE, Advocate from Nyange and Co. Advocates for the Defendant and REX ATTORNEYS, Advocates for the Plaintiff. i Briefly, the background to the matter giving rise to the preliminary objection is that it came about as a result of the suit the Plaintiff lodged in this Court against the Defendant on the 12th day of July 2010 for payment of shillings 6,297,803,812.82 plus accrued interest and other charges as sums due and payable to the plaintiff pursuant to an unlimited guarantee dated 31st May, 2007 issued by the Defendant in favour of TANZANIA FISHERIES DEVELOPMENT COMPANY LIMITED (TFDC) as borrower/principal debtor. The Plaintiff is calling in on the guarantee because TANZANIA FISHERIES DEVELOPMENT COMPANY LIMITED (the borrower) has defaulted. In the present matter, section 8 of the Civil Procedure Code is at the centre of the controversy, which stipulates as follows: "8. No court shall proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit between the same parties, or between parties under whom they or any o f them claim litigating under the same title where such suit is pending in the same or any other court in Tanzania having jurisdiction to grant the relief claimed. Explanation: The pendency o f a suit in a foreign court does not preclude the courts in Tanzania from trying a suit founded on the same cause o f action." (the emphasis is o f this Court). Both Counsel are in agreement that the objective of section 8 of the Civil Proedure Code is to bar courts from proceeding with the trial of a subsequently instituted suit if the matter in issue is also directly and substantially in issue in a previously instituted suit between the same parties pending in the same court or any court in Tanganyika having 2 jurisdiction to grant the relief claimed. The Plaintiffs Counsel cited the Indian decision in GRINDLAYS BANK LTD. VS. HINDUSTAN EMBROIDERY MILLS P. LTD A.I.R. 1981 Delhi 332 cited in Mulla Code of Civil Procedure 15th Edition at pg.84 on the applicability of section 10 (Indian Civil Procedure Code)(section 8 of our CPC) thus: "The object o f the section is to prevent Courts o f concurrent jurisdiction from simultaneously entertaining and adjudicating upon two parallel litigation in respect o f the same cause of action, the same subject matter and the same relief." The section comes into play to bar the court from proceeding with the trial o f any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit between the same partied' where on the final decision being reached in the previous suit such decision would operate as res-judicata in the subsequent suit. The doctrine of res judicata is incorporated under section 9 of the Civil Procedure Code and its main object is to bar the court from trying "any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties." The Plaintiff's Counsel relying on the commentary in Mulla on Code of Civil Procedure and cases cited therein, submitted that the following conditions have to be met for section 8 (section 10 Indian Civil Procedure Code) to apply, namely: 3 (i) The matter in issue in a subsequent suit is also directly and substantially in issue in a previously instited suit between the same parties (ii) The previously instituted suit is pending in the same or any other Court in Tanganyika (iii) That the Court in which the previously instituted suit is pending has jurisdiction to grant the relief sought (the emphasis is of this Court). In his submissions in support of the preliminary objection, the Defendant's Counsel quoted Mulla on Code of Civil Procedure, 15th Edition at page 84 to the effect that the words "directly and substantially in issue!' are used in contradistinction to the words "incidentally or collaterally in issue!' meaning that there has to be identity of the matter in issue in both the suits so that the whole of the subject matter in issue in both the proceedings is identical and not merely one of the many issues arising for determination. The Defendant's Counsel argued that in terms of section 8 of the Civil Procedure Code which provides for the doctrine of res sub judice, it has to be established that the matter in issue in the suit giving rise to the present objection, that is, Commercial Case No.60 of 2010 is also directly and substantially in issue in Civil Case No.47 of 2010 which is pending in the High Court of Tanzania, Dar es Salaam District Registry between Tanzania Fisheries Development Company and National Investment Company Limited ^the Defendant hereat), the plaintiffs thereat, and Leonard Mususa, Nelson Msuya and African Banking 4 Corporation Tanzania Limited fthe Plaintiff hereat), as the 1st, 2nd and 3rd Defendants thereat. The record shows that the suit pending at the Dar es Salaam Registry of the High Court, that is, Civil Case No.47 of 2010 was instituted on 19th April 2010. The suit pending in this Court, that is, Commercial Case No.60 of 2010 was lodged on 12th July 2010. Both the Dar es Salaam Registry of the High Court of Tanzania and the Commercial Division of the High Court of Tanzania are courts of concurrent jurisdiction. Considering therefore that Civil Case No.47 of 2010 was instituted on the ltf h April 2010 and Commercial Case No. 60 of 2010 on the 12fh July 2010, the former suit comes under the rubric of a "previously instituted suit" under section 8 of the Civil Procedure Code. The issue therefore is whether the matter in issue in Commercial Case No. 60 of 2010 is also directly and substantially in issue in the previously instituted suit between the same parties in Civil Case No.47 of 2010 which is pending at the Dar es Salaam Registry of the High Court. The Defendant's Counsel submitting on the identity of the parties and the claim in the pending suit, avered that the parties in the previously instituted suit pending at the High Court District Registry, Civil Case No.47 of 2010 are Tanzania Fisheries Development Company (as the 1st Plaintiff thereat) and National Investment Company Limited fthe Defendant herein), as the 2nd plaintiff thereat, and Leonard Mususa, Nelson Msuya and African Banking Corporation Tanzania Limited 5 (the Plaintiff herein), as the 1st, 2nd and 3rd Defendants thereat. The 1st Plaintiff in the pending suit is a wholly owned subsidiary of the 2nd Plaintiff, the Defendant hereat. The Defendant's Counsel submitted further that the object of the suit pending at the Dar es Salaam Registry of the High Court, Civil Case No.47 of 2010 is to restrain the Defendants, that is, Leonard Mususa, 1st Defendant, Nelson Msuya, 2nd Defendant and African Banking Corporation Tanzania Limited, 3rd Defendant (the Plaintiff herein), perpetually from exercising receivership over assets of the 1st Plaintiff, Tanzania Fisheries Development Company on account of a loan extended to the 1st Plaintiff by the 3rd Defendant, African Banking Corporation Tanzania Limited, (the Plaintiff hereat), and guaranteed by the 2nd Plaintiff thereat, National Investment Company Limited, the Defendant hereat. The Defendant's Counsel submitted further that the first two Defendants in the suit pending at the Dar es Salaam Registry of the High Court in Civil Case No.47 of 2010, are receivers appointed by the 3rd Defendant, African Banking Corporation Tanzania Limited, (the Plaintiff hereat), in respect of the assets of the 1st Plaintiff, Tanzania Fisheries Development Company, pursuant to a loan of Tshs.6,000,000,000.00 by the 3rd Defendant, African Banking Corporation Tanzania Limited, (the Plaintiff hereat), to the 1st Plaintiff Tanzania Fisheries Development Company availed on or about 9th June 2008 and which was guaranteed by the 2nd Plaintiff, National 6 Investment Company Limited ft he Defendant herein). The Defendant's Counsel submitted further that in the pending suit, Civil Case No.47 of 2010there are also other claims specifically for the 3rd Defendant, African Banking Corporation Tanzania Limited, (the Plaintiff herein), for breach o f contract in connection with an investment advice given by the 3 d Defendant in respect o f the project for which the 3rd Defendant availed the guaranteed global facility. As to the similarities in the matters in issue in both suits, the Defendant's Counsel zeroed on paragraph 5(i) of the Plaint which prays for ",4 declaration that the debt arising out of the lending done by the 3fd defendant to the 1st Plaintiff fall on the 3fd Defendant." The 'debt' mentioned in that paragraph refers to both the lending of AFRICAN BANKING CORPORATION to TANZANIA FISHERIES DEVELOPMENT COMPANY and the guaranteeing by NICOL more so as it is also followed by claims for damages for failure in the Plaintiff's (ABC) contractual duty to the Defendant (NICOL) to act professionally, independently and honestly, the Defendant's Counsel further submitted. The fact that there is only one Plaintiff against one Defendant namely CEO of NICOL instead of the three Defendants and two Plaintiffs as in the pending suit does not make this a separate claim from that in the pending suit, the Defendant's Counsel surmised. The Plaintiff's Counsel in his reply submissions restated the elements under section 8 of the Civil Procedure Code for stay of a subsequent suit as discussed by Mulla Code of Civil Procedure (15th Edition) making 7 reference to persuasive Indian cases on section 10 of the Indian Civil Procedure Code, which is pari materia to our section 8. The main contention of the Plaintiff's Counsel is that none of those elements have been met. A suit could be stayed under section 10 (India) (our section 8) only if there is identity of the matter in both proceedings meaning thereby, the whole of subject matter in both proceedings is identical and not merely of the many issues arising for determination, the Plaintiff's Counsel inisisted and cited the persuasive authority in the Indian case of SOHAL ENGINEERING WORKS V, RO STAM JEHANGIR VAKILMILLS AIR 1981 Guj. 110, and Mulla on Code of Civil Procedure, 15th Edition, at p.146, in support of his contention. I am at one with the Plaintiff's Counsel that the two suits involve different issues and the determination of which will not result in conflicting findings on issues which are directly and substantially in issue in Civil Case No.47 of 2010. As the Plaintiff's Counsel correctly submitted, Commercial Case No. 60 of 2010 is not res sub judice to Civil Case No.47 of 2010 for the simple reason that there is no identity of issues in the two suits. The latter suit is premised on the alleged breach o f duties by the Plaintiff to act expertly, professionally, independently and honestly as a result o f which the 1st Plaintiff is said to have suffered loss. There is nothing in that suit challenging the unlimited guarantee and the fact that the Defendant seeks to avoid its liability on the guarantee is not the same as seeking to avoid the guarantee. 8 As the Plaintiff's Counsel rightly submitted, the cause of action in the suit currently before this Court is founded on the Plaintiff's contractual right to enforce a guarantee which is separate from the guarantor's claim against the Plaintiff on the alleged breaches o f duties. There is therefore no suggestion that the Defendant herein is challenging the execution of the guarantee in this or the other suit and thus it cannot be said that the two suits will involve determination of identical issues in the manner submitted by the Defendant's Counsel. It is not therefore a question of courts of concurrent jurisdiction trying simultaneous or parallel suits in respect of the same matter in issue. As correctly submitted by the Plaintiff's Counsel the decision in the case pending at the Dar es Salaam Registry of the High Court, Civil Case No.47 of 2010 cannot operate as res judicata suit since there is no identity of issues which will be held to operate as a bar to the current suit. This finds support in the Indian decision in GRINDLAYS BANK LTD. VS. HINDUSTAN EMBROIDERY MILLS P. LTD A.I.R. 1981 Delhi 332 cited in Mulla Code of Civil Procedure 15th Edition at pg.84 on the applicability of section 10 (Indian Civil Procedure Code)(section 8 of our CPC) that it applies only where on the final decision being reached in the previous suit, such decision would operate as res-judicata in the subsequent suit. It was the further submission of the Defendant's Counsel that there is not only one but three parallel suits being tried simultaneously in two courts with concurrent jurisdiction, namely Civil Case No.47 of 2010 9 between Tanzania Development Company Limited and National Investments Company Limited (NICOL) vs. Leonard Mususa, Nelson Msuya and African Banking Corporation, Commercial Case No.41 of 2010 between Leonard Mususa and Nelson Msuya vs. Tanzania Fisheries Development Company Limited and its Directors; and Commercial Case No.60 of 2010 between African Banking Corporation vs. CEO of National Investment Company Limited (NICOL). The Defendant's Counsel submitted further that what makes these proceedings unequalled is that not only the two commercial proceedings pending in this Court are in direct conflict with the suit already instituted by the Defendant but this commercial matter in particular was filed on 12th July 2010 at a time the Plaintiff was way out to file extension of time to file written statement of defence in respect of Civil Case No.47 of 2010. The Defendant's Counsel submitted further that the Plaintiff instead of complying with the order of this Court to file written statement of defence together with counter claim if any and make an application to have the proceedings pending at the Dar es Salaam District Registry transferred from that Registry to the this Court, has preferred two other proceedings in this Court. The Defendant's Counsel invited this Court to dismiss the suit or strike it since it belongs to another area altogether. The argument of the Defendant's Counsel in support of this proposed course of action is that flouting an order of any Registry of the High Court made pursuant to the Civil Procedure Code is also a violation of an order of the Commercial io Division of the High Court a party required by the District Registry to file written statement of defence and fails to do so cannot be allowed to file a plaint in this Court in lieu of or as a disguised Written Statement of Defence as this would be fraudulent conduct Similarly, the Law of Limitation should be extended to this situation because the Plaint is a disguised written statement of defence to Civil Case No.47 of 2010. It was the further argument of the Defendant's Counsel that this commercial case is a clever substitute for the written statement of defence and a circumvention of the law of limitation. The Plaintiff wants to jump the queue so that it escapes from the consequences of its failure to file a written statement of defence in respect of the pending suit, the Defendant's Counsel surmised. In the alternative the Defendant's Counsel prayed for a rejection of the Plaint under Order VII Rule 1(c) of the Civil Procedure Code since the Written Statement of Defence is barred by law as such no fact which would have been pleaded as a defence or counter claim in that former suit can be raised in a plaint filed subsequently before another registry/division of the High Court. Lastly, as an alternative the Defendant's Counsel argued for stay of proceedings, since both the Dar es Salaam District Registry and the Commercial Division are courts of competent jurisdiction only that the matter in the Dar es Salaam District Registry preceded the matter in this Court. I am at one with the submission by the Plaintiff's Counsel that the suggestion by the Defendant's Counsel that there is in existence three 11 parallel suits being tried simultaneously in two courts has no basis at all more so because apart from the fact that the two suits have not met the test behind section 8 of the Civil Procedure Code, Commercial Case No.41 of 2010 and therefore it is irrelevant for the purposes of these proceedings. I am also at one with the submission by the Plaintiff's Counsel that the suggestion of the Defendant's Counsel that if the court proceeds to try and determine the suit ahead of Civil Case No.47 of 2010 the other suit will be barred for being res judicata is with due respect, of no moment particularly considering that there is nothing to render the other suit res judicata because the basis of it does not simply exist. In his reply submissions, the Plaintiff's Counsel submitted that as regards the consequences, in the "unlikely event' the Court finds that the suit is res sub judice, the remedy lies in ordering the stay of it as dictated by section 8 of the Civil Procedure Code, which course finds support in the decision of the Court of Appeal of Tanzania in CRDB BANK LIMITED VS. TANGA HARDWARE AND 6 OTHERS Civil Appeal No.104 of 2003 (unreported) interpreting the phrase ""shall not proceed with the trial' found in section 8 of the CPC and section 10 of the Indian Civil Procedure Code as indicating the action to be taken by the Court which is not to dismiss the suit, but the trial of the suit is not to be proceeded with. I am at one with the submission by the Plaintiff's Counsel for the reasons he has advanced that the invitation by the Defendant's Counsel to 12 have the suit dismissed has no legal basis be it on account of res sub judice or the alleged abuse of the court process. Considering that the " unlikely event!' the Plaintiff's Counsel envisaged has not yet materialised, the remedy which would have flowed under section 8 of the Civil Procedure Code, that is, an order for stay of the suit cannot be had since this Court has established that the suit is not res sub judice. I am also at one with the submissions by the Plaintiff's Counsel that it is not legally proper nor is it desirable for the Defendant's Counsel to engage this Court into determining whether filing an application for transfer of Civil Case No.47 of 2010 from the Dar es Salaam District Registry of the High Court to this Court instead of filing a written statement of defence was improper and/or an abuse of the court process for the simple reason that it is not within the province of this Court to discuss alleged non compliance with orders made elsewhere in separate and distinct proceedings. As the Plaintiff's Counsel correctly reiterated in his reply submissions, a party who files a suit whose facts and issues are similar to a previously instituted suit cannot be held to be guilty of abuse of the Court process because the law does prohibit that course of action. As the Plaintiff's Counsel correctly insisted in his reply submissions, it will be a different matter if the suit at the other High Court Registry were filed by the same Plaintiff in this suit because that would amount to forum shopping which is not permitted. In his reply submissions the Plaintiff's Counsel strongly resisted the allegation of fraud levelled at them by the Defendant's Counsel and made 13 reference to Black's Law Dictionary, 8th Edition at page 685 on the meaning of "fraud" that: is a knowing misrepresentation o f the truth or concealment o f a material fact to induce another to act to his or her detriment or a misrepresentation made recklessly without belief in its truth to induce another to act." I am at one with the Plaintiff's Counsel that the allegation of fraud the Defendant's Counsel came up in his submissions has been brought out of context as it has not even been pleaded in the Defendant's defence. In any event in my view, there is nothing fraudulent in filing a suit in the manner the Plaintiff did in the current proceedings. On whether the filing of the suit was an abuse of the court process as alleged by the Defendant's Counsel, the Plaintiff's Counsel in reply took issue with the tenacity of the second preliminary objection that it is not an objection on a pure point of law at all because it is not capable of disposing of the case without resorting to hearing evidence adduced by the parties. The Plaintiff's Counsel submitted that the second preliminary objection does not therefore satisfy the requirements of a nature of preliminary objection laid down in MUKISA BISCUITS MANUFACTURING CO. LTD VS. WEST END DISTRIBUTING LTD [1969] EA 696 where Law IL . stated that: "...a preliminary objection consists o f a point o f law which has been pleaded, or which arise by dear implication out o f pleadings, and which if argued as a preliminary may dispose o f the suit." And Sir Charles Newbold echoed the following statement: 14 "...a preliminary objection... raises a pure point o f law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or what is sought is a judicial discretion. The Plaintiff's Counsel submitted further that the decision in Mukisa case has been referred to in Tanzania in Commercial Case No.102 of 2001 between CRDB BANK LIMITED AND NOORALLY K.J. DHANAN AND ANOTHER; Commercial Case No.257 of 2001 between SYCAMORE INVESTMENTS LIMITED AND JUMA MGASSA (both unreported) and the REGISTERED TRUSTEES OF TANZANIA LABOUR PARTY VS AUGUSTINE LYATONGA MREMA & OTHERS CAT Civil Application No.34 o f 2003 (unreported). As the Plaintiff's Counsel rightly submitted, the second preliminary objection is not an objection on a pure point of law at all because it is not capable of disposing of the case without resorting to hearing evidence adduced by the parties. The allegation of abuse of the court process by the Defendant's Counsel will entail this Court to dig into evidence to establish whether the allegation of abuse of the court process has been established on a balance of probabilities. As the Plaintiff's Counsel rightly submitted, a party who files a suit whose facts and issues are similar to a previously instituted suit cannot be held to be guilty of abuse of the Court process because the law does prohibit that course of action. In the circumstances and for the foregoing reasons, the second preliminary objection has therefore failed to meet the test laid down in 15 MUKISA BISCUITS MANUFACTURING CO. LTD VS. WEST END DISTRIBUTING LTD (supra) and it is accordingly dismissed. In the upshot and for the foregoing reasons, both preliminary objections are overuled and are hereby dismissed with costs, which costs shall be in the cause. The suit is to continue to the next stages. It is accordingly ordered. A . R.V. MAKARAMBA JUDGE 21/12/2010 16