20151116 TZHC Dar es Salaam 1

,,.(•. ,· ·"''":'- . .,l i~-llfi. [pIN THE HIGH COURT OF TANZANIA DAR IES SALAAM DISTRICT REGISTRY AT DAR ES SALAAM {APPELLATE JURISDICTION) CIVIL APPEAL NO. 121 OF 2014 (From the Resident Magistrates' Court of Dar es Salaam at Kisutu in Civil Case No. 75 of 2012 -Hon. W.E. Lema, PRM) AKIBA COMMERCIAL BANK LIMITED .......................... APPELLANT VERSUS PRINCIPAL COMPANY LIMITED .....·......................... RESPONDENT Date of Last Order: 30 th July, 2015 Date of Judgment: 15th November, 2015 JUDGMENT FELESHI, J.: In the Resident Magistrates Court of Dar es Salaam at l<isutu, the respondent, a limited liability company sued the appellant, also a limited liability company for payment of Tshs. 47,500,000/=, being fund transferred from the respondent's account without her authority. She also claimed for interest, general damages and costs of the suit. In the Judgment of the Court, the respondent was awarded refund of Tshs. 47,500,000/=, general damages at Tshs. 100,000,000/=, interest at 12% per month from the due date to the Judgment date, interest at 7% from the date of Judgment till payment in full and costs of the suit. Aggrieved, the appellant has appealed on five (5) grounds namely:- 1. That, the trial Couti: erred both in [aw and in fact when deciding the issue whether the a.ppeflant fol[owed procedures when honouring the cheques in questron by holding that the appellant was negHget1t 111 Page 1 of 10 - confirming the authenticity of the instructions before making payments of the cheques. 2. That, the trial Court erred both ·in law and in fact in failing to decide that the respondent had contributed to the losses by failing to take steps to mitigate losses including informing the appellant that his mobile communication were temporarily interrupted. 3. That, the trial Court erred both in law and in fact in its wholesome acceptance of the respondent's allegations of losses without there being any proof in that regard. 4. That, the trial Court erred both in law and in fact in holding that general damages are awarded to restore a party to his original positions prior to the alleged [osses. 5. That, the trial Court erred both in law and in fact by awarding the respondent Tshs. 100,000,000/ = as general damages which is over and above any judicial standard of awarding general damages and without proof of any extenuating circumstances justifying the Court's judicial discretion in that regard. The appeal was conducted by way of written submissions where the appellant engaged the services of Tan Africa Law Chambers while the respondent enjoyed the services of Brass Attorneys. Addressing the grounds of appeal, the appellant's counsel submitted for the 1st ground of appeal that, signatures are not expected to be replicas of each other, adding that, the appellant sought confirmation through telephone number 0754284486 which was the contact number in the appellant's database, Besides, the respondent did not prove that the mobile phone vvas blocked and that the call was handled by a different person. Moreover, the respondent did not answer as to whether they signed up to confirm by phone as a means of establishing authenticity of the transactions. In respect of the 2nd gmund of appeal, the appellant's counsel submitted that, both the plaint and evidence are clear that the respondent Page 2 of 10 ... signed up for confirmation through phone. He argued that, the respondent ought to have prudently informed the appellant of his temporarily blocked cell phone number provided that they offered the very number for confirmation. He argued that that issue was out of the evidence on record. Regarding the 3rd , 4th & 5th g1·ounds of appeal, the appellant's counsel submitted that, the award of Tshs. 100,000,000/= had no legal justification for no proof was availed in Court by the respondent. He argued that, there is no legal logic in awarding damages over twice the substantive sum despite that Courts have discretionary powers which must be exercised judiciously. He cited a decision by the Court of Appeal of Tanzania in Zuberi Augustino vs. Anicet Mugabe [1992] T.L.R 137 to that effect In reply, the respondent's counsel submitted that, the trial Court was justified to hold that the required procedure in confirming the authenticity of the cheques was not complied with and that they were as such authorized by the respondent. He added that, it was proved through the signatures, that, the cheques were not genuine and that it was for the Bank to make sure. that the signatures \Vere the same before honouring them. He added that, the testimonies by ow1 and DW3 were clear that, the signatures in the presented cheques differed from those in the specimen thus with duty to verify the said signatu1·es before effecting payments. Regarding the 2nd ground of appeal, the respondent's counsel submitted that, the respondent had no duty to inform the appellant that his cell phone was temporarily interrupted or rather blocked. It was for the Page 3 of 10 :.. ".:t appellant to make sure that the signatures in the said cheques were similar with the specimen held under the appellant's custody. He cited Halsbury Laws of England (3 rd Edition) Volume 2 art. 380 that:- "A document in cheque form to which the customer's name as drawer is forged or placed thereon without authority is not a cheque, but a mere numty. Unless the banker can establish adoption or estoppel, he cannot debit the customer with any payment made on such document". Besides, the respondent's counsel submitted that, the said cheques were forged. As to the 3rd , 4th & 5th grounds, the respondent's counsel submitted that, the awarded general damages cannot be challenged for its award falls within pure discretionary powers of the Court. He urged this Court not to vary the awarded amount by the trial Court as underscored by the Court of Appeal in The Cooper Motor Co,rporation ltd vs. Mo:shl/ Arusha Occupational Hea[th Servkes [1992] T.L.R 96. In rejoinder, the appellant's counsel maintained that the respondent did not avail evidence on what procedure ought to have been effected by the Bank to verify authenticity of the signatures vvhich was the main anomaly that affected its entire conclusions on the issue of duty of care. Having considered the evidence on r·ecord and the submissions by the 1·espective counsels, the following are the findings of this Court in disposal. I \Nill start with the contention by the appellant's counsel that the respondent did not elucidate on the proper procedure that ought to have Page 4 of 10 . been· followed by the appellant before debiting the sums from the · respond~nt's account. Briefly, such argument should not detain us much. Clearly and in the customary Bank nature of conducting business, there is no more required procedure in Bank transactions to be followed by a Bank other than that of ensuring that a certain cheque is genuine and properly drawn by its maker in respect of debiting money from the drawer's account. I wonder why the appellant's counsel has pondered and stressed on such an obvious point unnecessarily. In the first place, it is not in dispute that the appellant debited the disputed sum from the respondent's Bank accounts in honouring some instructions presented before her. It is also not in dispute that the respondent holds a cheque book which was issued to her by the appellant. Furthermore, it is also not in dispute that, on 15/12/2011, the respondent formerly reported the allegations of unauthorized debit from her account. A thorough reading of the evidence on recor·d reveals that though the appellant has leveled five grounds of appeal, the main issues comprising all the grounds of appeal are, whether there was any legal justification in the appellant's conduct to debit the said sum from the respondent's account under what was referred to as the respondent's instructions by way of cheques honoured by the appellant and whether the award of general damages at Tshs. 100,000,000/= has any legal justification whatsoever. Starting with the first question, though DVV1 testified that upon examination of the cheques and their specimen she found the signatures to be the same and hence proceeding with verification of the same from PWl Page 5 of 10 GODFREY MOSHA which was their modus operandi whenever the debiting in question is in respect of an account not belonging to the drawer, yet, the same witness conceded that, the referred disputed cheques, that is, Exhibits "P3" and "PS" were different from the specimen held in their custody and marked Exhibit "Dl". Besides, DWl testified to have identified PWl through his voice but she also testified that, they had no cell phone of PWl and hence they had to ask it from Kariakoo Branch. These pieces of evidence cast shadow of doubts to the credibility of DW1. In disposing the above, reference is made to two English cases: Lewes Sanitary Steam Laundry Company (Ltd) vs. Barclays and Company (Ltd) [1906] T.L.R 737 and The Kepi.trgaUa Rubber Estates, Ltd vs. The National Bank of India, Ltd (1909) 2 !<. B 1010 which fits the case at hand. Both dealt with the defence of estoppel by negligence. In the case of Lewes Sanitary Steam Lat.H1dry Company (Ltd) above, the Directors of the Company appointed the son of the Chairman as Secretary of the company and allowed the secretary to have the custody of the company's cheque book and bank pass-book. In order to draw a cheque the signature of the Secretary and a Director were required. The Secretary forged the signature of a Director to a number of cheques purporting to be drawn on behalf of the company and obtained payment from the company's bankers. On an action brnught against the defendant to recover the amount the defendants raised the defence of negligence by estoppel. Kennedy J., afte1· quoting a numbe1- of authorities held that:- Page 6 of 10 "t "But in order to relieve the banker from the consequence of paying · money upon a forged cheque, it is not enough for the banker to show that the conduct of his customer, willful, careless or wasteful or au~ enabled the fraud to be committed. He must show that the customer caused him to pay the money upon the forged cheque. It is not enough to show that the customer gave occasion for his so paying .... The carelessness of the customer or neglect of the customer to take precautions unconnected with the act itself cannot be put forward by the banker as justifying his own default". From the above, the respondent who is not a Banker, rather, a client might even allowed the appellant to effect payment. From the fiduciary duty the appellant held with the respondent, she ought not to have honoured the said cheques considering the apparent defects which as such, \"lere observed by the officers of the appellant. Under normal Bank business transactions, even if the respondent gave a clean sheet regarding his instructions to the debited amount, meaning, allowing the appellant to proceed with payment vide the alleged cheques, once the signatures in the cheques appeared to differ with the specimens tt1ey have in the Bank as in the matter under scrutiny, by knowing the impact of honouring a defective cheque, it immediately follows that; a wise, knowledgeable and dully caring Bank would have returned the defective cheque to the drawer for her to present a proper cheque. It is surely unprofessional for a Bank to proceed with payment in respect of a cheque which on the face of it, they discovered the same to be tainted, hence defective. Normally, Banks issue to their clients certain respective cheque Books bearing certain ser·ial nun,bers to enable their clients to instruct withdraw of money from their Bank Accounts they hold with their respective Banks. Page 7 of 10 Cautiously, despite of such issuance of cheque books, yet, considering that such cheques may even be stolen, Banks remain with their autonomous duty to make sure that the said cheques are drawn by their customers. Notably, even though the appellant alleged to have confirmed with the appellant, yet, there is no proof on record that the said confirmation was ever made. No electronic evidence through printouts or wl,atsoever was ever availed on record to prove the same. Under such circumstances, a Court of law cannot make reliance to such mere unproven assertions. It is imperative to note that, if a Bank acts so locally or negligently in dealing with client's accounts that will distort the trust customers have with Banks and if that is left to continue, the same will lead to clients withdrawing their sums of money from Banks and ultimately lead to collapse of Bank business. Besides, that will also amount into breach of Banker-Customer duty to honour proper instructions from their clients. Furthermore, a Bank is not obligated to, and as such, cannot be blamed or rather be held responsible for not honouring a defective cheque. The contrary vvould have been the case if at all the cheques were properly drawn by the respondent but the Bank, unreasonably refuses to honour such instructions. From the above synopsis, the question framed by this Court as to whether there was any legal justification in the appellant's conduct to debit the said sum from the respondent's account under what was referred to as the respondent's instructions by way of cheques honoured by the appellant is hereby ansvvered in the NEGATIVE. Page 8 of 10 ;_ Resorting to the 2nd question, it is imperative that, no evidence was ever availed by the respondent in proof of the awarded general damages. Being the case, the immediate question is what stands to be the legal implications? In the case of Anthony Ngoo & Davis Anthony Ngoo vs. Kitinda Kimaro, Civil Appeal No. 25 of 2014 (Unreported), (Arusha Registry) the Court of Appeal of Tanzania observed that:- " ......... The law is settled that general damages are awarded by the trial judge after consideration and deliberation on the evidence on record able to justify the award. The judge has discretion in the award of general damages. However the judge must assign a reason, which was not done in this case. Nevertheless, the triaf judge awarded the plaintiff /respondent general damages of Tshs One Hundred MHfion (100,000,000) without assigning any reason for the sameu. From the above cited case law, the trial Court erred in law in awarding general damages at Tshs. 100,000,000/= without proof in justification of the award. In that regard, that ground of appeal is hereby allowed. Remarkably, tl1e argument by the appellant's counsel that the trial Court was not entitled to award general damages as twice as much of the specific claimed amount is a serious misconception of the law for such an award may be avvarded provided that there is proof to that effect. Conclusively, this Cou1t partly allows the appeal by dismissing the 1st and 2nd grounds of appeal but allows the 3rd , 4th & 5th grounds of appeal regarding general damages, that is, the awarded sum as to the withdrawn money from the respondent's account is not faulted whereas the award of Tshs. 100,000,000/= as general damages is set aside. Instead, having considered the disturbance and the suffering that faced the respondent in Page 9 of 10 the period under consideration I award him Tshs. 10,000,-000/= as general damages. I also find no reason to differ with the rate of interest awarded for they are reasonable. Considering that the appeal is partly allowed, I make no order as to costs. It is so ordered. 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