land appeal No

IN THE HIGH COURT OF TANZANIA (LAND DIVISION) AT PAR ES SALAAM LAND APPEAL NO. 22553 OF 2024 (Originating From Application No. 338/2021, Kinondoni District Land and Housing Tribunal) AKIBA COMMERCIAL BANK PLC..................................................... 1st APPELLANT HARVEST TANZANIA LIMITED.......... ............ ................................ .2nd APPELLANT DUNSTAN J.R HAULE....................................................................... 3rd APPELLANT LEGENDS AUCTION MART & GENERAL BROKER LIMITED.... ......... .4™ APPELLANT VERSUS ADRIANA SEVERIN SIMON.... .......................................... .......... 1st RESPONDENT SIMON NASUILAH YUDA............................................................ 2nd RESPONDENT CHARLES RUTAKANGWA RUTASHOBORWA..... .......................... 3rd RESPONDENT JANE KOKULAMUKA RUTAKANGWA................. ........ ........... ....... 4th RESPONDENT JUDGMENT 5th to 26lh November, 2024 E.B. LUVANDA, J In the amended memorandum of appeal, the Appellant named above, raised a total of six grounds to challenge the decision of the Tribunal, thus: One, the Tribunal erred in law and fact by failing to evaluate and scrutinize exhibit U3. Had the Tribunal carefully scrutinized exhibit U3, it would have made a finding that the First Respondent herein failed to honour the terms contained under the said exhibit U3; Two, the Tribunal erred in law and fact by deciding that house No. 1098 Mbezi - Kawe was properly sold and the amount used to recover the outstanding loan; Three, the Tribunal erred in law and fact by declaring that i house No. 228 was not sold for recovery of the outstanding loan; Four, the Tribunal erred in law and fact by having contradictory decision on either house No. 228 was sold or sold without following auction procedures; Five, the Tribunal erred in law and fact when failed to consider the Appellants' evidence that at the time of sale agreement conducted between First, Second Respondents and Third, Fourth Respondents, the First Appellant was not involved at the period of payments; Six, the Tribunal erred in law and fact when failed to consider the failure of the First and Second Respondents to fulfil their mandatory contractual obligations and that it is their failure which mandated the First, Second and Fourth Appellants to sell a landed property at Boko area being housing number 228 Block "B". Ms. Joyce Sojo learned Counsel for Appellants combined ground number one, two and five. She submitted that once parties have entered into a valid contract, they are legally bound to comply with its terms. She submitted that it is also a trite law that once the terms of a contract are breached such contract becomes voidable, the implication of which allows the aggrieved party to revoke such contract when the terms of the agreement are not accurately respected and thus are breached, citing section 39 of The Law of Contract Act, Cap 345 R. E. 2019, for a proposition that when a party to a contract has refused to perform or disabled himself from performing her promise in its entirely, the promise may 2 put to an end of the contract unless he has signified by words or conduct his acquiescence in its continuance. She submitted that the First Respondent after defaulting to pay her loan, being of sound mind she approached the First Appellant and wrote a letter to allow to sale of her mortgaged properties being landed property comprised in plot No. 228 Block B, CT No. 55229, Boko area within Kinondoni Municipality in Dar es Salaam region. She submitted that the First Appellant proceeded to honour the First Respondent's request and wrote a letter requiring her to proceed with the said sale whilst abiding to the conditions stipulated in such letter, which are: the sale proceeds should pass into the First Respondents ACB account No. 10900084817; the bank officer should be involved on the selling process; she will be liable to pay the remaining overdraft limit balance plus debit interest in case the proceeds will not clear the balance. She submitted that both letters were deemed as set of promises forming consideration which are enforceable by law hence a contract under definition of section 2 (1) (e) and (h) Cap 345 (supra). She submitted that despite all the listed above conditions were ignored by the First Respondent, and proceeded to sell the house to the Third and Fourth Respondents without adhering to the given conditions. She submitted that the 3 Tribunal declared that such sale was valid, argued while the same was in total infringement of the conditions set and agreed by both parties. She submitted that according to the above provision, it is clear that the act of not respecting the conditions is an absolute breach of contract which had rendered the whole sale void. In reply, Mr. Adili Kiiza learned Counsel for First Respondent submitted that exhibit exhibit U3 is the same as exhibit Ml, only that exhibit U3 was tendered by the First Appellant while exhibit Ml was tendered by the First Respondent. He submitted that the Tribunal took into consideration before reaching its decision on whether the conditions laid down in exhibit U3 were adhered to before the sale, citing page sixteen of the impugned judgment. He submitted that all conditions were adhered by the First Respondent before the sale was conducted, citing the testimony of PW2 and PW3, argued they testified that before taking any step in respect of purchase of house on Plot No. 1098 they approached the First Appellant and met with one officer at the First Appellants office by the name of Bunini who was the First Appellants loan officer. He submitted that the duo testified further that payment of purchase price was effected vide the account illustrated in exhibit 113. He submitted that under paragraph three of the written statement of defence, the First Appellant admitted to have knowledge of the sale of the house located at Plot No. 1098 4 by the First Respondent to the Third and Fourth Respondent and money deposited into account number 10900084817. He submitted that the only complaint was that the deposited money was later withdrawn by the First Respondent. On rejoinder, the learned Counsel for Appellant submitted that exhibit U3 stipulated condition that the bank officer should be involved in the sale proceedings, argued the Respondent did not abide to this condition, for explanation that the Respondent did not involve the bank officer in the sale proceedings, argued there is nowhere in the judgment that shows that the Respondents involved the bank officer in the sale proceeds. She submitted that what the Respondents did was communicating with the bank officer after going physically to the bank to seek clarification and authorization that the money obtained from selling the house should be deposited in the First Respondent's account. On my part, I am not seeing any merit on these grounds of appeal. At page sixteen of the impugned judgment, the Tribunal ruled that PW2 and PW3 proved that during the process of purchasing the suit house, they visited at the Bank and met the loan officer of the First Appellant who affirmed that the money for purchasing a sum of TZS 85,000,000 should be deposited into the account of 5 the First Respondent. Indeed, in exhibit U3 or Ml, the condition precedent was for the sale proceed to be deposited into ACB account No. 10900084817 and secondly the bank officer ought to be involved on the selling process. This preceding condition was not elaborate as at what exactly stage of selling process the bank officer ought to be involved. The condition is silent whether involvement ought to be at stage of negotiation or actual sale or payment of money. To my opinion, in view of the fact that the first condition was for the proceed of sale to be deposited into the mentioned account, it cannot be said that the bank officer ought to be involved into that compliance. To my view, a mere fact that the proceed of sale was deposited into account mentioned in exhibit Ml, was enough for purpose of compliance. Now there be no clarification of the actual role of the bank officer during sale, and in absence of clear exposition of the actual stage of sell where ought to be involved. To my view the visitation of PW2 and PW3 to the bank officer was enough to alert him (constructive notice) regarding their intending purchase. To my opinion, when PW2 and PW3 visited to the bank officer asking as to where the money should be deposited, was a clear indication that the duo were prospective buyers. My undertaking is grounded on the fact that nowhere in exhibit Ml where it is stipulated that the bank officer will be privy to the sale or witness thereof. Rather to my view, the bank officer ought to be merely consulted and made 6 aware that sale was underway. Importantly, there was no requirement that the involvement of the bank officer ought to be officiated or in writing. That is why I am saying physical visitation was enough for purpose of compliance with the requirement in exhibit U3 or Ml. Therefore, the testimony of Simon Edward Rugenga (DW1) who is the manager Business Banking, that the bank officer ought to attend and witness during the event of sale, was misleading and not supported by the terms in exhibit Ml which require the bank officer to be involved. Ground number three and four, the learned Counsel for Appellant submitted that for the landed property/structure to attain its market price depends on the conducted valuation report and the validity of any valuation report lasts for only two years since its preparations and that is a statutory requirement and as years pass through the structure depreciates. She submitted that in this case valuation was conducted in the year 2012 whereas the sale of the same was conducted in 2016, being a difference of four years. She submitted that to stipulate further, the application was filed in the year 2021 and the decision of the same was pronounced and delivered in 2024, arguing being a difference of i • * nine and twelve years, respectively. She submitted that pursuant to statutory 7 requirement the validity for valuation is only two years, citing section 52 (2) of the Valuation and Valuers Registration Act, No. 10 of 2016. She faulted the learned Chairman to have erred to declare that the sale of landed property at plot No. 228 Boko area was void by selling the said house below the provided market value while relying on a valuation report prepared since 2012, arguing was absolutely contrary to the provisions of the law. She submitted that if the learned Chairman had not relied on the valuation report dated 2012, he would not have proceeded to declare that the sale of the afore mentioned landed property was void, for alleging it was sold below market price. She submitted that the declaration that the First Appellant sold the same landed property prior expiration of sixty days statutory notice is an error, for explanation that the learned Chairman had failed to consider the fact that the First Appellant wrote such notice since 17/3/2016 being two months after selling the said house without raising questions and why would the First Appellant take long to serve such notice to the First Respondent despite preparing it for such a long time. She submitted that if such question would have been raised the First Respondent's ill motive to mislead the court that she had earlier been served would be brought to daylight and the Tribunal would not consider such sale illegal/void for wanting to sell the landed property prior expiration of notice. 8 In reply, the learned Counsel for First Respondent submitted that apart from the irregularities depicted in the issuance of sixty days notice and auctioneer's fourteen days notice, the Tribunal nullified the sale of the house No. 228 after discovered many other anomalies and concocted stories on the part of the First Appellant in respect of the purported sale. He submitted that nowhere in the judgment the Tribunal made any kind of contradictory remark as alleged. He submitted that no certificate of sale was presented before the Tribunal for the alleged public auction. He queried as to why the debt amount of TZS 72,363,186.10 remained the same to date, even after sell of house No. 228. He submitted that the reasoning of the learned Chairperson was that if a house No. 228 Boko was sold by public auction way back in 2016, why then in 2021 the Fourth Appellant under the instructions of the First Appellant issued to the First Respondent with another notice (citing exhibit M5) intending to sale the house located at plot No. 228 Boko. On my part, these ground of appeal are meritorious. At page eighteen of the impugned judgment, the Tribunal nullified sale of the house on Plot No. 228 Block "B" Boko on the grounds interlia that DW1 did not tender a certificate of sale to vindicate that the suit house is sold; two, the procedure of issuing notice was flawed; three, the price was below what was contemplated by parties and 9 contrary to the law; five exhibit M5 depict the First Respondent was served with fourteen days notice in 2022, while the collateral was sold in 2016. I go along the argument of the learned Counsel for First Appellant that in determining that the house at Boko was sold below the price, the learned Chairperson had nothing to aid her proposition. Regard that the First Respondent did not tender any current valuation report showing the value of the suit house at the time of sell. Therefore, there was no basis upon which the Tribunal could rule that the sell was below the price. Regarding notice, DW1 tendered a notice of default exhibit U5, which was dully served to the mortgagor (First Respondent) along a notice of sale by public auction advertised vide Uhuru Newspaper exhibit U6. Now, a mere fact that later on 30/06/2021 the Fourth Appellant issued another fourteen days notice exhibit M5 for sale of both collateral, to my view could be a valid reason for vitiating the previous sale. Section 135(3) of the Land Act, Cap 113 R.E. 2019, provide, 'A person to whom this section applies is protected even if at any time before the completion of the sale, he has actual notice that there has not been a default by the borrower, or that a notice has not been duly served or that the sale is in some way unnecessary, improper or irregular, except in the case of fraud, io misrepresentation or other dishonest conduct on the part ofthe lender of which that person has actual or constructive notice' In that regard, the Third Appellant is protected under the above provision. Therefore a call for a certificate of sale, to my view was unnecessary and overstretching the issue. Having proved that the First Respondent was served with a statutory notice exhibit U5Z along publication of a notice of sale by public auction vide Uhuru Newspaper exhibit U6, the Tribunal erred to proceed to nullify the auction on the alleged grounds of sell below price, and issuance of another notice exhibit M5. Therefore, the Tribunal is faulted to have wrongly nullified sale of a house at Plot No. 228 Boko. For ground number six, the learned Counsel for Appellant submitted that the Tribunals should approach matters of clear-cut cases with caution. She submitted that it is undisputed fact that, the First Respondent owes the First Appellant and his failure to fulfil his contractual obligations had necessitated the Respondents to perform their contractual rights for recovery of the properties. She submitted that the First Respondent is quite aware that she has an obligation to pay the First Appellant since it is exactly 10 years since she secured a loan facility with the First Appellant where she mortgaged her residential properties knowing that such would be sold in events of default. She submitted that the First Appellant could not go to Court to recover the loan by other means 11 other than the security placed by the First Respondent and well accepted by First Appellant. She submitted that the First Respondent knowing in mind that, she defaulted to pay and upon recovery of the loan by selling the mortgaged securities she became adamant of the process. She submitted that complicating further, recovery process the Tribunal failed to consider the fact that the First Respondent had failed to perform her contractual obligations and that the bank had the right and duty to recover its money since she also needs fund to run her credit business and ignoring the First Respondents obligation to pay and the First Appellants right to recover, makes the First Appellants business at risk. In reply, the learned Counsel for First Respondent submitted that nowhere the Tribunal failed to consider failure of the First and Second Respondent to fulfil their mandatory contractual obligation. He submitted that the Chairperson expressed in the judgment that the First Respondent is liable to repay the outstanding balance of TZS 72,363,186.10, arguing that the Tribunal ruled that recovery procedure had to follow the due process of the law, citing page nineteen of the impugned judgment. On my part, I have failed to comprehend with the argument of the learned Counsel for Appellants. This because apart from nullifying sale of the hose at Boko (which has been faulted above), the Tribunal appreciated a fact that the 12 suit house was still under collateral. As alluded by the learned Counsel for First Respondent, what the Tribunal ruled was for the recovery process to be re­ done. Therefore, to my view, the Tribunal is faulted for nothing. May be to my view, the Tribunal having ruled that the Respondents are liable to pay a debt of TZS 72,363,181/=, the Tribunal slept into an error to dismiss the counter claim. Therefore, the Tribunal is faulted to that respect. For that reason, the appeal is partly allowed. No order for costs. NDA DGE 6/11/2024 Judgment delivered in the prefe^nce of Ms. Lisa Kingazi learned Counsel for Appellants, Mr. Adili Kiiza learndd Counsel for First, Second, Third and Fourth i/ 13