anwar mohamed another vs unicord t ltd 2023 tzhccomd 45 24 february 2023

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA IMMERCIAL DIVISION)

AT DAR ES SALAAM COMMERCIAL CASE NO. 30 OF 2022 ANWAR MOHAMED.......................... ............................... 1stPLAINTIFF ROSACHIM SARL............................................................ 2ND PLAINTIFF

VERSUS UNICORD (T) LIMITED................................................... DEFENDANT

JUDGMENT Date of/ast order: 07/12/2022 Date ofjudgment: 24/02/2023 AGATHO, J.: The Plaintiffs filed a suit praying for judgment and decree against the Dercndant for the following reliefs: a declaration that the Defendant has breached the terms of the purchase order contract, specific performahce of the contract in alternative payment of USD 88,920 being the actual amount received by the Defendant in consideration of two sisal fibre containers, an order for payment of USD 50,000 being expected profit had the Defendant supplied the containers timely, genera! damages to be assessed by the Court, ihterest at Court rate from the date of judgment to payment in fuil, costs of the suit and any other relief the Court deems just and equitable tb grant '■ Upon being served with plaint, the Defendant file her Written Statement of Defence disputing piaintiff claim on ground that there was no valid contract between that 1 parties. On that note, the defendant invited the plaintiff into strict proof of her claims thereof and eventually prayed that the suit be dismissed with costs. Both parties to this case engaged services of learned counsel. Whereas the Plaintiffs were represented by advocate Abubakar Salim, the Defendants were under legal representation of advocate Wilson Edward Ogunde. Before hearing the following issues were framed, recorded by the court and agreed between the parties

for determination of this suit as follows: (1) Whether there was an oral agreement between the Plaintiffs and the Defendant for the supply of two sisal fibre containers. (2) Whether the Defendant breached the said agreement (3) To what reliefs are the parties entitled to. Plaintiff in proof of his case called two witness, Anwar Mchamed and Tesiel Augustino Kikoto whom they testify that, plaintiffs and defendant entered into oral agreement through Khorshid Mulla in 2019 for supply of two sisal containers to be shipped to Casablanca Morocco. It was a plaintiff case that at first place the container was delivery to Morocco and defendant effected payment. It was stated Khorshed Mulla approached the piaintiff and by oral agreement two more sisal contajner were supplied but deferidant failed to perform its obligatiori as agreed, the plairitiff thoroughly made a friendly follow up of aforesaid dues to settle the amount but iri vain. In proof of her claim plaintiff tendered a Notice of debt acknowledgement arid payment plan agreement and WhatsApp extracted texts as exhibit P1 and P2respectively. On the other hand, the defendant was defended by one witncss; Omary Mulla who denied to have entered into oral agreement for plaintiff for suppiy of 2 sisal as a such they have never received a $um of USD 88,920.00 and purported agreement dated 15.10.2021 was not sanctioned by special

resolution bf the defendant company. At the end of hearing of the witnesses, the learned counsel prayed under Rule 66(1) of High Court Commercial Division Procedure Rules of 2012 as amended in 2019 to file their closing submissions, the same was granted. I will along with testimohies of their witnesses, take into account such closing submissions of the counsel for the parties as I address issues raised in this case. The first issue was couched thus, whether there was an oral agreement between the Plaintiffs and the Defendant for the supply of two sisal fibre containers. the learned counsel for plalntiff submitted that the Plaintiffs entered into oral agreement as per exhibit P1 and P2. On the other hand, the learned counsel for Defendant has strongly submitted that there was nd oral agreement between Plaintiffs and the Defendant on three-fold, one WhatsApp messages between plaintiff Khorshid Mulia and plaintiff does 'not constitute agreement. Two, it was not sanctioned by special resolutiop of the company. And three, that Khorshed Mulla had no mandate to transact any business on behalf of defendant company as he was neither shareholder nor director and was not empowered by any instrumerit tb hct on behalf of the company. It is trite iaw in our jurisdiction that a Contract may be oral bf?Written. The Plairitiffe havS termed oral agreement the exchange of short text messages on

WhatsApp aftd physioal meetings the parties had.-The next questibn I asked myselfis cari a 'cbritract be concluded electronically that is via' WhatsApp messages? It is uncontroversial that in Tarizania contracts may concluded via electronic rneans. Sections 21(1) and (2)cf Electronic Transactions Act, 2015 herein referred as ETA provides that a contract may be formed electronically and that a contract shall not be denied its validity or enforceability because it was formed electronically. If that is the position of the law and so long it is undisputed that the exchanges of promises to deliver the sisal fibre containers were communicated via WhatsApp messages, it is my considered view that the WhatsApp messages are confirmation of existence of a valid contract as per the ETA. And that contract cannot be denied its validity simply because it was concluded eleCtronically. See also the USA case of Moore v Microsoft 293 A. D,2d 587(N. Y App. Div 2002.). In addition, the parties conduct and testimony of PW2 substantiate that there was an oral agreement. Moreso, the l51 Plaintiff has tendered the WhatsApp messages as exhibit P2 and Exhibit Pl, a debt acknowledgement (promise to deliver the two containers onl5/12/2021 and 15/01/2022) and payment plan signed ori 15/10/2021 by Abdulfahim Mulla (one of the directors of the Defendant) to prove that there was 'a contractual relationship

between the parties.' In the case of HoteS Travertjne Limited and Two others V. National Bank of commerce Limited [ 2006] Nc 133 TLR the court of appeal quoted the following passage in the case Brodgen V Metropolitan Railway .co (1989) 2App Case 666 (HL)that: " I have believed always the iaw to be this, that when an offer is made to another party, and in that offer, there is a request express or impiied that he must signify his acceptance by doing some particuiar thing, then, as soon as he does the thing is bound" . 4, . I find this statement relevant in this case, on the following reasons, exhibit P2 shows how the parties communicated through WhatsApp messages. Worse enough the Defendant does not dispute both in pleadings and evidence that there was communication through WhatsApp messages. Surprisingly, PWl was not cross examined by the learned advocate for the Defendant on the point and as a matter of principle, a party who fails to cross examine a witness on certain matter is deemed to have accepted that matter and will be stopped from askirig the trial court to disbelieve what the witness said. Then, if that is the position, failure of learned cpunsel for plaintiff to cross examine PWl on that fact, should be taken to be an admission or acceptance that there was contractual relationship between the parties. This lega! positiori was stated by the Court of Appeal in the case

of SHADRACK BALINAGO v FIKIRI MOHAMED @ HAMZA & 2 OTHERS, CIVIL APPEAL NO. 223 OF 2017 (CAT) MWANZA (UNREPORTED) in which it was held that: - "/s rightiy observed by the iearned triai judge in her judgement, the appeiiant did not cross examine the Ist respohdent on the above piece of evidence. I4fe wouid, therefore, agree with the iearned judges' inferences that the appeiiant's faiiure to cross examine the Ist respondent amounted to acceptance of the truthfuihess of the appeiiant's account." It is on that account that, I agree with the plaintiff that, there was oral agreement between the parties. s Turning to the second fold, the learned counsel for Defendant has submitted that the purported agreement was not sanctioned by the board resolution. On the other hand the learned counsel for Plaintiffs has submitted the excuse that there was no power of attorney or board resolution is an afterthought in the ambit to disown exhibit Pl.The issue for determination at this juncture is whether a decision or all activities and contract entered by a company reqUires board resolution and or power of attorney? From the outset, a general rule is that a company operates or function through the Board of Directors which directs the mind of the company. See the cases of Salomon v Saiomon & Cc. Ltd. (1897) A.C.22,and Mike W. Kitwaka (as Lawfid Attorney of Floyd Vernon Hammer)v Parseko Vincent Kone

and Two others, Civil Case No. 6 of 2019, HCT, Tanga District Registry, (unreported), as well as Section 39 of the Companies Act [Cap 212 R.E. 2002]. However, there are exceptions to the rule that operation of the company is' through board resolutions. lam saying so because there are instances where the directors may ■cohclude contracts on behalf of or for the benefit of the company. Tt is eguallytrue that the issue of board resolution is internal affairs of the compa'ny an outsider may ndi knpw if the resolution has been procured as held in the case of BETAM Comrnunscaticns Tanzania Limitedv China International TelecommunicationLimited and Others, CivSI Case No.220 of 2012 HCT at Dar salaam (unreported).That is what happened in the present case. Despite DWl's denial that the company did riot conclude the contract with the Plaintiffs ahd his brother (Abdulrahim Mulla) 'enferetF into the contract in his personal capacity. Surprisingly, the DWl did not tell the Gourt whether there was any conflictamon^thrS directors of .the Defendant. Nor did he deny that the. Defendant did not receivelhe 6 payment for the containers of sisal fibre. Therefore, in absence of proof that the directors acted ultra vires and cohtrary to Defendant company's interest the contract concluded remains valid and enforceable against the Defendant. In the circumstance of this case, the power of attorney and

board resolution are internal affairs of the company that rarely bind third parties. They cannot be used to insulate the Defendant company or deny the contract concluded by the directors for benefit or on behalf of the company. Truly, each case has to be decided based on its own set of facts. It is also intriguing that the DWl while decried the absence of board resolution and power of attorney. By the same token he did not tell the Court why the WSD filed was not sanctioned by the board resolution or power of attorney. More alarming is the fact that the Defendant failed to bring a key witheSs one Abdulrahim Mulla (the director of the Defendant company) on a lame excuse that he was upcountry for business. Since defendant has failed to call one -Mr. Abcfulrahim Mufla who was a key witness who signed debt acknowledgement (Exhibit Pl) this court draws an adverse inference On the side that ought to bring the said witness that whatever the witness Would have testified could have darriaged a calling party's case. This instance was taken in the case bf Montix Knight Wear limited vS. Goppitex, Civil Case Nc 834 /2004 [2009] EKLR. See also Wambura Marwa Wamburav R., Criminal AppealNo. 115 of 2019 CAT at Mwanza. Coming to the third fold, in which the learned counse! for defendant submitted thar, Khorshed Mulla had no mandate to transact any business on behalf of defendant company as he

was neither shareholder nor director and he was not empowered by an instrument to act on behalf of the company. I must state from the outset that one may be ternpted to conclude that there was no valid agreement because accordirig to 7 DWl, Khorshid A. Mulla (deceased) who negotiated and concluded the contract with the Plaintiffs was neither a shareholder nor director of the Defendant company. Moreover, the Defendant's counsel submitted that the Plaintiffs made payment to Nyanza General Supply (Defendant's sister company) and not to the Defendant. Further, in the exchange of WhatsApp message neither Khorshid A. Mulla nor Abdulrahim A. Mulla mentioned UNICORD (the Defendant) in the messages (exhibit P2a). The issue to be resolved is whether Khorshid A. Mulla was the director bf the Defendant company. If he was neither the director nor the shareholder, why then his brother Abdulrahim A. Mulla (one of the directors of the Defendant) signed the debt acknowledgement and payment plan (exhibit Pl). He categorically stated in that document that the Defendant Company takes full responsibility for repayment. The Defendant's counsel claimed that the said document lacked company seal as requirbd by SectiOh 39(1) and (2) of the Compahies Act. But looking at exhibit P1 (debt ackriowledgement) the Defendant company's stamp is visible. Another critic the Defendant's counsel voiced is the

failure to mention the Defendant company's name in the WhatsApp messages (exhibit P2) exchanged by lst Plaintiff and Khorshid A. Muila and Abdulrahim A. Mulla. In my view, that does not ihvalidate the contract. What matters is the content of the messages. Omission to mention UNICORD in the texts is not fatal as the subiect matter of the sale agreement was sisal fibre which is known to the parties. The Defendant yet attacked the claim by asking to whom did th.e Plaiirtiffs effect payment? Was the payment for the delivery of two sisal fibre containers dphe to UNICORD or Nyanza General Supply? According to submission of the Defendaht's 8 1 counsel and allegedly exhibit P1 paragraph 2 stating that payment will be through sister company called Nyanza General Supply. The allegation that the payment for the sisal containers were made to Nyanza General Supply (Defendant's sister company) account is worthy to be examined. Mr. Ogunde, the Defendant' learned counsel submitted that PWl during cross examination testified that the payment for sisal container was made to the Defendant's sister company, Nyanza General Supply. My scrutiny of the Court record of proceedings especially testimony of PWl (Anwai’ Mohamed) does attest that the Defendant acknowledged receivirig payment of USD 44,000/= from him (PWl), And PWl added in his testimony during cross examinatidn that the Defendant transacted

through Nyanza Generai Supply thdugh he admitted having not brought any evidence to show that they are sister companies. From PWi' testimony it is unclear whether it was Nyanza General Supply that exported the'sisal container to Casablanca, Morocco. Again, if Nyanza General Supply did transpdrt the sisal container, I am of the considered view that it is hot illegal fbr athird party th transport goods of ddntracting parties. It edually not forbidden fbr a cbmpanytd-tiSe another company (sister company) to receive payment. BUt since the withesses did testify that, the Defendant company officials acknowleclged receivirig the payment the issue that the money was riot received ih the Deferidant's accbunt withers. I thuS find the Defendant's cbunsel submission to be without merit. After ai! the Deferidarit's witriess (DWl) said nbthirig ori the Issue df Nyanza Gentfer'Sii'ppf^ibei^^^raiigef. Consequehtly, the Defehdant canribt deny the existence of the agreement and ensued liability. In my settled view, there was a'valid oral agreement between the parties. ; Havihg decide tliat there was oral agreement betweeh the partles the question that follows is whether the Defendant breached the said agreement?PWl testified that. 9 there was an agreement between the parties, and that the Defendant beached it by failing to deliver the sisal fibre cbntainers as agreed. The DWl on his side

cbntended that the contract was concluded by Abdulrahim Mulla in his persorial capacity. From this it is follows that in his view the Defendant did hbt breach any contract. However, having found in the first issue that there was a valid contract between the parties, and since exhibits P1 and P2(a) are crystal a conclusiori that can be drawn is that the? Defendant'S failure tb deliver the sisal fibre containers amount to a breach of contract. It is settled legal position that breach of contract occurs when pne party in a binding agreement fails to perform its obligations and conditions according to the terms and conditions of the contract. The provision of section 37 the Law of Contract Act [Cap 345 R.E. 2019] underscores the point. For easy reference I produce it hereunder: s Section 37(1) "the parties to a contract must perform their respective promises, uniess sucti performatice is dispensed wiih or excused under ttie provision of this Act or of any otheriaws." Guided by the above legal stance, the next question I asked myself is, was there any such failure on the part of the Defendant? Having gone through the pleadirigs, the respective testimonies of the parties and final closing submissions and traversed the exhibits tendered, I am satisfied that in the circumstahces of this suit, Defendant breached the contract because the said containers were not delivered

despite promises made as seen in exhibit P2. Moreover, exhibit P1 is loud that the debt was acknowledged, arid payment plan was set. Thus, the 2rid isstie is‘ affirmatiyely answered; The afgument by the Defendant that triere was iioi prair agreemerit 10 concluded by herself and the second Plaintiff, Along that there was no breach of contract committed by the Defehdant it is a statements from barthere is not piece of evidence showing that Khorshid A. Mulla was indeed not a shareholder or directbr of the Defendant, and consequently, he cannot enter into any contract on behalf of the company. The Defendant did not tender any ddcumeht from Business Registration and Licensing Agency (BRELA), registrar of companies such as BRELA search report or extract from cOmpanies register showing the status of the Defendant, UNICORD (T) Limited that could have supported the allegations that the Khorshid A. Mullawas ndt .a shareholder or Director of the defendant. In absence of such evidence, there is nd way it can conclusively be determiried that, Khorshid A. Mullawas riot a director of the Defendant. It is trite law that, the court cannot make a finding basing on the document which was neither tendered nor admitted before it as exhibit.Wbrse still, the Defendarit Corripany MEMART were not brbught before the Court. Therefore, the allegation that Khorshid A. Mulla was neither the shareholder hbr

the director of the Defendant was not substantiated. In absence of any evidence to support it, it remains incredible. This legal position was stated by the Court of Appeal in the case of SHEMSAAND TWO OTHERS v SELEMAN HAMED ABDALLAH, CIVIL APPEAL NO 82 OF 2012(UNEPPORTED). In the circumstance, it cannot justifiably be said that Khorshid A. MullawaS not a director basing solely on DWi testimony that he was not a sharehoider or directof of the Defendant which was unsubstantiated and hence incredible and unbeiievable. The Defendant tendered nothing from BRELA. No company search report from BRELA was brought before the Court to show who were or currently are the difectors of the 11 Defendant, According to Section 110 of the Evidence Act [Cap 6 R.E. 2019] he who alleges must prove. The argument that the payment for sisal fibre container was paid to Nyanza General Supply (so called Defendant's sister company) does not imply that the Defendant did not receive the payment. PWl testimony that the Defendant's officials acknbwledged receiving the payment from the Plaintiffs was never discredited by the Defendaht. Mindful of the fact that the Defendant is a private company (family business, the shareholders and directors were brothers), and to complicate the matter, the debt acknowledgement and payment plan was signed by Abdulrahim Mulla (one of the directors of the Defendant). The

Defendant did not call him as her witness in this case. (i) To what reliefs are the parties entitled to. Having answered the first two issues on the affirmative, what follows is to dptermine as to What reliefs are the parties entitled to. The Plaintiffs have proved his claims on a balance of probability as required by Section 3(2)(b) of the Evidence Act [Cap 6 R.E. 2019]. The reiiefs they sought are: (1) Declaration that the Defendant has breached the contract Indeed, there was a breach of contract. Thus, the same has been so declared by the Court when answering the second issue hereinabove. (2) An order for specific performance of the contract or in alternative paymeht of USD88,920 being the actual amount received by the Defendant in consideration of the two sisal fibre containers. Regarding, a sought ordef for specific perfofmance of the contract whicn implies deliyefy ofthetwo 12 sisal fibre containers, that requires the Court to consider the circumstances under which such order may be given. A few examples will be mentioned and elaborated before deciding. (i) ,Where the goods or services to be purchased are only supplied by the Defendant. In other words, the Defendant is the only supplier and there is no room for getting them from other suppliers. And the contract was thus concluded because of that. In Hotel Travertine Limited M/S Gailey & Roberts [2009] T.L.R.158 the

Appellant's prayer for an order of specific performance was declined because the good to be supplied are ordinary articles of commerce which the buyer could obtain from elsewhere. In my view, sisal fibre are ordinary. goods that cah’be obtained from other suppliers. (ii), Where there is a contracf for service, and the Defendant is the only expert to render the services. As such the contract was concluded by the said expert (Defendant) because of his expertise. No other person can provide the service. The situatidns'exemplified here in above do not apply in the case a't hand. In addition, the Defendant failed to deliver the sisal fibre containers fof a considerable period.• To order the Defendant deliver the Sisal fibre containers is to continue posihg hardshlp. It will thus be unfair and unwarranted. Lthus grant the alternative relief sought that is repayment of USD 88,920 being the actual amount the Defendant received in CGnsideration of the two sisal fibre containers that were undelivered to the Plaintiff. The Defendant shall thus pay the 2nd Plaintiff USD 88,920. (3) Thirdly the Plaihtiffs prayed for an order of payment of<USD 50,000 being expected profit had the Defendant suoolied the said sisa! fibre: cohtalnars. I 13 am aware of the Common Law rule that is cherished in our jurisdiction that where a party sustains loss by reason of breach of contract he is so far as money

can do it be placed in the same situation with respect to damages as if the contract had been performed. That was held in Epimark Makoi and Prime Aloyce v Malawi Cargo Centres Limited [2010] TLR 146. Admittedly, I have considered the evidence given and I have not found ariy piece of evidence that substantiates the claim of USD 50,000 as anticipated profit. The Plaintiffs failed to provide evidence to show that the said amount is the profit that they foresaw. It is‘not enough to merely claim certain amount as anticipated profit without substantiating it. (4) General damages to be assessed by the Court. The Plaintiffs have also claimed general damages. Unlike specific damages that recjuires strjct prccf, general damages do not require the same. The latter is granted at the Court's -discretion. In IBM Tanzania Limited v Sunher3lex ConsiJting Cd. Ltd, Commercial Case\Np. 09 Pf 2020 the Court held that damages may be specific or general in nature. In that case like the present case the Plaintiff prayed to be paid general damages which need not to be specifically pleaded and proved. That is in accord with the case of Zuberi Augustino Mugabe v Anicet Mugabe [1992] T;L.R.

137. In my view the Plaintiffs deserve the general damages claimed because as it washeld in Hotel Travertine Limited v M/S Gailey & Roberts [2009] T.Lj^. 158 at page that theguiding principie in aSsessingdamages isto award the Piaintiffan amount ofmoney that wiii, as neariyas rnoney can, put him 14 in the same position as if he had not been injured by the wrongfui act of the Defendant. Having so observed from the authorities, and since the Plaintiffs have successfully proved their claim in this case, the general damages sought are granted. I proceed to grant that USD 50,000 that undoubtedly recompensate them for the loss they sustained due to the Defendant's breach of the contract. (5) Interest at Court's rate from date of judgment to date of payment in full. The order sought is granted, that the Defendant shall pay the 2nd Plaintiff interest at 7% court rate from the date of judgment to the date of payment in full. (6) The Plaintiffs shall also have their costs. It is so ordered. Coram: Hon. U. 1 Agatho 1 For Plaintiffs: Tesiel Kikoti, Advpcate holding brief of Abubakar Salim, Advocate For Defendant: Silvester Korosso, AdvOcate. holding brief ofWillson Edward Ogunde, Advocate C/C!erk: Sania Court: Judgment delivered today this 24th February 2023 in the presence of Tesiel KikOti, Advocate holding brief of Abubakar Salim counsel for the Plaintiffs, 1.5 and Silvester Korosso, Advocate holding brief of Willson Edward Ogunde, learned counsel for the Defendant. 16