CIVIL CASE NO

IN THE UNITED REPUBLIC OF TANZANIA

IN THE HIGH COURT OF TANZANIA

ARUSHA DISTRICT REGISTRY

AT ARUSHA CIVIL CASE NO. 16 OF 2022 AQUATECH LIMITED...................................... ..................FT PLAINTIFF ALBERT JACOB VAN AARST............................. ...2nd PLAINTIFF

VERSUS MOIVARO INVESTMENT & TRADING CO. LTD.............. 1st DEFENDANT PAES WEGS INTERNATIONAL BV_ _ _ _____ .2nd DEFENDANT BREES AAP B.V. ....... ...3rd DEFENDANT GIJSBERT DE RAADT........ .......... ..........4™ DEFENDANT KIA LODGE LIMITED................... 5th DEFENDANT

JUDGEMENT 05th June and 9th Aug, 2024 EBRAHIM, J; The named above plaintiffs are claiming from the lsi, 2nd,3rd, 41h, and 5 th defendants jointly and severally for the payment of the sum of Page 1 of 21 United States Dollars One Hundred and Eighty Thousand (USD 180,000) as consideration for the purchase of shares in a share transfer (swap) agreement. In line with that, the plaintiffs are also claiming for the payment of United States Dollars Nine Hundred Four Thousand and One Hundred and Two (USD 904,102) as specific damages incurred for breach of such agreement (i.e. Exhibits PE2 A and B). Summarily, the facts of the case as gathered from the plaint are that; The Tsi plaintiff was a founding member of the 1st defendant with 131 shares while the 2nd plaintiff was a director. On the other hand, the 2nd, 3rd, and 4th defendants are also the shareholders cum directors of the 1st and 5th defendants. In the year 2003, the plaintiffs entered into a sale and share transfer (swap) agreement (Exhibits PE2 A and B) with the 2nd and 3rd defendants where it was agreed inter alia that the plaintiff would sell its 1.67% shares held at the 1st defendant (Moivaro Investment & Trading Company Limited) to the 2nd and 3rd defendants (0.835% each) for consideration of United States Dollars Twenty Thousand and Forty (USD 20,040.00). Page 2 of 21 They further agreed that the 2nd and 3rd defendants

would sell their 15% of shares held at the 5th defendant (Kia Lodge Limited) to the plaintiffs for consideration of United States Dollars One Hundred and Eighty Thousand (USD 180,000). It was a fundamental term of their agreement that the plaintiffs should transfer the amount of United States Dollars One Hundred and Fifty-Nine Thousand Nine Hundred and Sixty (USD 159,960) to the 2nd and 3rd Defendants; and the 4th defendant shall undertake to register the relevant depository receipts for share transfer and instruct the 5th defendant to make amendments within the share register including appointing the 2nd plaintiff as a director. The plaintiffs averred in their plaint that in May 2003, they respectfully fulfilled their contractual obligations and transferred a sum of United States Dollars One Hundred and Fifty-Nine Thousand Nine Hundred and Sixty (USD 159,960} as agreed. It followed therefore that from 2003 to 2016, the plaintiffs believed that they were members of the 5th defendant holding 15% shares cum directorship as they have been supplied with various audited financial Page 3 of 21 statements reflecting their 15% shareholding and directorship. They claim however that; they were not involved in day-to-day management of the 5th defendant. The Plaintiffs also claim that after some time, the plaintiffs' shareholding and directorship in the 1st defendant was

illegally delegitimized as they are currently no longer the director and shareholder of the 1st defendant. In the same line, in year 2018, the plaintiffs also noted that the 5th defendant had omitted their names from the register of members. The aforesaid act prompted the 1st plaintiff to file a petition to the High Court of Tanzania at Moshi vide Miscellaneous Civil Case no.1 of 2019 praying for an order directing the 5th defendant to rectify its register of merhbers by entering the P* plaintiff's name as a shareholder holding 15% shares. The High Court dismissed the petition for the reasons that the petitioner had failed to establish that he was a member of the 5th defendant. Thus, the plaintiffs filed the instant suit against all defendants claiming for the following reliefs; Page 4 of 21 a. The payment of United States Dollars One Hundred and Eighty Thousand [USD 180,000] as consideration for the purchase of shares in a share transfer (swap) agreement. b. The payment of United States Dollars Nine Hundred Four Thousand and One Hundred and Two (USD 904,102) as specific damages incurred for breach of the share transfer (swap) agreement. c. the payment of interest at the rate of 23% per annum from the date of filing this suit to the date of judgment. d. The payment of interests on the decretal amount at the rate of 7% from the date of judgment until full and final payment. e.

Costs of the suit f. General damages and any other reliefs which this court may deem fit to grant in favour of the plaintiffs. The defendants filed their defenses debunking all the claims by the plaintiffs inviting this court to dismiss the suit with costs. Page 5 of 21 At the hearing, Mr. GJamara Valeria and Ms. Ikoda Kazi, learned advocates represented the plaintiffs; whereas the defendants had the services of the learned advocate Richard Massawe. In proving their case against the defendants, the plaintiffs tendered eleven exhibits to wit; BRELA search report of Moivaro Investment & Trading Company Limited dated 27th September 2019 (PEI), share swap agreement dated 16th May 2003 both in English and Dutch language (PE2 A & B), annual report and financial statements for the years 2009, 2010 and 2011 for KIA Lodge Limited (PE3 A, B, & C), the ruling of the High Court (PE4), the calculations for KIA LODGE loan liability (PE5), a company body resolution for Moivaro Investment & Trading Company Limited to sue (PE6), Memart of Moivaro investment & Trading Company Limited (PE7), the annual return of Moivaro Investment & Trading Company Limited for the year 2003, 2004, 2005 and 2007 (FEB A, B, C, and D), BRELA search reports of Moivaro Investment & Trading Company Limited and KIA Lodge Limited (PE9), transfer of share form dated 30th February 2008 (PE10), and Ordinary Resolution in

the name of Aquatech dated 30th Dec 2007 (PE11). Page 6 of 21 They also had only one witness avowed as PW1 - Mr. Albert Jacob Van Aarst. His testimony was preceded by filing his witness statement. The same was admitted at the hearing as his examination-in-chief in terms Of Order XVIII Rule 3 (1) of GN No 761 of 2021 (amendment of the Civil Procedure Code) Rules. Since the witness statement forms part of the records of the proceedings, I would not reproduce what PW1 testified in his witness statement because the testimony of PW1 has already been narrated: in the brief facts of this case above save for his assertion that Exhibits PE 10 and PEI were forged by the 1st Defendant resulting into the removal of the plaintiffs' shareholding and directorship at the 1st defendant company. In their defence, Ms. Aquiline Gaspar Mwaria (DW1) a human resources manager and company secretary for the defendants testified through her witness statements for the 1st, 2nd, 3rd, and 5th defendants in terms of Order XVIII Rule 3 (1) of GN No 761 of 2021 (amendment of the Civil Procedure Code) Rules. Page 7 of 21 The 4th defendant did not enter appearance. Advocate Massawe, in passing informed the court that the 41h defendant believed that the Plaintiffs had no cause of action against him. I would not base my proceedings on the contention by advocate Massawe since he was not his legal counsel;: I shall

however proceed with the case exparte on the basis that he knew about the case. Testifying, DW1 denied the claim stating that they had never entered into contract with the plaintiffs concerning the share transfer (swap) agreement (Exhibit PE2 A & B) and that neither the names nor signatures of the defendants appear in the said agreement. DW1 was of the views that in the said exhibit PE2 A & B there was a party namely PW1 and Breesaap who intended to sell 15% of their shares held in KIA Lodge and not the defendants. DW1 responded further that there was no proof in whatsoever manner to suggest that the purported agreement was ever implemented by actual deposit or payment of money and execution of transfer of documents. Page 8 of 21 According to DW1, the amount of USD 159,960,000/= purported to have been paid by the plaintiffs to the 2”d and 3rd defendants was hypothetical because the plaintiffs do not state the exact date that they paid the claimed monies and the details of the bank on which the money was deposited. It is DW1 concern as to how would it be possible for the 1st and 5th defendants be involved in repayment of money received by another party? In summary, the above was the evidence from both parties. Both sides prayed to file their final written submissions, and the court granted the prayer. I shall refer to submissions in the course of traversing issues in

this judgment. As records would reveal on 30th April 2024, the framed issues for determination were as follows: ]. Whether there was performance of a contract; 2. Whether there was a breach of the contract; 3. Whether there were damages; 4. What reliefs (if any) parties are entitled to. Page 9 of 21 After thoroughly going through the evidence presented in court, it is clear that the defendants are denying to have entered into a share swap agreement with the plaintiffs. In that case, I find it apt to first address the question as to whether there was an agreement between the parties, before determining the first issue on the performance of the contract. In his final submission, Counsel for the plaintiffs cited the provisions of section 2(1 )(a) and (b) of the Law of Contract Act, Cap 345 RE 2019 to show that there was proposal and acceptance to indicate that an enforceable agreement was entered between the Plaintiffs and the Defendants. Verily, a share swap agreement both in English and Dutch (Exhibit PE2 A and B) was tendered by PW1 before this court as evidence and at all times the defendant's counsel did not register to the court that they know nothing about it. This means, impliedly the defendants agreed on the existence of such agreement between the parties at some point in time. Page 10 of 21 The subsequent question now is on the performed of such agreement the response of

which shall be gained in the course of discussing the first issue. In so doing, I would like to point out the cardinal principle on the burden of proof in civil litigation as discussed by the Court of Appeal in Paulina Samson Ndawavya vs. Theresia Thomas! Madaha (Civil Appeal No. 45 of 2017) [2019] TZCA 453, The Court held inter-alia that: "It is trite law and indeed elementary that he who alleges has a burden of proof as per section 110 of the Evidence Act Cap. 6 [R.E 2002]. it is equally elementary that since the dispute was in civil case, the standard of proof was on a balance of probabilities which simply means that the Court will sustain such evidence which is more credible than the other on a particular fact to be proved....... ..It is again trite that the burden of proof never shifts to the adverse party until the party on whom onus lies discharges his and that the burden of proof is not diluted on account of the weakness of the opposite party’s case." [emphasis added] Page 11 of 21 Deriving from the above position therefore, if goes that the primary duty of proof lies firstly with the Plaintiff before the Defendants are called to disapprove the alleged facts unless otherwise. Abreast of the above stated position of the law, I shall proceed to determine the first issue on whether the said contract was performed. In so doing, I shall direct the mind of the court to the

position of the law that a party who agrees to the contract is bound to perform his respective duties - Section 37(1) of the law of Contract Act Cap 345 R.E. 2019 reads as follows: - “37. f/J The parties to a contract must perform their respective proinises, unless such performance is dispensed with or excused under the provisions of this Act or of any other law.” Therefore, each party in this suit was obliged to discharge its duty as per the terms and conditions stipulated in their agreement. Going by the averments in paragraph 9 and 10 of the plaint and paragraph 4 of the PW1 ’s witness statement; in the year 2003 the l5t plaintiff entered into a sale and share transfer (swap) agreement with the 2nd and 3rd defendants. They agreed that the 1sl plaintiff would sell Page 12 of 21 its 1.67% shares out of 131 shares held in the 1st defendant (Moivaro Investment & Trading Company Limited) to the 2nd and 3^d defendants. To prove that assertion PW1 produced a share swap agreement dated 16th May 2003 (PE2). Nevertheless, upon perusal of the exhibits tendered by PW1 particularly Exhibit PE8 A, B, C, and D which were the annual return for Moivaro Investment & Trading Company Limited for years 2003, 2004, 2005 and 2007; I observed that from 2003 the year which the 1st plaintiff claimed to have sold her shares up to 2007; all returns displayed the name of the 1st plaintiff as a

shareholder of the 1st defendant with the same number of shares i.e., 131 shares. Astonishingly, even BRELA search report (PEI) that accumulated an annual return filed up to 2016 named the 1st plaintiff as a shareholder of the 1st defendant with the same 131 shares. What astounds this court however is how would it be possible for the Is* plaintiff to own the same 131 shares up to 2016 while she had already disposed of 1.67% of the said 131 shares it to the 2nd and 3rd defendants in 2003? Page 13 of 21 It is my position that in the absence of evidence that exposes how the 131 shares remained still for almost 14 years while the plaintiff testified to have sold 1.67% of it to the 2nd and 3rd defendants, it would not make sense in so for as the performance of exhibit P'E2 A&B is concerned. The basis for my observation is that the shares that are said to have already been transferred in the past 14 years cannot remain the same to the transferor who had already passed them to another shareholder with neither further explanation nor evidence of how he re-claimed and gained them back. The law is very settled and clear that from negative is always impossible to prove. I would have expected the plaintiffs to adduce strong evidence before this court on how they sold 1.67% of shares to buy 15% shares from the 2nd and 3rd defendants’ company (KIA Lodge Limited). The mere mention of the bank

account of the 2nd and 3rd defendants cannot suffice to prove that the transaction was conclusively made. All these questions point to the fact that there was no finalization of the transaction (final performance) between the parties on this share swap agreement. Page 14 of 21 I take judicial notice that, in law, i.e., Section 82 of the Companies Act CAP 212 RE 2002 read together with Section 77 of the same Act the transfer of shares is a documented transaction followed by the transfer of share certificates, The law reads as follows: “82.-(I) Every company shall, within sixty days after the allotment of any of its shares, debentures or debenture stock and within two months after the date on which a transfer of any such shares, debentures or debenture stock is lodged with the company, complete and have ready for delivery the certificates of all shares, the debentures and the certificates of all debenture stock allotted or transferred, unless the conditions of issue of the shares, debentures or debenture stock otherwise provide. The expression "transfer" for the purpose of this subsection means a transfer duly stamped and otherwise valid, and does not include such a transfer as the company is for any reason entitled to refuse to register and does not register” [Emphasis added]. In the present case, there is no evidence from the Plaintiffs if at all the 1 st Plaintiff had ever

issued any share certificates. In the absence of such evidence, 1 cannot conclude with certainty as PW1 claimed in court that they have transferred and or sold 1.67% of their shares to Page 15 of 21 the 2nd and 3rd defendants. As per what remains would be a mere presumption that this court would not act upon even on the balance of probability because the transaction is governed by law and there is no any scintilla of the implied transaction to suggest otherwise. I am acquainted with the facts that annual report and financial statements for the years 2009, 2010, and 2011 of KIA Lodge Limited (Exhibit PE3 A, B, & C) that the 2nd plaintiff appeared as a director of the 5^ defendant (KIA Lodge limited) with 15% shares. However, the same cannot be absolute proof that he acquired the same via the performance of exhibit PE2 A&B. I am saying so because there is no evidence brought in court to prove how the plaintiffs bought the shares held by the 5th defendant. Moreover, there is no proof before this court to show that the 1st and 2nd plaintiffs had purchased shares from the 2nd and 3rd defendants apart from mere assertion of PW1 on a transaction which would definitely have documentary proof. E.g., a bank statement. However, it is evident from exhibit PEI 1 that in the year 2008, the Is* plaintiff transferred all of its 131 shares held in the 1st defendant to the Page 16 of 21 2nd

defendant with the consideration of Tanzanian Shillings One hundred thirty-one million [TZS. 131,000,000/=]. The same notwithstanding, PW1 averred at paragraph 15 of his witness statement that the said exhibit PEH above was forged by the defendants. It is my stance that since the law of evidence demands that he who alleges .must prove, it was incumbent upon PW1 to prove the forgery of which he miserably failed. Moreover, the issue of forgery emerged at the witness statement and was never averred in the pleadings. As rightly submitted by the learned counsel for the defendants in his final submission, parties to the suit should always adhere to what is contained in their pleadings unless an amendment is permitted by the court. The rationale behind this proposition Is to bring parties to an issue and not to take the other party by surprise. The Court of Appeal of Tanzania in NBC Limited & Another vs Bruno Vitus Swalo (Civil Appeal 331 of 2019) 120211 TZCA 122 quoted with approval the article by Sir Jack 1. H. Jacob Titled "The Present Page 17 of 21 Importance of Pleadings” published in Current Legal problems [i960) at page 174 that: - "As the parties are adversaries, it is left to each one of them to formulate his case in his own way, subject to the basic rules of pleadings... For the sake of certainty and finality, each party is bound by his own pleadings and cannot be allowed

to raise a different or fresh case without due amendment properly made. Each party thus knows the case he has to meet and cannot be taken by surprise at the trial. The court itself is as bound by the pleadings of the parties as they are themselves. It is not part of the duty of the court to enter upon any inquiry into the case before it other than to adjudicate upon the specific matters in dispute which the parties themselves have raised by the pleadings, indeed, the court would be acting contrary to its own character and nature if it were to pronounce any claim or defence not made by the parties. To do so would be to enter upon the realm of speculation." Since no amendment of pleadings was sought and granted, the defence of forgery is not accorded any weight. Page 18 of 21 Even if it is to be assumed just for the sake of argument PW] did not accord any proof on the said allegation of forgery that the said exhibit PEI 1 was forged by the defendants. Therefore, I am of the position that the agreement presented before the court might have been drafted to serve other purposes that are quite different from the facts adduced in the instant case. More so, in responding to the cross examination questions, PW1 admitted that they were having informal zoom meetings with the Defendants without recording them anywhere. As alluded earlier, the transfer of shares is a formal transaction the

procedure of which is governed by law. in other words, since they did not have official agreement, evidently there was no transfer. Thus, what transpired between them has not been exhibited before the court:. All said, the plaintiffs have failed to establish in this court that they sold the shares to the 2nd and 3rd defendants. Therefore, is so far as the 1st issue is concerned, it is my finding that there was no performance of the contract. Page 19 of 21 Having concluded on the first issue, I how turn to the second issue as to whether there was a breach of the contract. Again, this issue need not detain me much. As it can be discerned from the discussion above while determining the first issue; this court made a finding that there was no performance of the contract. Thus, the issue of whether there was a breach of the agreement automatically becomes unmerited. This finding clearly resolves the third issue as to whether there were damages; and the response is, there were none. The final issue is on the relief(s) parties are entitled to. Essentially, the party who succeeds in proving the case to the required standard is the one who carries the day and be entitled to relief. In this case, the balance of probabilities lies in favour of the Defendants against the Plaintiffs. In other words, the Plaintiffs have failed to discharge their burden of proving their case to the required standards set by the law as held in Paulina Samson Ndawavya (supra). Page 20 of 21 In the upshot, this case is hereby dismissed and the 1st, 2nd, 3rd and 5th defendants shall have their costs. Accordingly ordered. R.A Ebrahim

JUDGE Arusha 09.08.2024 Page 21 of 21