Ruling on PO Atlas Plumbers

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA DAR ES SALAAM SUB-REGISTRY AT DAR ES SALAAM CIVIL CASE NO. 13662 OF 2024 CASE REFERENCE 202406101000013662 ATLAS PLUMBERS & BUILDERS LTD ....................................……. PLAINTIFF VERSUS M.A. KHARAFI & SONS LTD………………........................…..........DEFENDANT RULING: 20th Sept. & 24th Oct. 2024 KIREKIANO, J: The plaintiff instituted a civil case against the defendant, claiming, among other things, payment of USD 456,608.97, the outstanding principal amount, and accrued interest as of 31 July 2023. He also claims interest, pipe profits, and compensation for cancelling the contractual relationship. Upon being served with the plaint, the defendant raised two points of preliminary objection on the points of law that: - 1. That this Honourable Court does not have the pecuniary jurisdiction to entertain the present matter and 2. That the present suit is not maintainable and bad at law for being based on foreign currency and contrary to the 1|Page provision of Section 26 of the Bank of Tanzania Act, Cap 197 R.E 2019. The preliminary objection was heard orally. Mr Roman Masumbuko, the Learned Advocate, appeared for the defendant, while Mr Juvenalis Motete, the Learned Advocate, appeared for the plaintiff. In support of the first point of preliminary Objection, Mr. Masumbuko referred this Court to the case of Mwanachi Communications Ltd & Others vs Joshua K. Kajula & Others (Civil Appeal No. 126 of 2016) [2020] TZCA 1824 (22 October 2020) at page 21 to the effect that what determines the jurisdiction of the Court is the substantive claim, not general damages. He submitted that the reliefs are pleaded in paragraphs 3,12, and 13 of the plaint where both seek profit and compensation. He cited Section 40 (1) of the Magistrate Court Act as amended by Misc. Amendment Act No. 25 of 2002 (2022), and since there is no specific claim, the Court has no jurisdiction to entertain the matter. On the second point, Mr. Masumbuko submitted that the basis of the claim is a basic currency. He argued that the foreign currency is not a legal tender. He submitted that the same is brought under Section 26 of the BOT, which provides for the legal tender, which was amended by 2|Page Finance Act no. 6 of 2024, to the effect that Section 26(2) provides that a person who transacts in other currencies is illegal. Therefore, it renders the plaint before this Court to be defective. He concluded that the suit was not maintainable based on the cited law. In reply to the first point of the preliminary objection, Mr. Motete submitted that the complaint is based on the Contract and that there was a contract of USD 3,729,000/=. He argued further that the plaintiff had a contract with the Ministry of Water in USD and that the pipes were to be procured outside Tanzania and thus used in USD currency. He argued that the cancellation of the Contract led to other contracts forming part of the plaint in paragraph 9. He said that under paragraph 10 of the contract, the defendant committed to pay 343,811.17, where 193,811.17 USD was the value of the supplying pipes and compensation for cancellation of the contractual relationship. He then argued that the amount is in USD. He submitted that there is no claim on general damages; the same is just inferred. He referred to Article 108 of the Constitution on the general jurisdiction of the High Court. Mr. Motete referred to the case of National Bank of Commerce Ltd vs National Chicks Corporation Ltd & Others (Civil Appeal 129 3|Page of 2015) [2019] TZCA 345 (23 September 2019) at page 13. On the jurisdiction of the High Court and distinguished the Case of Mwananchi, it was found on defamation which is not the case here. On the second point of preliminary objection, Mr Motete submitted that Section 26 of the B.O.T Act, as amended in 2024, was not the point of his objection. He argued that Section 26 is based on issues of notes and coins; it did not outline foreign currency. He submitted that the complaint was misconceived. He also argued that the amendment became effective in July 2024 while this suit was already in Court. He further argued that the effect of the amendment of the said law was not retrospective as no regulation was cited, and the Section did not outline the previous transaction. He also argued that the same does not criminalise transactions outside Tanzania or take away to receive fees in foreign currency. He finally argued that the second point of preliminary objection lacks justification to be point of preliminary objection and prayed the same to be overruled. In a brief rejoinder, Mr. Masumbuko reiterated what he submitted in chief and went on to argue that there is no specific claim; what is seen is an order to pay profit and compensation, which is found under 4|Page paragraphs 6 and 10. He further reiterated his submission in Mwananchi and that the decision in NBC did not overrule the decision in Mwananchi. On the second point, he rejoins that this Court cannot allow transactions on illegal tender of foreign currencies. I have considered learned advocates' submissions regarding the points raised and examined the plaint and its annexures. It is common ground that before indulging in the trial and determination of this suit, like any other cause, this court must be satisfied that it has the jurisdiction to try the case. I agree with the defendant’s counsel's submission that the substantive claim, not general damages, determines the court's jurisdiction. This is a settled principle stated in the cases of Tanzania China Friendship Textile Co Ltd vs Our Lady of Usambara Sisters (2006) and Mwananchi Communication Ltd (supra). Looking at paragraphs 3,12, and 13 of the plaint, which is being referred to by the counsel for the defendant that the same does not show the specific claims. I wish to reproduce the same as follows: - 3. That the plaintiff’s claim against the defendant is for payment of United States Dollars Four Hundred Fifty-six Thousand Six Hundred and Eight Cents Ninety-seven (i.e. 5|Page US $ 456,608.97) being outstanding principal amount and accrued interest as of 31st July 2023 plus interest that continues to accrue thereon up to the date of full and final payment. The claim constitutes profits of pipes supplied by the plaintiff to the defendant as well as compensation for cancellation by the defendant of the contractual relationship between the parties. 12. That the two instalments were not paid on their respective due dates as agreed. Despite several reminders by the plaintiff, both by numerous phone calls and by letters, the defendant has deliberately and condescendingly failed or neglected to effect payment of the overdue amount of US$ 343,811.17 which has been outstanding for over 4 years now if counted from the date the last installment fell due. The last of such reminders is the plaintiff’s letter dated 3rd April 2023 and whose receipt was acknowledged by the defendant on 4th April 2023 which is attached hereto as Annex APBL-6 forming part of this plaint. 13. that as from 22nd August 2019 when the 1st installment fell due and 22nd October 2019 when the 2nd Installment fell due, the principal amount of US$ 343,811.17 has as of 31st July 2023 attracted interest of US$ 112,797.80 calculated at the commercial banks’ Dollar lending rate of 10% per annum, bringing the total amount now payable by the defendant to the plaintiff to US$ 456, 608.97(principal + interest). 6|Page Looking at the paragraphs above, there can be no candid opposing argument that the plaint is based on contract, and what is being prayed for is the result of that breach. Given the above, I concur with what was submitted by Mr Motete for the plaintiff, stating that the claims in the paragraphs cited do not show general damages. Therefore, this cannot be termed general damages. The cited case of Mwananchi Communications Ltd is distinguished here in that respect and the first point is overruled. With regards to the 2nd point of preliminary objection, on the use of foreign currency contrary to Section 26 of the Bank of Tanzania Act, as amended by the Finance Act, Act No. 6 of 2024, the same provides that: - Section 26(2) Save as otherwise prescribed by the Minister in the regulations, a person who transacts using any other currencies other than the legal tender issued by the Bank, commits an offence.” The section cited by Mr Masumbuko establishes offence, and proving offence needs proof of the necessary ingredient by facts. To make a finding that the plaintiff's case is in breach of statutory offense will undoubtedly need facts, departing from the standard on the preliminary objection, set in Mukisa Biscuit Manufacturing Company Limited Vs. 7|Page West End Distributors Limited, [1969] EA 696, Sir Charles Newbold P. had this to say at page 701: - “A preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of 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 the exercise of judicial discretion is.” In passing, looking at the amendment of Section 26 above, it came into force on 30 June 2024. I note that the act is a substantive law and not a procedural law. With this, I join hand with what was submitted by Mr Motete, that the amendment came after the case was already in court and, in fact, after the alleged disputed contract. Ultimately, the preliminary objections raised have no merits and are overruled. The costs will be determined in the cause A. J. KIREKIANO. JUDGE 8|Page 24.10.2024 COURT: Ruling was delivered in the presence of Mr. Juvenalis Motete for the plaintiff and Mr Fraterine Munale, for the defendant. A. J. KIREKIANO. JUDGE 24.10.2024 9|Page