BANK OF AFRICA T LTD VS MARTIN MATIKO COMM CASE NO

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT DAR-ES-SALAAM. COMMERCIAL CASE NO. 62 OF 2013 BANK OF AFRICA TANZANIA LIMITED......................... PLAINTIFF VERSUS MARTIN MATIKU T/a MART COMMERCIAL TRADING...................................................................................... 1stDEFENDAN DEODATUS CONSTANTINE MONJI.............................................. 2ndDEFENDANT AFRICAN PROPERTY LIMITED.....................................................3rdDEFENDAN JUDGMENT Mruma, J. The Plaintiff Bank of Africa (Tanzania) Limited instituted a suit against three defendants namely Martin Matiku T/a Mart Commercial Trading Company, Deodutus Constantine Monji and Africa Property Limited praying for judgment and decree against the defendants jointly and severally as follows:- (a) This court be pleased to order the 1st and 2nd defendants to pay the plaintiff Tshs. 167,225,410/= being the amount of outstanding on the overdraft facility granted by the plaintiff's bank in favour of the 1st defendant. (b) This honourable court be pleased to order the 1st and 2nd defendants to pay the plaintiff normal interest and default i interest on the outstanding amount at the rate of 33% per annum of the above amount as contained in the overdraft agreement computed and accruing daily from the date of this plaint to the date of judgment. (c) Interest on the decretal sum in respect of (a) and (b) above at the court's rate computed from the date of judgment to the date of payment in full; (d) Payment of general and punitive damages suffered by the plaintiff due to the 1st and 2nd Defendants refusal, and neglect to repay the facilities as may be assessed by the court. There were another six prayers which were made in the alternative to prayers stated above, however given the nature in the trial of proceedings, I find it rather an academic exercise to repeat them herein. During the trial parties filed a memorandum of five issues which are in dispute. The issues are:- 1. Whether or not the 1st defendant was in breach of the terms and conditions of the overdraft facility. 2. If the 1st issue is answered in the affirmative, whether or not the 1st and second defendants are bound to pay the outstanding sum. 3. Whether the 3rd defendant failed to exercise due diligence in so far as the second defendant's mortgaged properly is concerned. 2 4. If the 3rd issue is answered in the affirmative, whether failures of the 3rd defendant has made is impossible for the plaintiff to realize the security held by it against the second defendant. 5. To what reliefs are the parties entitled. In these proceedings the plaintiffs were represented by Mr. Muganyizi, advocate, the 1st defendant Martin Matiku t/a Mart Commercial Trading Company was represented by Mr. David Malima learned advocate. The second defendant Deodatus Constantine Monji though duly served did neither file a written statement of defence nor enter appearance, thus this case is proceeded ex-parte against him. The 3rd defendant though filed a written statement of defence and were duly represented by Mr. Michael Chahe, learned advocate opted not to call a witness to testify on their behalf. One witness testified for the plaintiff. He is Partick Jackson Malewo who testified as PW1. The witness (PW1) who is a principal credit officer with the plaintiff's bank testified that the 1st defendant approached the plaintiff's bank in November 2010 with a request for a credit facility amounting to Tsh. 100,000,000.00 (One Hundred Million Tanzania Shillings). The bank approved the facility (exhibit Pl). According to the facility letter the terms of the facility was to expire on 24th November, 2011. The 1st Defendant accepted all the terms and conditions of the facility letter and to signify his acceptance he signed exhibit Pl. 3 It is the evidence of PW1 that it was a condition precedent to the use of the overdraft facility (exhibit Pl), that the first defendant must secure repayment of the monies in the facility by obtaining a contract of guarantee. Thus, in complying to that term of the overdraft facility (exhibit Pl), the 1st defendant introduced to the plaintiff the second defendant Deodatus Constantine Monji as his guarantor. The second defendant Deodatus Constantine Monji guaranteed the repayment of the said loan by creating a legal mortgage over his landed property described as Plot No. 130 Block 10 Mbweni Mpiji area in Kinondoni District which is held under a certificate of title No. 65629. The plaintiffs bank accepted the mortgage which was created by the second defendant in their favour. It is the evidence of PW1 that the bank accepted the said mortgage on the basis of the valuation report and photographs prepared for and submitted to them by the 3rd defendant Africa Property Limited. However witness testified further that the valuation report prepared by the 3rd defendant and the photograph submitted to the plaintiff's bank were of a totally different property from that of the 2nd defendant. He said that the value of the property of the second defendant's was of far less value than the value of the property whose valuation report and photographs were submitted to the bank by the 3rd defendant. The witness testified further that according to the terms and conditions contained in the overdraft facility the 1st defendant was required to pay the whole facility not letter than 24th November, 2011 and upon full utilization of the facility. Following, the 1st defendant's failure to repay the 4 overdraft loan facility the plaintiff's bank wrote a demand letter to the 1st defendant demanding repayment of the entire amount together with accused costs and all expenses incurred by the plaintiff but that was in vain. Demands were sent to the second defendant who also failed to pay and hence this suit. Regarding the third defendant, it is the evidence of PW1 that they (ie 3rd defendant) were negligent in evaluating the second defendant's mortgaged property in that they negligence evaluated and took photograph of a different property and therefore submitted false information to the Bank. He said that the third defendant failed to exercise due diligence therefore they are liable in terms of the overdraft agreement and the guarantee agreement. On his part, the first defendant Martin Matiku Nyetileu testified as DW1 and was the only witness for the defendants. He told the court that he took a loan of Tshs. 100,000,000/= from the plaintiff's bank. He said that the loan was guaranteed by one Deodatus Monji (The second defendant) who he didn't know before. He conceded that he didn't repay the loan facility granted to him because of change of business environments which found him in economic doldrums. As stated herein before, the second and third defendants didn't call any witness to testify on their behalf. The 1st issue is whether or not the 1st defendant breached the terms of and conditions of the overdraft facility (exhibit Pl). From the evidence of 5 PW1 and the contents of exhibit Pl (ie facility letter), the tenure of the facility was 12 months effective from the date of the 1st disbursement which was 26th November, 2010, thus the facility expired on 24th November, 2011. Admittedly the first defendant did not repay any amount in the outstanding sum. According to the facility letter (the agreement), the facility ought to have been repaid fully on maturity. Thus, failure to repay the facility after its maturity was a clear breach of the terms of the letter of facility signed between the plaintiff's bank and 1st defendant. Accordingly the 1st issue is answered in the affirmative, that is to say the 1st defendant breached the terms and conditions of the overdraft facility. The second issue is whether the 1st and 2nd defendants are duty bound to pay the outstanding sum. I have found as a matter of fact and it is admitted that the 1st defendant took an overdraft facility from the plaintiff's bank. The amount of the facility was Tshs. 100,000,000/= (Say One hundred Million) only. The facility was not paid and it remain unpaid todate. The first defendant admitted in cross-examination that he is duty bound to pay the outstanding amount. He said that to his recollection he repaid something about ten Million shillings only. He is therefore duty bound to pay the outstanding sum plus all accrued interests. Regarding the second defendant there is evidence from PW1 to the effect that he mortgaged his property described as Plot No. 130 Block 10 Mbweni Mpiji area within Kinondoni Municipality in Dar es Salaam Region. The property was evaluated by the 3rd defendant and its value was stated to be Tshs. 200,000,000/=. Basing on this valuation report the plaintiff's bank 6 granted the overdraft facility to the 1st defendant. There is evidence that a second valuation which was done after the 1st defendant had defaulted, revealed that actually there was no property on Plot No. 130 Block 10 Mbweni Mpiji area within Kinondoni Municipality in Dar es Salaam Region. The second defendant guaranteed the payment of and according to the facility letter (exhibit Pl) and the mortgage of a right of occupancy following the 1st defendant's default, the second defendant is jointly and severally liable to pay the outstanding sum. As regards the liability of the third defendant, there is evidence to the effect that they were engaged by the plaintiff to carry out valuation of a property on Plot No. 130 Block 10 Mbweni Mpiji Kinondoni Municipality. They carried out the valuation and submitted their report to the bank. Basing on the valuation report submitted to the bank the plaintiff's bank approved the overdraft facility to the 1st defendant. There is also evidence by .PWl to the effect that another valuation which was conducted by a different firm established that the 3rd defendant's valuation report was false because there was no property on Plot No. 130 Block 10 Mbweni Mpiji area within Kinondoni Municipality. As started earlier the 3rd defendant opted to give no evidence to counter these allegations. In law when a fact is not disputed, it deem to be admitted and because in civil cases the standard of proof is on the balance of probability, I find that the allegation that the third defendant acted negligently and contributed to the valuation on a wrong propety has been proved on that balance. Accordingly I hold the third defendant liable for negligence which contributed to the Plaintiff's 7 failure to realize the loan through the mortgaged property, (and this answers the 4th issue) which asks whether the third defendant has made it impossible for the plaintiff to realize the security held by it against the second defendant). The last issue is about reliefs. I find that the plaintiff's bank is entitled to recover the entire sum outstanding plus interest and costs. According to the facility letter the agreed interest rate was 20% per annum. The penalty interest of 33% per annum agreed in the facility is rather on the high side of the scale and unfair given the circumstances of this case and economic weight of the parties. The plaintiff also is praying for general damages. I hold that she is entitled to general damages in terms of punitive damages against the third defendant for their professional negligence which induced the bank to approve the loan. I assess the general damages payable at Tshs. 30,000,000/= (Say Thirty Million Only). In summary therefore judgment is entered for the plaintiff against the defendants as follows:- 1. The first and second defendant shall jointly and severally pay the plaintiff's bank Tshs. 167,225,410/= (Say Tshs. One Hundred Sixty Seven Million, Two Hundred and Twenty Five Thousand, Four Hundred and Ten) being the outstanding and due amount as the time of filing the suit. 8 2. That the third defendant Africa Property Limited shall pay to the plaintiff Tshs. 30,000,000/= (Say Thirty Million) Only being general damages for professional negligence which made it impossible for the plaintiff to realize the security held by it against the second defendant. 3. The decretal amount in (1) and (2) above shall carry interest at the rate of 20% per annum from the date of filing the suit to the date of judgment. 4. Further interest at the court's rate of 7% per annum shall be chargeable from the date of this judgment till payment is full. The Plaintiff is awarded costs of the suit against all defendants. Order accordingly. A. R. Mruma JUDGE 1/6/2016 Court: Judgment delivered this 1st day of June 2016 in presence of Ms.Fatuma Seif Advocate for the Plaintiff and Mr. Malima David and Ms Victoria Mandari advocate for the 1st and 3rd defendants respectively. The second defendant is absent. A. R. Mruma JUDGE 1/6/2016 9