bernard kabende haule vs azania bank limited 2021 tzhclandd 707 27 august 2021

IN THE HIGH COURT OF UNITED REPUBLIC OF TANZANIA (LAND DIVISION) AT PAR ES SALAAM LAND CASE NO. 133 OF 2017 BERNARD KABENDE HAULE............................................ PLAINTIFF VERSUS AZANIA BANK LIMITED............................ DEFENDANT Date of Last Order: 9/7/2021 Date ofJudgment: 27/08/2021 JUDGMENT MANGO, J. The Plaintiff and the Respondent had an employer employee relationship in which the Plaintiff was employed Dy the defendant Bank as a head of Human Resource and Administration Department. In 200b, his position changed to Director of Human Resource ana Administration. On 24th June 2014, during the subsistence of their employer employee relationship, they entered into a mortgage loan agreement upon which the Defendant purchased a house with Certificate of Title No. 19346 Plot No. 332 Block JJ Oloirien area Arusha Municipality at Tshs. 240,000,000/- Two Hundred and Forty Million Tanzanian Shillings omy. The Plaintiff was mdking regular payments of his loan until December 2015 when the Defendant terminated the Plaintiff's employment. It is alleged that, at the time of Plaintiff's termination, the outstanding loan balance was Tshs. 359,639,874.23 1 The Plaintiff alleges that, at the time of his termination, it was agreed that the defendant will retain the Plaintiff's terminal benefits worth Tshs. 173,880,000/- to partly liquidate the outstanding loan balance. The defendant offered to pay Tshs. 150,000,000/- on consideration of the Plaintiff paying Tshs. 42,131,674.23 that will remain as the outstanding loan after retaining the Plaintiff's terminal benefit and payment of Tshs. 150,0()0,000/-by the defendant. The Plaintiff alleges further that he fulfilled his party to the agreement by paying Tsns. 42,131,674.23 on top of his terminal benefits. To his dismay, the Defendant refused to discharge the title deed of the mortgaged premises alleging that, she still owes the Plaintiff Tshs. 161,476,451.41. The Plaintiff instituted this suit against the defendant claiming nand over of the mortgaged house with a certificate of title No. 19346 Block JJ Olerien Area, Arusha Municipality. He prayed for tne following orders; i. An order to the defendant to hand over immediately to the Plaintiff the certificate of title No. 19346 Plot No. 332 Block J.l Oloirien Area Arusha Municipality; ii. A Declaration that the Plaintiff does not owe the defendant any amount of money after he paid Tshs. 42,131,674.23 and the defendant appropriated Tshs. 173,880,000/-; iii. A declaration that the defendant is bound by its promise to pay or forego Tshs 150,000,000/- as part of the Plaintiff's terminal benefits which it deducted from Plaintiff's mortgage loan and loan amounts; iv. A permanent injunction to the defendant from ever interfering with the Plaintiffs quite enjoyment of the suit premises; v. Costs; and 2 vi. Any other order or relief that this honourable Court may deem just and fair to grant. In her written statement of defence, the Defendant, conceded to the arrangement made with regard to the outstanding loan balance at the time of the Plaintiff's termination but, she alleged that the Tshs. 150,000,000/- were to be paid by the Insurance Company and not the defendant. She alleges further that, the arrangement for insurance is between the insurance Company and the Plaintiff who was the insured. Thus, upon the defendant's failure to recover 15",000,000/- from the Insurance Company, the duty to Day the amount remains to the Plaintiff, In determining this suit, the following issues were drawn: - i. Whether the Plaintiff and the defendant entered into a termmation of employment agreement on 21st December 2015 upon which the terminal benefits payable to the Plaintiff were to be used to partly liquidate all the loans the Plaintiff has taken from the defendant including the legal mortgage over Plot No. 332 Block JJ Oloirien area Arusha Municipality; ii. Whether the parties further agreed that the defendant will pay 150,000,000/-to partly liquidate the loans the Plaintiff owed to the defendant; iii, Whether the Plaintiff was also obliged to pay Tshs. 42,131,674.23 to fully liquidate the outstanding loans; iv. Whether the parties fulfilled their obligations under the said agreement and whether there is an outstanding loan to the defendant that is secured by the legal mortgage over the landed property in dispute; 3 v. Whether the defendant is legally bound to release the title deed of the property in dispute; vi. What reliefs are parties entitled to? During hearing the Plaintiff was represented by Dr. Rugemeleza Nshalla, learned advocate while the Defendant was represented by Ms. Endael Mziray, learned advocate. In proving his claims, the Plaintiff who was the sole witness testified that he was employed by the Defendant since November 2004 as a head of Human Resource and Administration department. He tendered his letter of appointment dated 25th November 2004 which was admitted as exhibit Pl. In the year 2006 employment structure of the defendant changed and his position changed to Director of Human Resource and Administration. On 24th June 2014 he entered into a mortgage loan with the defendant, he tendered the letter of offer for mortgage and the same was admitted as Exhibit P2. He stated further that, the mortgage was in respect of house located at Plot. No. 332 Block JJ with Certificate of title No. 19346 which was previously owned by Samson Jefta Tilya who is now dead. He tendered a photocopy of the certificate of title because the origin is in the defendant custody. Before tendering a photocopy, the Plaintiff issued a notice to produce original documents but the defendant failed to produce the original document on time. The copy of a certificate of title over the disputed land was admitted as Exhibit P3. The Plaintiff testified further that, in 2015, the defendant changed her Organization structure which lead to retrenchment of some of her employees including the Plaintiff. A letter communicating cessation of the Plaintiff's employment contract with the Defendant dated 14th December 2015 was admitted as exhibit P6. The termination letter contains information about the 4 outstanding loans and the mode of settling the same as the Plaintiff's contracts with the defendant ceases. He alleges that, the amount of loan contained in Exhibit P6 includes the mortgage loan in P2. On the mode of settlmg the loan which was Tshs. 359639874.23, the mortgage loan inclusive, the Plaintiff testified that his terminal benefits amounting to Tshs. 173,880 000/- were retained by the defendant to liquidate the loan. The defendant promised to recover from the Insurance Policy Tshs. 150,000,000/- and the Plaintiff was supposed to pay Tshs 42,131,674.23 to fully liquidate his loans owed by the defendant. The Plaintiff stated that he pa>d the Tshs. 42,131,674.23 as agreed and requested the defendant to release the certificate of title the request which has never been honored by the defendant. He tendered TISS form reflecting payment of Tshs 42,131,674.23 and his letter dated 13th July 2016 requesting release of the certificate of title of the suit premises which were admitted collectively as Exhibit P9. After refusal by the defendant to discharge tne mortgage charged to the certificate of title and handling over the same to the Plaintiff, the Plaintiff had to institute this suit. The defendant had three witnesses. Mr. Eugine Kimaro who is the Loan Manager of the Defendant, testified as DW1, According to his testimony the Plaintiff had two types of loans granted to him by the defendant. First, the staff loan of approximately Tshs 147,000,000/- and a mortgage loan of Tshs 240,000,000/-. He stated that, at the time of cessation of the Plaintiff's employment to the defendant, the total outstanding loan balance was approximately 359,000,000/-. According to record he has in his office as a loan manager, the Plaintiff has not fully paid his loan. He tendered the loan repayment schedule dated 31st July 2017 as a proof that the loan advanced by the defendant to the Plaintiff has not yet fully paid. The loan payment schedule 5 was admitted as Exhibit D3. He argued further that, the suit premises were mortgaged to secure the loan advanced to the Plaintiff thus, it can only be released after the Plaintiff has fully discharged his duties to the mortgage loan, that is, by paying the loan advanced to him fully. When cross examined on the effects of the contents of exhibit P6 to the loan he testified that the document insists that the Plaintiff should pay the loan. Despite that he admitted that the termination of employment agreement indicates that the defendant will claim Tshs. 150,000,00/- from the Insurer. He also admitted that his department received the Plaintiff's terminal oenefits and 42,131,674.23 as part payment of the Plaintiffs loans. He also admitted that it is only 150,000,000/- that remained unpaid todate. He could not respond on issues pertaining to insurance policy as he said he is not responsible with insurance. He stated clearly that insurance issues are dealt upon by the Insurance department. He testified that the termination of employment agreement did not affect the mortgage loan because no addendum was s'gned to vary terms and conditions in the mortgage loan. He insisted signing of the agreement does not have any effects to the mortgage loan, it is only the amount paid after signing of the agreement that affected the loan balance by partly liquidating it. DW2, VINCENT TIVAI, a Ch'ef Operations Officer of Britam Insurance Tanzania Ltd, testified that the defendant is the Customer of Britam Insurance Ltd. According to him the Insurance policy was issued to the defendant. He remembers that their company received claims from the defendant concerning their employee, Bernard Kabenae Haule who was retrenched while he had an outstanding loan. In the course of analyzing the ciaims, they found out that the empioyees of the bank are not covered by the agreement. The Company wrote to the bank communicating the terms of the policy towards bank employees. 6 DW3 Neema Mathayo, claims manager of Britam insurance company testified io the effect that, the defendant is their client who holds different covers including insurance covers in respect of their ’cans advanced to the>r staff and customers, subject to the terms and conditions contained in the policy issued lo them. And that, their company was formerly known as Real Estate (T) L mitea it was later acquired by Britam Insurance (T) Ltd Sne testified further chat according to the policy dated 30th December 2015 issued to defendant by Real Estate (T) Ltd now Britam Insurance (T) Ltd, tne policy covers loans issued to the defendant customers in case of death, permanent disability and atrenchment except retrenchment of banks own employees. She tendered Banker's Loan guarantee which was adm;tted as Exhibit D5, She mentioned the aason wny the defendant claims for payment of 150,000,000/- for retrenchment of the Bernard Kabende Haule could not be honoured. In this she stated that, in the course of processing the payments they found that the policy does not cover the defendant's bank own employees. She mentioned part C item 6 of the policy as the item that excluded retrenchment of bankers own employees from the list of risks that were insured by the defendant bank. After the closure of the Plaintiffs case and the defendant case, both parties filed their final submissions I am grateful for tneir lucid submissions in respect af this matter. I will not reproduce the submissions as they are part of record n this case. I will only refer to the contents of the submissions where appropriate. According to the testimonies of both patties and tneir final submissions tne following facts are not disputed. i. That the Plaintiff was the employee of the defendant since 24th June 2014 7 ii. That the Plaintiff entered into a mortgage loan with the defendant and the peeped?/ m dispute was put as a collateral iii. That the Plaintiff had other loans categorized as staff loan, advanced to him by the defendant iv. That the Plaintiff was retrenched from his employment on 21st December 2015 v. That at the time of his retrenchment tne total loan balance from the mortgage loan and staff ioan was Tshs. 359 639 874.23 Regarding the first issue, the submissions and evidence adduced during hearing establishes further that, the first issue is partly not disputed by all parties as they both agree that, the defendant and the Plaintiff entered into a termination of employment agreement on 21st December 2015. The only disputed issue is whether the termination of employment agreement had any impact in the mortgage loan. The defendant allege that the termination of employment agreement did not anyhow affect the conditions in the mortgage agreement between same parties. DW1, Eugine Kimaro, loan manager of the defendant, expressly stated that, the conditions in the mortgage loan were not altered by tne termination of emoloyment agreement though he admitted to have received the Plaintiff's terminal benefits as payment of outstanding loan owed to the Plaintiff by the defendant. Even the Defendants counsel submitted to the effect that the two agreements are distinct and they should be treated separately. According to the learned counsel, the termination of employment agreement did not discharge the Plaintiff from his responsibilities in the mortgage loan. It only reminded the Plaintiff that he need to pay his outstanding 'oan and informed him that the defendant will claim Tshs. 150,000,000/- from the insurance Company. She insisted that the defendant's promise did not discharge the Plaintiff from his responsibility to pay the Tshs 150,000,000/- 8 upon failure of the defendant to recover the same from the Insurance Company. Tne Plaintiff treated the termination of employment agreement with the defendant as an agreement that altered all his agreements with the defendant. To him, the agreement indicates that the defendant will recover Tshs. 150,000,000/- from the insurance Company and he was supposed to pay Tshs. 42, 131,674.23 and surrender his terminal benefits to fully liquidate the loan. In his submission, the Plaintiff's counsel considered tne termination of employment agreement to have altered the mortgage agreement by offering to the Plaintiff that, his terminal benefit oe used to partly liquidate the outstanding loan, promising the Plaintiff the defendant will recover 150,000,000/- from the insurer and requiring the Plaintiff to pay Tshs 42, 131,674.23 to fully liquidate the outstanding loan. I agree with the Plaintiff's Counsel that the termination of employment agreement Is a valid agreement after the Plaintiff accepted the same by signing the acceptance part of the agreement as required by the agreement as provided under sections 2(1 )(a) &(b),3,4( 1) and 4(2)(a)(b) of the Law of Contract Act, [Cap. 345 R.E. 2019]. I am of a considered view that, the termination of employment agreement aite'ed terms and conditions of all other agreements that was executed by the Plaintiff and the defendant. I hold so because the agreement which was admitted as exhibit P6 did not only communicate the termination of the Plaintiff's employment to the defendant bank but it also offered the Plaintiff the mode of paying his outstanding loan. The offer on now the outstanding loans may be paid was accepted by the plaintiff and thus making it a valid contract as correctly submitted by the learned counsel for the 9 Pfaintiff. For easy reference, the relevant contents of the termination of employment agreement are hereby reproduced; "Payment of the above terminal benefits, amounting to TZS 173,880,OOO/-(say one hundred seventy three million , eight hundred e/gnty thousand only) is subject to full liquidation of all outstanding loans and advances from the bank, as well as taxes and other statutory deductions. You will note that your terminal benefits will not be sufficient to fully liquidate your obligations to the bank with the existing outstanding loans of TZS 359,639,874.23 (say Tshs Three hundred fifty nine million, six hundred thirty nine thousand, eight seventy four cents twenty three only) as at 21st December 2015. Please be informed that as per the insurance policy cover, the bank will ciatm up to a maximum of tzs 150,000,000/- (sat Tshs one hundred and fifty million only) from the insurer to cover part of the short fall In that regard you will still have outstanding loans of TZS 42,131,674.23 after tax, which you are required to liquidate immediately. P/ease confrm your understanding of the above notification and your terminal benefits by signing on the space provided at the bottom of this letter." Tne Plaintiff signed the space indicated at the bottom of the letter to signify his acceptance of the terms and conditions contained in the termination of employment agreement. 10 According to the contents of the letter, the defendant expressly communicated the following terms and conditions which were accepted and fulfilled by the Plaintiff i. Termination of his employment for failure to meet criteria/qualifications set for the position of a Director of shared services ii. He is entitled to be paid terminal benefits amounting to Tshs 173,880,000/- iii. That the terminal benefits will be paid subject to full liquidation of all outstanding loans and advances from the bank as well as taxes and other statutory deductions iv. That the existing outstanding loan was Tshs. 359,639,874.23 v. That the terminal benefits will not be sufficient to fully liquidate the Plaintiffs obligations to the bank vi. That the bank will claim from the Insurer up to Tshs. 150,000,000/- vii. That the Plaintiff will have an outstanding loan of Tshs. 42,131,674.23 Reference to the outstanding loans and providing the mode of liquidating the same altered the terms and conditions contained in the mortgage agreement. In holding so I am alert that there was no addendum executed by the Plaintiff and the defendant to vary terms of the mortgage loan. Execution of an addendum would have been necessary if parties intended to vary terms of a single agreement. Evidence in record establishes that the defendant and the plaintiff had several agreements that needed to be conclusively performed at once as they were parting ways. They had an employment agreement, mortgage loan, advances, and staff loan agreements. It was necessary for each party to perform his duties to all these agreements immediately as the main agreement which regulated the relationship between the defendant and the 11 Plaintiff was being terminated. Payment of all the loans and advances were through monthly deductions from the Plaintiff salary and the employment agreement which enabled the defendant to deduct his dues from the plaintiff's salary will be terminated. Thus, the two parties decided to enter into another agreement that varied terms and conditions of all prior agreements between them. In such circumstances it cannot be said that the mortgage loan was not covered by the termination of employment agreement. Such evaluation of evidence in record establishes that the first and second issues are in affirmative. Evidence on record especially the testimonies of the Plaintiff and DW2 establishes clearly that the Plaintiff performed his duties in the termination of employment agreement. The plaintiff did not collect a penny from his terminal benefits and he paid the Tshs. 42,131,674.23 as required by the agreement. The termination of employment agreement expressly provide that the Plaintiff was obligated to pay Tshs. 42, 131,674.23 to fully liquidate the outstanding loans. Thus the third issue is also in affirmative. On the fourth issue as to whether parties fulfilled their obligations to the agreement, the response is affirmative. The Plaintiff surrendered his terminal benefits and paid the Tshs.42, 131,674.23. The defendant performed her duty by claiming from the insurer the Tshs. 150,000,000/- as promised. However, the defendant could not recover the same for reasons expressed in the testimony of Insurance officers. In short, the defendant's insurance policy did not cover retrenchment of her own employees. After her failure to recover from the Insurance company the bank decided to shift the burden of the paying the Tshs. 150,000,000/- to the Plaintiff. 12 I am of the view that it was not proper for the Dank to require the Plaintiff to pay the said 150,000,000/- which were expressly promised to be recovered from the Insurance policy of the bank. I hold so because the terms of the agreement were very clear that the bank will recover 150,000,000/- from the insurance policy and the termination of employment agreement aid not contain a proviso on what will happen in case the defendant fails to recover the Tshs 150,000,000/- from tne insurance. Impliedly, the termination of employment agreement Discharged the Plaintiff from the duty to pay Tshs. 150,000,000/- as tne defendant promised to recover the same from the insurance company. In addition, the duty to nsure the loan was not on the Plaintiff. The Plaintiff's duty as per the mortgage agreement was to insure the property that was used as security. That duty is clearly provided under item (i) of the condition precedent of tne mortgage agreement. Testimon.es of the Insurance officers establishes tnat, loan insurance policy was privy between the defendant and the Insurance Company. Thus, at the bme of termination of the Plaintiff's employment agreement, the defendant was aware of the terms and conditions of the insurance policy that she holds In such circumstances, requiring the Plaintiff to pay the Tshs. 150,000,000/- will be contrary to what it was agreed in the termination of employment agreement. With due respect to the defendant's counsel, I find it to be an afterthought. Even if the omission to put a proviso on what should be done in case of the defendant's failure to recover the amount from the instance company will be considered to be caused by as a mistake of fact that, "not all claims for payments based on insurance policy will be honored'', the same is a unilateral mistake which cannot make the contract voidable as provided under section 22 of the Law of Contract Act, Cap. 345 R.E. 2019]. 13 Such findings dispose the fifth issue negatively because evidence in record establishes that the defendant has no reasons to keep the title deed of the mortgaged premises. She ought to have released the title deed of the suit property immediately after the Plaintiff had fulfilled his obligations as contained in the termination of employment agreement. In that regard, I find the Piaintiff to have successfully proved nis case n the required standards, therefore this court issues the following orders:- 1. The court declares that the plaintiff ooes not owe tne defendant any amount of money from the mortgage deed signed on 24-h June 2014; 2. The defendant should handover to the Plaintiff Certificate of title No. 19346 Plot No. 332 Block JJ Oloirien area Arusna Municipality; 3. The defendant is permanently restrained from interfering with tne plaintiff's peaceful enjoyment of the property situated in Plot No.332 Block JJ Oloirien area Arusha Municipality, comprised under certificate of title No. 19346; 4. Costs of the suit be borne by the defendant. 14