caltex t ltd vs nazar n mohamed afs 2004 tzhccomd 23 15 october 2004

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT DARES SALAAM COMMERCIAL CASE NO, 98 OF 2003 CALTEX TANZANIA LIMITED............ PLAINTIFF VERSUS NAZAR N. MOHAMED t/a SONGEA AGIP FILING STATION..................DEFENDANT JUDGMENT KIMARO, J. The parties in this case are at a loggerhead over an amount of T.shs 122,223,869/=. The plaintiff alleges that the amount is an accumulation of purchase price of petroleum products and lubricants which the plaintiff supplied to the defendants upon his order and request which has not been paid for. The plaintiff alleges further that" the defendant signed an agreement for settlement wherein the debt was acknowledged. The defendant on the other hand alleges that the admission of the debt was obtained through undue influence, coersion and fraudulent misrepresentation. How the parties arrived at the above position, and the truth of the matter, will be borne out of the facts surrounding the case. The defendant owns a service station. He entered into a fuel supply agreement with the plaintiff whereby the plaintiff agreed to supply to the defendant petroleum products and lubricants on 30 days credit. The agreement was not tendered in court as an exhibit but its existence has not been disputed by the parties. It was drawn by Mr. Said El-Maamry, Advocate and it was for the period between 30th October, 2001 and 30th March 2003. The limit of the credit was T.shs 100,000,000/-. The testimony tendered to support the plaintiff s case was that the defendant was supplied with goods which were not paid for and the amount rose until it reached T.shs 122,223,869.00. The debt was admitted by the defendant in a settlement agreement which was tendered and admitted in court as exhibit P6. The plaintiff s witnesses testified further that the defendant issued some cheques which bounced. Although a demand notice was sent to the defendant requiring him to make payment, the defendant defaulted. It was then the plaintiff stopped supply. The following documents were tendered in court as exhibits in substantiation of the plaintiff s case: “ i) Statement ofAccount of the customer - Exh.Pi. ii) Five cheques worthy T.shs 48,520,000/= issued by the defendant which bounced - exhibit P.2. iii) A bundle of tax invoices - exhibit P3. 3 iv) A demand notice dated 16th July 2003 requiring the defendant to pay T.shs 122,223,869.99 - exhibit P4- v) A letter signed by the defendant to the plaintiff dated 9th September 2003 asking for a credit facility of T.shs 50,000,000/= - Exhibit P5. vi) An agreementfor the settlement of a debt of T.shs 122,223,869.99 exhibit P6. vii) A bundle of delivery notes/stock transfer advice stock withdrawal authority from Oil Com (T) Ltd, Engen Petroleum Tanzania Ltd, and National Oil (Tanzania) Ltd and CxA Exports Ltd - exhibit P7. The testimony for the plaintiff was that they do not have a place for storage of their products in Dar-Es-Salaam. They store their commodities with other oil companies at a fee. The defendant collected the commodities from those oil companies through an order from the plaintiff. That explains about the documents issued by the other oil companies to the defendant. The defendant admitted that he stopped payments for the cheques. He said that was done after the plaintiff stopped supply. He also admitted signing exhibit P6 but said it was signed in an 4 anticipation of regaining continuation of the supply of the commodity on credit. He did that after writing a letter of complaint to the plaintiff explaining disatisfaction about the conduct of the plaintiff in stopping the supply while he was anxious for the continuation of the supply. The defendant said the agreement was written in English while he does not know English and he was not even with his Advocate when he signed the agreement. The defendant tendered in court a letter which was written by his Advocate; Semgalawe, Jundu & Co. Advocates requesting the plaintiff to open reconciliation for purposes of resolving the dispute as an exhibit. It was admitted as exhibit Di. In essence the defendant has raised the defence of “non-est factum” in his written statement of defence. Both parties are represented. The plaintiff is represented by Mr. F. Mbuya, Learned Advocate and the defendant by Mr. Rutashoborwa Learned Advocate. Issues drawn for determination of the court are: i) Whether the defendant is indebted to the plaintiffin respect of the petroleum products and lubricants supplied by the plaintiff to the defendant. ii) To what extent is the defendant so indebted if at all the answer to issues No. I is affirmative. 5 iii) Whether the defendant legally acknowledged indebtedness to the sum ofT.shs 122,223,869.00. iv) To what reliefs are the parties entitled to. It is apparent from the plaintiffs’ pleadings and evidence that the plaintiff s suit is based on the Agreement for the settlement of a debt (Exh.P6). The defendant admitted signing it. However, his pleadings and his defence raised the defence of “non est factum”. I consider the proposal made by Mr. F.S. Mbuya, Learned Counsel for the plaintiff that starting with the question whether the defendant has established sufficient facts to sustain the plea of non est factum will give the court a good direction, to be sound. The determination of this question will simplify the work of determining the issues framed. Mr. Rutashoborwa’s submission on the plea of non-est factum is mainly based on a second agreement which was signed by the parties. He said the agreement was entered into without the defendant’s consent. It was obtained through undue influence, coersion and fraudulent misrepresentation. In Mr. Rutashoborwa’s views there was coersion and undue influence because the plaintiff intimated to the defendant expressly that no fuel would be supplied unless and until the second new contract between the parties was executed. Mr. Rutashoborwa said it was in those circumstances that the defendant executed new and 6 further credit of T.shs 50,000,000/= to be secured by the Defendant’s second Title Deed. As the defendant wanted fuel to be supplied, he agreed to sign the agreement and also surrender to the plaintiff yet another title deed which is still with the plaintiff. Mr. Rutashoborwa submitted further that there was fraudulent misrepresentation due to the following reasons. The plaintiff told the defendant that: “a) The signing of the new contract would result into immediate resumption offuel supply by the plaintiff However, that was not done. b) The defendant was told it was a new credit facility while in the real sense it sought to obtain the defendant’s acknowledgement of indebtedness of T.shs 122,233,869/=. c) The defendant was induced to acknowledge the debt of T.shs 122, 233,869/= while the real fact is that the defendant is not indebted to such an amount or at all to the plaintiff. d) The document was prepared in English by the Plaintiffs Advocate (Mr. Thadayo) while the defendant did not totally understand the language. 7 Explaining the meaning of non-est-factum the Counsel for the defendant relied on the Thorough good’s case (1584) 2 Co Rep. 9a where it was held that - “ The general rule is that a man is estopped by his deed and a party of full age and understanding is normally bound by his signature to a document. If however, a party has been misled into executing a deed or signing a document essentially different from that which is intended to execute or sign, he can plead non-est-factum in an action against him. The deed or writing is completely void in whosoever hands it may come.” Mr. Rutashoborwa said the principle was exemplified in SAUNDERS V ANGLIA BUILDING SOCIETY (1971) AC 1004 where the House of Lords said that - “ The essence of the plea of non-est factum is that a person signing believed that the document he signed has one character or one effect whereas in fact its character or effect was quite different, ... There must be a radical difference between what he signed and what he thought he was signing.” The case of SLUIS BROTHERS (EA) LTD V MARTHIAS & KITOMARI (1980) TLR 294 was also referred to, to show how the doctrine of non-est factum should be applied. 8 Mr. Rutashoborwa concluded his submission by saying that the plaintiff failed to establish that the signing of the second contract was done in fair environment because - “ (a) The plaintiff’s management is aware of the fact that the defendant does not understand English and this is not disputed in the plaintiffs evidence. (b) Only the last page of the contract document was read and explained to the defendant and the defendant signed only the said page of the contract. (c) Though the second contract between the parties was executed before Todayo Advocate, he was not summoned to explain the circumstances under which the contract was signed. (d) The plaintiffs witness tried to show through evidence that the defendant came with the contract document from Songea whereas the plaintiff prepared the document in Dar-es-Salaam. (e) The defendant was induced to acknowledge indebtedness to the tune of T.shs 122,233,869/= without first heeding to the defendant’s demands to reconcile the 9 accounts of revolving credit facility in respect thereto whereas the defendant is not indebted at all.” Mr. Mbuya in reply expounded on the circumstances under which the doctrine of non est factum applies. Mr. Mbuya said it applies where the person sought to be liable has not signed the document and where the person who has signed the document is nonetheless allowed to repudiate the document. He cited the case of Gallie V Lee (1971) AC 1004; (1970) 3 WLR 1078; (1970) 3 ALL ER 961. The case says that the doctrine of non est factum must be kept within narrow limits if it is not to share the confidence of those who habitually and rightly rely on signatures where there is no obvious reason to doubt their validity. A document should be held void (as opposed to voidable) only when the element of consent is totally lacking or when the transaction which the document purports to effect is essentially different in substance or kind from the transactions intended. First there must be a case of fraud. In Fosters V Mackinnon (1869) LR 4 C.P. 704 at 711, it was said that a signature obtained by fraud is invalid not merely on the ground of fraud where fraud exists, but on the ground that the mind of the signer did not accompany the signature. He never intended to sign, and therefore, in contemplation of law never did sign the contract to which his name is appended. 10 Secondly, the man cannot escape from the consequences as regards innocent third parties, of the signing of a document, if being a man of ordinary education and competence, he chooses to sign it without informing himself as to its purpose and effect. Thirdly, there is the case where the signer has been careless in not taking ordinary precautions against being deceived. According to Lord Wilberforce: “ a person who signs a document, and parts with it so that it comes into other hands, has a responsibility, that of the normal man of prudence, to take care what he signs, which, if neglected, prevents him from denying his liability under the document according to its tenor...” As regard the illiterate, blind or lacking in understanding, Mr. Mbuya said the law is in dilemma. On the one hand, the law is traditionally and rightly ready to relieve them against hardship and imposition. On the other hand, regard is to be paid to the position of innocent third parties who cannot be expected, and often would have no means, to know the condition or status of the signer. Mr. Mbuyas opinion is that there is no defined solution provided for all the cases. The law however ought to give effect if satisfied that the consent was truly lacking but will require of the signers even in this class that they act responsibly and carefully according to their circumstances in putting signatures to legal documents. Mr. Mbuya made an analysis of the evidence which was tendered in court by the defendant and came to a conclusion that 11 there is nothing in the defendant’s evidence showing that the Agreement was entered into without his consent or that the consent was obtained through undue influence, coercion or fraudulent misrepresentation on the part of plaintiff as to the true nature and quality of the said agreement. On the contrary the evidence clearly shows that the defendant signed the Agreement fully knowing its meaning and import with a view to obtaining additional supply of petroleum products. Mr. Mbuya submitted further that there is no reference at all to any or a second title deed in the Agreement. On the allegation that the Defendant does not understand English and that he relied on his Manager - Jamal Hemed (DW2) to communicate with the Plaintiff, Mr. F. Mbuya submitted that there is ample evidence showing that written communication between the plaintiff and the defendant in the course of their business was conducted in English. At no time was such communication conducted in Swahili. Mr. Mbuya said although the Defendant testified that the author of the letter written in English (Exh.Ps) was the Defendant’s Petrol Station Manager, the Manager (DW2) denied in cross examination that he was the author of the letters. Mr. Mbuya added that the defendants submission amount in to shifting the burden of proof from the defendant to the Plaintiff to prove that there was no undue influence, coersion or fraudulent misrepresentation. Mr. Mbuya cited sections 110, 111,112 and 113 of the Law of Evidence Act 1967 arguing that since it is the Defendant 12 who is asserting undue influence, coersion and fraudulent misrepresentation, the burden lies on him. The burden of proof lies on the person who seeks to involve the remedy of non est factum. He said the burden of proof shifts depending on what is established by one party against the other. He referred to Sarkar on Evidence 14th Edition 1993 Vol. II at page 1339 where it is reported that - “ as the case proceeds the onus must shift from time to time. But the judge should not be blind to the facts established before him.... In most cases, the burden of proof is divided accordingly as each party has one or more of the issues cast on him. The party on whom the burden of proof lies in the first instance, may shift it to the other by proving facts giving rise to a presumption in his favour... The elementary rule in S.101 is inflexible and must apply to all cases. S.102 makes it clear that the initial onus is always on the Plaintiff and if he discharges that onus and makes out a case which entitles him to a relief, the onus shifts to the Defendant to prove those circumstances, if any, which would disentitle the Plaintiff to the same.” His conclusion was that the defendant legally acknowledged indebtness to the plaintiff in the sum of T.shs 122,223,869/=. Having carefully analysed the pleadings the evidence and the submissions made, I am inclined to agree with Mr. Mbuya that the Defendant signed the Agreement acknowledging indebtness knowing 13 exactly what he was doing. I arrived at this conclusion because although Mr. Rutashoborwa has relied so much on the agreement for supply of an additional credit of T.shs 50,000,000/= the Agreement was not tendered in court as an exhibit. As the defendant testified in court, he never said that he was made to sign the settlement agreement on a promise that the supply of fuel would resume. Neither did he testify that he was only shown the last page of the agreement or that the management of the plaintiff knew that he did not know English. I remind Mr. Rutashoborwa of the case of Vidyrthi V Ram Rakha (1957) EA 527 that submission should be confined to the evidence. The evidence on records shows that communication between the plaintiff and the defendant has always been in English. This was an admission made by the defendant himself. Even exhibit P5 is written in English and it is signed by the defendant. Although he attempted to tell the court that his Manager wrote it for him and he signed it, his Manager (DW2) refuted doing so. This means that the defendants evidence that he does not know English is not true. Considering all the circumstances of this case, the defence of non est factum can not apply. The defendant has failed totally to prove that he qualifies for the defence. Since the defendant admitted the debt, the first issue is answered positively. The answer to the second issue is that the extent of indebtedness is T.shs 122,223,869.00. The answer to the third issue is yes. 14 Consequently, judgment is entered for the plaintiff as prayed with costs. N.P.KIMARO JUDGE 15/10/2004 Date: 22.10.2004 Coram: Hon. N.P.Kimaro, J. For the Plaintiff - Mr. F. Mbuya. For the Defendant - Absent. CC: R. Mtey. Court: Judgment delivered today. Order: Judgment is entered for the plaintiff as prayed with costs. N.P.KIMARO, JUDGE 22/10/2004 I Certify that is is a true and correct 3,045 _ words o^der Judgement Fxulling ot the origi Sign_____ jd. Registrar Com ikCourt Dsm Date