LAND APPEAL NO

IN THE UNITED REPUBLIC OF TANZANIA IN THE HIGH COURT OF TANZANIA IN THE DISTRICT REGISTRY OF MTWARA AT MTWARA LAND APPEAL NO. 12 OF 2023 (Arising from the District Land and Housing Tribunal for Mtwara at Mtwara in Land Application No. 84/2019 dated 13th January, 2023) NATIONAL MICROFINANCE BANK PLC..........-....................... — APPELLANT VERSUS ISMAIL SAID MPAMBAHI ........................................................ 1 st RESPONDENT SHARIFU ATANASI MITIMINGI ———————— 2^ RESPONDENT KURUTHUMU DADI KUBANGA.......................................... — 3™ RESPONDENT JUDGEMENT Date of last Order: 16.08.2023 Date of Judgment: 24.11.2023 Ebrahim, J.: In this first appeal the Appellant is challenging the decision of the District Land and Housing Tribunal for Mtwara (DLHT) in land application No. 84 of 2019. In essence the DLHT dismissed the Page l of 20 Appellant’s claim on their intention to sale the house in dispute (mortgage property) which is alleged to be the house of the 2nd Respondent, The facts of the case can be briefly narrated as follows; the 2r'° Respondent was advanced a business loan of Twenty-Three Million Tanzania Shillings (TZS. 23,000,000/=) by the Appellant on 13.02.2019. He (2nd Respondent) mortgaged (informal mortgage) the house located at Julia street Newala Municipal Plot No. 237, Block W. The 2nd Respondent failed to repay the loan. Therefore, the Appellant made a public announcement to sale the disputed house. It was then that the ls; Respondent (applicant at the DLHT) hurried to the DLHT praying among other reliefs an injunction against the Appellant not to sale the house on the claim that it is his property and not the property of the 2nd Respondent. In protesting the Appellant’s claim, 1st Respondent argued that he has purchased the disputed house on 27.02.2019 from the 2nd Respondent, After paying the 1st installment he discovered that the disputed house had another charge at Tanzania Postal Bank and they have also advertised it for sale. Due to that the 1st Respondent Page 2 of 20 agreed with the 2nd and 3rd Respondents that he pays the outstanding balance to the Postal Bank. On 12.09.2019 he signed another sale agreement with the 2nd and 3rd Respondent of purchasing the disputed house Plot No. 237, Block W, Julia Street, Newala, Mtwara. The 1st Respondent tendered a sale agreement, acknowledgement of payments and certificate of title. The Appellant tendered documentaryevidencesuchasloanagreement, info r m a I m o rfg a g e form No. 006, affidavits of the 2nd Respondent regarding; marital status, ownership of land and notice of default by the 2nd Respondent. Upon hearing both parties the DLHT found in favour of the 1st Respondent. Dissatisfied by the decision of the District Land and Housing Tri b u n a I, th e A p pe11 a n t p referre d this a p pea I rai si n g fo u r grounds of appeal as follows: 1. That the honorable trial Chairman erred in law and fact in deciding on issues which were not framed and consequently nullified loan agreement between the Appellant and 2nd Respondent; Page 3 of 20 2. That the honorable trial Chairman grossly erred in law and fact by applying principle of bonafide purchaser while it is in operative in the circumstance of the case at hand; 3. That the honorable trial Chairperson erred in law by holding that the 1st Respondent is entitled to claim cost of the suit to the Appellant. 4. That the honorable trial Chairperson erred in law by failure to appreciate the law and effect of ranking of informal mortgage while at the time 2nd Respondent was advanced loan the land was not surveyed and registered. The Appellant prayed for this court to allow.the appeal, quash and set aside the decision. This case proceeded exparte against the 2nd and 3rd Respondents who were duly served but never entered appearance at the time of hearing. The court ordered exparte proof on 16.08.2023. The appeal was heard by way of written submission. Parties duly complied to the scheduled order. The Appellant’s submission was drawn by Advocate Emmanuel Ngongi while the first Respondent was re p re s e nte d b y Ad vo c ate A n n a sta zi a Mi nj a. Page 4 of 20 Supporting the appeal, Counsel for the Appellant started by narrating a story of what transpired leading to the instant matter. I find no need to recount the same. Arguing the Ist ground of appeal Counsel for the Appellant submitted that it is a cardinal principle of the law that it is the duty of the court to frame issues to determine the matter in dispute as per Order XIV Rule 1 of the Civil Procedure Code (CAP 33 R.E. 20191 which reads together with Regulation 12 (3) (b) of Land Dispute Courts (the District Land and Housing Tribunal) GN. No. 174 of 2003. That the issue for determination in a suit generally flow from the pleadings and the trial court may only pronounce judgment basing on the issues arising from the pleadings. Failure of which prejudices the rights of the parties and the trial decision is rendered to be defective. To cement his argument, he cited the case of Victor Raphael Luvena vs. Magreth Ephraim Kawa, John J.N Ntagwabira & Joshua S. Kazi Civil Appeal No. 25A of 2021- CAT-Arusha (Unreported), He submitted further that the Chairman did not answer the issues framed on 21.01.2021 at the trial tribunal instead he raised new issues Suo motto of which the Appellant did not have an opportunity to defend on the validity of the loan Page.5 of 20 contract between the 2nd and 3rd Respondent and that there was no valid loan agreement between 1st and 3rd Respondent, He also referred to the case of Matumaini Saccos LTD vs. Stanley Ezeli (DC Civil Appeal No. 24 of 2019 [2021] . Without according the parties the right to address the issue. The Chairman of the tribunal went further by nullifying the loan agreement of which it was unlawfully because there was a valid contract and title of the mortgaged property which is the loan agreement dated 13.02.2019. He further argued that the issue was not on the legality of the loan contract but it was on the legality of the mortgage property, He contended that when the 1st Respondent was cross examined by the Appellant Counsel he confirmed that the disputed house was placed by the 2nd Respondent as security at the NMB Bank pic: on 13.02.2019 and he purchased the said property oh 27.02.2019. This shows that the l5i Respondent did not observe the principal of “buyer beware" by doing due diligence. Due to that fact Counsel for the Appellant argued that the Chairman of the tribunal infringed their right to be heard as per Article 13 (6) (a) of the Constitution of the United Republic of Tanzania of 1977. Page 6 of 20 Submitting in regard to the 2nd ground of appeal, Counsel for the Appellant stated that the principle of bonafide purchaser which was raised by the Chairman of the tribunal was inoperative in the circumstance of the case. 1st Respondent was not a bonafide purchaser to be protected by Section 135 (1) (a)-fb) and Section 135 (5) of the Land Act fCAP 113 R.E. 20191. He submitted that there should be a valid contract between the parties and a person referred as a bonafide purchaser must have obtained the mortgaged property from the mortgagee and not otherwise. From the record, the 13t Respondent obtained the suit property from the 2nd Respondent who at the time had no better title to pass to the 1st Respondent because the property was placed as security to the Appellant. To bolster his argument he cited the case of Cassian Calist Joseph vs. Pendo Sisfy Chuwa and Others Land Case No. 322 of 2017 HC-Dar es Salaam at page 24. He further submitted that PW2, the Land Officer of Newala Municipality testified that Plot No. 234 Block J Julia Newala was not on official survey plan. That it was registered in 2020/21 where the 1st Respondent was issued with the right of occupancy. From their understanding at the time when the informal mortgage was entered Page 7 of 20 i.e., 13.02.2019, the land in dispute was not surveyed hence it was proper for the Appellant to label if as informal mortgage. The sale of the disputed house was made on 27.02.2019, hence void. Arguing on the 3rd ground of appeal, Counsel for the Appellant submitted that it was wrong for the trial Chairman to order the Appellant to pay cost of the suit to the 1st Respondent. Since the Appellant was exercising his duty and power as per the loan agreement and it was not the Appellant’s fault to recover the loan by way of sale. He further argued that Section 73 (1) of the Law of Contract Act FCAP. 345 R.E. 20021 provides that a person who has breach the contract, the one suffered is entitled to compensation for any loss caused by him. He contended that the Appellant had no contract with the lsi Respondent and the 1st Respondent is not a bonafide purchaser as per Section 135 of the Land Act fCAP. R.E. 20191. Submitting on the 4th ground of appeal, counsel for: the Appellant argued that the law allows one house to be placed as security in more than one bank as oer Section 117 of the Land Act FCAP. R.E. 20191. He elaborated on the issue of informal mortgage to be the type of Page 8 of 20 mortgage normally used in circumstances that the house is on unregistered land as discussed in the case of National Microfinance Bank Pic vs. Joanes Mtalemwa Kailembo & Others Land Appeal No. 11/2020 (Unreported). He submitted further that when the Is' Respondent instituted this Land case in December, 2019, he had no title. The suit land was surveyed sometimes in 2020/21 and the official title number was Plot No. 81 Block “W" Julia Newala. It was then the right of occupancy was issued to the 151 Respondent. However, before that it was Plot No, 237 Block “W” Julia Newala. The issue here is, since 13.02.2019 the land in dispute was secured as security. He stated also that the evidence of the Land Officer shows that the land at first was not registered on a survey plan. According to them, the suit land was not surveyed and there was no certificate of right of occupancy. He contended that the trial Chairman erred in law by saying that the land was registered in 2018 and to nullify the loan contract. In reply, Counsel for the 1st Respondent submitted that the Appellant’s claim is based on the issue as to whether the disputed house was mortgaged to the Appellant by the 2na Respondent. Responding io the 1st grounds of appeal Counsel for the 1st Respondent contended Page 9 of 20 that in the case at hand there is no any new issue raised during the composition of the judgment He reminded the court that the issues raised during: the trial were three (3) of which were stated at page 11 of the typed proceedings of the trial tribunal and page 3 of the typed judgment. The stated issues were resolved basing on the evidence adduced at the trial tribunal and the evidence obtained at the locus in quo. The first issue was resolved in favour of the 1st respondent due to the reason that there was no lawful mortgage contract between the 1st Respondent and 3rd Respondent. He said the cited the case of Matumaini Saccos LTD vs. Stanley Ezeli (DC Civil Appeal No. 24 of 2019 [2021] is irrelevant in the circumstances of this case. Arguing on the 2nd ground of appeal Counsel for the 1st Respondent argued that the Chairman of the trial tribunal properly applied the principle of bonafide purchaser. He said the Appellant has misconceived the point by saying thatfor the doctrine to be applied there two things to be considered which are; valid contract between the parties and the bonafide purchaser must have obtained the mortgaged property from the mortgagee. He contended that such interpretation is not correct in the eyes of law. The tribunal was correct Page IQ of 20 to declare the 1st Respondent as bonafide purchaser on the fact that he bought the suit land without fraud or collusion. He distinguished the relevance of the cited Section 135 (1) (a) and (5) of the Land Act (CAP. R.E. 20191 a nd th e case of Cassia n Calist Joseph vs. Pen do Sisty Chuwa and Others (Supra) to the instant case on the basis that the above authorities talk on the situation where the buyer buys a mortgaged land in auction. In our case at hand the Ist Respondent did not buy the house in auction. Responding to the 3'c ground of appeal Counsel for the Ist Respondent was of the view that the trial tribunal was correct to order cost of the suit to the 1st Respondent due to the reason that the dispute was caused by the Appellant.. To cement his argument, he cited the case of Juma Mganga Lukobora & 7 Others vs. Tanzania Medicine and Medical Devices Authority & 3 Others Misc. Civil Application No. 642 of 2020 HC-Dar es Salaam on the principle I that cost shall follow the event and as a general rule costs are awarded at the discretion of the court. He challenged the 4th ground of appeal that it has no merit on the reasons that exhibit D-2 described the house which is quite different Page 11 of 20 from the house in dispute. He described the borders of the mortgaged house at the east side that it is boardered with Mfanyabiashara Seie, west side Sad a m , North side Mzee Chuma and South side a person known as Kichaa. He sajd as per the report during the locus in quo the tribunal observed that the house in dispute is boardered at the east side with the house of Rashid Mkulula, west side there is a road to Julia ward offices, at the north side house of Ally Mkomi and qt south side the house of Mustafa Ally Matipa. Due to that reason the disputed house is different as it was not described in the informal mortgage. He further submitted that since Mohamed Mauled Mwayara was a guarantor then it is his property which was supposed to be sold. He therefore prayed for this court to dismiss the appeal for want of merits with costs. 1 have dispassionately followed the rival submissions by the parties’ Counsels I have also gone through the proceedings before the DLHT which show that among the issues deliberated by the Tribunal, is “who is the lawful owner of the suit property (mortgaged property)’’. The DLHT came at a conclusion that it was the 1st Respondent who was the lawful owner. The conclusion was reached after the DLHT looked Page 12 of 20 at exhibit Cl-sale agreement tendered by the 1st Respondent, exhibit C2-letter of offer and exhibit C3-certificate of occupancy. Notwithstanding the findings of DLHT on the ownership of land, I shall first confine myself as to whether the disputed house was a mortgaged property. This is because the Appellant’s grounds of appeal based on the complaint that the disputed house was a property which was Used by the 2nd Respondent to secure the loan facility. The grounds of appeal therefore, can be conveniently determined by a single issue of Whether the disputed house was a mortgaged property to the Appellant. As it can be observed, this being the first appeal, I am obliged without fail to re-visit and re-evaluate the entire evidence on record and subject the same into objective scrutiny; and if merited arrive to this court's own findings of fact. I am inspired by the position slated in the case of Shah Vs Aguto (1970) 1 EA 263 citing with authority in the case of Peter Vs Sunday Post (1958) EA 424 where it was held at page 492 that: “It Is a strong for an appellate Court to differ from the finding on a question of fact of a judge who tried the case and who has had The advantage Page 13 of 20 of seeing and hearing the witness. An appellate court has, indeed jurisdiction to review the evidence in order to determine whether the conclusion originally reached upon that evidence on records and find out whether the appellant's defence can stand or otherwise". [Emphasis added]. Similar position has been illustrated by the Court of Appeal of Tanzania in the cases of Leopold Mutembei Vs Principal Assistant Registrar of Titles, Ministry of Lands, Housing and Urban Development and Another, Civil Appeal No. 57 of 2017; and Jamal A. Tamim Vs Felix Francis Mkosamali & The Attorney General, Civil Appeal No. 110 of 2012 [both unreported) to name but a few. I n d et erm i n i ng th is appeal, is ha 11 be g u id e d by th e pri n ci pI e of th e I a w that “he who alleges must prove; and that a burden at proof lies on a person who Would fail if no evidence were given at all on the other side” - Section ITO (1) and 111 of the Law of Evidence Act [CAP 6 R.E. 20221. As evidence on record would show, the Appellant claimed that on 13.02.2019, the 2nd Respondent approached the National Microfinance Bank PLC Newala Branch (the Appellant) for a loan Page 14 of 20 amounting to Tanzanian Shillings Twenty-Three Million (23,000,000/=). The loan was secured by the 2nd Respondent’s house valued at Tanzanian Shillings Forty-Five Million (45,000,000/=) located at Julia Area within Newala District, Mtwara. As the house was built in an unregistered land, the parties agreed to register their loan agreement under the provisions of Section 113 (51 arid (6) of the Land Act [Cap. 113 R. E. 20041. The Appellant received affidavits of the 2nd Respondent regarding; marital status and ownership of the land. In the said affidavit 2nd Respondent declared not to be married (single). Since the Appellant acted on the strength of those affidavits by the 2rtd Respondent there was no reason that could1 have prevented her from disbursing the loan, l am inspired by the Court of Appeal Hadija Issa Arerary vs Tanzania Postal Bank (Civil Appeal 135 of 2017) [2020] TZCA217 (11 May 2020) where it said that: “In the instant case, it is undisputed that the mortgagor provided an affidavit proving that he was single. With that information, the mortgagee had no reason to disbelieve him. It is on the strength of the above information which the respondent verily believed it to be true that she disbursed the loan io......." Page 15 of 20 Now coming to the issue whether the disputed house was mortgaged to the Appellant. Basing on the records of the trial tribunal 2nd Respondent who neither enter appearance at the trial tribunal nor at this Court obtained a loan facility of TZS. 23,000,000/= on 13.02.2019 and it was secured by his house valued Tanzanian Shillings Forty Five Million (45,000,000/=) located at Julia Area within Newala District, Mtwara. SU2, the witness of the Appellant told the trial tribunal that 2nd Respondent mortgaged the disputed house as security for the loan. To prove his ascertain, he tendered loan agreement dated 13.02.20! 9 which was admitted as Exhibit D2 and affidavit of ownership of land was admitted as Exhibit D3. Since the 2nd Respondent did not enter appearance to defend the claims against him, then the Court has to rely on the trial tribunal records. After going throw the impugned judgment of the trial tribunal I found that the Chairman basing On the evidence of PW2, Land Officer, Exhibit C2 (letter of offer) and Exhibit C3 (certificate of occupancy), Page 16 of 20 stated that the Appellant did not do due diligence to ascertain herself on the disputed house if it was surveyed or unsurvey. On perusing the admitted exhibits at the trial tribunal, I found that Exhibit Cl (sale agreement) it shows that the 1st Respondent purchased the disputed house on 27.02.2019 and the house described to be the house of 2nd Respondent which is at Julia. There is no any other description. Now, another issue is that, if the said house in dispute had been surveyed on 12.06.2018 as shown in Exhibit C2 which is the acknowledgement of payment and not a letter of offer as labeled by the trial Chairman; why didn’t the 2nd Respondent while selling the house in dispute describe it to be Plot No. 237 Block “W" Julia Newala? Referring to Exhibit D2 which was also approved by hamlet leader of Julia, Chairman of the Street Local Government of Julia and the Ward Executive Officer (WEO) of Julia the description of the house in dispute was the same as the description stated by the 2nd Respondent at the time he was selling the disputed house. Concerning the issue of property boundaries (disputed house), it goes without saying, people do sale their land at any moment as the way Page 17 of 20 2nd Respondent did. So, property boundaries do change i.e. neighbours. Consequently, I am of the view that the house in dispute was mortgaged to the Appellant. Due to the reason that 1st Respondent purchased the disputed house on 27.02.2019 and the 2nd Respondent secured the loan and mortgaged the disputed house in an informal mortgage on 13.02.2019. Before I pen off, I should discuss about the loan which 2nd Respondent had with Tanzania Postal Bank and the said loan was secured by using the same disputed house herein. This issue was raised by the 1st Respondent but he did not reveal at the trial tribunal when was the said loan obtained. According to the trial tribunal's records, the 1st Respondent contended that immediately after purchasing the disputed house he came to discover that the said property was used as security a loan at Tanzania Postal Bank. Tanzania Postal Bank had advertised to sale the disputed house. Due to that 1st Respondent had to clear the outstanding balance. Therefore, I think this should not be a surprise to the 1st Respondent that 2nd Respondent had another loan with the Appellant on the same house, Page 18 of 20 Section 117 (2) of the Land Act [CAP.113 R.E. 2019] provides for the procedures for informal mortgages. It states that; "(2) Informal mortgages shall rank according to the order in which they are made provided that where an informal mortgage is registered under section II of the Registration of Documents Act it shdll take priority over any unregistered informal mortgage." Therefore, the disputed house was mortgaged also to the Appellant by the 2nd Respondent and the procedures on informal mortgages by including the Street Local Government leader and Ward Executive Officer (WEO) were followed. Although the said mortgage was not registered as per Section 1 l of the Registration of Documents Act, still, it does not nullifies its existence. Having saying that, I find that 1st Respondent bought the disputed house on 27.02.2019, When the disputed house was already under the mortgage with the.Appellant. Therefore, at that particular time the 2nd Respondent had no title to pass to the 1st Respondent. 2nd Respondent acted fraudulently by selling the disputed house while knowing that he had already created mortgage on the disputed house. Thus, the Page 19 of 20 1st Respondent derives his claim from the 2nd Respondent only and not the Appellant. As such, the sale of house in dispute to the 1st Respondent was void abnitio. In view of the above findings, this Court do hereby allow the appeal in its entirety with costs. 24.11.2023 Mtwara. Page 20 of 20