cosco east africa limited vs alexander joseph malyi 2021 tzhclandd 37 12 february 2021

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (LAND DIVISION) AT PAR ES SALAAM LAND CASE NO. 134 OF 2017 COSCO EAST AFRICA LIMITED .................................................PLAINTIFF VERSUS ALEXANDER JOSEPH MALYI .....................................................DEFENDANT JUDGEMENT Maige, J The dispute at hand traces its genesis on 6th day of September 2013 when the parties herein executed a sale agreement (exhibit PI). The theme of the agreement was two pieces of land at Kimara Temboni Dar Es Salaam. The first piece of land was surveyed and identified as Farm No. 2150 with a letter of offer. The second one which was not surveyed, was adjacent to the first one. The two pieces of land together constituted proximately 6 acres. For the purpose of this suit, the two pieces of land shall be referred to as "the suit properties". Express in exhibit PI was the fact that, the purchase price for the suit property would be USD 128,000.00 per acre. This means that the total purchase price for the entire suit property would be USD 768,000.00. It was to be paid in two installments. The initial installment of USD 100.000.00 was to be paid within ten days from the date there of. The balance purchase price would be paid into the vendor's designated account upon completion of the transfer process. On 30th September 2013, it is not in dispute, parties executed a supplementary agreement (exhibit P2). In effect, exhibit P2 varied the mode of payment so that the initial purchase price would be paid through the vendor's designated account at Standard Chartered Bank Ltd under supervision of the Bank. On 13th January 2014, parties are in agreement, exhibit PI was further amended so that the purchaser, with a view to facilitating the effort of the defendant to speed up the transfer process, would provide additional support of USD 10,000.00. It was further acknowledged between the parties that, in addition to USD 18,000 which the plaintiff had previously advanced to the defendant, the defendant had in total, received USD 28.000.00 as facilitation. The plaintiff claims that, while the supplementary agreement in exhibit P2 extended the period for completion of the transfer to March 2014, the defendant had, until December 2016, not transferred ownership of the suit property to the plaintiff. That is so notwithstanding that by July 2014, he had procured certificates of title for both the two properties. The plaintiff contends that, this is an event of fundamental breach of contract on the part of the defendant. The plaintiff further claims that, subsequent to the procurement of certificates of title on the suit property, the defendant, in breach of the contract, proposed for an increase of the purchase price of the suit property. As a result, on 10th December 2016, at the instance of the defendant, a meeting was held to discuss about the proposed new purchase price. As the plaintiff did not agree with the proposed price, she gave the defendant two options. First, a friendly termination of the agreement with a refund of USD 128,000.00 and TZS 620,000 without any claim of compensation. Two, the defendant to perform the contract in the same purchase price with compensation for loss occasioned. The defendant, it is claimed, opted for the second option without mentioning the issue of compensation and hence the instant suit. 3 In this suit, the plaintiff is claiming for three substantive reliefs. First, declaration that the defendant is in breach of the contract. Two, payment of USD 128,000.00 and TZS 620,000/= as a special damages with interest thereon at 9% per annum from July 2014 to the date of judgment. Three, general damages for financial loss and loss of business opportunity. In his written statement of defense much as it is in his testimony in rebuttal as DW1, the defendant, while in agreement with the chain of events narrated by the plaintiff from the date of execution of exhibit PI to 10th December 2016 when the plaintiff offered the defendant with two options on the way forward for the contract, he vehemently denies to have breached the contract. Of the two options, the defendant claims to have opted the second one. He claims further that, soon upon opting the second option, the plaintiff's advocate prepared conveyance documents which the defendant immediately signed. The plaintiff however returned the documents, on 12/12/2016, unassigned, it is further claimed. In his written statement of dependence, the defendant has also raised a counter claim blaming the plaintiff for a breach of the agreement in exhibit PI and a lease agreement subsequently executed between them. He is praying therefore for three substantive reliefs. First, payment of USD 425,800 as special damages for a breach of contract. Two, payment of TZS 168,000 as rent arrears. Three, payment of TZS 16,800 as liquidated damages for a breach of a lease agreement. At the final pre-trial conference, two issues namely; who breached the sale agreement between the parties and to what reliefs are the parties entitled were framed for determination. The prosecution of the case at the instance of the plaintiff was done by Mr. Sylvester Shayo learned advocate while the defense aspect was conducted for Mr. Idd Omari Mlisi, also learned advocate. Coincidentally, each of the parties called one witness to advance its case. Mr. Jie QI is the director of the plaintiff. He was the only prosecution witness. He tendered the sale agreement (exhibitPl), the first supplementary agreement (exhibit P2), the second supplementary agreement (exhibit P3), certificate of incentive (exhibit P5), a letter from the n c to the plaintiff dated 20/11/2013 (exhibit P6), a letter from the plaintiff to the defendant dated 3/3/2017 (exhibit P7) and a letter from the plaintiff to 12/12/2016 (exhibit P8). In the course of cross examination, PW1 was caused to produce which was admitted as Dl, a letter dated 26th October 2016 purporting to be from the plaintiff to the defendant. 5 On his part, the defendant personally testified as DW1. He admitted to have sold the suit property to the plaintiff as per PI. He admitted to have executed exhibits P2 and P3 too. He admitted as well to have received an advance payment of USD 100,000 through his Bank account. He also admitted to have received an extract amount for facilitation of the transfer process so that the total amount paid is USD 128,000. He accepted the receipts in exhibit P4 as evidence of payment of the amount therein stated. He testified further that, pursuant to the agreement, he was able to procure, on 17/10/2014, two certificates of title of the suit property (exhibit D2). He said, soon upon issuance of exhibit D2, he availed copies thereof to advocate Mbuya who was contracted by the plaintiff to prepare the relevant conveyance documents. He said, he received the relevant draft agreements from the said advocate (exhibit D3). He did not agree with the terms thereof in that they departed from what agreed upon. He clarified that, instead of the agreed price of USD 128,000 per acre, the amount was changed into TZS 250 million per title. 6 As a result of the disagreement, it is further in his testimony, a meeting was held in 2016 to reconcile the situation. He was required to choose either to continue with the contract or pay back the purchase price to the plaintiff. He opted to continue with the contract. Mr. Mbuya prepared the agreement. The defendant signed but the plaintiff did not. He admitted further to be aware that, the suit property was intended to be used for investment. To assist the plaintiff to achieve the goal, the defendant executed a lease agreement to be submitted to TIC (exhibit D4). He denied to have breach the contract. He blamed the plaintiff for breaching the same in not paying the purchase price. He prayed therefore that, the suit be dismissed and the prayer in the counter claim be granted. On cross examination, DW1 admitted that in accordance with P2, payment of the purchase price would be upon execution of the agreement and vacant possession of the suit property. He admitted as well that in view of exhibit P3, the purpose behind remitting USD 128 was to ensure that before the end of March 2014 the transfer process should be completed. He admitted as well that the transfer process never completed in the said time. He admitted further that exhibit D3 assisted the plaintiff to procure certificate of inventive. 7 In his submissions in address of the first issue, Mr. Mlisi has urged the Court to answer the question affirmatively. He has assigned several reasons to support his claim. In the first place, it is his contention that, while according to the clear expression of exhibits P1,P2 and P3, the defendant was to finalize the transfer process before the end of March 2014, until 2016, he had not. That is so notwithstanding the unquestionable fact that, he had received USD 128 as facilitation fund and the fact that, by July 2014, he had already procured certificates of title of the suit property. Relying on the provision of section 37(1) and 39 of the Law of Contract Act, Cap. 345, R.E., 2019 as considered in DELTA AFRICA LIMITED VS. VODACOM TANZANIA PLC. COMMERCIAL CASE NO. 95 OF 2017, the counsel submitted that, the defendant has committed an event of breach of contract by way of non-performance of his contractual obligation. In the second place, he submitted, the defendant having expressly admitted in his pleading to have opted to continue with the contract in the manner proposed in the second proposed option, he was not expected to be heard in evidence giving a testimony to the contrary. He invited the Court to hold that in not performing his bargain not withstanding his 8 acceptance of the second option, the defendant breached the contract. He submitted, guided by the principle in OYSTERBAY VILLAS LIMITED VS. THE KINONDONI MUNICIPAL COUNCIL AND ANOTHER that, the defendant was bound by his own pleading. Rebutting the claim of there being prepared draft agreements for disposition of the suit property, the counsel challenged the defendant in not producing into evidence the alleged signed agreements. He invited the Court to draw a negative inference against the defendant for failure to produce the documents in annexure AJM-1 of his defense. In the fourth place, the counsel submitted that, in varying the terms of the agreement as to the purchase price of the suit property, the defendant was in breach of the express provision of exhibit PI which required any amendment of the terms thereof to be in writing. He further breached the terms of exhibit PI by requesting that the amount be deposited in escrow account which was not in the contract. In rebuttal, Mr. Shayo submits in the first place that, because until on the date of the repudiation of the contract on 12/12/2016 the defendant had performed part of his bargain, it cannot be said that he was in breach of the contract. He submits further that, the defendant was ready to execute 9 the draft conveyance documents in D3 but for variation of purchase price from TZS 650,000,000 to 250,000,000/=. In the alternative, it is his submission, time was not of essence in the agreement in exhibit PI. He justifies his contention on the fact that, although the plaintiff had not, as of December 2013, performed her bargain, she made use of exhibit P3 to condone the non-performance. The counsel submitted further that by October 2016, he had already given vacant possession of the suit property. He has placed reliance on exhibit P9 which was produced by way of cross examination. The counsel submitted further that since the contract at hand pertains to specific performance of real estate, the Court should not, in ascertaining whether time was of essence look at the letter but substance of the agreement. Reliance was placed in the authority of the Privy Council in 3AMSHED KHODARAM IRANI fPLAINTIFn VS. BUJAN. (1995) AC 386 where in it was held that:- Under the law o f equity, which governs the rights o f the parties in cases o f specific performance o f contracts to self real estate, court looks not at the letter but at the substance o f the agreement in order to ascertain whether the parties, notwithstanding that they named a specific time within which completion was to take place, reality and 10 substance intended no more than it should take within a reasonable time. Having considered the rival submissions in line with pleadings and evidence, it may desirable to address myself with the issue at stake. The agreement, the subject matter of the dispute is incorporated in exhibit PI. It has been supplemented by the documentary evidence in exhibit P2 and P3. It is express in exhibit PI that, the purchase price of the suit property was USD 128,000 per acre. The size of the suit property was 6 acres. The total purchase price of the suit property was thus USD 768,000.00. It was to be paid in two installments. The advance payment of USD 100,000.00 was to be paid within ten working days and before yielding vacant possession of the suit property to the plaintiff. The balance purchase price would be paid into the vendor's designated account upon the completion of the transfer process and within ten working days of such completion. Express in clause 2.2 was the fact that the transfer process was to be completed at the end of 2013. li Linder clause 7 of exhibit PI, parties were to execute Deed of Transfer soon upon approval of the change of use of the suit property, the duty, which according to clause 4 of exhibit P I was imposed on the defendant. It was further express in clause 12 of exhibit P I that, any amendment of the terms of the agreement would be in writing. Exhibit P I was executed on 6th September 2013. Until on 30th September 2013, it is not in dispute, the plaintiff had not performed her contractual obligation in clause 2:1 of exhibit P I which required her to, within 10 working days pay an advance payment of USD 100,000.00. By agreement, it would appear, the parties signed an agreement, on 30th day of September 2013 which among others, amended clause 2.1 of exhibit P I to read as follows:­ " After signing the saie Agreement and before handing over possession o f the property, the purchaser shall pay the sum o f the United States Dollars one hundred thousand (USD 100,000.00) advance payment o f the purchase price into the Vendor's designed account in Standard Chartered Bank Ltd. The Vendor and the Purchaser agree that such advance payment shall be supervised by Standard Chartered and may be used by the Vendor only after the Vendors transfers the land use rights to the Purchaser". Due to delay to fulfill the terms of the contract on the part of the defendant as a result of bureaucracies, parties executed, on 13th January 2014, a supplementary agreement in exhibit P3. The substantive term of the agreement was as follows " That the parties have on lf f h January 2014 agreed that the Purchaser shaii provided additional financial support of US Dollars 10,000.00 Ten Thousand only immediately to support the effort o f the Vendor in speeding up the processes. Apart from taxes relating to transfer and other taxies, there will be no further advances. The purchaser previously advanced USD 18,000 and the new amount o f USD 10,000 the total sum will now be USD 28,000.00. The remittance of the advance payment of USD 100,000.00 as per clause 2.1 of exhibit PI as amended by exhibit P2 is not doubted. Equally so for the payment of facilitation amount in exhibit P3. They have been expressly admitted in pleadings and evidence. In the circumstance, I think, parties are not in dispute as to the fact that until the date of execution of exhibit P3 in January 2014, the plaintiff had duly performed his contractual obligation. In exhibit PI, it is express, the defendant was expected to complete the transfer process at the end of 2013. In the supplementary agreement in 13 exhibit P3, it is suggestive, the time was extended up to the end of March 2014. It is undeniable that, by March 2014 while the plaintiff had fully discharged her contractual obligation, the defendant had not. He had not discharged the same until on 10th December 2016 when parties met for negotiation to resolve the controversy as well. In the said negation, the defendant expressly admitted in paragraph 3 of his written statement of defense that, he was offered two proposals. One of such proposals which he accepted was "preparation and execution of fresh conveyance documents to transfer the properties at the price of USD 128,000 per acre" The defendant claimed in paragraph 5 of his written statement of defense to have fulfilled the terms of the agreement by signing the various conveyance documents prepared by the advocate for the plaintiff but the plaintiff refused to sign and instead served the defendant with revocation letter. The defendant pleaded, as annexure AJM-1 collectively, copies of the conveyance agreements. Quite unexpectedly, neither of them was exhibited into evidence. Instead, the defendant produced, which was admitted as D3, a copy of unsigned sale agreement. I agree with the counsel for the defendant that, what the defendant did amount to 14 departure from pleadings which is prohibited by the express provision of order 6 rule 7 of the CPC. On that account therefore, this Court shall not place reliance on any evidence departing from pleadings. Mr. Shayo further submitted, relying on the authority of the Privy Council in Jameshi (supra) that, in cases of specific performance of a real estate, what is of essence is the substance and not the letter of the agreement. He urged the Court therefore to hold that, time was not of essence in the instant matter. I have carefully gone through the authority just referred. I am satisfied myself that the Privy Council in that particular case was considering the provision of section 55 of the Indian Contract Act, 1872 which is in per materia with section 55(1) of our Law of Contract Act. I am highly persuaded by the said authority and I have no doubt that it is relevant in ascertaining the meaning the similar provision of section 55 (1) of our Law of Contract Act which provides as follows "55-(l) When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before specified time, the contract, or much o f it as has not been performed, becomes voidable at the option o f the promise, if the intention o f the parties was that time should be o f the essence o f the contract 15 In effect, the principle stated in the said authority is that, in ascertaining whether time is of essence in a contract of specific performance of a real estate, the Court is, unless there express stipulation to the contrary, expected to look at the substance and not the letter of the agreement. The principle, it would appear, was deducted from the English authority in TILLEY VS. THOMAS (1) L.R. 3 Ch. 61 where it was held: A Court o f equity wiii indeed relieve against-f and enforce specific performance, notwithstanding a failure to keep the dates assigned by the contract, either for completion, or for steps toward completion, if it can do justice between the parties, and if ( as Lord Justice Turner said in Robert vs. Berry), there is nothing in the express stipulation between the parties, the nature of the property or the surrounding circumstances, which would make it inequitable to interfere with and modify the legal right. This is what it meant, and all that it meant, when it is said that in equity time is not o f essence o f the contract. In this case, I agree with Mr. Shayo, the provision of clause 2.2 of exhibit PI as amended by exhibit P3 far from stating the period within which the defendant should perform his bargain, does not specifically stipulate if time is of essence. In the circumstance and applying the principle in the authority just referred, this Court is expected, in ascertaining the essence or otherwise of time, to consider the substance of the agreement and not 16 the letter. If I may apply the principle in Tilley case therefore, the question that I have to address is whether the nature of the property or surrounding circumstance would render it inequitable to disregard the letter. On this I have considered the evidence and rival submissions. I am satisfied that the object for which the property was acquired and the circumstances surrounding the case reasonably suggest that, the intention of the parties was to make time of essence in performance of the contract. Parties are not in dispute and it is express in PI that, the property was acquired for investment in terms of Tanzania Investment Act. Under the express provision of section 17(8) of the Act, Mr. Mlisi correctly submitted, such investment is supposed to commence within two years from the date issuance of certificate of incentive. Parties were aware, when they were executing exhibit P3 that, the certificate of incentive had been issued in December 2013 (exhibit P5) and that, under the respective provision, the plaintiff was supposed to commence the project within two years from the date thereof. More to the point, the evidence in exhibit P3 which forms part of the agreement, suggests that, as a result of the delay to complete the transfer process, the plaintiff gave the defendant, on agreement, USD 28,000 to facilitate the transfer process so that it would come to completion by the end of March 2014. In my opinion therefore, considering the substance of the agreement, time was of essence in the agreement in question. Assuming, which is not, that it was not of essence, yet in not perfoming his contractual obligation for such a long, the defendant would have been deemed to have breached the contract in not perfoming his bargain within a reasonable time. In the circumstance, I will answer the first issue in favour of the plaintiff and against the defendant both in the main suit and the counter claim. This now takes me to the last issue as to reliefs. The plaintiff has prayed for declaratory order that the defendant has breached the sale agreement. It is granted in view of what I have decided on the first issue. He is also praying for payment of USD 128, 000 and TZS 620,000 with interest thereon at the rate of 9% per annum from July 2014 to the date of judgment. It is granted for the reason as aforestated. 18 He has also claimed for general damages for financial loss and loss of business opportunities. From the evidence adduce however, I find nothing to imply such a loss. Though the Court enjoys discretion to grant or not general damages, the discretion must be exercised judiciously based on sound judicial principles. The consideration must as well be guided by the evidence on the record. The plaintiff has as well sought for interest of the dicretal sum from the date of judgment to full settlement of the decree at the Court rate. It is granted. The plaintiff is also granted costs for prosecution of his case. On counterclaim, there has not been adduced any evidence to establish breach of contract on the part of the plaintiff. The lease agreement, the defendant admits both in pleadings and evidence, was only executed to facilitate the plaintiff in his duty to procure certificate of incentive while the plaintiff was in the process of procuring certificate of title. Consequently, the counter claim is dismissed in its entirety. Dated at Dar Es Salaam this 12th day of February, 2021. 19 Date: 12/2/2021 Coram: Hon. A.S. Chugulu - DR, For Plaintiff: Absent For Defendant: Mrs. Bernadeta Shayo, advocate RMA: Bukuku. Court: Judgment delivered this 12th day of February, 2021 in the presence of counsel for defendant Mrs. Bernadeta Shayo only. Right of Appeal full> 12/ 2/ 2021. 20