Default Judgment CRDB v Harmonize

1 IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA COMMERCIAL DIVISION AT DAR ES SALAAM COMMERCIAL CASE NO. 151 OF 2023 CRDB BANK PUBLIC LIMITED COMPANY….……..……………………. PLAINTIFF VERSUS RAJABU ABDUKAHALI IBRAHIM alias HARMONIZE………………….. DEFENDANT JUDGMENT June 19t, 2024 & August 2nd, 2024 Morris, J This is a default judgment. The plaintiff instituted the present suit praying for judgment and decree of the Court against the defendant. He sought the following reliefs: payment of Tshs 103,185,755.16 being outstanding loan under Credit Facility Letters between the parties; interest on the outstanding amount at the rate of 18% per annum; interest at the court’s rate accruing from the date of judgment to the date of payment in full; general damages; costs and expenses incurred by the plaintiff; commercial rate interest of 25% per annum from institution of this suit until 2 the date of judgment; and any other orders or reliefs per the Court’s discretion. The important facts pertaining to this matter are easy to summarise. On 10.10.2019, the plaintiff offered to the defendant two credit facilities namely, term loan facility I and term loan facility II (the Facilities). The Facilities were to the tune of Tshs 100,000,000/= and 200,000,000/= respectively. They each attracted interest rate of 18% per annum. The defendant was to repay the loan within 36 months on the basis of equal monthly instalments. The purpose of the Facilities was to finance costs for defendant’s music equipment, establishment of production studio, music production and promotion. The Facilities were secured by a letter of lien over designated account that was supposed to be opened and maintained by the borrower for an amount of Tshs 100,000,000/=. The defendant was, among other conditions, required to channel all of his business proceeds through the subject account stated above. According to the plaintiff, the defendant apart from failing to comply with the terms and conditions of the Facilities he did not repay the loan in full. The present suit ensued accordingly. 3 The plaintiff instituted this suit as the recovery measure against the defendant on 06.12.2023. Consequently, on 08.12.2023 and 14.12.2023 the Court summonses were issued to the defendant for appearance and filing of his written statement of defence (WSD) respectively. Both summonses were served upon the defendant on 21.12.2023. The defendant however, neither entered appearance in Court nor did he file the WSD. Upon the prayer by the plaintiff’s advocate on 28.02.2024, the Court issued the reservice order. As a result, another summons was issued by this court on 04.03.2024. The defendant was, once again, required to file his WSD and attend the first pre- trial conference thereafter. The second summons was returned unserved upon the defendant for reported refusal of service on 06.03.2024. Once again, the defendant neither filed his written statement of defence, nor did he appear in court. Over again, the Court issued another order for reservice on 12.04.2024. However, this time the plaintiff was ordered to serve the defendant with the summons by way of publication via Mwananchi Newspapers. Accordingly, the plaintiff published the summons on 19.04. 2024. Yet again, the defendant never filed 4 his defence. He did not enter appearance in Court on the scheduled date either. The defendant’s unreceptiveness shown above was not condoned by the resolute plaintiff. His advocate, Mr. Fredrick Mpanju, prayed to proceed with the suit in the defendant’s absence (ex parte) under Order VIII Rule 14 (1) of the Civil Procedure Code, Cap. 33, R.E. 2019. Additionally, he prayed for leave to file the Statutory Form No. 1 for default judgment under rule 22 of the High Court (Commercial Division) Procedure Rules, 2012 as amended by the High Court (Commercial Division) Procedure (Amendment) Rules, 2019 (the Rules). The foregoing prayer was granted. The filing schedule was accordingly set by the Court. The plaintiff complied religiously. The plaintiff’s counsel filed in Court the Statutory Form No. 1 (application for default judgment against the defendant) under rule 22 of the Rules. In essence, the plaintiff prayed for judgment and decree against the defendant in respect of the reliefs stated in the plaint. The application was accompanied with an affidavit to that effect, duly sworn by Peter J. Musetti, the Principal Officer of the plaintiff. 5 Primarily, affidavit above contained deposition which reiterated the filed pleadings. It retold the like chronology of events leading to the Facilities (CRDB 1). The plaintiff averred that disbursement of the loan under the Facilities was subject to various terms and conditions precedents. However, due to the urgent need of funds, the defendant was unable to fulfil them expeditiously. He thus, successfully requested for waiver of such prerequisites and Tshs 300,000,000/= was disbursed to him forthwith (CRDB 2). Nevertheless, the defendant was required to submit all conditional documents within one month of the disbursement date. To this condition, however, he did not heed. The plaintiff wrote a couple of reminders to him to no avail (CRDB 3). The defendant never fulfilled them. It was deposed further that; the defendant was again notified of his contractual obligations, the default and duty to repay the loan through WhatsApp messages (CRDB 4). The plaintiff asserted in addition that, on 30.01.2022, upon constant demands for payment of the loan to him, the defendant wrote a letter to the plaintiff’s Branch Manager at Mlimani City requesting for variation of 6 repayment schedule. He proposed the monthly instalment of Tshs 10,874,567.83/= to be reduced to Tshs 3,300,050/=. Accordingly, a deed of variation was issued on 18.09.2022 (CRDB 5). In terms of Clause 1 of the subject deed of variation, the outstanding debt was Tshs 109,731,369.06/=. In consequence, the defendant was supposed to pay the monthly instalment of Tshs 3,963,733.46/=. Mr. Musetti deposed further that, with the above variation, the defendant made several monthly instalments as covenanted in the deed of variation. Nevertheless, the defendant defaulted the repayment later as shown in the bank statement (CRDB 6). He was thus, notified of such default via a demand notice dated 16.05.2023 (CRDB 7). At the time of such notice, the defendant’s outstanding amount was Tshs 103,185,755.16/=. However, the defendant neglected or refused to pay the debt in total breach of the terms and conditions of the Facilities and deed of variation. The affidavital depositions are further to the proof that due to the alleged breach, the plaintiff suffered and continues to suffer significantly. The losses and damages were presented in the form of: Tshs 103,185,755.16/= being the outstanding debt; wasted investment 7 opportunities; general costs and expenses incurred in seeking repayment of the outstanding amount. The diligent examination of the affidavit, pleadings and produced supporting documents leads the Court to set one issue for determination. That is, whether the reliefs sought by the plaintiff in this suit are tenable. As stated above, the suit was prosecuted pursuant to rule 22 of the Rules. For clarity, I find relevancy in sub rule (1). As such, I find myself obligated to reproduce it hereunder. It provided that; “Where any party required to file written statement of defence fails to do so within the specified period or where such period has been extended in accordance with sub rule (2) of rule 20, within the period of such extension, the Court may, upon proof of service and on application by the plaintiff in Form No. 1 set out in the Schedule to these Rules accompanied by an affidavit in proof of the claim, enter judgment in favour of the plaintiff.” Thus, the law cited above establishes five principles for grant of the default judgment. One, the party required to file WSD fails to do so within time. Two, service of summons to such party is proved. Three, the plaintiff moves the court to enter default judgment formally. Four, the plaintiff’s 8 application to conform with Form No.1 of the Rules. Five and last, the plaintiff proves his claim by filing the affidavit thereof. This is not the first time the Court is restating strict compliance to the foregoing penta fundamentals. I have in mind holdings in Alaf Limited v Ummy Hashim Kazungu, Commercial Case No. 120 of 2022; Nitro Explosive (T) Ltd v Tanzanite One Mining Ltd., Commercial Case No. 118 of 2018; A-One Products & Brothers v Techlong Packaging Machinery Ltd & Another, Commercial Case No. 105 of 2017 (all unreported) in this regard. As shown above, the defendant did not file his WSD to contest this suit. The plaintiff’s assiduous attempts to serve him summonses for the needful were also evident herein. Consequently, the plaintiff filed the application in this Court praying for the default judgment. The application was filed through Form No. 1 pursuant to law. The same was supported by the affidavit of the plaintiff’s principal officer proving claims pleaded in the plaint. Precisely, it is sufficient to state at this juncture that, the plaintiff accordingly, complied with the mandatory conditions of rule 22 of the Rules. 9 In the premises, the only paramount question pending is if the plaintiff has proved his claims herein. Apparently, the plaintiff’s claim against the defendant is founded on the breach of Facilities (paragraph 13 of the plaint). The Facilities were executed by the parties herein in 2019 (CRDB 1). They indicate that the defendant obtained from the plaintiff the loan totaling Tshs 300m/=. Further, in purview of Clause 2.1(c) thereof the loan attracted interest at the rate of 18% per annum. The foregoing assertions were also articulated in the affidavit (paragraphs 2, 3.1 and 3.2). I took time to go through the facility agreement (CRDB 1). Indeed, the parties above executed the Facilities for the stated loan on the disclosed terms and conditions. The plaintiff further stated in paragraph 8 of the plaint that, the loan amount (Tshs 300,000,000/=) was actually disbursed to the defendant on a single tranche, upon his request (the defendant). This fact was as well, replicated in paragraph 6 of the affidavit. In buttress thereof, the plaintiff also attached copies of letters dated 22.10.2019; 23.06.2021; and 6.12.2021 (CRDB-2 and CRDB-3). Upon my watchful reading of the letters, it was manifest to the Court that; the letter of 22.10.2019 was for approval of disbursement of Tshs 10 300m/- on single tranche at the defendant’s request. It was the plaintiff’s internal communique via which the defendant was required to adhere to all Facilities’ conditions within one month from the disbursement date. The other letter was authored by the plaintiff on 23.06.2021 to the defendant specifically reminding the latter to submit the missing documents or information in his loan file (copies of Business License, Tax Clearance Certificate and Two Passport Size photos). Besides, the third letter dated 06.12.2021 was but another reminder for submission of the said documents. Further allegations in the plaint (paragraph 10) were that the defendant wrote a letter on 30.01.2022 requesting for variation of monthly instalments from Tshs 10,874,567.83/= to Tshs 3,300,050/=. And that, on 17.08. 2022 the plaintiff issued a deed of variation thereof. From the said deed (CRDB 5), the outstanding amount was stipulated as Tshs 109,731,369.06/= payable monthly at the rate of Tshs 3,963,733.46/=. Paragraph 8 of the affidavit echoed such information. Reading the documents attached satisfies the Court that the plaintiff has proved the defendant’s request for variation and approvals thereof. 11 The plaintiff also pleaded and proved that the defendant paid several monthly instalments. See paragraphs 11 and 7 of the plaint and affidavit respectively. Buttress is also made through the Bank Statement (CRDB-6). Further, the outstanding loan as at 16.05.2023 was proved to be Tshs 103,185,755.16/= per paragraph 10 of the affidavit. Therefore, from the above examination and analysis, I am of the considered view that, the affidavit has established the plaintiff’s claims to the extent stated above. I so hold also taking into consideration that, the material facts of this suit plus the evidence in affidavit, stand uncontested. In fine, the issue raised is answered in the affirmative. Consequently, pursuant to rule 22 (1) of the Rules, this Court hereby enters the Default Judgment in favour of the plaintiff as follows: a) The defendant is ordered to pay the plaintiff Tshs 103,185,755.16/=. b) The defendant is hereby ordered to pay the plaintiff interest on the outstanding amount at the rate of 18% per annum from the date of default to the date of this judgment. c) The defendant shall pay 7% interest on the decretal sum from the date of this judgment to the date of full payment. 12 d) The plaintiff is entitled to Tshs 10,000,000/= general damages from the defendant. e) The defendant shall pay costs of this suit. It is so ordered. The right of appeal is explained to parties. C.K.K. Morris Judge August 2nd, 2024