DAIKIN T LTD VS DAIKIN INDUSTRIES LTD COMM CASE NO

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM COMMERCIAL CASE NO. 115 OF 2015 DAIKIN TANZANIA LIMITED............................................ PLAINTIFF VERSUS DAIKIN INDUSTRIES LIMITED MIKOCHENI BUILDERS MERCHANTS LTD (MBM) j... DEFENDANTS 4th November & 7th December, 2015 RULING MWAMBEGELE, J.: This ruling is in respect of two sets of preliminary objections raised by the defendants. The first set contains three points of preliminary objections and is raised by the first defendant. The second set is raised by the second defendant and contains only one point. The preliminary point of objection raised by the second defendant is among the points of preliminary objection raised by the first defendant. The preliminary objection by the first defendant has the following points: (a)This Honourable court has no jurisdiction to hear and determine the suit; 1 (b)The suit is time barred in so far as the claim against the first defendant is concerned; and (c)In the alternative, and without prejudice to the (a) and (b) above, the plaint does not disclose a cause of action against the first defendant. And the preliminary objection by the second defendant reads: The plaint does not disclose the cause of action against the second defendant. Both sets of preliminary objection were argued before me on 04.11.2015 during which Dr. Saudin Mwakaje, learned counsel appeared for the plaintiff while Dr. Wilbert Kapinga and Mr. Alike Mwamanenge, learned counsel, advocated for the first and second defendant respectively. The oral hearing was preceded by the three learned counsel filing skeleton written arguments pursuant to the provisions of rule 64 of the High Court (Commercial Division) Procedure Rule, 2012 - GN No. 250 Of 2012. These skeleton arguments were adopted by the three learned counsel at the oral hearing. At the hearing, it was Dr. Kapinga, learned counsel for the first defendant, who set the ball rolling. He kicked off by adopting the skeleton arguments earlier filed. The learned counsel argued in the skeleton argument on the first point of the preliminary objection that this court has no jurisdiction to entertain and hear this matter because the plaint has not set out a monetary claim for purposes of determining jurisdiction. What the plaint has done is to quantify the general damages which cannot determine the jurisdiction. The learned counsel maintains that the suit ought to have been instituted in a 2 court of the lowest grade competent to try it. To buttress this proposition, the learned counsel has cited the provisions of section 13 of the Civil Procedure Code, Cap. 33 of the Revised Edition, 2002 (henceforth "the CPC"), China - Tanzania Friendship Co. Ltd Vs Our Lady of the Usambara Sisters [2006] TLR 70; the decision of the Court of Appeal and two unreported decisions of this court which have followed the Our Lady of the Usambara Sisters case which are George David Gordon Vs Reliance Insurance (T) Ltd, Commercial Case No. 102 of 2005 and John Maiiya Vs M/S ZanteI (T) Ltd and another, Civil Case No. 62 of 2007 (Dar es Salaam District Registry). On the suit being time barred, which is the subject of the second point of the preliminary objection by the first defendant, Dr. Kapinga, learned counsel, submitted that section 5 of the Law of Limitation Act, Cap. 89 of the Revised Edition, 2002 (henceforth "the Law of Limitation") provides that a right of action accrues on the date on which the cause of action arose. In the case of the right of action founded on a contract, as per item 7 of the second schedule to the Law of Limitation, the suit must be commenced within six years. The learned counsel submits further that the plaintiff alleged that the cause of action against the first defendant arose in 2005 thus she ought to have filed the suit within six years after the cause of action arose. On this premise, the learned counsel prays that, in terms of section 3 of the Law of Limitation, this suit must be dismissed. The third point of the first defendant's preliminary objection is on nondisclosure of the cause of action against the first defendant in the plaint. Dr. Kapinga, learned counsel submits that paras 4.1, 4.2 and 4.3 which are 3 alleged by the plaintiff to contain the cause of action, do not actually disclose any cause of action because they do not disclose when the alleged distributorship was cancelled by the first defendant or any wrongdoing on the part of the first defendant respecting costs incurred by the plaintiff in nurturing the Daikin brand and further that there is nothing disclosing the alleged inducement by the first defendant of the second defendant to infringe the trade and domain name of the plaintiff. The learned counsel submits further that the averments in paras 13, 14, 15, 16, 17 and 19 of the plaint point to no legal or contractual obligation that could validly be claimed to have been breached by the First Defendant and that the Plaint contains no facts giving rise to one or more bases for suing nor any factual situation that entitles the Plaintiff to obtain a remedy in this Honourable Court from the First Defendant. The learned counsel relies on Halisbury's Laws of England, 4th Edition, 1982 at page 27 to define what a cause of action is and the cases of Jeraj Sheriff & Co. Vs Chotai Fancy Stores [1960] E.A. 374, Attorney General Vs Oluoch [1972] E.A. 392 at p.394 and John M. Byombalirwa Vs Agency Marime Internationale (Tanzania) Limited [1983] TLR I) on how the court should go about in order to determine whether a suit discloses a cause of action. The second defendant defines a cause of action to mean the basis upon which the plaintiff's complaint arises, when a right of the plaintiff is breached or infringed upon as result or on account of some act or omission of the defendant. The learned counsel submits that the set of facts in the plaint do 4 not a cause of action against the second defendant and, like the first defendant, prays that the plaint should be rejected. The plaintiff has countered the defendants' submissions with some force. The learned counsel maintains that this court has jurisdiction to entertain this suit. He relies on the provisions of section 2 (1) of Judicature and Applications of Laws Act, Cap. 435 of the Revised Edition, 2002 and article 108 (1) & (2) of the Constitution of the United Republic of Tanzania, 1977 as well as rule 5 (2) of the High Court (Commercial Division) Procedure Rules, 2012 - GN No. 250 of 2012 to buttress this proposition. The learned counsel for the plaintiff submits that, the plaintiff estimated the value of her claim/subject matter at issue at USD 17,700,000/= as per para 19 and the reliefs clause in the plaint. The learned counsel is thus of the view that this court has pecuniary jurisdiction to entertain this matter. He adds that the case of Our Lady of the Usambara Sisters is distinguishable here because, that case dealt with a pure monetary claim where specific damages have been clearly claimed. The court used the stated specific damages as criteria for determining the value of the claim. The case at hand is not an ordinary monetary claim, and no specific damages were claimed. Thus the limitations stated in Our Lady of the Usambara Sisters do not apply in this case, he argues. The learned counsel for the plaintiff adds that the Our Lady of the Usambara Sisters decision was based on section 13 of the CPC which section is not a jurisdictional section but a rule of procedure; it does not therefore oust this court's jurisdiction. He cites SAKAR, Code of Civil 5 Procedure, 11th Edition, page 197, which dealt with section 15 of the Civil Procedure Code of India which is in pari materia with section 13 of the CPC that it is essentially "a rule of procedure and not of jurisdiction and it does not therefore oust the jurisdiction of the Courts of higher grades who have concurrent jurisdiction in the matter ... the object is that the courts of higher grade shall not be overcrowded with suits". The learned counsel cites also Bhuwaneswari Kuar Vs Raghubansh Mani Prasad Narayan Singht AIR 1954 Pat 34, a Division Bench of the Patna High Court which stated that section 15 of the Civil Procedure Code of India is not imperative in its character and the Court of higher grade has a discretion either to return the plaint or not to return the plaint for being presented to the Court of the lower grade. He adds that he Court of higher grade cannot be said to have committed any illegality in the exercise of its jurisdiction and that there is nothing in the language of section 15 or Order 7, Rule 10 to suggest that the jurisdiction of the Court of the higher grade is ousted. He adds that Bhuwaneswari Kuar Vs Raghubansh Mani Prasad Narayan Singh was followed in J. Venkatramana Reddy vs Kanakagari Bhakthavatsaiaiah, 2003 (4) ALT 16. On limitation of time, the learned counsel submits that the business relationship between the plaintiff and the first defendant began to deteriorate in 2004 when it transferred its business operation to its European subsidiary but that negotiations proceeded since then until February 2013 when the official termination of exclusive dealership was communicated to the plaintiff (Annexure DTL-24 to the Plaint). The learned counsel submits that since the termination of business relationship was done in 2013 and the case was filed 6 in 2015, this suit is well within the statutory time as provided for under section 5 of the Law of Limitation Act. On nondisclosure of the cause of action, the learned counsel joins hands with the counsel for the defendants in the definition of the cause of action and cites M/S Noremco Construction (NOREMCO) l/s Dar es Salaam Water and Sewerage Authority (DAWASA), Commercial Case No. 47 of 2009 (unreported) in which this court defined a cause of action to constitute "facts or allegations which if proved, entitle a plaintiff to a judgment or a decree, and that this is not the same as the evidence required to prove the facts contained in the pleadings." In the present case, he submits, the cause of action is based on a claim of compensation for the development and promotion of Daikin brand in Tanzania and nearby countries. The learned counsel elucidates that the claim by the Plaintiff traces from an implied contract for exclusive dealership of DAIKIN air conditions machines and appliances with the first Defendant which commenced sometimes back in 1969 as the Plaintiff was then operating in the name of "Refrigeration Tanzania Limited". This suffices the requirements of Order VI rule 12 of the CPC, he submits. The learned counsel thus prays that all the preliminary objections raised by the Defendants be dismissed with costs. Alternatively, the learned counsel states, if the Court finds that the Plaint does not disclose cause of action or is barred by any law including section 13 of the CPC, the court should allow him to amend the Plaint so that the same can be compliant with the law or reject 7 (for want of cause of action) or return (for want of jurisdiction - Order VII rule 10) the Plaint and not to strike it out. The two counsel of the two defendants had very little to rejoin, they reiterated what they stated in their submissions-in-chief. I have listened well to the learned arguments by the three learned counsel for the parties. I have, as well, read between the lines the loaded skeleton written arguments by the three trained minds. I commend them for the good work well done. The ball is now in my court to decide. Let me start by stating at the outset that the correct position of the law on the first point of preliminary objection by the first defendant is as canvassed by Dr. Kapinga, learned counsel. It is the law in this jurisdiction that suits must be instituted in a court of the lowest grade competent to try it. This is the tenor and import of section 13 of the CPC. For easy reference let me reproduce the section hereunder: "Every suit shall be instituted in the court of the lowest grade competent to try it and, for the purposes of this section, a court of a resident magistrate and a district court shall be deemed to be courts of the same grade." [Emphasis supplied]. Fortunately, this does not seem to be disputed by Dr. Mwakaje, learned counsel for plaintiff. 8 Equally is the law that pecuniary jurisdiction of the court will not be determined by general damages. That this is the law, as Dr. Kapinga, learned counsel rightly puts, was articulated in the Our Lady of the Usambara Sisters case (supra); the decision of the Court of Appeal. In that case, like in the instant, the issue was whether pecuniary jurisdiction could be determined basing on general damages erroneously quantified. The court held that it is the substantive claim and not the general damages which determine the pecuniary jurisdiction of the court. The Court of Appeal stated at page 76: "But since general damages are awarded at the discretion of the Court, it is the Court which decides which amount to award. In that respect, normally claims of general damages are not quantified. But where they are erroneously quantified, we think, this does not affect the pecuniary jurisdiction of the Court. In our view, it is the substantive claim and not the general damages which determine the pecuniary jurisdiction of the Court." [My emphasis]. The stance on this point in Our Lady of the Usambara Sisters was restated in the recent past by the same court in Tanzania Breweries Ltd Vs Antony Nyingi, Civil Appeal No. 119 of 2014 (not yet reported). The Court of Appeal, in its judgment pronounced on 27.05.2015, restated: 9 "(1) It is the substantive claim and not the general damages which determine the pecuniary jurisdiction of the court. (2) Although there is no specific provision of law stating expressly that the High Court had no pecuniary jurisdiction to entertain claims not exceeding Tshs 10,000,000/= according to the principle contained in section 13 of the Civil Procedure Code that every suit must be instituted in the court of the lowest grade competent to try it." This case provides answers to many questions that arise out of Dr. Mwakaje's submissions as well as well as the applicability of the provisions section 2 (1) of Judicature and Applications of Laws Act, Cap. 435 of the Revised Edition, 2002 and article 108 (1) & (2) of the Constitution of the United Republic of Tanzania, 1977 on which he heavily relies. The Court of Appeal stated in no uncertain terms that that these provisions are applicable subject to other written laws. Having analysed the import of these provisions, the highest court of our land stated: "It is therefore clear from these provision of JALO and the Constitution, that the jurisdiction of the High Court is subject to the provisions of other written laws. So, it was wrong for the learned trial judge to have decided the question of io jurisdiction by looking at Article 108 (2) of the Constitution alone. In other words, Article 108 (2) of the Constitution should not have been read in isolation, without discussing whether or not such other written laws to the contrary exist." The Court of Appeal went on to state that such other laws include the provisions of section 13 of the CPC. Unfortunately, Dr. Mwakaje, learned counsel for the plaintiff has fallen into the same error of reading the provisions of section 2 (1) of the JALA and article 108 (1) & (2) of the Constitution in isolation as did the trial judge in Tanzania Breweries Ltd Vs Antony Nyingi, (supra). It should now be clear that these provisions; that is, section 2 (1) of the JALA and article 108 (1) & (2) of the Constitution, are not read in isolation. They are subject to other written laws. Such other written laws include section 13 of the CPC which require that a suit must be instituted in the court of the lowest grade competent to try it. I find too cheap to buy Dr. Mwakaje's argument to the effect that Our Lady of the Usambara Sisters is distinguishable from the facts of the present. If anything, the present case falls in all fours with the Our Lady of the Usambara Sisters case. I shall demonstrate. In the Our Lady of the Usambara Sisters case, the respondents (the plaintiffs at the trial) sued the appellant (the defendants at the trial) for the following reliefs: (a)TShs. 8,136,720/= being costs incurred for the production of the vitenge fabrics and tax paid; 11 (b)TShs. 15,000,000/= being general damages suffered by the respondentsfor the inconvenience caused in the preparation of their celebrations; (c) Interest on TShs. 8,136,720/= at the Court rate from the date of judgment till final payment; (d)Costs of the suit; and (e)Any other relief the Court could deem fit and just to grant. And in the case at hand, the plaintiff is seeking for the following reliefs: (a)An order compelling the 1st and 2nd Defendant jointly and severally to pay the Plaintiff a sum of USD 17,700,000 being general damages for the 35 years (1969/70 through 2005) during which time the latter devoid its time, energy and resources to establishing the Daikin brand name in Tanzania and East Africa; (b)An Order to prevent the 1st Defendant or any of its business associates from terminating the business relationship with the Plaintiff save for prompt and adequate compensation; (c)A Declaration that the 2nd, Defendant's use of the website namely www.daikintanzinia.co.tz is unlawful for infringing on the prior registered domain name (website) by the Plaintiff namely www.daikintanznia.com; (d)An Order compelling the 2nd Defendant to register and or close the website www.daikintanznia.com forthwith; (e)An Order compelling the 2nd Defendant to refrain from employing the terminology Daikin Tanzania in any literature or website text it might produce; 12 (f) An Order compelling the 2nd Defendant to publish in a widely circulating Tanzanian newspaper a retraction of its advertisements and website indication it has no relationship with the Plaintiff; (g) A Declaration that the Plaintiff is the lawful owner of the registered trade name Daikin Tanzania Ltd; and (h) Any other reliefs that this Honourable Court shall deem fit to grant. As can be gleaned from the reliefs sought in the two cases, they are essentially similar, save for declaratory orders sought in the instant case, which in my view can be entertained by a subordinate court and Dr. Mwakaje, learned counsel, has not stated that they can only be entertained by this court. The provisions of section 13 of the CPC are couched in mandatory terms. This can be inferred from the use of the word "shall" in the provisions. The use of the word "shall" connotes that the section is mandatory. This is perceived so in terms of the provisions section 53 (2) of the Interpretation of Laws Act, Cap. 1 of the Revised Edition, 2002. This sub-section reads: "Where in a written law the word 'shall' is used in conferring a function, such word shall be interpreted to mean that the function so conferred must be performed." In view of the fact that I have found and held that that it is the substantive claim and not the general damages which determine the pecuniary jurisdiction of the court and in further view of the fact that I have found and held that 13 the declaratory order sought by the plaintiff could be entertained by a subordinate court, it is obvious therefore that the plaintiff ought to have conformed with section 13 of the CPC to the letter. Having not done that, the plaintiff, I am afraid, cannot seek refuge under the fact that the orders sought are mainly declaratory. Neither can he seek refuge under the fact that he estimated the general damages to be USD 17,700,000.00. Dr. Mwakaje's argument to the effect that the plaintiff should be allowed to rectify the anomaly should the court find that the action is "barred by any law including section 13 of the CPC" did also not find purchase with me. Taking the path suggested by Dr. Mwakaje after the preliminary objection has been raised, I am afraid, will have the effect of preempting the preliminary objection raised by the defendant which, as already alluded to above, is illegal. That this is the law has been stated times without number in a plethora of cases in this jurisdiction. One such case is Mary John Mitchell VC? Sylvester Magembe Cheyo & ors, Civil Application No. 161 of 2008 (unreported) in which the Court of Appeal reiterated its earlier position it stated in Method Kimomogoro Vs Board o f Trustees o f TANAPA, Civil Application No. 1 of 2005 (unreported) in which it stated: "This court has said in a number of times that it will not tolerate the practice of an advocate trying to preempt a preliminary objection either by raising another preliminary objection or trying to rectify the error complained of." 14 This was not the first case the Court of Appeal aired this view; that a preliminary objection should not be pre-empted. There are other cases. Such cases include Shahida Abdul Hassanali Kassam Vs Mahedi Mohamed Gulamali Kanji Application No. 42 of 1999 (Unreported), Almas Iddie Mwinyi l/s National Bank of Commerce & Another [2001] TLR 83, Alhaji Abdallah Talib Vs Eshakwe Ndoto Kiweni Mi/sA/'[1990] TLR 108, The Minister for Labour and Youth Development and Shirika la Usafiri DSM Vs Gaspa Swai & 67 Others [2003] TLR 239] and Frank Kibanga Vs ACCU Ltd, Civil Appeal No. 24 of 2003 (unreported), to mention but a few. In all these authorities, the court did not mince words: it stated in no uncertain terms that a preliminary objection should not be preempted. As a matter of principle and particularly the principles of precedent and stare decicis, courses of action which cannot be tolerated by the Court of Appeal; the highest court of our land, cannot be tolerated by this court as well. This being the case, again, I respectfully decline the invitation by Dr. Mwakaje, learned counsel for the plaintiff, to allow the plaintiff rectify the ailment after the preliminary objection raised by the first defendant that the suit has offended the provisions of section 13 of the CPC, for, that course will be tantamount to pre-empting the preliminary objection raised, a course which I have already stated to be illegal. In view of the foregoing, I find merit in the first point of preliminary objection raised by the first defendant against the plaintiff's suit. On this point, the suit deserves the wrath of being struck out. 15 The above finding is enough to dispose of this matter. But for completeness of this ruling and the fact that the finding on the second point of preliminary objection has a stricter outcome, I shall canvass the second point as well. This is the question of the suit being time barred as against the first defendant. Dr. Kapinga, learned counsel, has submitted that the cause of action against the first defendant accrued in 2005. That impression is gotten from the plaint, particularly at para 4.1 at which the plaintiff avers that the first defendant unilaterally cancelled the "long standing exclusive distributorship arrangement without any compensation thereby profiting the efforts made by the plaintiff over a period of 35 years (from 1969/70 to 2005) to establish the Daikin brand as a leader in Tanzania and other East African markets". On the other hand, Dr. Mwakaje, learned counsel is of the view that the cause of action arose in 2013, when the business relationship was terminated. The learned counsel submits that the business relationship started to dwindle from 2004 but that there were some negotiations which proceeded up to 20.02.2013 when official termination of exclusive dealership was communicated to the plaintiff vide Annexture DTL - 24 to the plaint. Determination of this point of preliminary objection, as can be deciphered from the submissions of the two learned counsel above, would need factual proof to determine as to when the cause of action arose. That is to say, factual proof would be needed to prove that there were negotiations which commenced in 2004 and were declared as failed in 2013. This eventuality, as the two learned counsel are aware or must to be aware, disqualifies this point to be a preliminary objection. The oft-cited case of Mukisa Biscuit 16 Manufacturing Co Ltd Vs West End Distributors Ltd [1969] 1 EA 696; the decision of the erstwhile Court of Appeal for East Africa, has it all. In view of the foregoing, I do not wish to canvass on the third point of preliminary objection raised by Dr. Kapinga, learned counsel for the first defendant which point has also been raised by Mr. Mwamanenge, learned counsel for the second defendant as the end result will not change the finding in the conclusion reached on the first point. In the upshot, for he reasons stated above, the plaintiff's suit is struck out with costs. Order accordingly. DATED at DAR ES SALAAM this 7th day of December, 2015. J. C. M. MWAMBEGELE JUDGE 17