CIVIL APPEAL NO 292 OF 2022 DANGOTE INDUSTRIES LTD TANZANIA VS WARNERCOM T LIMITED

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM (CORAM: LILA, J.A., MWANDAMBO, J.A. And KAIRO, J.A.^ CIVIL APPEAL NO. 292 OF 2022 DANGOTE INDUSTRIES LTD. TANZANIA.................................... APPELLANT VERSUS WARNERCOM (T) LIMITED........ .......................................... RESPONDENT [Appeal from the judgment and decree of the High Court of Tanzania (Commercial Division) at Dar es Salaam] (Maqoiaa, JM dated the 29thday of April, 2022 in Commercial Appeal No. 1 of 2Q20 JUDGMENT OF THE COURT 29th April & 14th May, 2024 MWANDAMBO. J.A.: The respondent, Warnercom Tanzania Limited successfully sued the appellant Dangote Industries Limited Tanzania before the Resident Magistrates' Court of Kinondoni for, amongst others, a declaration that the appellant breached an agreement for transportation services for which she claimed special and general damages and other ancillary reliefs. In an ex parte judgment made on 2 January 2020, the trial court i awarded the respondent TZS 200,000,000.00 and TZS 150,000,000.00 in special and general damages respectively upon finding the appellant breached the said agreement. The appellant was aggrieved and appealed to the High Court (Commercial Division) in Commercial Appeal No. 1 of 2020 but her appeal was dismissed. Still aggrieved, she has preferred the instant appeal predicated on 10 grounds of appeai. As it will become apparent shortly,the determination of the appeal turns on the first two grounds premised on the jurisdiction of the trial court. The facts from which the suit before the trial court was instituted and ultimately the instant appeal are, by and large, common ground. According to the plaint, the appellant engaged the respondent for transportation of its goods from Songea to Mtwara and Mtwara to Dar es Salaam sometime between October and December 2015. The plaint alleged further that, despite the respondent performing its obligations under the contracts, the appellants failed to pay for the contracted services which triggered in the suit founded on breach of contract. The respondent prayed forassortment of reliefs, including a declaration that the appellant was in breach of the contract and a claim for TZS 200,000,000.00 each in special and general damages plus interest and costs. Instead of filing a written statement of defence, the appellant challenged the suit by way of a preliminary objection contending that the trial court had no pecuniary jurisdiction to entertain the suit on the strength of section 40 (3) (b) of the Magistrates' Court Act (henceforth the MCA). Nevertheless, the trial court struck out the objection for being improperly raised. Consequently, in the absence of a written statement of defence, the trial court proceeded with ex parte hearing under Order VIII rule 14 (1) of the Civil Procedure Code (the CPC). After the ex parte hearing, the trial court found the suit proved on the required standard and entered judgment for the respondent as alluded to earlier. Dissatisfied, the appellant preferred an appeal before the Commercial Court in Commercial Appeal No. 1 of 2020 (the Commercial Appeal) upon 11 grounds of appeal. Ground one faulted the trial court for entertaining the suit in which it had no jurisdiction. Initially, the Commercial Court struck out the Commercial Appeal for being incompetent. Nevertheless, on appeal in Civil Appeal No. 13 of 2021, the Court vacated the order striking out the Commercial Appeal and ordered hearing of the said appeal on merit. The first appellate court dismissed the first ground on lack of jurisdiction being satisfied that the suit before the trial court was an ordinary civil suit with no commercial significance and therefore falling outside the ambit of section 40 (3) (b) of the MCA. That notwithstanding, the learned first appellate judge proceeded with the determination of the rest of the grounds on merit which he dismissed sustaining the trial court's decision. For reasons which will come to light later, the determination of the appeal turns on grounds 1 and 2 which, after paraphrasing them run as under: - 1. That the High Court judge erred in law and fact in holding that the Resident Magistrates' Court acted within its pecuniary jurisdiction by entertaining the suit which was commercial in nature and the claim exceeded its pecuniary jurisdiction contrary to section 40 (3) (b) o f the Magistrates'Court Act; 2. That the High Court judge erred in law and in fact in holding that the contractual relationship between the appellant and respondent did not meet the threshold o f being a civil case with commercial significance while the same falls within the meaning o f a commercial case as defined under section 2 o f the Magistrates' Court Act. At the hearing of the appeal, Mr. Luka Elingaya, learned advocate who appeared for the appellant stood by the written submissions he filed earlier on and addressed the Court orally on a few aspects. So, did Mr. Alex Mashamba Balomi, learned advocate representing the respondent. It is remarkable that, the two grounds are akin to two sides of the same coin which justified the approach taken by the appellant's learned counsel arguing them conjointly. We shall follow the same path in our discussion. The first appellate court is faulted for holding that the suit before the trial court did not meet the threshold of a suit with commercial significance and thus determined as an ordinary civil suit. The learned counsel for the appellant has gone at great length to demonstrate that what was before the trial court was not an ordinary civil suit but a matter with commercial significance. This was so because it was founded on a dispute from a contractual relationship between the parties involving payment obligations by the appellant for transportation services rendered to her by the respondent. It was his further submission that, contrary to the reasoning of the first appellate court, the nature of the suit fell squarely in the definition of a commercial case prescribed under section 2 of the MCA. Counsel pointed out that, the suit ought to have been determined as such as required by section 40 (3) (b) of the MCA considering that the amount claimed was above TZS 70,000,000.00 triable by a District or Resident Magistrates' Court in commercial cases. It was argued further that, the learned first appellate judge made an erroneous interpretation of the definition of a commercial case under section 2 of the MCA by resorting to the meaning of trade and commerce from Black's Law Dictionary to justify that the suit had no commercial significance because it did not arise out of a transaction of trade or commerce as defined by rule 3 of the High Court (Commercial Division) (Procedure) Rules, G.N No. 250 of 2012, henceforth, the Commercial Court Rules. The learned advocate pointed out further that, since the definition of a commercial case under section 2 of the MCA was clear, it was not open to the court to engage into interpretation of an obvious consistent with the Court's decision in Republic v. Mwesige Geofrey & Another, Criminal Appeal No. 355 of 2014 (unreported) referred subsequently in Serengeti Breweries Ltd. v. Joseph Boniface, Civil Appeal No. 150 of 2015 (unreported). The Court was also referred to a decision of the High Court in African Wheels and Tires Ltd. v. Transec Limited, Misc. Civil Revision No. 11 of 2020 (unreported) on the jurisdiction of the District and Resident Magistrates' Courts under section 40 (3) (b) of the MCA in relation to commercial cases. In the course of his oral submission, counsel brought to our attention two of the Court's recent decisions on what it takes for a suit to be treated as a commercial case; Maduhu Sang'udi Investment v. Kasonzo Car Hire Co., Civil Appeal No. 148 of 2021 and National Bank of Commerce Ltd. v. Maisha Musa Uledi (Life Business Centre), Civil Appeal No. 501 of 2022 (both unreported). With the foregoing, counsel urged the Court to uphold grounds 1 and 2 and hold that the first appellate court strayed into an error in not holding that the 7 suit before the trial court was a commercial case on which the trial court had no pecuniary jurisdiction. Responding to a question posed by the Court, Mr. Elingaya argued that, having dismissed the first ground and held that the suit before the trial court was not a commercial case, the first appellate court erred in determining the Commercial Appeal on merit. This is so, he argued, no appeal lies to the Commercial Court from the decisions of the District and Resident Magistrates' Courts in ordinary civil cases and so the first appellate court indulged itself in a nullity. Going forward, counsel invited the Court to nullify the proceedings and quash the decision of the first appellate court for being a nullity on account of lack of jurisdiction in the event it will be found that the suit before the trial court was, but an ordinary suit. Otherwise, counsel maintained his stance that since the suit was a commercial case, the trial court wrongly assumed jurisdiction to entertain it because it was beyond its pecuniary jurisdiction. Accordingly, the Commercial Court ought to have nullified the trial, quashed the judgment and set aside the decree. 8 For his part, Mr. Balomi was in support of the first appellate judge's interpretation of a commercial case in the light of the definition under rule 3 of the Commercial Court Rules which the learned judge held to be wider than the one in section 2 of the MCA. However, counsel was quick to concede in his oral address that, since the suit before the trial court was an ordinary suit, the Commercial Court lacked jurisdiction to determine an appeal against the trial court's decision. Neither was the Commercial Court right in determining the merits of the appeal after it had held that the said suit was not a commercial case. Nevertheless, the learned counsel concluded by urging the Court to dismiss the appeal. Upon our examination of the two grounds under consideration, two but related issues arise for determination. The first relates to the nature of the suit before the trial court and the second is whether the trial court acted within its jurisdiction in determining the suit. As of necessity, the first issue calls for our examination of the plaint in the light of the provisions section 40 (3) (b) of the MCA which stipulates: "(3) Notwithstanding subsection (2), the jurisdiction o f the District Court shall, in relation to commercial cases be Umited- (a) in proceedings for the recovery o f possession of immovable property, to proceedings in which the value o f the property does not exceed one hundred million shillings; and (b) in the proceedings where the subject matter is capable o f being estimated at money value, to proceedings in which the value o f the subject matter does not exceed seventy million shillings". Section 2 of the MCA defines a commercial case to include; the contractual relationship of a business or commercial organisation with other bodies or persons outside the business or commercial organization; the liability of a business or commercial or official of the business or commercial organisation arising out of its commercial or business activities; or the liabilities of a business or commercial person arising out of that person's business or commercial activities. Apparently, the list of cases considered to be of commercial significance in section 2 of the 10 MCA is not exhaustive just as it is in rule 3 of the Commercial Court Rules. There is hardly any dispute that the suit before the trial court related to a contractual relationship between two commercial organisations which related to a liability of one commercial organization (the appellant) with another one (the respondent) arising from a claim for sums of money. The liability involved in particular, TZS 200,000,000.00 allegedly due for transportation services claimed to have been rendered by the respondent to the appellant. Indeed, counsel for the parties do not appear to be in disagreement on this. The learned first appellate judge went at great lengths in an attempt to define the phrase commercial case and preferred the definition of commercial case in section 2 of the MCA to the definition in rule 3 of the Commercial Court Rules which he found to be wider than the former. The opening sentence in the definition of commercial case in rule 3 of the Commercial Court Rules runs: "Means a civil case invoiving a matter considered by the Court to be o f commercial significance, including ii any claim or application arising out of a transaction of trade of commerce but not limited to ... [Emphasis added]. On the other hand, section 2 of the MCA defines a commercial case to mean a civil case considered to be of commercial significance but not limited to the 11 categories listed therein. According to the first appellate court, the suit before the trial court was not a commercial case with commercial significance because it did not arise out of a "transaction o f trade or commerce" With respect, the learned first appellate judge strayed into an error in his interpretation of the phrase commercial case in relation to the Resident Magistrates' Court and District Courts. To begin with, the Commercial Court Rules which influenced the impugned decision are not applicable to the District Courts and Courts of Resident Magistrates but to the Commercial Court itself as clearly provided for under rule 2 (1) of the said rules. Indeed, the citation of the rules is too clear to require any interpretation; they are rules of procedure applicable to the Commercial Division of the High Court. Naturally, such Rules could not be said to be extending to any other 12 court than the Commercial Division itself. Secondly, the rules are part of a subsidiary legislation. They could not override the provisions of section 2 of the MCA assuming they were applicable to the subordinate courts. Thirdly and most importantly, it is clear that, unlike rule 3 of the Commercial Court Rules, section 2 of the MCA defines a commercial case as a civil case considered to be of commercial significance without the words Including any claim or application arising out o f trade or commerce"featuring in the said Rules. Consistent with the Court's holding in Mwesige's case (supra), where a statute is clear, it is not open for the court to engage into interpretation lest it interferes with the function of another arm of the state; legislature. In this case, the legislature in its wisdom saw it fit to define a commercial case as it is in section 2 of the MCA without more. It was thus not open for the first appellate court to attempt to interpret it in the manner it did by reference to rule 3 of the Commercial Court Rules. 13 Apparently, as recent 2023, the Court dealt with a similar issue involving a definition of a commercial case in NBC Ltd. v. Musa Uledi (supra). Like here, the appeal in that decision originated from a Resident Magistrates' Court concerning a dispute over a return of a certificate of occupancy to the respondent which had been used as security for the loan advanced by the appellant NBC Limited. The Court held in that decision that the suit had a commercial significance in terms of section 2 of the MCA since it arose from a contractual or business relationship between the parties; lender and borrower relationship. Consequently, the discharge of the mortgage and release of the certificate of occupancy was well within the ambit of that relationship. The Court took a similar path in Maduhu Sang'udi Investment (supra). It is significant that, in African Wheels Tyres Limited (supra) Ismail, 1 (as he then was) with whom we respectfully agree, dealing with revision application stated the following: "....From the quoted definition, there can hardly be a dispute that the transaction between the parties herein was a business transaction and the liability that 14 emanated therefrom is a commercial liability, perfectly fitting in the mould o f a commercial case. It follows, therefore, that what was preferred in the trial court was, true to its designation in the pleading, a commerciai case for which section 40 (3) (b) o f Cap. 11 is applicable. Its institution ought to have conformed to the pecuniary limit set by law. In this case, this limit was flouted, and the trial court was lured into 'punching above its weight', by entertaining a case in respect o f which it did not have any powers to adjudicate..." [ at page 9]. With the foregoing, we endorse the submission by the appellant's counsel and hold that, the first appellate court made an error in holding that the suit was an ordinary civil case not covered by section 2 and 40 (3) (b) of the MCA. On the contrary, we are satisfied that the suit had commercial significance involving an amount of more than TZS 70,000,000.00 which was beyond the pecuniary limit of the trial Resident Magistrates' Court in terms of section 40 (3) (b) of the MCA. At any rate, as both learned advocates agree, having held that the suit was not a commercial case, the first appellate court appears to have 15 been eluded by the old adage: you cant eat a cake and remain with it. We shall explain. After dismissing ground one on jurisdiction, the first appellate court proceeded with the determination of the merits in the Commercial Appeal notwithstanding the fact that, no appeal lies to the Commercial Court from a decision of a subordinate court in an ordinary suit. Had the learned first appellate judge had regard to rule 69 (1) of the Commercial Court Rules, he could not have proceeded in the manner he did. Be it as it may, as we have held that the suit before the trial court was a commercial case involving a sum of T2S. 200,000,000.00 beyond its pecuniary jurisdiction, the course open to the first appellate court was to quash the trial court's decision and the proceedings for being a nullity. Accordingly, we set aside the first appellate court's decision in ground one and substitute it with an order sustaining that ground; the trial court had no jurisdiction to try the suit with the net effect that, the trial and the resultant judgment and decree were all a nullity. Stepping into the shoes of the first appellate court on the authority of section 4 (1) of the Appellate Jurisdiction Act (the AJA), we hereby declare the trial before 16 the trial Resident Magistrates' Court at Kinondoni in Civil Case No. 176 of 2019 a nullity and quash the judgment and set aside the resultant decree. In the event, we allow grounds one and two which are sufficient to dispose the appeal which is hereby allowed with costs. DATED at DAR ES SALAAM this 10th day of May, 2024. S. A. LILA JUSTICE OF APPEAL L. J. S. MWANDAMBO JUSTICE OF APPEAL L. G. KAIRO JUSTICE OF APPEAL The Judgment delivered this 14th day of May, 2024 in the presence of the Mr. Peter Clavery, learned counsel for the appellant and Mr, Alex Balomi, learned counsel for the respondent, is hereby certified as a true copy of the original.