20121011 TZHC Dar es Salaam

IN THE HIGH COURT OF TANZANIA {DAR ES SALAAM DISTRICT REGISTRY) AT DAR ES SALAAM , .· ... ... CIVIL CASE NO.149 OF 2011 .. . . . DFCG INTERNATIONAL LIMITED .................................... 1 ST PLAINTIFF . r · ND JAMES MWAMSOJO •••••••••••••••••.••.•.••••••••••••••••••••••••••••• 2 PLAINTIFF Versus · TANZANIA INVESTMENT BANK LTD .............................. 1 sTDEFENDANT . ELISA ABEL MSUYA _.. (RECEIVER MA"'AGER), DFCG INTERNATIONAL LTD .... 2No DEFENDANT y •. : . :. _ REGI_STRAR Of COMPANIES ·~······································3RDDEFENDANT ~- -;·:. :· ~ -~ - ~ ..,. Date of last order.· 29/08/2012 Dat(! of Ruling: 11/10/2012 .. ' RULING 1 . . . . DFCG International Ltd. has taken a Bank Guarantee from Tanzania Investment Bank Ltd. ("the Bank" or "the 1st Defendant''). As security for the Guarantee, QFCG provided the Bank with a debenture on the company's shares, and a ·. mortgage for landed property (Plot No. 242 Jangwani · Beach, Dares Salaam) belonging to James Mwamsojo, one of its directors ("the 2nd Plaintiff''). On grounds of failure to carry out is obligations under the Guarantee, the Bank appointed Elisa Abel Msuya the Receiver Manager ("the Receiver Manager'') of DFC!:G. DFCG is aggrieved by the Bank's decision to appoint the Receiver Manager. Page 1 of 6 Jointly with its Director, Mr. James Mwamsojo, DFCG has filed this suit against the Bank and the Receiver Manager. They have also joined the Registrar of - Companies (''thEtRegistrar'');-though-the-reliefs-they·seek-are-essentially .against _ __ the Bank and the. Receiv~r Manager. The Plaint has two principal prayers:A declaration that the Bank .is in breach of a banker/customer relationship with AFCG and an order nullifying the appointment ~f Mr. Msuya as Receiver and Manager. The Defendants have raised five points of preliminary objections. They want the suit dismissed on grounds that the 1st Plaintiff has no power in law to institute proceedings against the 1st and 2nd Defendants; that this Court has not been properly moved to make any orders against the Defendants; that the action to stay/stop the sale of the mortgaged property is incompetently instituted in a High Court Registry not vested with jurisdiction, contrary to section 140 (1) of the Mortgage Financing (Special Provisions) Act, 2008; and that the application for injunctive orders is legally untenable as it is made on an incompetent plaint, contrary to section 139 (1) (a) and (b) and section 140 (1) (a) and (b) and (c) of - the Mortgage Financing (Special Provisions) Act, 2008. The objections have been argued by way of written submissions. I will begin with a discussion of the ground that challenges the jurisdiction of this Court to .hear and determine the suit on grounds that the suit has been filed in the wrong registry. This ground is capable, if it succeeds, of disposing of the entire suit. Learned Counsel Thadayo for the Defendants has based his. submissions on the provisions of section 140 (2) and .. (3) of the Land. Act as amended by section 18 (1) of the Mortgage Financing (Special Provisions) Act. Though, as correctly pointed out by Mr. learned counsel for the Plaintiffs, learned counsel Thadayo has misstated the provision, I consider that shortcoming insignificant. Page 2 of6 •I Mr. Thadayo contended that under the said provisions, an action for the exercise of the power of sale or repossession of mortgaged property can only be entertained by the Land Division of this Court. He admitted to being aware of the Chief Justice's Circular Ref. DA.82/204/01/8 of 1st · December 2009, which appointed all Judges of the High Court as Judges of the High Court (Land Division). •,;:< However, it is Mr. Thadayo's submission that the circular did not remove the .-:•J, .·,. requirement that matters required by law to be filed in land registries would continue to be filed in those registries. Neither did it grant powers to High Court ·,, Judges to exercise their jurisdiction in land matters in cases filed in registries •' ... . ······· ,_,. other than the Land Registry.That is why Land Registers in all High Court :.' .... :~;~. _;•,: ·. • .... ::_ . registries were created. jjj~! Counsel for the Plaintiffs has countered with the argument that the Defendant's counsel's submission is misle_ading. He contended that section 140 (2) of the Land Act is discretionary, since it provides that an action such as this " ... may be brought in the Land Division". Citing section 53 of the Interpretation of Laws Act, Cap 1 (R.E. 2002), counsel says that section 140 (2) should not be taken in isolation. ,-_ .-::: It is the Plaintiff's position that the case is a normal commercial matter, that the ti-, issue of security/mortgage is secondary to the claim, which relates to an alleged breach of a Banker/customer relationship and a .disputed appointment of a Receiver/Manager. The issue, therefore, is whether this suit can be entertained despite having been filed in a registry other than the Land Registry of this Court. The provisions of law that are the centre of the controversy under this ground are basically two: Section 140 (2) of the Land Act states: Page 3 of 6 ' ·' .. : ·.·, "Notwithstanding any other provision of this Act an action for exercise of a power of sale or for possession of a mortgaged property may be brought in the Land ":' ' ..· ·- · .... Division of the High Court."[emphasis provided] The other provision is section 140 (3) of the Land Act, which states: . . ., . . . "Notwithstanding any other provision of law, and excepting any action on a customary mortgage under section 115, any action brought in another forum to contest, stay, suspend, terminate or seek relief from demand for payment of a debt secured by a mortgage of real property, or an action for possession of ·•·. mortgaged property, exercise of a power of sale under this Act shall be ·• . transferred to the Land Division of the High Court immediately upon commencement of an action in that forum the same subject matter and -· . ~ "'~· ~._:-._ consolidated with such action." r;~(i~j;.-;. ·: Considering the unambiguous words of the above provisions, it is clear in my ,;;_-f1r.7 .·~~-~ . ~- ~~~t;;, .=. ·_ ''';·;· ..... mind that the discretion given by the words "may be brought" in subsection (2) does not allow for a choice in the forum in which an action can be filed. It simply allows a choice of whether to file such action or not. A claimant cannot, therefore, choose a forum other than the Land Division of this Court. Subsection (3) directs any forum other than the Land Division where an actionto contest, stay, suspend, terminate or seek relief from demand for payment of a debt secured by a mortgage of real property, or an action for possession of mortgaged property, exercise of a power of sale under the Land Act, to transfer such action to the Land Division of the High Court immediately upon its ~~ ' . . .. commencement. This is to be done, "notwithstanding any other provision of ' . ,_,.::.t • t•~ ~ law". The law has spoken. It is loud and clear. As Lord Denning said in A.G. v BBC (1981) AC 303 at 305 (cited to me by counsel for the Plaintiffs): "It is the law, and it remains the law, until it is changed by Parliament.'1 have no doubt that submissions made by counsel for the Plaintiff have a lot of force. The primary Page 4 of 6 t :·_. 1,1-, --- - - · --~~ -__ ,- --:- --- ~-- - - ~{i,{\,'.k:~l _tran~a~!io~ in this.case is -a loan agreement, under which not only a, mortgage ....,;. ~·:-. ·-~·"'·~ . ~ . ; .. . - ...... ~ ~- - 'J_H""~'-r-,,.,-~;:- ~:~1li#:::;:· under the ·. Land Act, ·but also a debenture (a ·creature of the Companies Act)· was·---· -- - t))f~f:j;:(~ executed and provided security-for-the-1oan:-Indeed,the-appointment-of-a---- .i?(¥e~5- Receiver is a-n act that is not provided for under the Land Act,-but the Companies Ii ~.: ~~~ -~tf;J~~r;;;Jlr: ;:ts~:~s;i:o~a:~thae ~~::::~ur:f c;:~d ti~: ::;t i: ~~o;~:;;d ~~:•-~:- -~-- !~f#4I .1..,,., specialised in land matters, to entertain matters that are primarily commercial ,;,::.r,,:.;;·.: ,·.~ 4":>-\ ;~ ..i-'.1..'t,,/"i~J. 7.\1 ., and ·have little to do (and only secondarily) with issues touching upoh land. ~';t~r~ · 1... However, the wording of section 140 (3) does not leave any doub_t as to its tiffiQ!ffg\ intention: Notwithstanding any other provision of any .law (which of course iii ::~~:~n=ebyc~;::o~~: :~~~ ,.J. ~ ... ;---z.-;);,~•,.:.:·, t~:~ :h:i~:n~e~~~~o::f.:h:~:~a~:u~nnot be lr~\Y~ti#r·. In light of this, I cannot but hold that this suit is in the wrong forum: It should f.i#w~;~t•. have been instituted in the Land Division (hence the Land Registry) of this Court. ·1111f This is despite the statement admitting jurisdiction of the Court irn the f-~iffJ Defendant's· Written Statemeiit of Defence.: Such a concession cannot .confer \it,i: jurisdiction to a Court or tribunal where none exists in law, if:lJ~~\f1v••·;~,-. ;f~;~:~· ~'.:j} The import of this finding is to remove from this Court the jurisdiction to ·i.rr .; ~~i~;f{?f.. determine any of the other four points of objection raised by the Defendants. In -il the absence of jurisdiction, the Court cannot ent_ertain any other issue arising J~i~r.R~:· from this case. I would thus not consider the other four points of preliminary ~?/:~~~ objection. '. 1 ,]'ti··~ fl:~$··'· ~ .-,:-~r~J',:,,-/.: I now turn to the remedy. Under section 140 (3), the answer is not to dismiss the action, as counsel for the Defendants has urged this Court to do. The law enjoins me to transfer the case to the Land Division of the High Court. Page 5 of 6 .... Consequently, I hereby orderthat this suit be tr~nsferred to the Land Division of this Court, in terms of section 140 (3) of the Land Act, as amended. . .. I would make no order as to costs. Dated at Dar es Salaam this 11th day of October 2012. / Judge 11 thday of October 2012 Delivered in Court this 11th day of October 2012. Judge 11th day of October 2012 .·: ' ..,. Page 6 of6