DHL Tanzania Limited vs Dar Aviation Services Ltd Civil Case No

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (DAR ES SALAAM SUB-REGISTRY) AT DAR ES SALAAM. CIVIL CASE NO. 96 OF 2022 DHL TANZANIA LIMITED.......................................................PLAINTIFF VERSUS DAR AVIATION SERVICES LTD................................................DEFENDANT JUDGMENT Date of last order: 06/11/2024 Date of judgment: 06/12/2024 A.A. MBAGWA, J. The plaintiff is suing the defendant for a breach of an Independent Retail Outlet Agent Agreement (henceforth “the Agreement”) which was allegedly executed on 12th March 2021. As such, she is praying for the following reliefs: a declaration order that the defendant is in breach of the Agreement; a declaration that the defendant acted fraudulently and deceptively by making false payments to the Plaintiff resulting in monetary damage and loss to the plaintiff; and payment of a total of TZS 257,292,736/= (or Euro 99,341) being specific damages suffered by the 1 plaintiff arising out of the defendant’s breach of contract and the defendant’s fraudulent and deceitful acts. The plaintiff also prays for general damages, interest on the decretal sum at the Court’s rate of 12% per annum from the date of judgment to the date of payment in full, costs of this suit, and any other relief as this Court may deem fit, just, convenient and equitable to grant. The factual background to this suit as gathered from the pleadings and evidence may briefly be recounted as follows; On 12th March 2021, the plaintiff and the defendant executed an Independent Retail Outlet Agent Agreement (exhibit PW1/1A) which was to last for 36 month period. It was the agreement term that the defendant would act as the plaintiff's agent in connection with courier services to customers wishing to use the plaintiff's services. Thus, the defendant was, among other things, receiving customers’ cargo, giving them airway bills depending on the weight of the cargo as displayed in the system, providing the customers with Lipa Number for effecting the fee payment, and finally filling in the Retail Cash Hand Over Sheets various particulars including the name of the customer, the weight of the parcel, the amount of shipping fee paid and M-Pesa reference number. In short, the information filled in the retail 2 cash handover sheets ought to match with the information in the system, particularly the M-Pesa statement. However, things did not work in that way. In March 2022, while reconciling the record, the plaintiff suspected the defendant’s fraudulent acts namely, under-depositing of cash collected from the plaintiff's customers and the use of invalid M-Pesa references in the pick-up sheets which could not be traced to the respective M-Pesa statements. Following that suspicion, the plaintiff resolved to mount an investigative audit. She thus appointed Carlsen Consultancy to carry out the forensic audit for all of the plaintiff's independent retail outlet agents in respect of their dealings with the plaintiff. The audit was conducted accordingly and finally revealed that there were fraudulent acts on the part of the defendant leading to the loss of TZS 257,292,736 (EUR 99,341). On account of the audit findings, the plaintiff's board resolved to terminate the said agreement and consequently filed the present suit. Upon service, the defendant filed her written statement of defence vehemently disputing the allegations in the plaint. She thus prayed for the dismissal of the suit. The defendant strongly denied knowledge of the agreement allegedly breached. However, she admitted to having 3 a principal-agent relationship with the plaintiff. The defendant also confirmed that she was being paid a commission by the plaintiff depending on the sales collected from the plaintiff’s customers. The defendant went further to state that even if the court finds that there was such an agreement as the plaintiff contends, yet, according to the alleged agreement, the defendant did not breach the said agreement because she could not access the system to which the money was paid. In fine, the defendant prayed for the dismissal of the suit with costs stating that there is no valid claim whatsoever against her. On the 15th day of April 2024, the Court, with the consensus of the parties, amended the issues that had been framed on the 10th day of October 2022 and reframed the following six issues; 1. Whether the suit is competent before this Court. 2. Whether the parties executed the Independent Retail Outlet Agent Agreement. 3. If the second issue is answered in the affirmative, what were the terms and conditions of the agreement? 4. Whether the said agreement was breached by the defendant. 5. Whether the plaintiff suffered damages. If so, to want extent? 4 6. To what reliefs are the parties entitled? During the hearing, the plaintiff was represented by Ms. Caster Lufunguro, learned advocate whilst the defendant had the services of Mr. Kasaizi Andrew Kasaizi, learned advocate. In the endevours to prove the claims in the plaint, the plaintiff paraded three witnesses namely; Joshua Jonas, Chief Financial Officer of the plaintiff (PW1), Daniel Marandu, the auditor from Carlsen Consultancy (PW2), and Sebastian Maega, DHL accountant (PW3). Moreso, the plaintiff tendered six (6) documentary exhibits namely; The DHL (Tanzania) Ltd and Dar Aviation Services Independent Retail Outlet Agreement (exhibit PW1/1A), the Loss Report (exhibit PW1/1B), fifty-three (53) copies of the Retail Cash Hand Over Sheets (exhibit PW1/2 collectively), the Board Resolution (and Ratification) to institute and continue legal proceedings against Dar Aviation Services Ltd (exhibit PW1/3), the Final Report Forensic Investigation Report (exhibit PW2/4), and the M-pesa statement along with Certificate of Authenticity (exhibit PW3/5 collectively). On the other hand, the defendant marshaled two witnesses namely; Mr. Othman Hemed Mbwana (DW1), the Director of the defendant company, 5 and Ms. Rahima Othman Mbwana (DW2), the customer care officer of the defendant company. It is worthwhile to mention that the plaintiff’s witnesses testified viva voce whereas the defendant’s witnesses adduced their evidence through witness statements in terms of Order XVIII of the Civil Procedure Code. In essence, the plaintiff’s witnesses expounded on the averments in the plaint. It was the evidence of PW1, the Chief Financial Officer, that, in the course of reconciliation, they noted a difference in the amount of money actually received by the plaintiff via M-Pesa from the amount indicated in the cash handover sheets (exhibit PW1/2). As such, plaintiff the company decided to conduct a forensic audit which ultimately unearthed the fraudulent acts on the part of the defendant. PW1 stated that the defendant had caused a loss of TZS 257,292,736. While under cross- examination, PW1 stated that the forensic report (exhibit PW2/4) proved how the defendant breached the contract. PW1, PW2, and PW3 conceded that the contract between the plaintiff and the defendant was signed on 12th March 2021 but the loss (TZS 257,292,736) disclosed in the final report (exhibit PW2/4) allegedly arose from the transactions of all the plaintiff’s agents including the defendant from 1st January 2021 up to 31st 6 October 2021. Further, PW1 and PW3 conceded that there is no evidence tendered to prove the specific loss averred in the plaint in that even the retail cash handover sheets (exhibit PW1/2) when lumped up do not establish the alleged loss. On the adversary, Mr. Othman Hemed Mbwana (DW1) and Ms. Rahima Othman Mbwana (DW2) in their written statements and oral testimonies disputed the plaintiff’s claims. DW1 denied recognizing the agreement but admitted his name and his company’s seal appearing on the agreement in dispute. While under cross-examination, DW1 and DW2 admitted that the defendant was an agent of the plaintiff. The defendant’s witnesses stated that when a customer came with his luggage, the luggage was weighed and the details were entered into the plaintiff’s system by the defendant. The system would display the amount to be paid and then the customer would be directed to make payment for the parcel through the plaintiff’s Lipa number. After the money was paid, the system would send the airway bill number. The airway bill number along with the corresponding amount were manually recorded by the defendant in the Retail Cash Handover Sheet ( exhibit PW1/2). When further cross- examined on the identified discrepancies between the Retail Cash 7 Handover Sheet (exhibit PW1/2) and the M-Pesa statement (exhibit PW3/5), the defendant’s witnesses conceded that they did not have a different M-Pesa statement to controvert the plaintiff’s evidence on the anomalies. DW1 stated further that the difference indicated in the two documents namely, exhibits PW3/5 and PW1/2 is TZS 51,022,000/= and not TZS 257, 292,000/= as claimed by the plaintiff. Upon conclusion of the hearing, both parties filed their respective written submissions. I am quite grateful to both counsel for their informative rival submissions. Suffice it to say that I have keenly read and considered the parties’ submissions in making this decision. Having recounted the parties’ evidence albeit in a nutshell, it behooves me now to determine the issues framed. Starting with the 1st issue to wit, whether the suit is competent before this Court. The defendant challenged the competence of the suit on the rider that it was instituted without a board resolution. To counter the defence objection, the plaintiff through PW1 tendered in court the board resolution (PW1/3) authorizing the plaintiff company to institute the legal proceedings against Dar Aviation Services Ltd (exhibit PW1/3). This implies that the institution of the present suit was sanctioned by the 8 company’s board. However, it is important to remark that, as per the current position of law, the board resolution is only mandatory where the dispute involves shareholders of the same company. See the case of Mohan Oysterbay Drinks vs British American Tobacco Kenya Limited, Civil Application No. 70/01 of 2022. I therefore entirely concur with the plaintiff’s counsel that since the case at hand involves two different companies, the question of the board resolution does not come into play. Now coming to the second limb of the 1st issue on the requirement of a written notice before the institution of the suit, I should hastily say that this argument is an abuse of the court process. This is because this Court (Hon. Kisanya J) in its order dated 6th October 2023, determined this issue by overruling it. It was therefore uncalled for to raise it again as an issue for determination. Notwithstanding the foregoing, the alleged provisions of the agreement (exhibit PW 1/1A) the defendant’s argument is pegged from do not ouster the jurisdiction of this court. The said provisions read as follows; ‘29.1- In the case of any dispute arising between the parties under this agreement, the parties shall 9 resolve such dispute by way of consultation held in good faith to attempt to resolve such dispute....... 29.2- In the event that the parties do not resolve the dispute, they shall be free to pursue the dispute in the courts of Tanzania.............’ From the above excerpts, I do not see how this Court is prevented from entertaining this suit. It is therefore my unfeigned view that the alleged provisions of the agreement do not bar this Court from entertaining the suit. Consequently, I hold that the suit is competent before this Court. With regard to the 2nd issue to wit; whether the parties executed the Independent Retail Outlet Agent Agreement. It is the plaintiff’s evidence that the duo executed an agreement on 12th March 2021 (exhibit PW1/1A). On the contrary, the defendant denies the existence of the agreement. Surprisingly, both DW1 and DW2 admitted that the defendant had a principal-agent agreement and that the defendant was working as an agent of the plaintiff. DW1 further stated that the defendant was paid a commission according to the sales from the plaintiff’s customers served. Despite denying the agent agreement, DW1 could not produce a different agreement under which the defendant was acting. Having assessed the 10 evidence as a whole, I found the defendant’s version an afterthought for the following reasons; Under paragraph 3 of the written statement of defence, the defendant states that it is the plaintiff who breached the contract and it is the plaintiff who should pay the defendant for such breach. It is a trite law and I need not cite any authority that parties are bound by their pleadings. This averment implies admission and recognition of the existence of the disputed agreement. Further, the defendant insisted that parties had to resolve the matter amicably before resorting to court in terms of Clause 29.1 and 29.2 of the contract (exhibit PW1/1A). The foregoing above, when holistically appraised, tells it all that there was a valid agreement between the parties and it is not other than exhibit PW1/3. I therefore proceed to answer the second issue in the affirmative. On the 3rd issue to wit; if the second issue is answered in the affirmative, what were the terms and conditions of the agreement? The said agreement (exhibit PW1/1A) contained several terms and conditions to which parties were bound. For purposes of answering this issue, I will single out a few provisions. Clause 2 specifically 2.1.3 (vi) and (vii) and Clause 11.12 are relevant for the determination of the issue. 11 They provide; 2.1.3 Performance of the services- (vi)- Collect charges and any other fees payable by customers (vii)-Pay collected charges to DHL with all required documentation. 11.12- The Agent shall, in general, observe the utmost good faith in its dealings with DHL. This Court therefore shall examine whether the indicated terms and conditions above were breached in the next issue. The 4th issue is whether the said agreement was breached by the defendant. The plaintiff alleged that the defendant in carrying the courier services on behalf of the plaintiff, misappropriated the cargo fees she was collecting from customers. In particular, the plaintiff contended that the defendant was under-depositing the money and sometimes did not deposit it at all. To substantiate her claims, the plaintiff tendered exhibits namely, 53 copies of the Retail cash Handing Over Sheets (exhibit PW1/2 collectively), the Forensic Investigation Report (exhibit PW2/4), and the M-Pesa statement (exhibit PW3/5 collectively). Exhibit PW1/1A conspicuously indicates the amounts different from the M-Pesa statement 12 (exhibit PW3/5). In contrast, the defendant through DW1 and DW2 refuted the allegations on the rider that they did not have direct control of the payment system. Nonetheless, during cross-examination, DW2 admitted that the amount indicated in the retail cash hand over sheets did not tally with that in the M-Pesa statement. For clarity, I let the relevant part of the evidence speak for itself. ‘According to (exhibit PW1/2) on 05/10/2021, the customer by the name of Ramadhani Mgaza paid TZS 966,000 through account/reference No. 8J525YSEURO. According to exhibit PW3/5 (DHL M Pesa statement), account /reference No. 8J525YSEURO the amount indicated is TZS 94,000/=. Indeed, the amount is different from the Retail Book Handover Sheet (exhibit PW1/2) from the DHL MPesa account exhibit PW3/5. I was filling in what I saw in the system. Each reference number was in respect of one transaction. I have not brought any document to contest the claims by DHL. I have never seen the audit report.’ From the evidence of both parties, it is common cause that the information in the retail cash hand over sheets which were being filled in 13 by the defendant ought to tally with that in the system in particular the M-Pesa statement. Indeed, the defendant failed to provide a plausible explanation of the anomalies. The law is settled that parties are bound by the terms of the contract which they freely entered. The authorities on this are without a number. They include; Miriam E. Maro vs. Bank of Tanzania, Civil Appeal No. 22/2017, CAT at Dar es Salaam, Unilever Tanzania Ltd vs. Benedict Mkasa t/a BEMA Enterprises, Civil Appeal No. 41 of 2009, CAT at Dar es Salaam, Philipo Joseph Lukonde vs. Faraji Ally Saidi, Civil Appeal No. 74 of 2019, CAT at Dodoma, Simon Kichele Chacha v. Aveline M. Kilawe, Civil Appeal No. 160 of 2018, CAT at Mwanza, and Kilanya General Supplies Ltd. and Another vs CRDB Bank Limited and Two others, Civil Appeal No. 1 of 2018, CAT at Dar es Salaam, to mention but a few. Since the defendant freely signed the agreement, it naturally follows that she was duty-bound by its terms. Indeed, the defendant failed to collect the shipping charges accordingly, and to cap it all, she acted without good faith contrary to provisions of Clauses 2.1.3 (vi) and (vii) and 11.12 of the agreement. On the above account, I am inclined to hold that the 14 defendant breached the agreement terms and conditions. Consequently, I proceed to answer the fourth issue in the affirmative. Regarding the 5th issue to wit; whether the plaintiff suffered damages. If so to want extent? From the deliberation on the 4th issue hereinabove, it goes without saying that the plaintiff suffered a loss due to the defendant’s fraudulent acts. As to what extent the plaintiff suffered damages, it is an issue to examine shortly. The alleged loss of TZS 257,292,736/=or (Euro 99,341) is claimed as specific damages. It is a trite law that special damages must be specifically pleaded and strictly proved. See the cases of Zuberi Augustino v. Anicet Mugabe, [1992] TLR 137 and Stanbic Bank Tanzania Limited vs Abercrombie & Kent (T) Limited, Civil Appeal 21 of 2001, CAT at Dar es Salaam (unreported). The pertinent issue for consideration under this part is whether the plaintiff strictly proved the claimed damages. The plaintiff pleaded the loss of TZS 257,292,736/=or (Euro 99,341). To establish this claim, the plaintiff tendered fifty-three (53) copies of retail cash hand over sheets (PW1/2), forensic audit report (PW2/4), and M-Pesa statement (PW3/5). 15 Mr. Daniel Marandu (PW2) clearly stated that during the forensic audit, they were not availed of all the retail cash hand over sheets for the relevant period. He further testified that based on the sheets availed, the audit established the loss of TZS 51, 022,000/=, and the rest of the amount was estimated. On this, I find it relevant to reproduce the findings of the forensic audit as recorded on page 16 of the report (exhibit PW2/4). It reads: ‘We have tested a total of 184 AWBs amounting to a total of TZS 68,718,990 (EUR 26,532) covering the period from August 2021 to October 2021. The AWBs were recorded in a total of 51 pickup sheets. From our test of the 184 AWBs, we uncovered the following; 1.1. An under-deposit amounting to TZS 48,687,991 (EUR 18,798) From our test, we have noted an under-deposit of TZS 48,687,991 (EUR 18,798) for 178 AWBs. This represents 71% of the total population tested. The amount is a result of less cash deposited in the M- Pesa statement compared to the amount 16 declared/received from the customer as per the pickup sheets for the same reference number. 1.2. Invalid M-Pesa reference amounting to TZS 2,314,999 (EUR 894) In our test, we noted five(5) invalid M-Pesa references disclosed in the pickup sheets but not traceable to the M-Pesa statement amounting to TZS 2,314,999 (EUR 894). Details of the AWBs and pickup sheets are attached in this report We note that, for the same period under test, as per the M-Pesa statement, a total of TZS 34,317,824 (EUR 13,250) was deposited. In our analysis of the M-Pesa Statement for Dar Aviation, we noted an amount of TZS 14,990,824 made up of 153 M-Pesa reference numbers were not part of our test in the population provided to us. This implies that a (sic) there are number of pickup sheets which were not provided to us as part of the test and a possibility of further misappropriation of cash. 17 For this reason, we have performed a global test comparing the amount that was supposed to be deposited as per the OPMS to the amount that deposited in the M-Pesa statement for the months of January 2021 to October 2021.’ The above excerpt is clear that only amounts TZS 48,687,991 (EUR 18,798) and TZS 2,314,999 (EUR 894) were actually established to have been misappropriated. In addition, DW1, while testifying admitted that the difference between the retail cash handover sheets and the plaintiff’s M-Pesa account is to the tune of TZS 51, 022,000/=. Further, PW2 conceded that he was not supplied with all the receipts while auditing and that even the amount of TZS 257,292,736/= (or Euro 99,341) was generally estimated for all the plaintiff’s transactions from all the agents starting from January to October 2021. From the above analysis of evidence, I hold that the plaintiff has only strictly proved the specific loss of TZS 51, 022,000/=. The plaintiff also prayed for general damages as may be assessed by the Court. As the law stands, general damages are awarded at the court's discretion. Its purpose is to put the plaintiff in the same position as money 18 can do if his rights have been observed. As it could be gleaned from the evidence adduced in court, the defendant had breached the Independent Retail Outlet Agent Agreement, (exhibit PW1/1A). It is obvious that the breach caused inconveniences to the plaintiff. Thus, considering the inconveniences associated with the defendant’s acts, I am opined that the award of TZS 10,000,000/- (Tanzania shillings ten million) would meet the ends of justice. Since the suit has succeeded, the plaintiff is also awarded costs for prosecuting the case. In the final analysis, I enter judgment and decree in favour of the plaintiff, hence I order and or declare as follows; 1. The defendant is in breach of the Independent Retail Outlet Agent Agreement executed on 12th March 2021. 2. The defendant acted fraudulently and deceptively by making false payments to the plaintiff thereby resulting in monetary damage and loss to the plaintiff. 3. The defendant is hereby ordered to pay the plaintiff TZS 51, 022,000/= say Tanzania shillings fifty-one and twenty-two thousand only being specific damages from the defendant’s breach of the Independent Retail Outlet Agent Agreement. 19 4. General damages to the tune of TZS 10,000,000/= say Tanzania shillings ten million. 5. The interest of 7% on the decretal amount under item (3) per annum from the date of judgment to the date of payment in full. 6. Costs of the suit be borne by the defendant. It is so ordered. The right of appeal is explained. A. A. Mbagwa JUDGE 06/12/2024 Court: The judgment has been delivered in the presence of Mr. Noel Adam Mosha, learned counsel for the plaintiff, and Mr. Kasaizi Andrew Kasaizi, learned counsel for the defendant on this 6th day of December 2024. A. A Mbagwa JUDGE 06/12/2024 20