ea trade marketing g solution vs sayona drinks limited 2022 tzhccomd 70 11 march 2022

IN THE HIGH COURT OF THE UNITED REUBLIC OF TANZANIA (COMMERCIAL DIVISION) AT DAR ES SALAAM COMMERCIAL CASE NO. 127 OF 2020 EA TRADE & MARKETING SOLUTIONS LTD...........................................PLAINTIFF VERSUS SAYONA DRINKS LIMITED DEFENDANT Last order: 03rd March, 2022 Judgment: 11th March, 2022 JUDGEMENT NANGELA, J. , The Plalnt^here|njJu^ttie Defendant and prays for judgment andxdecre&Ss follows: fc^nJe^Defendant pay the Plaintiff K/TZS 200,940,000/= following Breach of the parties' Sales and Distribution Agreement. 2. Interest of 10%on the claimed amount in (1) above at the prevailing commercial rate from July 30th, 2020 to the date of judgment. 3. Interest on the decretal amount at the Court's rate of 30% from Page 1 of 16 conferenc^w&j convened and the parties settled for the followingjssueS'to-be resolved by this Court: N^/Whether there was a contract between the Plaintiff and the Defendant for thethe date of judgment till final settlement. 4. Cost of this suit. 5. Any other relief this Honourable Court May deem fit and just to grant. The facts of this case are briefly that, on the 21st January 2020, the Plaintiff and Defendant concluded a Sale and Distribution Agreement, wherebyZthe Plaintiff was appointed a distributor of the Defendant's p^dfes. It is alleged that, the Defendant breacfied?tfezterms of the agreement by appointing another ^distributor to operate within the same ^rito^^^fe~the Plaintiff was operating with an exclusivity^statusf hence, causing loss to the Plaintiff. Sale and Distribution of the Defendant's products. 2. If so, whether there was breach of that contract; 3. If the second issue is in the affirmative, whether the defendant suffered damages and to what extent. Page 2 of 16 4. To what reliefs are the parties entitled. At the commencement of the hearing of this case, the Plaintiff enjoyed the services of Mr Denis Mwesiga, learned advocate, while Mr Jerome Msemwa, Advocate represented the Defendant. The Plaintiff called two witnesses, namely: Mr Kennedy Kajuna who testified as Pw-1 and Mr Raymond Ferdinand Mutungi who testified witness, namely, Mr.MusaRashidi' Lilombo, who testified as the defense .witness (Dw-1). At the closure of the defense case, tne'le^med^dvocates prayed to file closing submissipns^or before 25th February 2022 and, on the 7th ^ebru^r^2^22, I set a date for the delivery of judgment of this suit. As proceed hereunder I will \\ )/ consider=their closing submissions as well. However, before I proceed to tackle the agreed issues which I earlier pointed out here above, as a matter of law, the basic principle relating to proof is that he who alleges must prove and, such proof, must meet the requisite standards. See the case of Abdul-Karim Haji vs. Raymond Nchimbi Alois and Another, Civil Page 3 of 16 Appeal No.99 of 2004 (unreported). In civil cases, however, parties are to prove their cases on the balance of probability. See the case of Silayo vs. CRDB (1996) Ltd [2002] 1 EA 288 (CAT). The first issue which needs to be established, therefore, is: Whether there was a contract between the Plaintiff and the Defendant for the Sale and Distribution of the Defendant's products, As it was once pointed^w£_^^e j?ase of Louis Dreyfuls CommoditiesXTanzania Ltd vs. Roko Investment Tanzanig^td^xCiviU^ipeal No.4 of 2013 (CAT) (unreported),^the g^lteral principle about contract is that, it arises^because-.one party makes an offer or proposal andThe other^party accepts it to procure what in law is referred'tchas’ consensus ad idem. /riievabo^elholding by the Court of Appeal is indeed the\essence of section 10 of the Law of Contract Act, Cap.345 R.E, 2019 which provides that, all agreements are contracts if they are made by free consent of the parties who are competent to contract, for a lawful consideration and with a lawful object and are not on the verge of being declared void. In the case at hand, Pw-1 who also doubles as the Managing Director of the Plaintiff, told this Court that, Page 4 of 16 sometime on the 21st January 2020 the Plaintiff inked a Sale and Distributorship Agreement with the Defendant, and its duration was for a year. To prove such a fact, Pw-1 tendered in Court the original contract which, after some deliberations and directives, I admitted it as Exh.P.l. Looking at Exh.P.l which was duly signed by the two parties, I have no doubt that it created binding obligations^b^tween^the parties and signify their intention to that effecfer Its existence before this Court as an Exfribit^therefore, A V > suffices to dispose of the first issue affirmatively. The second issue wa^^preGiica’ted~on the first issue being responded to affinmatively. ^particular, the second issue was that: n A j' If thgs.firet issue is in the affirmative, whether there was breach of that contract, ^As^it'^vas/once stated by this Court in the case of Kibogat^Tanzania Ltd vs. Grandtech (T) Ltd, Comm. Case No.32 of 2021 (unreported), in law, a breach of contract is a material non-compliance with the terms of a legally binding contract which occurs when one of the parties fails to perform his/her obligations to the detriment of the other party. In this case at hand, it was the testimony of Pw-1 before this Court, that, according to Paragraph 1 (a) of Page 5 of 16 Exh.P.l and Exh.P.2(c) the Plaintiff was an exclusive distributor of the branded products of the Defendants which were listed in Exh.PZ (b) and these were for exclusive distribution by the Plaintiff in the following geographical supply areas: the City Centre, Kariakoo, Upanga, Kurasini and part of Kigogo and Ilala,Chang'ombe Police, Ferry Area and Keko Gerezani and Keko-Makochi. Y> However, Pw-1 testified that a new distributor in the name of T-STORES was introduced by the_Defendant in the same territorial area earlier^signeCexclusively to the Plaintiff without notificatidn^th^Raintiff. Looking at the testimony of Pw-1 in respect of that fact, I find myself coming up with two^basic-^uestions which need to be examined furthej^narn^^Was there such introduction of a new djstnbutor^I^yes, did such an act constitute a breach ofThe^terrnSjor their agreement (Exh.P-1)? Xlrbl^testimony, Pw-1 had testified that on the 20th Julyv020 the Plaintiff was e-mailed by the Defendant to the effect that the assigned territorial area needed more man power and thereafter assigned the territory to a second distributor. The said e-mail, however, was not tendered in Court as evidence. Nonetheless, the testimony of Pw-2, who was engaged by the named T-STORES distributor from June 2020 and, that, he worked for that distributor Page 6 of 16 till October 2020, has evidential information that tends to corroborate the testimony of Pw-1. In his testimony, Pw-2 told this Court that, he had previously worked for the Defendant as a Sales and Distribution Officer for four years until when he faced retrenchment from his job sometimes in 2019. Pw-2 told this Court that, afterwards in June 2020 he was engaged by T-STORES DISTIBUTORSto distribute SAYONA branded products, indudihg^Tanda 600mls, Twist 400mls, SAYONA water,^AYONA'Snacks A Y y and Apple Bubble, to mention ,buta According to Pw-2^the\^STORES' Managing Director, one Asher^J^pesh^hera/instructed him to distribute and provide sales'seiyice of these products in the following 3feas\city/Center, Upanga, Kurasini, Kariakoo, Msimbazielllala, Chang'ombe Police, Ferry Area and Keko'G^pzani^Makochi. He also testified that, in the coyrse^f^erforming his duty, he met Pw-1 who was also doing the same business in the same territory. In'my view, much as it is true that Pw-2 had earlier worked for the Defendant before, I find that, his testimony is still a reliable account of what he is conversant with and I see no reasons why I should doubt him. Besides, the Defendant raised nothing to the attention of the Court to indicate that Pw-2 is not Page 7 of 16 independent witness but a witness with interest to serve other than that of speaking the truth. As this Court stated in the case of Nadds Bureau de Change and Another vs. Y2K Bureau de Change Limited, Commercial Application No.8 of 2021 (unreported), (citing the Indian case of State of Kerala vs. Narayanan Bhaskaran and Others, 1992CrimLJ 238): X "Expressions like 'independent witness and interested fereSsi a Xx' must be understood^ 'nC^a reasonable perspeetive._WhatJis a z* N—-— witness yeroected to be independent 'of? He'must be independejits^ofXbias, for or fSgai^t^tt^prosecution or the accused. He should be free of personal interest in the outcome oflhe trial....Whether a witness is independent or interested, is a matter of ascertainment from circumstances, by a process of evaluation, based on broad probabilities and sound forensic sense." This Court did cite another Indian case of Raju v. State of T.N, reported in (2012) 12 SCC 701, where the Supreme Court of India was of the view and held that:- Page 8 of 16 "A witness may be called 'interested only when he or she derives some benefit from the result of litigation; in the decree in a civil case, or in seeing an accused person punished. A witness who is a natural one ... in the circumstances of a case cannot be said to be 'interested/^ As I stated, here above regarding the status of^Pw- 2, I am convinced that he is an independfent^rtness as he has nothing to derive from the4ase aVterra. For that reason, I find him and his testifnony^fo^be credible and reliable. Since he has testified to naye once worked with T-STORES and, that<me distribution of his supplies of SAYONA products was in the same territory of supply which was exclusively assigned to the Plaintiff, I find that, this testim^n^prrobprates the testimony of Pw-1. ^rAsJ stated,, Pw-l's testimony was to the effect that, the\Defendant had assigned to another distributor (T- Stores)^the territorial areas which were exclusively reserved for the Plaintiff. On the other hand, and, even with such a finding regarding the reliability of the evidence of Pw-2, can this Court safely make a conclusive finding to the effect that such testimony was a sufficient proof of breach of the distribution agreement, Exh.P.l? Page 9 of 16 To respond to that question, one has to look at the Exh.P.l, particularly looking at the exclusivity nature of the appointment of the Plaintiff as a distributor. Essentially, Clause 4 of Exh.Pl reads as hereunder: "Supplier's appointment of Distributor in section 1 of this agreement is an exclusive appointment to distribute the* Products in the territory. Supplier can independently advertise solicit and make salesjif Sujaplfer Products, suppgrt^^gpplje^s products ^^^ohTtadditional distributorsyfor t^/SuppIier Products^ Jn'the Territory ft «..X\ ... , except in case Supplier found satisfactory Distributor's performance based on % Supplier's parameters (Emphasis added). As itlmay be observed from the above clause, the agreement did not rule out the possibility of the Defendant to appoint another additional distributor in the same territorial area. However, that could only be done upon establishing that there was unsatisfactory distribution performance on the part of the Plaintiff. On the contrary, it was clear in the testimony of Pw-1, that, from February 2020 to 30th July, 2020, the Page 10 of 16 contrary'evidence of underperformance on the part of the Plaintiff which would have justified the introduction of a second distributor in line with Clause 4 of the Agreement Plaintiff had already generated income in favour of the Defendant amounting to TZS 303,084,210.00 being the invoice of stock supplied to the Plaintiff. Pw-1 did avail to this Court a copy of the General Ledger sent by the Defendant to the Plaintiff and this was part of Exh.P2 and stated that, the monthly turnover amount generated in favour of the Defendant by average was TZS 50,504,035/= while the average profits y> generated as a result of Sales and distributiqa of all products on behalf of the Defendant wa^TZS?0.89/= which is equivalent to TZS 5,546,543.85'Kper month. The above testimony ofTw^rwas-not controverted in any way by the DeJfegd^ibsT^t^stimony of the sole witness to the Defendant'sj:ase,was not of any assistance either since, it^lled^ forj1 strict proof, some of the averments in-the Plaint as if it was a written statement of defense/instead^ftproviding an opposing view regarding whatT’he^Rlaintiff?had alleged. (Exh.Pl). Undoubtedly, since the Defendant failed to establish that the Plaintiff was underperforming, there was no justification on the Defendant's part to introduce a new Page 11 of 16 distributor to the same territory as evidenced by Pw-2's testimony, while the Plaintiff was enjoying exclusivity status in that territory. It is my finding, therefore, that, the assignment of distribution and sales functions to another distributor (M/s T-STORES) in the same geographical area which was earlier overseen by the Plaintiff (as substantiated by the testimony of Pw-2), and, without concreteyjdstifications, violated the sense of exclusivity envisaged in^Clause)-! of the agreement (Exh.Pl) and amoun^^tb>a^breach thereof. The second issue is, ^nce,\responded to affirmatively. The third is nowxorrtessto the? scrutiny. This was couched as follows: /'Sk if the. second issue is in the affirmative, whether the defendant suffered damages and toTivhat extent. Perhaps Xshould tackle the third issue by referring ']/ to What the Court of Appeal of Tanzania stated in the case of Simon Kichele Chacha vs. Aveline M. Kilawe, Civil Appeal No. 160 of 2018 (unreported), concerning the sanctity of a contractual relationship. The Court of Appeal of Tanzania had the following to say, that: "It is settled law that parties are bound by the agreements they freely entered into and this is the Page 12 of 16 cardinal principle of the law of contract. That is, there should be a sanctity of the contract as lucidly stated in Abualy Aiibhai Azizi v. Bhatia Brothers Ltd [2000] T.L.R 288 at page 289 thus: - 'The principle of sanctity of contract is consistently reluctant to admit excuses for non­ performance where therejs-no incapacity, no frai^dj (actual/or constructive) j/Or misrepresentation^ "aficP no ■ ■ I principle of\ Pu^ie r policy prohibiting enforcement." From the above holding, it is clear that, in any contractual rel^lbnship^^ch party is expected to honor her or hi^^i^lupl obligations. Put otherwise round, each^party is^qtitled to perfect performance of the terms agreed contractual undertaking, failure of that being \x y tantamount to breach of that contract. It is clear, likewise, that, each party to a contractual relationship expects to obtain the benefit of the agreed deal reciprocally. Contrary to that will mean that, an innocent party who does not receive the reciprocal benefit of the contract, by reason of the other party's Page 13 of 16 breach, has a legal right to recover compensation for the damages suffered. It is a matter of legal requirement, however, that, a claim for specific damages or losses, must be strictly pleaded and proved. The case of Zuberi Augustino Mugabe vs. Anicet Mugabe [1992] T.L.R. 137 and Stanbic Bank Tanzania Ltd vs. Abercrombie & Kente (T) Limited, Civil Appeal No.21 ofe^OOl (CAT) (unreported), laid emphasis on that fact; In the case at hand, the PlaintiffChas^pecifically claimed for, among other things, specific payment of TZS ZZ-------- “7™"— 200,940,000 as loss arising out^the-Defendant breach of the Exh.Pl. This sp^^k^oss iS/not only pleaded in the Plaint but also ^particularized therein (see paragraphs 7^0^f theJPIaint) and proved by Pw-1. Specially testified that, prior to the introductiohxQf^a^new distributor the average profits genefated\by\^ie Plaintiff were TZS 33,279,263/= in six^uiio^hs time. He also tendered in Court as Exh.P- 3 thetarget per period per area which the Defendant had assigned to the Plaintiff to be met by the latter. Pw-1 also stated, as well, that, the expected turnover by the Plaintiff as from August to December 2020 which are high season months, was TZS 2,511,750,000/=. Page 14 of 16 Further according to Pw-1, the monthly turnover amount generated in favour of the Defendant by average was TZS 50,504,035/= while the average profits generated as a result of Sales and distribution of all products on behalf of the Defendant was TZS 0.89/= which is equivalent to TZS 5,546,543.85 I per month. All these were not controverted by the Defendant. In view of the above and, since there was, no t> evidence to indicate that the targets seMjnders^xn.P3 were not met by the Plaintiff, and,Jn vievyrf>-the>fact that there was no notice o^£roi^plaint regarding underperformance on the part'oFthe-Plaintiff, it follows, that, the third issue isjn the-.affirmative as the Plaintiff has established thC basis for his claim of TZS 200,940,000/=^ The last^ssueSs-in respect of the reliefs which the Xx * parties arexeq^diro. In my view, the Plaintiff has fully dischar^bdMts^burden of proving its case and deserves to be gra^^the reliefs it has sought. In view of that, this Court proceeds to grant the following reliefs sought in the Plaint, that: 1. The Defendant is hereby ordered to pay the Plaintiff TZS 200,940,000/= following Defendant's Breach of the Sales and Distribution Agreement dated 21st January 2020. Page 15 of 16 2. The Defendant is hereby ordered to pay the Plaintiff Interest of 10% on the claimed amount in (1) above at the prevailing commercial rate from July 30th, 2020 to the date of judgment. 3. The Defendant is hereby ordered to pay the Plaintiff Interest on the decretal amount at the Court's rate of 7% from the date of judgment till final settlement. 4. The Defendant is hereby ordered to pay the Plaintiff cost of this suit. It is so ordered. DATED AT DAR-ES-SALAAM ON THIS 11th DAY OF MARCH, 2022 DEO JOHN NANGELA JUDGE, Right of Appeal Explained. Page 16 of 16