FINAL DEFAULT JUDGMENT EEKLO MINES LTD v PHILIP DE BEATS CC 14432 Edited

THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION) AT DAR ES SALAAM COMMERCIAL CASE NO 14432/2024 BETWEEN EEKLO MINES LIMITED.………………………………………. PLAINTIFF VERSUS PHILIP DE BEATS………………………………………………DEFENDANT DEFAULT JUDGEMENT Date of last order: 09/10/2024 Date of Judgement:15/11/2024 GONZI, J. The Plaintiff sued the Defendant claiming against him for Judgment and Decree for Orders that: (i). That the Honourable Court be pleased to declare that all the funds i.e. USD 85,000 and 350,000 EURO equivalent to TZS. 1,195,767,650.00 were funds transferred by Lenders in favour of the Plaintiff. (ii). That the Honourable Court be pleased to order the Defendant to refund the above amount in (i) immediately into the Plaintiff’s NMB Bank Euro Account No. 24810012960 and USD Account No 24810012959 1 (iii). That the Honourable Court be pleased to order the Defendant that the amount in (i) above should be refunded with an interest of 7% percent per Annum from the date Judgment till the date of full payment. (iv). That the Honourable Court be pleased to order the Defendant to pay specific damage of TZS. 1,000,000,000. (v). That the Honourable Court be pleased to order the Defendant to pay Interest in (iv) above at the Commercial rate of 12% per Annum from the date of Judgment till full payment (vi). General Damages to be assessed by this Court. (vii). Costs of this suit be borne by the Defendant. (viii). Any other relief(s)this Court may deem fit and just to grant. The Plainliff's case is basically for the claim against the defendant in respect of the Plaintiffs fund amounting to USD 85,000 and EURO 350,000 withdrawn by the defendant for his personal use from the Plaintiff’s NMB Bank USD Account No 24810012959 and NMB Bank Euro Account No 24810012960 respectively. The withdrawal was contrary to the intended use of investing the said funds on mining activities. The amount of money withdrawn by the defendant emanated from three loans advanced to the Plaintiff by two different persons namely Jean Marie Leemans and Mr Boon 2 Venture. The loans were advanced through the Defendant who was acting on behalf of the Plaintiff. On 7 / 06/2023 the defendant, acting for and on behalf of the Plaintiff, executed a loan agreement with Jean Marie Leemans for Euros 350,000 (Three hundred and fifty thousand Euros) an amount which was deposited into the Plaintiff’s account on 15 /06/ 2023. Further, on 13/09/ 2023 the Defendant executed another loan facility with Mr Boon Venture amounting to USD 45,000 aimed at supporting and facilitation of obtaining a prospective mining license for an area with 240 square Kilometers within Tanzania. In the third instance, the Plaintiff as a borrower, on 19 /12 /2023, executed a loan agreement with Mr. Boon Venture for USD 40,000.00 for the purpose of extraction of copper with Kazikugoma Limited in Tanzania. The initial loan secured was due for repayment within a period of five months from the date of its execution whilst the second and third loans were due before 1/03/2024. The Plaintiff company had four directors namely Jean Marie Leemans, Daniel Haberkorn, Erica Bernard Udambwe and Philip De Baets. By then the Defendant was the only present active signatory as the other directors were abroad, However, the Project did not materialize due to the fact that the defendant withdrew the entire borrowed funds and spent the same for his 3 personal use without the knowledge of the other directors. It was further stated by the Plaintiff that after a long wait and curious questions concerning the project , the defendant’s response was that the project would begin no sooner and that exercising patience was vital. With increased anxiety, the other directors came to Tanzania to see for themselves the progress but to their dismay they discovered that all funds had been withdrawn by the defendant from the Plaintiff’s bank accounts. When the defendant was inquired he admitted withdrawing the funds for his personal expenses and promised to refund the amounts within a month. Contrary to that promise, seven months elapsed without the Defendant repaying the money. This in turn resulted into the Plaintiff’s failure to repay the loan to its lenders who constantly reminded the plaintiff to repay the said loans before further legal action could be taken against it in Europe. This prompted the other Plaintiff’s Directors Daniel Haberkorn and Erica Bernard Udambe to demand that the Defendant should refund the said amounts to the Plaintiff. However, their efforts were rendered futile. The intended mining activity (extraction of copper) being the plaintiff’s main activity which made the plaintiff borrow the money, did not take place as expected due to deviation of 4 money by the defendant resulting into financial risk of the Plaintiff running bankruptcy since the expected profits to be obtained from the intended investment of money and expansion of business did not materialize. The Plaintiff Company thus passed of a board resolution for the matter to be referred to court. When the suit was filed in court, the Court ordered through initial orders and summons that the Written Statement of Defence (WSD) should have been filed by 22/07/2024. However, service of the Plaint and Summons accompanies with the Initial Orders was impracticable as the defendant was not in Tanzania anymore. On 07/08/2024 the Court ordered service of summons by way of substituted service an order that was adhered to through publication in the Mwananchi Newspaper dated 20/08/2024. On 19/08/2024, the Defendant was also served with the summons via the email address of Advocate Godlove Sanga which is godlovegodwin64 @gmail.com. electronic service was done through the Defendant’s email address which is philipdebaets@hotmail.com. After substituted service whereupon the Defendant did not file the Written Statement of Defence nor enter appearance in Court, the case proceeded without the Defendant’s involvement and the Plaintiff prayed for default judgment. When the suit 5 was called for necessary orders on 26/09/2024, no Written Statement of Defence had been filed and therefore the learned Advocate for the plaintiff Mr. Godlove Sanga, Prayed to be allowed to proceed with the hearing of the case by filing application for default Judgment under the provision of Rule 22(1) of this Commercial Court Rules. In the Circumstances, the prayer was granted. On 09/10/2024 the plaintiff filed the Application for Default Judgment vide Form No.1 accompanied by an affidavit of proof of the claim sworn by one, Jean Marie Leemans, Principal Officer of the plaintiff Company. The Plaintiff attached Exhibit JML-1 which is a copy of the Loan Agreement between Jean Marie Leemans and EEKLO MINES evidencing additional loan agreement between the two worth 350,000 Euro. Exhibit JML-2 is a copy of the Loan agreement between Mr. Boon Venture and EEKLO mines evidencing the initial loan between the two worth USD 45,000. Exhibit JML- 3 is the second Loan Agreement between Mr. Boon Venture and EEKLO mines amounting to USD 40,000 (Forty Thousand United States Dollars) for the purposes of extraction of copper with Kazikugoma Limited in Tanzania. 6 Exhibit JML-4 is the Plaintiff’s bank statement evidencing the withdrawn funds by the Defendant. Exhibit JML-5 are letters from the Lenders reminding the Plaintiff to repay the advanced loans. Exhibit JML-6 are copies of the demand notice to the defendant. Exhibit JML-7 is a copy of the Board Resolution. As earlier on intimated, the suit was proved by the Plaintiff through an affidavit and Form No.1 as the Defendant defaulted to file the Written Statement of Defence. It is a cardinal principle of law that an affidavit is a substitute for oral evidence. This is the rule in the case of Uganda v. Commissioner of Prisons, Ex parte Matovu (1966) E.A.514 at page 520. The court of Appeal held that: “… as a general rule of practice and procedure, an affidavit, for use in court, being a substitute for oral evidence, should only contain statements of facts to which the witness disposes either of his own personal knowledge or from information he believes to be true.” (Underlining supplied) Additionally, it is settled that when the Defendant does not deny the averments in the pleadings of the other side, he is deemed to have admitted the same. Further, where the Defendant does not file a counter 7 affidavit to dispute the contents of an Affidavit, he is deemed to have admitted the factual statements in the Affidavit of the adverse party. Subbscribing to the decision of Fatuma Ally Mohamed vs Mohamed Salehe [2020] TZHCLand 2320 (TANZLII) at page 2, I quote: “The position of the law on failure to file a counter affidavit it is settled. The Respondent is deemed to have not contested on the factuality of the affidavit. I agree with Mr. Njama that, omission to file a counter affidavit does not render the application uncontested as to deny the respondent a right to address the Courton merit or otherwise of the application. Neither does it release the applicant with a duty to argue his case. This position was clearly stated in among other, in Finn vin Wurden Perterson and Another Vs. Arusha District Council, Civil Application No.562/17 of 2017.” (underlining supplied) The suit is premised on allegations of misappropriation of funds by the Defendant as a director of the Plaintiff company, withdrew from the Plaintiff’s account and spent the same on his own personal uses. That is a breach of the fiduciary duty of the director of a company towards the company itself and its members. Section 182 of the Companies Act provides that: 182.-(1) Subject to this section, a director of a company, when exercising powers or performing duties, must act 8 honestly and in good faith and in what the director believes to be the best interests of the company. In the case at hand, the Defendant was a director of the Plaintiff company entrusted with powers to transact business of the company and transact the bank accounts of the Plaintiff company. However, it is alleged that in breach of the fiduciary position and by abusing his position as a director, he misappropriated the funds of the company and converted them to his own uses. The main issue is whether the Defendant as the director of the Plaintiff Company withdrew the funds from the Plaintiffs’ bank accounts for his own personal uses. If so whether the Plaintiff is entitled to the reliefs claimed. On the first issue, through Exhibit JML-1 which is a copy of the Loan Agreement between Jean Marie Leemans and EEKLO MINES Ltd, it evidences existence of an additional loan agreement between the two worth 350,000 Euros. Exhibit JML-2 is a copy of the Loan agreement between Mr. Boon Venture and EEKLO mines Ltd evidencing the initial loan between the two worth USD 45,000. Exhibit JML-3 is the second Loan Agreement between Mr. Boon Venture and EEKLO mines Ltd for USD 40,000 (Forty Thousand United States Dollars). The foregoing exhibits evidence the source of the money that the Defendant is alleged to have 9 misappropriated. The Defendant’s withdrawal of the funds from the bank accounts of the Plaintiff company is evidenced by Exhibit JML-4 namely the Plaintiff’s bank statement proving the withdrawing of funds by the Defendant as the director which funds were not used for the intended purposes of mining activities. Exhibit JML-5 is made up of letters from the lenders reminding the Plaintiff to repay the said advanced loans proving that the Plaintiff had borrowed the money and had failed to repay the loans timely. Exhibit JML-6 which is made up of copies of the demand notices shows the fact that the Plaintiff Company had not condoned the misappropriation of funds by the Defendant and that the Defendant was called upon to return the funds. The Defendant, however, refused to repay the funds hence proving misappropriation of money by the Defendant as Director of the Plaintiff Company. Having carefully gone through the affidavit of proof of claim and exhibits JML 1-7 as elucidated above which were tendered by the Plaintiff in this suit, I am satisfied that the defendant in abuse of his position as a director of the Plaintiff Company, withdrew the funds from the Plaintiff’s account for his own personal use without approval by the company or its Board of Directors. As the withdrawn money was not spent into the approved 10 business of the company, rather was put into personal use of the Defendant, it was not utilized in the best interest of the company. Therefore, relying on the pleadings and documents relied upon by the plaintiff and the affidavit of proof of claim, I hold that the plaintiff has proved that the Defendant is in breach of his fiduciary duty towards the Plaintiff company. The Plaintiff has also proved the losses suffered as a result of the breach. The demand letters from the lenders who claim the repayment of the loaned amount with interest proves that the Plaintiff has incurred the losses as claimed in this case. The Bank account of the Plaintiff Company, equally, indicate the extent of amounts withdrawn illegally by the Defendant from the bank account of the Plaintiff company. For the foregoing reasons, I enter Judgment and Decree in favor of the Plaintiff against the Defendant as prayed and proceed to make the following orders: i. It is hereby declared that USD 85,000 and 350,000 EUROS equivalent to TZS. 1,195,767,650.00 which the Defendant withdrew and misappropriated, were funds belonging to the Plaintiff Company transferred by Lenders of the Plaintiff in favour of the Plaintiff. 11 ii. The Defendant is hereby ordered to refund the Plaintiff the amount of USD 85,000 and 350,000-EUROS equivalent to TZS 1,195,767,650.00 immediately into the Plaintiff’s NMB Bank Euro Account No. 24810012960 and USD Account No 24810012959 iii. The Defendant is hereby ordered to refund the Plaintiff the amount in (b) above with an interest of 7% percent per Annum from the date of their last withdrawal from the Plaintiff’s Bank Accounts on 12th June 2023 to the date of Judgment. iv. The Plaintiff’s Claim for the Defendant to pay the plaintiff specific damages of TZS. 1,000,000,000/= was not specifically proved separately other than what is ordered in (a) and (b) above. TZS 1,195,767,650.00 has been granted as specific damages in (b) above. v. The Defendant is hereby ordered to pay the Plaintiff interest of (b) above at the Commercial rate of 12% per Annum from the date of Judgment till full payment. vi. General Damages are Awarded at TZS 100,000,000/=. vii. The decretal sum shall carry interest at the court rate of 12% per annum from the date of delivery of this Judgment to the date of full 12 and final satisfaction thereof. viii. Costs of this suit shall be borne by the Defendant. I further Order that the decree emanating from this suit shall be executed subject to compliance with the provisions of Rule 22 (2) (a) and (b) High Court (Commercial Division) Procedure Rules, 2012 (as amended, in 2019). It is so ordered. A.H.GONZI JUDGE 15/11/2024 Judgment is delivered this 15th day of November 2024 in the presence of Mr.Godlove Sanga and Geofrey Mushumbusi, Advocates for the Plaintiff accompanied by 3 directors of the Plaintiff company. A.H.GONZI JUDGE 15/11/ 2024 13