efc tanzania microfinance bank ltd 2 others vs lucy diu simtowe another 2023 tzhclandd 16585 26 june 2023

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (LAND DIVISION) AT DAR ES SALAAM LAND APPEAL N0.260 OF 2022 (Arising from the Decision of the District Land and Housing Tribunal for liaia - Hon. Mguiambwa- Chairperson in Application No.127 of 2014, delivered on 27h November 2021) EFC TANZANIA MICROFINANCE BANK LTD............. 1st APPELLANT MBOGO AUCTION MART & REAL AGENCY CO.LTD...2ND APPELLANT DEBT STAR & AUCTIONEERS..................................... 3rd APPELLANT VERSUS LUCY DIU SIMTOWE.............................................. 1st RESPONDENT WATSON MANDA SIMTOWE.................................. 2nd RESPONDENT JUDGMENT 1st & 2ffh June 2023 L. HEMED, J. At the District Land and Housing Tribunal for Ilala (DLHT), Ms.Lucy Diu Simtowe and Watson Manda Simtowe successfully instituted Land Application No. 127 of 2014 suing the appellants herein EFC TANZANIA MICROFINANCE BANK LTD, MBOGO AUCTION MART & REAL AGENCY CO.LTD and DEBT STAR & AUCTIONEERS, to challenge the intended sale of the suit landed property, a house situated on plot No. i ILA/ILL/SSH18/30 Shariff Shamba Ilala, Dar es Salaam registered in the names of the respondents with Reg. No. 101795. The intended sale of the suit landed property was aimed at recovering the outstanding amount of loan which was advanced to the respondents by the 1st appellant. The background story of the dispute is that on 17th September 2012 the respondents herein entered into a loan agreement of Tshs 35,000,000/= with E.F.C Tanzania M.F.C Ltd, the 1st Appellant, which was to be serviced within the period of 24 months, by 16th September 2014. The securities for such loan were two motor vehicles, Minibus-Toyota Coaster with registration No.T.166 BNC, Pick up - TATA -Registration No. T.500 AHD, 3.5 tones and a piece of land No. ILA/ILL/SSH 18/ 130 Shariff Shamba, Ilala- Dar es Salaam. On allegation that the respondents had defaulted to service the loan, the appellants sold the two motor vehicles. While being in the process to dispose of the suit landed property by sale, the respondents rushed to the DLHT to challenge it. After having deliberated the matter before it, the trial Tribunal found that the respondents herein had paid the loan in full. The appellants were 2 thus aggrieved by the whole decision of the DLHT hence this appeal on the following grounds: 1. That, the honorable chairperson erred in law and facts to decide in favour of the respondents white the suit was not proved by the Respondents based on evidence tendered. 2. That, the honorable chairperson erred in law and fact to heid(sic) that, the respondents paid the loan in full while they breached the loan agreement dated 12fh September 2012 3. That, the honorable chairperson erred in law and facts to decide that, the respondents paid the loan in full while loan facility has interest and penalties accrued due to breach of loan agreement by the Respondents. 4. That, the honorable chairperson erred in law and facts for not appreciating that, the Appellants has (sic) a right to exercise the right of sale of the mortgaged property upon default to repay the loan by the respondents 5. That, the honorable chairperson erred in law and facts for failure to appreciate that, the Respondents after being served with the default notices, they failed to repay the loan. 6. That, the trial chairperson erred in law and facts to entertain the case while the Tribunal has no jurisdiction to enforce the loan agreement." 3 On 27th April 2023 when the matter was called for necessary orders, the Court directed the appeal to be argued by way of written submissions. Parties complied with the court's directives as they promptly filed their submissions in chief and the reply thereof. The respondents delayed in supplying a copy of reply submissions to the appellants which necessitated them on 1st June 2023 to pray for extension of time to file rejoinder. The prayer was granted and the appellants were directed to file rejoinder by 8th June 2023. However, up to 9th June2023 when the file was placed before me to compose judgment, there was no copy of the rejoinder submission in the file. I had no option other than presuming that the appellants opted not to file rejoinder submission. At all the material time, the appellants were represented by Mr. Cleophace James, learned advocate while the respondents enjoyed the service of Mr. Nehemiah Nkonko, learned counsel. I must state at the outset to appreciate the valuable submissions made by both learned advocates which greatly helped in composing the very judgment. In respect of the 1st ground of appeal, the counsel for the appellants asserted that it was the duty of the respondents to prove that they paid 4 the loan facility without any default. He stated that the respondents were supposed to pay TZS 2,070,833 as monthly instalment from 21/09/2012 without missing even a single instalment. According to the appellants' advocate, the 1st instalment was paid on 22/10/2012 instead of 21/09/2012. Bank statement does not indicate that TZS 47,860,000/= was deposited by the Respondent. In his view, bank statement is only authentic documents showing exact entries in the respondents' account. In regard to the 2nd ,3rd and 5th ground the counsel for the appellant argued that the trial chairperson erred in law to hold that the respondents paid the loan in full while they breached the loan agreement. He added that the respondents were supposed to pay the loan as per the payment schedule. The loan agreement attracted interests and penalties in default. The appellants stated that the respondents defaulted to pay the principal of TZS 11,232,569 which amounted to breach of the loan agreement. In cementing his argument, he cited the decisions in Abdallah Yusuf Omar vs The People's Bank of Zanzibar and Another [2004] T.L.R 399 and in National Bank of Commerce Limited vs Stephene Kyando T/A ASKY Intertrade, Civil Appeal No. 162 No. 162/2019 (CAT) where it was 5 held that failure to repay any of the instalment amount to breach of loan agreement. In regard to 4th and 6th grounds of appeal emphasized that the respondents were duly served with the default notice but neglected to heed hence, the appellants had the right to exercise power of sale under the mortgage deed. He stated that the respondents had pledged the suit property located at Shariff Shamba-Ilala with Residential License No.ILA/ILL/SSH 18/30 which upon default by the respondents, the appellant had the right of sale as per section 132 of the Land Act, Cap 113. It was the view of the counsel for the appellants that it was the misdirection by the trial tribunal to order the release of the residential license while it has been mortgaged and the respondents having breached the loan agreement. He prayed the court to allow the appeal. In reply to the 1st ground of appeal, Mr. Nkoko was of the view that, the respondents discharged their duty of proof on the balance of probability as required by the law. He contended that evidence of the respondents was coherent, consistent and worth to be believed by the trial Tribunal unlike the evidence of the appellants. He argued that according to 6 the record, the respondents had repaid the amount of Tshs 63,660,000/=although they were supposed to pay the amount of Tshs 49,700,000/=. He was of the view that the trial Tribunal was justified to hold that the loan was repaid in full and in excess. As to the 2nd ,3rd and 5th grounds of appeal, the advocate for the respondents argued that the amount acquired from the sale of the motor vehicles was enough to cover the outstanding amount as evidenced by exhibit P3. He stated that evidence adduced by the respondent showed that the loan was pad in full. He thus distinguished the decision in Abdallah Yussuf Omari (supra) that it does not apply where the loan is pain in full. He submitted further that even if the loan could not have been repaid by selling the motor vehicles, the blame would have been on the 1st appellant and the respondents would have been discharged from the loan. To fortify his point he cited the decision in I & M Bank(T) Limited vs Mustafa's (2005) Limited and Two others, Commercial Case No. 15 of 2022 (HC-Commercial Division) where the borrower was discharged from further 7 liability for the reason that by accepting a price which was lesser than the secured amount, the lender assumed the risk. In regard to the 4th and 6th grounds of appeal he submitted that there was no breach of contract on the part of the respondents. He asseverated that since the 1st appellant exercised her right to sale the two motor vehicles, it should be taken on board that the respondents had already been discharged from the loan agreement. I prayed for the dismissal of the appeal with costs. Having gone through the rival submissions, it is my turn to determine on the meritorious of the appeal. The appellant had six (6) grounds of appeal. Having closely examined all the grounds I realized that all are centered on only one point that is the respondents having failed to repay the loan in full. Since all six(6) grounds are grounded on one point I am going to determine all of them collectively. The proceedings and the judgment of the trial tribunal show that the central issue for determination was 'whether the loan agreement was paid in full'. It was thus the duty of the respondents herein (the applicants 8 during the trial) to establish that they repaid the loan in full pursuant to section 110(1) of the Evidence Act, [Cap 6 R.E 2019] which provides thus: "Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist" The question that arise is whether the respondent proved their claims on the balance of probability that they had repaid the loan in full to justify the decision of the trial tribunal. To answer the said question I had to peruse the proceedings of the trial Tribunal to find out if such evidence exist. I found that there was no dispute that the loan advanced to the respondents herein was Tshs 35,000,000/=. According to DW2 one Felista Nialiaki Kipuyo, the respondents were to repay a total amount of Tshs. 49,700,000/= pursuant to the payment schedule, exhibit "D4". The respondents who were the applicants during the trial testified to have repaid the amount of Tshs.47,860,000/=, this was evidenced through exhibit P3, the pay in slips. 9 Evidence adduced by DW2 also revealed that the appellants had sold the two motor vehicles for purposes of realizing the outstanding loan. According to her testimony, the Minibus Toyota Coaster was sold at Tshs.l3,300,000/=and the pickup - TATA was sold at Tshs.2,500,000/= making the total of Tshs. 15,800,000/=. From evidence on record, the total amount paid by the respondents through exhibit P3 and the sale of the two motor vehicles is Tshs. 63,660,000/=. In view of the decision in Hemed Saidi v. Mohamed Mbilu [1984] T.L.R 113 that 'the person whose evidence is heavier than that of the other is the one who must wirb, it is my firm view that the respondents had heavier evidence that established that they had paid the load in full. It was thus justifiable for the trial Tribunal to find in favour of the respondents. I must clearly state at this juncture that the purpose of security in any loan facility is to provide an alternative source of repayment. Once the loan is repaid then the property which was pledged as a security has to be released. In the present matter the respondents borrowed Tshs.35,000,000/=, they were supposed to pay Tshs. 49,700,000/= and have already paid Tshs. 63,660,000/=. io It is my firm view that the act of the appellants demanding to sale the suit property despite having realized Tshs. 63,660,000/= from the respondents amounts to predatory lending. I am holding so because it appears the appellants are determined to ensure that the suit landed property is sold. This Court is not prepared to bless such kind of lending. From the foregoing, I find the decision of the trial Tribunal has nothing capable of being faulted by this court. The said decision deserves the blessings of this court. In the end I proceed to dismiss the entire appeal with costs. It is so ordered. DATED at DAR ES SALAAM this 26th Juna2023 HEMED JUDGE 11