Elements v NCBA judgment 22

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL COURT DIVISION) AT DAR ES SALAAM COMMERCIAL CASE NO. 9679 OF 2024 ELEMENTS LIMITED……………………………………………………PLAINTIFF AND NCBA BANK TANZANIA LIMITED…….………….………............DEFENDANT JUDGMENT Date of last order: 28/10/2024 Date of judgment: 22/11/2024 AGATHO, J.: The central issue in this judgment is whether the parties executed credit facility agreement. While the plaintiff alleges that there was a credit facility agreement, the defendant refutes it. The court is thus asked to disentangle the issue while referring to the parties evidence and the law. The parties enjoyed legal services from learned counsel. Whereas Claudio Msando represented the plaintiff, Adronicus Byamungu stood for the defendant. The plaintiff filed the present suit in court seeking the following orders: 1 (i) Declaration that, the defendant has breached the terms of the Credit Facility Offer Letter. (ii) An Order for the payment of United States Dollars Seven Hundred Ninety Thousand (USD 790,000), being the specific damages as loss of prospective profits following termination of sub-contractual arrangement entered between the Plaintiff and the third parties. (iii) An order for payment of United States Dollars Five Hundred Twenty Thousand (USD 520,000), as loss of business investment capital of the money secured from private creditors. (iv) Payment of Tanzania Shillings One Billion (TZS. 1,000,000,000), being reputational damages and loss of business opportunities. (v)An order of payment of general damages as may be assessed by the Court. (vi) Costs of this suit be borne entirely by the defendant herein, and, (vii) Any other orders or reliefs, as the honorable Court may deem fit and just to grant. Upon being served with the plaint the defendant denied the plaintiff’s claims by filing the WSD. The matter went to final pre-trial conference after the mediation marked failed. In the final PTC the issues were framed as 2 shown below: For determination of the matter the following issues were framed: 1. Whether there was credit facility agreement between the parties? 2. Whether either party breached the terms of credit facility agreement. 3. Whether either party suffered any damage as a result of the breach in (2) above. 4. To what reliefs are the parties entitled to. In a bid to prove her claims, the plaintiff brought one witness, Tom Joseph Mazanda, herein referred to as PW1. He took oath and tendered his witness statement which was received and recorded as his testimony in chief. PW1 testified that he is principal officer of the plaintiff. It was his testimony that on the 14th August, 2023 the plaintiff wrote a letter to the defendant titled (Application for Term Loan Facility USD 425,000 to acquire assets of Quality Pulse Exporters Limited and additional working capital), to request a credit facility amounting to United States Dollars four hundred twenty - five thousands (USD 425,000) as the working capital for grain processing, purchase of necessary plant and machinery spare parts and rehabilitation as well as undertaking major rehabilitation of 3 the building to be acquired. Towards that end PW1 tendered a copy of the said loan application letter dated 14/08/2023 which was admitted as exhibit P1. PW1 testified that after receiving the application letter, the defendant issued to the plaintiff a facility offer letter with Ref. No NCBA/CORP/MEMO/221/2023/TT dated 22nd December, 2023. It was the witness’ view that the defendant did approve the application of a credit facility amounting to United States Dollars three hundred seventy -five thousand (USD 375,000). The witness continued to testify that the credit facility was meant to be secured by separate securities, but among them was the landed properly and assets located on Plot No. 1081, within processing zones Authority (EPZA) Ubungo Mabibo External, along Nelson Mandela, which was to be financed by the credit facility extended by the defendant. Further to that PW1 testified that the plaintiff signed the credit facility offer letter to enabling her to acquire the above stated landed property as part of the financing terms by the defendant. Since the said property is part of the processing zone by the EPZA, on 14th August, 2023 the plaintiff executed a lease assignment agreement with Quality Pulse Exporters Limited 4 for purpose of acquiring the said property for operating various businesses. According to PW1 the said agreement was delivered to the defendant’s office on 15th August, 2023. As for the pricing, the witness testified that the property was to be acquired at a consideration amount of United States Dollars three hundred seventy-five thousand (USD 375,000) which was to be paid not later than 31st August 2023 through a deposit to the bank account of Quality Pulse Exporters Limited maintained in the defendant’s Bank. PW1 went on testifying that upon signing of credit facility offer letter and submission of all the necessary documentations for processing of the credit facility, the defendant did not disburse the entire loan amounts as stated in the respective facility letter. The witness decried such situation to have caused significant financial loss, several hardships and inconveniences to the plaintiff. Among them, missing out the chance of acquiring the landed property as stated above. The plaintiff’s witness told the court that following the defendant’s default, on several occasions and through various letters they did remind her to honor the obligations as per the terms and conditions on the facility offer letter but she neglected them. On this PW1 tendered the letters dated 5 29/01/2024 and 12/02/2024 from the plaintiff to the defendant inquiring on the loan that were admitted as exhibit P2 collectively. In addition to sending reminder letters, PW1 testified that they sent the defendant various emails inquiring about the status of the requested loan as per the terms and conditions in the facility offer letter. But the defendant neglected and refused to heed them. To support his testimony the witness tendered in evidence the printouts of email correspondences between plaintiff and the defendant which was received and admitted as exhibit P3. Regarding the defendant’s response, PW1 explained that in following on the status of the said facility, it was not until 3rd April, 2024 (which is almost three (3) months after issuing of the credit facility offer letter) that the defendant replied with a letter with reference number NCBAT/CEO/CIB/2024/04/03, dated 3rd April, 2024. This letter stated that, non-adherence to the aforesaid facility was caused by the plaintiff’s delay in providing necessary documents the defendant requested. A fact, which in PW1’s view is incorrect and wrong. The witness tendered in evidence a letter dated 03/04/2024 from NCBA to the plaintiff whose subject matter was status of facility activation for purchase of Quality Pulse Properties Limited which was admitted as exhibit P4. 6 The witness continued to the tell the court that, the defendant’s non - adherence to the said Credit Facility Offer Letter led to the plaintiff missing out crucial investments opportunities and hindered her ability to meet critical financial obligations a result, which has caused suffering of substantial financial losses, including but not limited to loss of business opportunities, interest expenses, and reputational damage. It was PW1’s allegation that non-disbursement of funds as per the credit offer letter was a clear violation of the terms and conditions stated in that offer letter. It was his view that that is a breach of the arrangement which has caused severe financial harm to the plaintiff. In like manner, the witness lamented that the defendant’s non- adherence of the terms and conditions on the credit facility offer letter has caused unbearable stress, disturbance and monetary loss to the plaintiff who had incurred numerous costs and spent much of her productive time and resources following up and making correspondences in attempt to ensure that the defendant perform her obligation as per the terms of the agreement. As courtesy to the defendant, PW1 testify that on 3rd April, 2024 the plaintiff through her legal counsel, Msando Law Office issued a demand notice to the defendant with Reference No. MLO/NCBA/EL/DL/2024/04/17 7 dated 3rd April, 2024 claiming reliefs that are sought in this case. PW1 stated that this letter was received by the defendant on the same date. The same was however not tendered as exhibit. According to PW1, following receipt of the said demand letter, the defendant decided not to give an attention of the same and did ignoring the demands stated in the said demand notice. Sequel to the failure of the plaintiff’s efforts in securing her rights, with no any other means, she decided to institute this suit. That, upon institution of the said suit and on the course of proceeding with the same, on the 17th Day of July, 2024, the defendant, did issue a variation of the offer letter, which varied the terms of the offer letter dated 22nd December, 2023, an offer letter which the defendant denies to have processed it for failure of the Plaintiff submission of some of the requested documents. The said offer variation letter was not admitted in evidence because it was not pleaded in the plaint. Its admission would have therefore contravened the provisions of Order VII rule 14 of the Civil Procedure Code [Cap 33 R.E. 2019] requiring documents to be relied upon to be pleaded in the pleadings During cross examination by Mr Byamungu, defence counsel, PW1 testified that they sued the defendant because she had an agreement with 8 plaintiff to extend her a loan to purchase property from Quality Pulse Export Limited in the EPZ. He testified that the agreement was that the defendant should send a loan application to the defendant bank who will grant the plaintiff the loan. When pressed with more questions, PW1 told the court that the agreement is in various documents that he has tendered in court including offer letter. But the Court noted that the offer letter was not tendered in evidence. PW1 went on testifying that there are emails that he has tendered in evidence, exhibit P3. These were correspondence in which the bank wanted the plaintiff to send application for loan. The exhibit P3 (print out of email correspondence), email date 07/03/2024 subject: purpose of the visit; and status of the approved loan. It was an email from the bank to the plaintiff. At this juncture, the witness conceded that the same email on a second page, below there are comments from Managing Director of the defendant instructing the plaintiff to send loan application letter. Contradictorily, PW1 stated that the instruction to send the application letter was implemented even before the said instruction was given on 7th March 2024. 9 He testified that the bank had already issued offer letter. It was supposed to implement it. The witness claimed that the original offer letter is with the bank. Along that he said he was given the original offer letter which he signed and returned it to the bank. Since returning it to the bank he never saw it again. According to him he returned the offer letter to the bank on 29/12/2023. He told the court that when he was preparing this case, he had a copy of unsigned offer letter. Asked if he had a copy, he admitted having it but since it was not signed by the bank, he could not bring it to the court he said. The witness also told the court that he cannot remember everything written in the offer letter because it was long. It is more than six or seven pages. It was his testimony that the main content in the offer letter was to approve the loan for the purchase of property of Quality Pulse. It had some terms and conditions which he could not remember. Having shown the offer letter PW1 recognized it. He said it is dated 22/12/2023. He admitted having signed it and returned to the bank. PW1 went on testifying that the offer letter had some conditions, one being to submit various documents to the bank. These are financial 10 statements of the plaintiff, tax clearance certificate, annual returns filed at BRELA. After PW1 had looked at the offer letter section B which contain conditions. He stated that it stipulates the documents required. PW1 testified that they complied with all conditions under Section B from (a) to (d). However, he conceded that he has no evidence to prove that the documents listed under Section B were submitted to the bank. Likewise on Section C about security, PW1 testified that the plaintiff issued two securities: properties (two title deeds), and debentures of directors. He went on telling the court that these are securities given. He continued to testify that These securities were with the bank before December 2023 because the plaintiff had a previous loan with the bank. That was a loan to the tune of USD 559,869. And this loan is still outstanding, but the plaintiff is servicing it. It will end next year. PW1 claimed when the new offer letter was given to them, they were not told that there will be any changes in relation to the securities they offered earlier. But he admitted that one condition for new loan (for which offer was given) was variation of securities. He told the court that the plaintiff 11 did not sign any variation. He also admitted that the plaintiff never asked for variation. She was asking for loan after signing the offer letter. When asked to read page 4 of offer letter, PW1 conceded that it had specific conditions: (i) the disbursement to be done after confirmation and rehabilitation and operation of the plaint. PW1 testified that they did not implement this condition because the bank had not given them the property. The court observed that is contrary to what PW1 had testified earlier. The witness admitted that in the offer letter there was no provision that the bank will give them the property. He went on saying no document tendered in court that requited the bank to give the plaintiff the property. Besides the witness testified regarding the other condition which is (ii) on the ban to disburse USD 150,000. In connection to conditions in the offer letter, PW1 admitted that he did not have any evidence to prove that they sent the documents required in the offer letter and that they fulfilled all conditions in the offer letter. The plaintiff’s witness went on admitting that the plaintiff know that Quality Pulse sold the property to another buyer. And they got that information from the bank. He testified that after the plaintiff signed the facility letter, and sent it to the bank and the latter had a duty to return it to 12 them after signing. When the plaintiff was signing the facility letter it was not yet signed by the bank. The witness testified that the bank did not return to the plaintiff the signed offer letter even after reminding them several times. However, he admitted that he has no letter to prove that they were inquiring about offer letter. He added that sometimes the parties communicated via phone. It was his testimony that the bank informed them through email that the offer letter had been signed and approved. But he conceded that he had not seen the offer/facility letter signed by the bank. Along with that he retracted to have called the letter facility agreement. He clearly admitted that there is no contract between the defendant and the bank other than the offer letter. When the facility letter was shown to him, the witness recognized it because the plaintiff signed it and he also retained the copy but it was yet to be signed. He admitted that the one he saw in the court was signed by the bank only, which he recognized because he knows its content. The witness went on contradicting himself when he testified that he saw the copy of the letter. And the original that he saw previously was not signed, and it is not in this court. The witness was categorical that he called that offer letter 13 although it was not signed by the bank but it came from them as it informed the plaintiff that it was the offer letter. He stressed that it was not signed by the bank but it came from them. On the offer letter again, PW1 testified that he has not tendered in court the copy of the offer letter they signed and returned to the bank. He said he retained it because it lacked signature and official stamp of the bank. On rehabilitation of the property and starting operation, PW1 testified that they could not rehabilitate the property because the bank had not given them the loan. It was his view that the plaintiff did not have any responsibility to rehabilitate the building because the bank did not give them the loan. PW1 admitted that there is a provision in the offer letter which required the plaintiff to do rehabilitation of the property and start operations. Further admission was that the loan was for purchase of the lease. PW1 continues to admit that part of the loan money was supposed to be used to clear the outstanding loan that the plaintiff had. All these were in the offer letter. The witness conceded further that towards the end before the meeting with defendant’s MD they got information that the seller has already repaid his loan hence the bank has no interest to issue the loan applied to the plaintiff. 14 Interestingly, PW1 disputed the suggestion that the purpose of the loan had changed. It was his testimony that part of the purpose of the loan sought was to repay the loan. But to him, that is not 100% of the purpose. Because the other part of the purpose of the loan was for the plaintiff to operate the business (property at EPZ). Asked about current status, PW1 told the court that Quality Pulse Exporters Limited have not sold property and they do not have lease there anymore. The witness admitted having no answer as to where the lease has gone because the property is under EPZ. PW1 claimed that he knew all this because they were interested in the property, and they had incurred some expenses. Surprisingly, despite knowing all that he conceded that he does know where the lease has gone. Referring to exhibit P3 (email correspondences), PW1 testified that the 1st email was from Quality Pulse Export Limited’s Lawyer Bertha Nanyaro to Erick Patrick of NCBA Bank and copied to PW1. He was quick to state that Quality Pulse Export Limited is not part of this case. Pinned to paragraph 13 of his witness statement, PW1 claimed that the plaintiff lost crucial investment opportunities, which to court’s dismay failed to explain what these investment opportunities are. 15 Regarding the plaintiff’s claims that he had failed to meet critical financial obligations, the witness testified that she failed to meet critical financial obligations. But he admitted that he has not explained these critical financial obligations. PW1 also admitted that he has not explained the substantial financial losses the plaintiff suffered. Nor had he explained the loss of business opportunities the plaintiff sustained. Same problem has been noted that plaintiff’s claim on interest expenses, that has not been explained. Similar defect of unexplained claim to plaintiff’s reputation damage is recorded and it is explicit in PW1’s testimony. In re-examination, by Mr Msando, Advocate, PW1 elaborated that he inquired on the signed offer letter but the bank was mute. Regarding securities, he clarified that there were two title deeds that the bank took as security for the loan they took previously and they were continuing to service. PW1 went on clarifying that plaintiff is a customer of the bank for a long time, and the bank extended loans to her twice previously. And in the last transaction with the bank, it has approved the loan to the plaintiff for purchasing the property of Quality Pulse Exporter Limited. 16 As for the terms and conditions of the facility offer, PW1 retracted what he stated in cross examination and claimed that they met the conditions. He also clarified that they gave the plaintiff securities because she had their documents given in the previous loans. On Quality Pulse Exporter Limited involvement in this case, PW1 told the court that they could not join them because they are not the one that offered them the loan. That is legally sensible. Finally, concerning the meeting with MD of the defendant, PW1 clarified that the purpose of the meeting was to discuss the status of the loan they applied for. That is the end of plaintiff’s evidence. On the defendant’s side, she brought one witness, herein DW1, Erick Patrick, who after taking oath tendered his witness statement that was received and recorded as his testimony in chief. However, during cross examination DW1 admitted not to have seen or to know Maliki Hatibu Hamza, the commissioner for oaths before whom his witness statement was taken. The court ruled that the witness statement was not taken before the commissioner for oaths which is against the law, Rule 50(1)(a) of the HCCD Procedure Rules. Consequently, it was struck out. And that was the end of 17 defence case. Having depicted the evidence adduced in this suit, the court now turns to the issues for determination. These issues are follows: 1. Whether there was credit facility agreement between the parties? 2. Whether either party breached the terms of credit facility agreement. 3. Whether either party suffered any damage as a result of the breach in (2) above. 4. To what reliefs are the parties entitled to. To begin with the 1st whether there was credit facility agreement between the parties. Being a contract the evidence is either documentary which is the contract itself and incase of unwritten agreement an oral testimony has to be given. Besides that, the burden of proof in this suit lies on the plaintiff who alleges that there was a credit facility agreement. However, PW1 was recorded both in his testimony in chief and cross examination that there was offer letter which the plaintiff had signed, and the defendant had not. It was revealed during cross examination that there was a copy of offer letter that the bank had signed. But none of these were tendered as exhibits. 18 Section 4(2)(b) of the Law of Contract Act [Cap 345 R.E. 2019] deals with communication of acceptance that is as against acceptor when it comes to the knowledge of the proposer. Since PW1 failed to tender the credit facility letter signed by the bank, one cannot say there was execution of the credit facility letter. Even though the PW1 kept insisting that the parties have executed the credit facility agreement he failed to tender evidence to prove his allegations. It is the law under Section 110 of the Evidence Act [Cap 6 R.E. 2019] that he who alleges must prove. This principle was emphasized in the case of Hemedi Said v Mohamed Mbilu [1984] TLR 113. It follows that the plaintiff has failed to discharge her burden of proof. From the evidence adduced the parties did not execute any credit facility agreement. All that they had was simply offer letter which lacked evidence if at all it was accepted by the defendant to make it a binding contract. That said the first issue is answered in the negative. Turning to the 2nd issue, whether either party breached the terms of credit facility agreement, this will not detain the Court much. Since the 1st issue has been answered in the negative, the 2nd issue is pre-empted because there was no contract between the parties. 19 Advancing to the 3rd issue, whether either party suffered any damage because of the breach in (2) above. As a consequence of 1st and 2nd issue the 3rd issue is equally without legal basis. After the court has found that there was not credit facility agreement executed between the parties it is imperative that neither of the suffered any damage. Even if a party might have suffered any damage that is a loss that cannot be legally sanctioned. In the context of this case that is injuria sine damnum, injury without legal redress. Lastly, to what reliefs are the parties entitled to, this can be answered briefly that, since the plaintiff has failed to prove her claims her suit is dismissed. The court thus finds that the defendant is not blameworthy. For that reason, the defendant request to have the suit dismissed has substance. In the end, the suit is found lacking merit. It is hereby dismissed with costs. Order accordingly. 20 DATED at DAR ES SALAAM this 22nd Day of November 2024. U. J. AGATHO JUDGE 22/11/2024 Court: Judgment delivered today, this 22nd November 2024 in the presence of Denis Leka, Advocate h/b of Claudi Msando, Advocate for the plaintiff and Tom Mazanda, Advocate, and Adronicus Byamungu for the defendant. U. J. AGATHO JUDGE 22/11/2024 21