EQUITY BANK T LTD VS AQUILINE TRADERS T LTD COMM CASE NO

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION) AT ARUSHA COMMERCIAL CASE NO. 06 OF 2023 EQUITY BANK TANZANIA LIMITED.......................... PLAINTIFF VERSUS AQUILINE TRADERS (T) LIMITED............................. DEFENDANT DEFAULT JUDGEMENT Date of Last Order: 17/05/2024 Date ofJudgment: 21/05/2024 GONZI, J. By way of plaint the plaintiff instituted the instant suit for breach of a Merchant Service Agreement dated 21st November 2014 entered between the plaintiff and the defendant praying for judgement and decree seeking the following orders, namely: - a) Payment of USD 129,767.69 as pleaded in paragraph 3 of this plaint. b) Payment of interest at commercial rate of 12% per annum for the sum in para 3 of the plaint from when it was due to the date of judgement. i c) Payment of interest on the decretal sum at 12% from the date of the judgement until payment in full. d) Costs of this suit. e)Any other order and relief may this honorable court deem fit and just to grant. The brief facts of this suit as collected from the plaint are that pursuant to the merchant services agreement entered into between the plaintiff and the defendant, the plaintiff supplied to and allowed the defendant to operate point of sales (POS) machines of the plaintiff. The defendant's sales would be paid electronically by card-holders to the defendant as per annexure EBTL-1 (Merchant Services Agreement). It was one of the terms of the merchant services agreement as per the indemnity agreement executed on 21st November 2014, that through the said POS machines, the defendant would debit customers (Card Holders) who use its services and or buying from the defendant via online payments system keep their record and thereafter submit to the plaintiff such debits for encashment without waiting for the payment from the respective card holders' banks. This term was in annexure EBTL-2 (Indemnity Agreement). It was alleged by the Plaintiff that the online payments made through POS machines and cashed by the plaintiff to the defendant, would later on be repaid to the plaintiff by the cardholders' banks upon 2 confirmation of the services rendered and/or sales made to the respective cardholders. That it was also a term of the said merchant services agreement that the defendant was to keep and maintain records /proof of ail transactions of the card holders that would have used the services and thereby authorize the defendant to debit their accounts through the POS machines. It was alleged that the plaintiff made some payments to the defendant on the basis that those sales were made by the defendant to customers whose cards were debited by the defendant through POS machines and that their payments would be effected to the plaintiff by the said customers' banks once confirmed by the said card holders. This was as per annexure EBTL-3 (Copy of Bank Statements). The plaintiff alleged further that the transactions and /or debits made by the defendant through the POS machines were denied by the card holders for being fraudulently done by the defendant. The plaintiff relied on the various correspondences between the parties in proof of such fraudulently acts by the defendant and these formed annexure EBTL- 4 (Copy of the Correspondences). Upon this discovery, the plaintiff made several follow-ups with the defendant and demanded proof of the said transactions so that it could avail the same to VISA and to the Defendant's clients' banks to prove that sales were made to the card holders, but all such efforts ended in vain . As a result of the 3 failure and /or refusal of the defendant to provide supporting evidence within required time, VISA reversed all transactions through charge-back by debiting the plaintiff's account held by it an amount equivalent to all disputed transactions which didn't have supporting evidence of services or goods used by the card holders. Upon realizing that the defendant had no proof of the transactions leading to the said debits, the plaintiff demanded refund of all money paid by the plaintiff. However, the defendant has failed, neglected and or /or refused to pay the said outstanding amount as per Annexture EBTL-5 (Demand Notice). The plaintiff boards of directors sat on 25th April 2023 and resolved to institute this suit for recovery of outstanding of credit facilities advanced to the defendant this is as annexure EBTL- 6 (A Copy of Body Resolution). Upon failure by the Defendant to file written statement of defence despite being duly served with the Plaint, the suit proceeded exparte by the Plaintiff filing an affidavit of proof and Form No.l which is an application for default Judgment In proving the ciaim, the plaintiff filed in this Court, Form No. 1 accompanied by the affidavit sworn by one, ERIC AKYO who is the principal officer of the plaintiff. All the annextures to the Plaint were also tendered in court as Exhibits attached to the affidavit of proof. According to paragraph 12 and 13 of the affidavit in proof of the claim 4 sometimes in January,2019 twenty nine (29) Point of Sale Transactions (POS) made by the defendant and paid by the plaintiff, were denied by the cardholders from being fraudulently done by the defendant. The denied transactions amounted to USD 108,453.11 which the card holders' banks refused to refund the plaintiff while the same had been paid to the defendant in anticipation of refund from Card Holders'.banks. The Plaintiff in a bid to prove its case tendered 6 exhibits as follows: Exhibit EBTL-1 is the Merchant Service Agreement pursuant to which the plaintiff supplied and allowed the defendant to operate point of sales (POS) machines of the plaintiff whereby the defendant's sales would be paid electronically by card holders to the defendant. Exhibit EBTL-2 is the Discharge and indemnity agreement. This agreement shows that it was the duty of the Defendant to collect the specified mandatory details of the cardholders such as account number, expiry date, full names, contact phones, photocopy of the card in both sides, and the name of the bank that issued the card. The defendant was supposed retain documentary evidence of authorisations by its customers using the POS during the transactions and that the Defendant would indemnify the Plaintiff for any losses arising from failure by the Defendant to observe the proper procedures for the POS system. 5 Exhibit EBTL-3 is the account statement of the defendant from 11th October 2014 to 28th December 2014 showing the Point of Sales Transactions by the defendant in respect of which the plaintiff made payments to the defendant on the understanding that those sales were made by the defendant to customers whose cards were debited by the defendant through POS machines and that their payments would be done to the plaintiff by the said customers' bank once confirmed by the said card holders. Exhibit EBTL-4 is a record of the denied transactions which were made by the Defendant through the points of sales. They amount to USD 108,453.11. These are the transactions and /or debits made by the defendant through (POS) machines and which were denied by the card holders for being fraudulently debited by the defendant. Exhibit EBTL-5 is the Demand Notice evidencing that upon realizing that the defendant had no proof for the denied transactions leading to the said debits, the plaintiff demanded refund of all money paid by the plaintiff in respect thereof. However, the defendant has failed, neglected and or /or refused to pay the said outstanding. Exhibit EBTL-6 is the Board Resolution evidencing that the plaintiff' board of directors sat on 25th April 5 2023 resolved to institute this suit for recovery of the outstanding credit facilities advanced to the defendant. This suit revolves around breach of contract on the part of the defendant. Typically, in a suit for breach of contract, the Plaintiff is required to prove existence of a valid contract between him and the Defendant. Also, he must prove that the Defendant has unjustifiably breached that contract and that damages have been suffered by the Plaintiff as a result of that breach. In the case at hand according to Paragraphs 6-18 of the affidavit of proof of the claim, the plaintiff and the Defendant entered into a Merchant Service agreement on 21st November 2014. The obligations of the Plaintiff included to pay money to the defendant as per the merchant services agreement in order to facilitate the transactions in the point of sales machines and the the defendant had an obligation to issue a discharge and indemnity to the plaintiff so as to allow prompt payment to the defendant by the plaintiff prior to the collection of money from collection card holders' banks. It was proved by the plaintiff that the plaintiff paid the defendant for the online transactions in respect of which it was supposed to collect money from the respective card holders' banks upon confirmation of the services rendered or sales made to the card holders by the defendant. The 7 defendant was required to keep and maintain records/ proof of all transactions of the card holders that used, purchased or bought any service from the defendant and the authorization to debit their accounts through the point of a sales machines operated by the defendant. Thus, the first element of the cause of action is established. On the breach of contract, it is not disputed that the plaintiff made payments for the point of sales transactions to the defendant through its bank accounts maintained with the plaintiff. However, the plaintiff established that a total of Twenty-Nine (29) point of a sales transactions made by the defendant and paid for by the plaintiff, were subsequently denied by the card holders' banks for being fraudulently debited by the defendant. That the denied transactions amounted to USD 108,453.11 which the card holders banks refused to refund the plaintiff while the same had been paid by the Plaintiff to the defendant in anticipation of refund from card holders banks. Despite the plaintiff's demand for payment from the defendant, and demand to be supplied with proof of transactions authorization by the respective card holders who used the services of the defendant in order to satisfy the bank that the payments were genuine, the defendant failed, ignored and refused to supply the 8 plaintiff with the demanded proof as per their agreement. This constituted a breach of the contractual terms by the Defendant. On the plaintiff suffering damages, it has been proved by the Plaintiff that due to the defendant's failure to supply the demanded documentation the plaintiff has suffered loss through a transaction reversal to its account with VISA whereby all the disputed transactions valued at USD 108,453.11 were debited from those accounts. When the plaintiff demanded refund from the defendant, through a demand notice, the defendant failed, neglected or refused to pay the said outstanding sums to the plaintiff. This constitutes the third element for the breach of contract cause of action. I find this suit being proved by the plaintiff to the standard required in civil cases against the defendant that there is unpaid amount of USD 129,765.69. This Court dealt with cases of default judgments in many other cases such as the case of NITRO EXPLOSIVE (T) LIMITED v. TANZANITE ONE MINING LIMITED, COMMERCIAL CASE NO.118 OF 2018 (HC) DSM (Unreported). 9 In the interpretation of Rule 22 (1) as amended, this court held that, for the plaintiff to enjoy fruits of justice under Rule 22, the following cumulative ingredients must be proved, namely; 1. Proof of the service to the defendant but who has failed to file written statement of defence. 2. The plaintiff must make an application in the prescribed Form No. 1- to the First Schedule to the Rules. 3. That the said application in Form No. I must be accompanied by an affidavit in proof of the claim. In the instant suit, there is no dispute that the defendant was served in accordance with the law. However, no written statement of defence was filed nor any application for extension to file one was made. Equally, it is not in dispute that the plaintiff has made an application in prescribed Form No. 1 and that the same was accompanied with the affidavit in proof of the claim. I hold that, the conditions for granting a default judgment are all in existence. In the totality of the above, and equally having carefully gone through the affidavit together with its annexures from exhibits EBTL 1 to EBTL 6; and in terms of Rule 22(1) of the High Court (Commercial Division) Procedure Rules, 2012 as amended by G.N.107 of 2019, this io court does hereby enter judgement in default against the defendant in favour of the plaintiff and order as follows: - (i) The defendant is hereby ordered to pay the plaintiff the sum of USD 129,765.69 being amount due and owing to the Defendant from the Plaintiff on account of the Merchant Services Agreement entered between the Plaintiff and the defendant. (ii) The defendant shall pay the plaintiff commercial interest on mercantile practices at the rate 12% per annum from October 2019 when the sums became due to the date of judgement. (iii) The defendant shall pay general damages of TZS. 10,000,000/= for inconveniences suffered by the Plaintiff. (iv) The defendant shall pay interest on the decretal sum at the court rate of 7% per annum from the date of judgement and decree to the date of full and final satisfaction thereof. (v) The defendant shall pay the costs of this suit. In terms of Rule 22 (2) (a) and (b) of the High Court (Commercial Division) Procedure Rules, 2012 (as amended, 2019), the Plaintiff is ordered to ensure that, the decree emanating from this suit shall not be executed unless the decree holder, within a period of ten (10) days from the date ii of this default judgment, publishes a copy of it (the decree) in at least two (2) widely circulating Newspapers in the country and after a period of twenty one (21) days, from the date of expiry of the said ten (10) days, has elapsed. That is to say Execution of the decree in this case will be subject to compliance of the provisions of Rule 22(2) of the High Court (Commercial Division) Procedure Rules, 2012 (as amended, 2019). It is so ordered. A. H. GONZI JUDGE 21/05/2024 Judgment is delivered in Court this 21st May 2024 in the presence of Mr. Lyaro, learned advocate for the Plaintiff and Mr. Eric Kimaro, learned advocate for the Defendant. 12