EQUITY BANK AND AVALON TOURS COMMERCIAL CASE NO 8857of 2024 Ruling

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION) AT MWANZA COMMERCIAL CASE NO 8857/2024 BETWEEN EQUITY BANK (TANZANIA)LIMITED………………………………………. PLAINTIFF VERSUS AVALON TRAVEL & TOURS…………………………….…………………… DEFENDANT DEFAULT JUDGEMENT Date of last order:03/09/2024 Date of Judgement: 18/10/2024 GONZI, J. The Plaintiff sued the Defendant claiming against him for Judgment and Decree for Orders that: a. That the Honourable Court be pleased to order the Defendant to pay the Plaintiff the outstanding Principal sum of USD119,173.02 as pleaded in paragraph 3 of the Plaint. b. That the Honourable Court be pleased to order the defendant to pay the Plaintiff interest on the aforesaid sum accruing at the Commercial rate of 23% per annum for the Sum in 1 paragraph 3 of the Plaint from when it was due to the date of Judgment. c. That the Honourable Court be pleased to order the defendant to pay the Plaintiff the interest on the Decretal sum at 12% from the date of Judgment to the date of final payment. d. Costs of this suit In terms of the plaint, the Plaintiff claims against the Defendant for breach of Merchants Service Agreement and indemnity agreement between the Plaintiff and the Defendant. According to the Plaint, through the Merchants Service Agreement, the Plaintiff supplied and permitted the Defendant to operate Point of Sales (POS) Machines whereof the Defendant’s sales would be paid electronically by Cardholders. One of the terms of the said Merchants Services Agreement which was later complemented by the Indemnity Agreement that was executed through the POS Machines, was with regard to the Defendant’s ability to debit customers (“Cardholders”) using its services and/or buying from the Defendant as online payments. The Defendant, under the agreement, would submit to the Plaintiff such debits for encashment rather than the respective Cardholders’ banks. The payments made to the Defendant would later be refunded to the Plaintiff by the 2 Cardholders’ Banks upon confirmation of the services rendered and/ or sales made to the respective Cardholders. Among the terms of the said Merchants Services Agreement stipulated that the Defendant was to maintain records/proof of all transactions of the Cardholders that have subscribed the services or authorized the Defendant to debit their accounts through the POS Machines. The Plaintiff believing that sales were made by the Defendant to customers whose cards were debited by him through POS Machines, effected payments to him. The transactions were, however, denied by the Cardholders for being fraudulently done. Further, one of the terms of Indemnity Agreement was that in the event of non-confirmation of the sales/services rendered to the Cardholder, the Defendant would be obliged to refund the Plaintiff any payment made on Plaintiff’s Account. Upon the denials by the said Cardholders/Banks, the Plaintiff contacted the Defendant to produce supporting evidence/document that would either verify that the transactions led to the debits or the alleged sales transactions were authorized by the Cardholders, nonetheless the Defendant disregarded and declined to provide the said documents despite several attempts. Upon realization that proof of the transactions was rendered futile the Plaintiff demanded refund from the 3 defendant which was unsuccessful. This prompted the Plaintiff’s Board to resolve to take the matter to court for redress. Upon institution of this suit, the court ordered that the defendant be served with summons dated 13/6/2024. Proof of service of court process server Kassanga H. Kassanga dated 1/7/2024 was filed, indicating that the defendant was not found even through his physical address. All efforts made by the Plaintiff to find the defendant ended in vain. Substituted service by publication in Newspaper was ordered and complied with by the Plaintiff, after which the case proceeded without the Defendant’s involvement When the suit was called for necessary orders on 13/08/2024, no Written Statement of Defence had been filed and therefore the learned Advocate for the plaintiff Mr. Maduhu Ngassa, Prayed to be 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. The plaintiff filed the Application for Default Judgment vide Form No.1 accompanied by an affidavit of proof of the claim sworn by one, Melchisedeki Mtebe, a Principal Officer of the plaintiff Company. 4 The Plaintiff attached Exhibit EBTL-1, A Copy of the said Merchants Services Agreement. He also attached Exhibit EBTL-2 which is a copy of the Bank Statement, as evidence that the amount which was paid by the Plaintiff to the Defendant was USD 119,173.02 only. The plaintiff attached Exhibit EBTL- 3 which is a copy of the correspondences between the Plaintiff and the Defendant which serves as proof of fraudulent acts by the Defendant. Exhibit EBTL-4 is a copy of the Demand Notice dated 6th October which entails the Plaintiff’s intention to file a suit against the defendant. It is a cardinal principle of law that an affidavit is a substitute for oral evidence as elucidated in the case of Uganda v. Commissioner of Prisons, Ex parte Matovu (1966) E.A.514 at page 520. The principle in that case was accepted by the Court of Appeal of Tanzania in the case of PHANTOM MODERN TRANSPORT (1985) LTD and D.T. DOBIE (TANZANIA) LTD and in several other cases. In Uganda vs commissioner of Prisons, Exparte Matovu case (supra), the rule on the making and use of affidavits for use in court was stated 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 5 which the witness disposes either of his own personal knowledge or from information he believes to be true.” It is plain therefore that an affidavit for use in court is a substitute for oral evidence. Additionally, it is a settled principle that when the Defendant does not deny the averments in pleadings of the other side he is deemed to have admitted the same. Further, where the one party does not file a counter affidavit to dispute the contents of an Affidavit, he is deemed to have admitted the factual allegations and statements contained in the Affidavit of the adverse party. Subscribing to the decision of Fatuma Ally Mohamed vs Mohamed Salehe [2020] TZHCLand 2320 (Tanzlii) at page 2, I quote that: “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 Court on merit or otherwise of the 6 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.’’ It is worth noting that an affidavit is evidence and the annextures thereto substantiate the allegations made on the Affidavit. In the case of Bruno Wenceslaus Nyalifa v. The Permanent Secretary Ministry of Home Affairs & Another, [2018] TZCA 297 (Tanzlii) at page 9, the Court reiterated and I quote: “We find further that the documents which were annexed to the appellant’s affidavit should not have been disregarded on the ground that they were not tendered in evidence, this is for obvious reasons that, affidavit is evidence and the annexture thereto is intended to substantiate the allegations made in the affidavit.” 7 Having carefully gone through the affidavit of proof of the claim and exhibits EBTL 1-4 which were tendered by the Plaintiff in this suit, I am satisfied that Parties entered into a valid Merchants Service Agreement. Also, it is clear that the Defendant has not honored her contractual obligations hence is in breach of the Merchant Services Agreement. In short, I find that on the balance of probabilities, the suit for breach of Merchants Services Agreement has been sufficiently proved by the Plaintiff to the standard required in civil cases, against the defendant. Relying on the pleadings, documents relied upon by the plaintiff and the affidavit of proof of claim, I hold that the conditions for granting default judgment are satisfied. The Plaintiff has also proved the losses suffered as a result of the breach. 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: a. The Defendant is hereby ordered to pay the Plaintiff the outstanding Principal sum of USD119,173.02 . b. The Defendant is hereby ordered to pay the Plaintiff interest on the aforesaid sum in paragraph (a) above, accruing at the Commercial rate 8 of 23% per annum from 31st July 2021 when it was due to the date of Judgment. c. The Defendant is hereby ordered to pay the Plaintiff interest on the Decretal sum at the court rate of 7% per annum from the date of Judgment to the date of final payment. d. Costs of the suit shall be borne by the Defendant. I further Order that the decree emanating from this suit shall not be executed unless the decree holder has complied 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 18/10/2024 9 Judgment is delivered in Court this 18th day of October, 2024 in the presence of Stella Chagi Advocate for the Plaintiff. A. H. GONZI JUDGE 18/10/2024 10