land app 15191 SCANNED

IN THE HIGH COURT OF TANZANIA (LAND DIVISION) AT DAR ES SALAAM LAND APPEAL NO. 15191 OF 2024 (Originating from the judgment and decree in Land Application No. 91 of 2018 of the District Land and Housing Tribunal of Kinondoni at Mwananyamaia delivered on 31st May 2029 by R. Mbiiinyi, Chairperson). FERDINAND MKINGA....................................................... 1st APPELLANT JANUARIUS OTTO MKINGA.............................................. 2nd APPELLANT VERSUS BANK OF AFRICA TANZANIA LIMITED.......................... 1st RESPONDENT KURINGE REAL ESTATE................................................ 2nd RESPONDENT NAMPULA AUCTION MART AND COMPANY LIMITED....3rd RESPONDENT JUDGMENT 19/9/2024 & 07/10/2024 A. MSAFIRI, J. The appellant being aggrieved by the decision of the District Land and Housing Tribunal of Kinondoni at Mwananyamaia (herein the trial Tribunal) following the decision in Land Application No. 91 of 2018, has lodged this appeal on the seven (7) grounds of appeal which I will not reproduce them here but will be presented in determination of the appeal i The brief background of the dispute is that the appellants were successfully granted loan amounting to TZS 126,906,606/= from the 1st respondent, Bank of Africa TZ Ltd. The loan was secured by placing Plot No. 188 Block C Mbezi Area, within Kinondoni Municipality, Dar es Salaam as collateral (herein the suit property). The terms of the mortgage were set out in a mortgage agreement admitted as exhibit U2 and terms of the loan were set as per the facility letter (loan agreement) which was admitted during the trial as exhibit U1 collectively. The appellants claims that the 1st respondent without consent and /or authorization from the 1st appellant, debited the 1st appellant's account for the total sum of TZS 4,041,075.02. That the action of the 1st respondent of debiting the said sum has marked the beginning of the problem in the loan repayment as the account debited was the account that was used for re-servicing the loan. The appellants claims further that the effect of that debit is that now the 1st appellant is now deemed to have not paid one installment in the loan repayment while in actual fact, the 1st appellant has paid the same. The 1st respondent claims that the appellants have defaulted in loan repayment by agreeable instalments and that despite being granted the grace period, the appellants have failed to adhere to the terms. TW 2 dispute gained momentum when the suit property (the mortgaged property) was sold through auction which was held on 30/5/2020. The appellants alleges that the auction was carried out irregularly and in contravention of both the law and the terms of the mortgage agreement. The appellants sought redress before the trial Tribunal which decided against them. They were aggrieved and have lodged the current appeal. The hearing of the appeal was by way of written submissions. The submission in chief and rejoinders by the appellant was drawn and filed by Mr. Daibu Kambo, learned advocate and the reply submission by the 1st and 3rd respondents was drawn and filed by Mr. Mbuga Emmanuel, learned advocate, while the reply submission by the 2nd respondent was drawn and filed by Mr Francis Makota, learned advocate. I have well considered the submissions by the learned counsels and I commend them for assisting the court in determination of the appeal. In determination of the appeal, I have consolidated the first, second, and third grounds of appeal for the reason that they are all based on the complaints of the appellants that the 1st respondent has deducted TZS 4,041,075.02 from the appellants' account without the consent of the appellants. The appellants complain that the trial Chairperson erred in law and in fact in holding that the said deduction was lawful, and that it did 3 not have effect in the loan repayment. They claim further that the trial Chairperson erred in the findings that the deduction was done by the 1st respondent as costs for postponement of an auction. Being the first appellate court, I have mandate to go through the available evidence adduced during the trial, make analysis and come up with the findings. As said earlier, the appellants then the applicants were seeking for declaration that the unilateral debt of TZS 4,041,075.02 in the 1st applicant's account is illegal and second, for declaration that the auction done by the respondents on 30/5/2022 was lawful. During the trial, the appellants who were the applicants brought two witnesses. The 1st appellant Ferdinand Mkinga testified as SMI saying that on 16/8/2016 he acquired a loan which was a top up, the amount of TZS 70 million which made a total acquired loan to be TZS 126,926,606/=. He produced a loan agreement which was admitted as exhibit Ml.That the loan was from Bank of Africa (1st respondent). That the monthly instalments was agreed to be TZS 2,600,000/- .That after that he was servicing the loan by paying monthly instalments. SMI stated that he instituted a suit after discovering a deduction of the amount of TZS 4 million in his account which he was using for servicing 4 the loan. That when he asked the Bank about the deduction, he was told that it was for life insurance. He said that he did not agree on deduction and he has not agreed with the Bank on life insurance. He said further that he was also told by the Bank that the deducted money was for payment of the auction which was postponed. That he was unaware of the auction. He produced a letter which the Bank gave him about the deductions. The letter was admitted as exhibit M2.That the letter was dated and issued to him on 18/9/2017 while the deductions were already done since 13&14/9/2017. That the issue of life insurance and the auction expenses was not agreed in the loan agreement. SMI said that the deduction of TZS 4 million in his servicing account made the Bank to regard it as the applicants' failure to repay monthly instalment hence the default in loan repayment. He said further that it was the Bank which has breached the agreement as they deducted the appellant money (SMI) TZS 4 million without his knowledge. On the reasons for deduction, the witness SMI said that first; about the expenses of postponement of auction, he was unaware of the said auction and second; on life insurance policy, there is no any clause in the loan agreement about life insurance and he was unaware of the said life insurances- v L- 5 Wemastella Mkinga, the daughter of the 2nd respondent testified under power of attorney for the 2nd applicant Januarius Otto Mkinga who the court was told that he is very old and was unable to attend the court. Her evidence was also similar to the one of SMI. On the defence, also two witnesses testified. SU1 was Victor Lewanga, an employee of the Bank of Africa. He claim to know the appellants who are the clients of the Bank who were granted a loan totaling TZS 200,000,000/=. He produced two facility letters (loan agreement) which was admitted as exhibit U1 collectively. That the security for the loan was the suit property. He produced a mortgage deed which was admitted as exhibit 112. SU1 said that the appellants failed to adhere to the terms of the loan agreement and that the appellant defaulted in loan re-servicing as agreed. That the appellants wrote a letter to the Bank about the default asking for grace period. The letter was admitted as exhibit U3. That the Bank wrote back to the appellants reminding them to comply with the terms of the agreement. The letters were admitted as exhibit 114, U5, U6,U7. SU1 said that after several reminder notes and default notice to the appellants, they still failed to repay the loan hence the Bank instructed the debt collector called Joint Venture to follow on the payment of th 6 loan by the appellants but still the appellants failed on payment. That the appellant was issued with 60 days' notice which was produced and admitted in court as exhibits U10 and Uli. That still the appellants failed to pay so the Bank appointed an auctioneer to proceed with the sale of the suit property by auction. About life insurance, SU1 said that it was agreed in the mortgage deed at clause L (2). He produced a proof about the insurance policy which was admitted as exhibit U12. He said that the deductions were done to protect the loan as per item 1 in the cover note which is exhibit U12. About the deductions on the expenses of postponement of an auction, the witness said that the appellants were the one who asked for the postponement of an auction. He produced the proof as exhibit U13. That after that the suit property was sold in an auction and Kuringe Real Estate was the highest bidder and succeeded to purchase the same. In the cross examination, the witness said that what was deducted was not life insurance but it was for the protection of the mortgage and that was agreed in the mortgage deed which was between the Bank and Otto Mkinga and not Ferdinand Mkinga. Having gone through the oral evidence and exhibits, I find that the appellants were aware of the insurance policy as evidenced under clause 7 ,-K, 4.06 (l)(i),(ii) (i'i) and clause 5.01(b) of the Mortgage Deed. The clauses provides for insurance of the mortgaged property. In the said clauses, the Bank can make necessary deductions as to the appellants' liabilities which include insurance. Furthermore, the first item at page 4 of the letter facility gives the Bank the right at any time and without notice to set off balances on any of the business's accounts and liabilities with and to the Bank which includes insurance deductions. The appellants also have complained that the trial Chairperson erred by failing to differentiate between life insurance and insurance charged as security. That the clause in the mortgage deed is about insurance on assets charged as security and the insurance paid is meant to take care of the risk of loss by fire or burglary and not life insurance. On this, I have read the contents of exhibit U12, a cover note showing the insurance policy whereby a mortgage protection policy was set for Ferdinand Mkinga (1st appellant). The cover period is for one year renewable at every policy anniversary until the expiry of a loan term. I therefore agree that the appellants have misinterpreted the terms of insurance policy because it was not the appellants who were covered by life insurance but it was the mortgage property protection of which in the event of the death of the mortgagor, the so called life insurance would- 8 have to pay for arrears instead of auctioning the mortgaged property. Hence, the mortgaged property was insured against all risks, fire, burglary or even the death of the mortgagor. On the deductions of the expenses for postponement of an auction, under clause 5.02 of the mortgage deed, the mortgagor has agreed on payment of all costs charges and expenses incurred by the Bank in obtaining or attempting to obtain payments in relation to the mortgaged property. Again at page 4 of loan agreement at the first item, the Bank has right to set off any balances and liabilities or set off any sums in credit in the account. The appellant as SMI said that he was unaware of the auction. The respondent side as SU1 said that it was the appellants who asked for the postponement of the auction which was already set by the Bank after the appellant's default. In this I find that the appellants were well aware of the intention of the Bank to sell the suit property by auction. Exhibit U7 is the notice of intention to sell the mortgaged land which was issued to the 2nd appellant on 07/6/2017.The notice expressed the mortgagee's intention to auction the suit property within ten (10) days from the date of service of notice. Following that, on 07/9/2017, the 1st appellant wrote to the Bank complaining about the unfair treatment among them being 9 the intention of sale of the suit property without following the procedures. The letter was admitted as exhibit U9. Having analysed the evidence, I have concluded that the deductions on the insurance and the expenses on postponement of an auction were lawful and the appellants were aware of them. This is according to the terms of the loan agreement and mortgage deed which gave power to the Bank to make the necessary deductions according to the said agreements. I therefore find that the trial Chairperson did not error in anyway in his findings that the deductions were lawful and the appellants were aware of the deductions and the auction postponement. I therefore find the first, second, third and fourth grounds of appeal to have no merit. The fifth ground is that the trial Chairperson erred in law and in fact in holding that the injunction order dated 16/5/2018 had ceased to have effect by the time the auction was done. The counsel for the appellants Mr.Kambo submitted that an auction conducted by the Bank was illegal since it was done while there was a court's order of maintenance of status quo. That the trial Chairperson erred in his findings that the court injunction order has expired within six months hence the auction was lawful. Mr Kambo was of the view that by marginal note in Order XXXVIII Rule 3 of the Civil Procedure Code, Cap 10 33 R.E 2019, for the six months rule to apply, the suit must be adjourned generally. He argued that in the application before the trial Tribunal, the suit was not adjourned generally. That the Tribunal issued a temporally order pending hearing and determination of the Misc. Application for injunction interpartes. That the 1st respondent through the 2nd respondent auctioned the suit property while the hearing of the Misc. Application was pending. He added that the injunction order was conditional in the sense that the order exists until when the hearing of the application interparties is determined by the trial Tribunal. That the said order could only expire when the application for injunction was heard inter parties and determined. The counsels for the 1st &3rd respondents and the 2nd respondent have denied vehemently about the position of the counsel for appellants. They maintained that the life span of an injunction order is just 6 months and the time can be extended. It should be noted that the order of maintenance of status quo is also an injunctive order, intended to preserve the property while there is a contest or dispute between the parties over the property. Therefore, in the present dispute, the trial Tribunal order of maintenance of status quo on the subject matter pending the determination of the application for li temporary injunction, was still the temporary injunctive order. Being that, it is subjected to the provisions of Order XXXVII Rule 3 of the CPC which provides as follows; 3. In addition to such terms as the keeping of an account and giving security, the court may by order grant injunction under rule 1 or ruie2 and such order shall be in force for a period specified by the court, but not exceeding six months....(emphasis added). The proviso of Rule 3 above allows for the extension of such period from time to time but the extension shall not exceed one year. In the instant matter, it is said that the order for maintenance of status quo was issued on 16/6/2018 and the auction was conducted on 14/01/2020. It is my view that Mr Kambo's interpretation of Rule 3 of Order XXXVII was misconceived. It is not the intention of the cited provision that once the maintenance of status quo is granted by the court, it has no time limit even if the application for temporary injunction could take years to be heard as it was in the instant matter. It is my view as already said that the order of maintenance of status quo is the injunction order hence is falls within the provisions of Rule 3 of Order XXXVII of the 12 For the above analysis, I find that the trial Chairperson was right in the findings that the court injunction order which was issued on 16/5/2018 has already expired and has no effect by the time the auction took place on 14/01/2020. There was no evidence that the appellants has made application or sought for the extension of time of the order of maintenance of status quo or temporary injunction. I find this ground of appeal also to have no merit. The sixth ground is that the trial Chairperson erred when held that the procedures for auction were fully complied with before the auction was done. In this the counsel for the appellants argued this ground jointly with the seventh ground that the trial Chairperson erred by failing to analyze the evidence before her. According to the submissions by the counsel for appellants, the same claims they were not properly served with the 60 days default notice and that the 3rd respondent did not serve 14 days' notice to the appellants hence contravening Section 12 of the Auctioneers Act Cap 227. The counsels for the respondents submitted in response that all procedures were adhered to hence the auction was lawful. I have gone through the evidence of SU1 who testified how the procedure for conduction of an auction was complied with by the 1st and 13 respondents. He said that the procedure for conducting an auction was adhered to. He produced several documents to prove that. I have gone through the documents which were admitted in court during the trial. Exhibit U10 collectively is sixty (60) days demand note which was issued by the Bank to the appellants after the default. The demand note is dated 15/01/2018. It was issued to Januarius Otto Mkinga, the 2nd appellant who is the mortgagor. The 2nd appellant signed to receive the notice on the same date. On 09/5/2018, the appellants were served with 14 days' notice by Adili Auction Mart under instructions of the Bank of Africa. The Notice was received by Ferdinand Mkinga on the same date and he signed to acknowledge the receipt. On 08/5/2018, the Bank of Africa served the appellants with the 14 days Demand Notice. It was received on the same date. This is per Exhibit Ull collectively. Again on 16/5/2020, the respondents advertised the intended public auction in Mtanzania Newspaper. The newspaper was admitted in court as exhibit U15. The auction was conducted on 30/5/2020 as per the Certificate of Sale which was admitted in court as exhibit U16. Basing on that, I agree with the findings of the trial Chairperson that all the requirements and procedures on the public auction was complied with. 14 The appellants were well informed and were aware of the intention of the Bank to dispose of the mortgaged property by way of auction after the appellants' default on loan repayment. In addition, having read the impugned judgment, I am satisfied that the trial Chairperson well analysed the evidence which was adduced before the trial Tribunal and came up with the right and just conclusion. I find these two grounds of appeal to have no merit. To sum up, I find the whole appeal to have no merit and I dismiss it with 07/10/2024 15