20091006 TZHC Arusha

.,, . ~- . ,, · - ,, -.iw:, . IN THE HIGH COURT OF TANZANIA AT ARUSHA MISC. CIVIL APPLICATION NO. 70 : OF 2009 (Originating from Civil Case No. 21/2009) GAPOIL TANZANIA LIMITED . .. . .. PLATINIFF / APPLICANT - Versus - BADER MAREL NAHDI t/a NAHIL PETROL STATION ... DEFENDANT/RESPONDENT 29 th September, & 6 th October, 2009 RULING Mmilla, B. M.; J. This application has been filed by the applicant, GAPOIL Tanzania Limited. It has been brought under the provisions of Order 37 rule 1, sections 68 (c), (e) and 95 of the Civil Procedure Code:Cap.33 of the Revised Edition, 2002 (herein referred to as the Code). It emanates from Civil Case No. 21 of 2009. It is seeking this court's indulgence to grant orders for I .. I temporary injunction against the respondent, Bader +\'Iarel Nahdi t/a Nahil Petrol Station prohibiting him firstly from using the applicant's equipment to sell and/o_r_ distribute any petroleum products, other than the applicant's products until the determination of the suit; s~condly from selling petroleum products other than the applicant's products until the 1 determination of the suit. As is usually the case in applications of this -) nature, the applicant's application is supported by an affidavit sworn by Godfrey Fernandes who is its Chief Executive Director. CRB Attorneys of Dar es Salaam are advocating for them. On the other hand, the application is being contested by the respondent who enjoys the services of Duncan J. Oola & Co., Advocates of Arusha. They have filed a counter affidavit affirmed by the respondent in person. In that counter affidavit, the court is strongly urged to dismiss the application. A brief note of the back ground facts may assist in letting us know what gave rise to all this. The parties in this case entered into a Retail Agreement on 2.4.2002 as part of marketing strategy in which the applicant agreed and allegedly provided the respondent with the equipment and appliances necessary for retailing, stocking and selling the applicant's petroleum products for the period of ten years commencing_from 2002 .. It has been alleged that the agreement required the respondent, among. other things, not to store, display, expose nor sell in the premises any petroleum products other than applicant's products -and further restrained the respondent froni outsourcing petroleum products from any other competing suppliers. The applicant bound itself to constantly and regularly supply the respondent with those products. It has been submitted by learned counsel Rwechungura from CRB Attorneys for the applicant that there was a time during the life time of the 2 Retail Agreement when their client experienced ipsolvency problems . ! . I between August, 2006 and September, 2008 and failed to supply the . ! I ·respondent with the products. It tppears that is 1hen the respondent_ began outsourcing the same from other suppliers. Thb applicant contends · .l I however, that as from 16.9.2008 it resumed operation and duly notified the . . I I respondent by a letter dated 16.9.2008.· That letter ii annexture 2 to the l i · affidavit of Godfrey Fernandes. It has been submitted that in total breach .! I of the Retail Agreement, the rkspondent has *een and continues · outsourcing, stoc1·ung, · · d.1sp1ay1ng · II an d se11·mg petro1eum · 1 pro d ucts £rom I other competitors of the applicant iii breach of the Akreement while using the applicant's equipment and a~pliances long Jfter the latter had overcome its insolvency problem asl aforestated. T~is is the reason why the applicant has instituted Civil cJse No. 21 of 2009/ during the pendency of which it has preferred this apJlication which a/sI already stated, ,1 is . f or issuance see1ung . of or ders f or temporary \ . . . 1 m1unct10:r;i.. . I I Of course, as briefly stated at the beginning, the r¢spondent is strongly opposing most of the allegations being leveled agaiAst him and is asking I I this court to decline to grant the rrders sought. 4.Jthough he does not dispute the existence of the Ret~il Agreement b~tween him and the applicant, it has been submitted oJ his behalf that ~he applicant failed to provide or supply him with petrollum products as 1envisaged in the said I ! Agreement. It has further been su:qmitted that on 2~.9.2008, the applicant returned to him T.shs. 20,061_'500j= instead of _sup~lying. them with. the needed petroleum products which fact, 1t 1s submitted, 1s evidence of failure I 3 of the former to honour the contract. It is on this basis that learned ,~-l ~~~- counsel Oola is requesting this court to dismiss this application. · It is a settled principle of law that granting or not of the remedy of temporary injunction is a matter of discretion of the court. Th.is discretion however, has to be based on settled principles of law. As was properly expressed by Richard Kuloha in his book titled Principles of Injunction on page 26, it is supposed to be a sound discretion guided by law, governed by rule and not humour or mood and it should not be arbitrary, vague or fanciful. Whenever it is exercised, reason for its exercise must be revealed. This is the only way through which it may be vouched whether or not relevant matters for granting it have been taken into consideration. There· is a range of authorities in which pre-requisites for granting the sought remedy were expressed. These authorities include J. A. Kaare v. . General Manager Mara Cooperative Union (1984) Ltd (1987) T.L.R .. 17, Giela v. Cassman Brown & Co., Ltd. (1973) E.A. 358, Civil Case No. 177 of 2006, GAPCO Tanzania Limited & Another v. Barclays Bank Ltd. & Another, High Court of Tanzania Dar· es Salaam Registry (unreported), Atilio v. Mhowe (1969) H.C.D~ 284 and CPC International Inc. v. Grain Millers Ltd., Civil Appeal No. 49 of 1995 (unreported). In Atilio v .. Mhowe, the court held that:- "(2) It is generally agreed that there are three conditions which must be· satisfied before ... an injunction can be issue:- 4 (i) there must be a serious questio11- to be tried on the . I facts alleged, and a probability tµat the plaintiff will I be entitled to the relief prayed; (ii) that the court's interference is :µecessary to protect the plaintiff from the kind of injury which may be I irreparable before his legal right is established, and (iii) that on the balance there will be greater hardship and i mischief suffered by the plaintiff from the withholding of the injunction th~n will be suffered by I the defendant from the grant of it .... " I. I As regards the first pre-requisite, that is whether or not there is a serious I issue before the court, I feel it is worth starting with the caution which was I expressed by Hon. Mr. Justice Kalegeya, J (as he th~n was) in the case of GAPCO Tanzania Limited & Another v. Barclays Bank Ltd. & Another I (supra). While relying on the other case previously decided by himself that of Tanzania Parkers Ltd v. The Commissioner for Income Tax and Another, Commercial Court No. 5 of 1999, Dar es Salaam (unr~ported) his Lordship stated that:- although Atilio's case shows that there should exist a probability of applicant's success in the main matter, in my 1 view, this should not be interpreted to niean that the facts at I 5 hand should declare the applicant a wmner. To conclude as such would be to pre-empt the trial and would militate against the basic principles of justice. It will be tantamount to pre- judging parties before they are- heard on the controversy. In my view therefore, what is meant is that the applicant should show that though evidence has not been given, the allegation so far made by him, prima facie portray him as having been aggrieved by the respondent entitling him to the reliefs being sought in the main suit." See also the case of Tanzania Breweries Ltd v. Kibo, Breweries Ltd and Another, Civil Case No. 34 of 1999, High Court of Tanzania, Dar es Salaam Registry ( unreported)~ It is fortunate in the :present case that both counsel for the-parties agree that there is a serious issue before the court which require determination. Their common stand on this is based on the undisputed· fact on 2.4.2002 the parties had entered in a Retail Agreement which is indeed the stratum of the dispute between them. I hasten to say that I share their views. As already pointed out, the Retail Agreement stipulated terms and conditions to be observed- by both sides to the contract. It has not been contradicted, and· I take it as a fact that the applicant agreed to provide the Retailer with equipment and appliances necessary for retailing, stocking and selling. the applicant's petroleum products at a defined- period in consideration that the respondent was, among other things, required not to store, display, expose nor- sell in the premises any petroleum products 6 other than applicant's products. He was also requir~d to abstain from ' /J outsourcing petroleum products from any other co~peting suppliers. ' . Since the applicant on the one hand is now alleging that the responding is ' breaching the Retail Agreement in that he is outs~urcing and selling petroleum products from other suppliers, and the respo:µdent alleges on the other hand that the applicant failed to discharge i\s part of the said agreement, given such a dispute it is certain that there is a serious question I to be tried on the facts being alleged. It is on this basis :that I hold that the ' first pre-requisite in Atilio's case has been established. The second pre-requisite is whether or not court's inte~ference is necessary to protect the plaintiff from the kind of injury which; may be irreparable before his legal right is established. On this, counsel ;for the parties have locked hones. . .I While learned counsel Rwechungura says their client is the one who stands I to suffer most if injunction will not be granted, learned counsel Oola has I countered in the first place that since the injury co:rp.plained of is in the nature of the breach of contract which, in his view: can adequately and .sufficiently be repaired by way of award of damages, it cannot be said the 1 applicant is likely to suffer an irreparable loss. He quipped that if all goes well for him, he can be easily compensated. He rd1ed on the pleadings, particula:rly the spread sheet which is annexture 2 to: the plaint containing ' calculations which show the monetary loss suffered so far. Secondly, ' learned counsel Oola has submitted that on the basis pf paragraph 11 of the counter affidavit of his client, the applicant is well se~ured on account that I 7 he is holding the respondent's Right of Occupancy over Plot No.145 Block (] "GG" at Kwangulelo Location at which the Petrol Station in issue is situated. He submitted therefore that the second pre-requisite is not established. After carefully weighing the submissions of counsel for the parties on the point, this court is of the opinion that circumstances militates in favour of the applicant. In the first place, the full range of equipment and appliances supplied was listed in the Retail Agreement which is annexture 1 to the affidavit of Godfrey Fernandes. The intention for the supply of the said equipment and appliances was, as submitted by learned counsel Rwechungura and unassailed by learned counsel Oola, to create a market share for itself and to protect that share market from other competitors or other oil suppliers. I also agree with Mr~ Rwechungura that in terms of clauses 1.1 and 1.2 of the Retail Agreement, Nahil Petrol Station was to be used to dispense on an exclusive basis the applicant's products. Since the respondent is currently using the equipment and appliances supplied by the applicant and installed at Nahil Petrol Station to stock petroleum products supplied by their competitors, it is obvious that the Petrol Station is benefiting the applicant's competitors in the market at the expense the applicant. In other words in so doing,. the respondent is causing damage to the applicant not only in terms of loss of revenues and related profits,. hut also in terms of shrinkage of its market which the applicant created by making the said investment and which it is flexing to protect at all costg.. I further agree 8 with learned counsel Rwechungura that the damage resulting from the loss I =1 of market share, unlike the loss of profit and related revenues which agreeably is quantifiable as submitted by learned colinsel Oola, is not I quantifiable in monetary terms. Indeed, such is an irreparable loss which I requires court's . interference to protect a party in the shoes I of the applicant when resolve to the dispute is being worked out. I note that counsel for the applicant concedes that his ~lient is holding the I Right of Occupancy over the land on which Nihil Pet~'.ol Station is built, I but denies that same is being held by the applicant a~ security resulting I I from breach of contract or otherwise. He has submitted that his client I holds the same in its capacity as lessee. I agree with Mri Rwechungura. I However, even-where it was- to be said'. that it was mea~t to be a security in respect of general losses as submitted by learned counsel Oola, I would still ' say that it cannot override the finding I have just mad~ that loss of market I share is an irreparable one. ' I I On the other hand, because the applicant is willing a~d able to supply to I the respondent any quantities of petroleum products ~hat the still binding I Retail Agreement obliges it to supply provides ~ contrast that the I respondent is not likely to suffer an irreparable damage. On account of what I have said in this regard, the second pre-requisite too is established. I The third and last pre-requisite refers to the questipn of the balance of I probabilities, meaning which party among the two sfdes will suffer more. I 9 As expected, while learned counsel Rwechungura says this balance tilts in favour of his client, learned counsel Oola ridicules the idea. As far as he is concerned, it is his client in whose favour the balance of convenience tilts. Learned counsel Oola's stand is founded on the fact that the applicant has admitted that there was a time when, due to insolvency problems, they failed to supply the respondent with petroleum products between August 2006, and mid September, 2008. He has submitted that that is the situation todate, adding that they even dared to return the respondent's money instead of supplying him with the products he had sought. How can they suffer now? He is asking. He has submitted that his client has already suffered due to the fact that his stocking trade of more than shs.20 million was retained by the· former from 28.8.2006 up to 24.9.2008 when same was returned without plausible reasons and without interest. His second leg of argument in this regard is that in terms of paragraph 2.1 (k), it is the respondent who will suffer if the injunction will issue as he is the one who constructed the petrol station in issue. May I start by saying that the respondent has not contradicted the fact that the Retail Agreement is still binding on them. It is similarly true that at the moment the respondent is outsourcing petroleum products from other suppliers, something which is working a terrible economic blow on the part of the applicant. In the circumstances, I agree with learned counsel Rwechungura that if injunction will not be granted, that will result I I I I I I I I to continued breach of the Retail Agreement which till lead to even I ✓ I further loss in terms of revenues and related profits, more so in terms of I I loss of market share for the duration of the Retail Agreement. I also agree I • i with Mr. Rwechungura that since the applicant is not s;eeking to put the I respondent out of business, that is he does not intend /that Nahil Petrol • I I Station is closed, but that they are seeking him to sell t~e products of the applicant, the respondent will not suffer if at all injunction is granted. It I I will continue doing business provided it does so in ac¢ordance with the Retail Agreement. The third pre-requisite is similarly es~ablished. I In conclusion, I find that the requisite conditions for gra:r,ting the remedy being sought have been met, thus that the application m,erits its grant. In I I consequence, it is ordered that the respondent; namely B;ader Marel N ahdi I t/a N ahil Petrol Station, his agents, employees or any persons having any I direct or indirect authority from the respondent are restrained from using the applicant's equipment to sell and/or distribute any p etroleum products, 1 I I other than the applicant's products until the determination of the suit; i I secondly from selling petroleum products other than the; applicant's products until the determination of the suit. (Sgd) Mmilla,B.M.. Judge 06.09.2009. 11 Date: 6/10/2009 r1, \L .. J Coram: B. M. Mmilla, J. For the Applicant: Mr. Rwechungura. For the Respondent:. Mr. Oolla. B/c: Olivia. Court:· Ruling delivered this 6th day of October, 2009 in the presence· of learned counsel Rwechungura for the applicant and learned counsel Oola for the respondent. AT ARUSHA (sgd) Mmilfa,. B.M. Judge 6/10/2009 DISTRICT REGISTRAR ARUSHA BMM/jn.. 12.