GAS ENTEC

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA IN THE SUB-REGISTRY OF MWANZA AT MWANZA CIVIL CASE NO. 34 of 2022 GAS ENTEC CO. LIMITED………………………..……………..……………..PLAINTIFF VERSUS MAGARE CO. LIMITED……………………….………………………..……..DEFENDANT JUDGMENT 18th July & 27th September 2024. Kilekamajenga, J. The plaintiff sealed a ship-building contract with Marine Services Company Limited (MSCL) on behalf of the Government of Tanzania. The ship-building project required a crane for lifting different materials during the construction. As a result, the plaintiff hired from the defendant a 70-ton crane. The plaintiff later brought this matter against the defendant claiming special damages of USD 1,209,000 (equivalent to Tshs. 2,780,700,000/=), plus interest, due to a breach of the 70- ton crane contract. The mediation process failed leading to the full trial of the case. The only witness for the plaintiff (PW1), Khuhyun Kwak, the Managing Director of the Gas Entec testified that the company deals with shipbuilding which has a contract with Marine Services Company Limited under the Ministry of Transport of 1 Tanzania. The contract was to build a ship, “MV Mwanza - Hapa Kazi Tu” with a carrying capacity of 1200 passengers (exhibit P1). In the process, the plaintiff hired a 70-ton crane from the defendant for three months. The witness blamed the defendant for the breach of the rental agreement (exhibit P2). PW1 further testified that the plaintiff suspended the project due to force majeure and consequently notified the defendant. After the suspension, the defendant requested the crane for two weeks (exhibit P3) and was accordingly allowed (exhibit P4). On 04th May 2022, the plaintiff requested back the crane but without success. On 13th May 2022, the plaintiff requested the crane from the defendant (exhibit P5). The letter was communicated to the defendant through email (exhibit P6). However, there was no response from the defendant. The plaintiff reminded the defendant without success (exhibit P7). Finally, the defendant replied on 25th May 2022 through an email (exhibit P8). He promised to return the crane after three months contrary to the initial agreement. The plaintiff also replied to the defendant but there was no response from the defendant (exhibit P9). On 1st July 2022, the plaintiff’s Board resolved to file the instant case (exhibit P10). The plaintiff is claiming special damages to the tune of 1,209,000 USD because the project was delayed for 31 days. The special damages are calculated according to the contract between the plaintiff and MSCL. The contract between the plaintiff 2 and MSCL provides for a charge of 0.1 per cent of the contract sum (39,000,000 USD) as liquidated damages for delaying the project. In the defence, Mabula Magangila (DW1), the Managing Director of Magare Company Limited, confirmed that he was appointed by the Board Resolution to represent the defendant in this case (exhibit D1). He informed the court that, on 03rd February 2022 the plaintiff hired the 70-ton crane from the defendant for three months at a monthly price of USD 10,000= (exhibit P2). The plaintiff hired the crane for three months from 21st February 2022 to 21st May 2022. The plaintiff used the crane for two months and paid the money accordingly. Before the expiry of the contract, the plaintiff suspended the project for three months because he had no funds to foot the project. The defendant received information about the suspension through a letter dated 11th April 2022 (exhibit D2). Thereafter, the parties met and discussed about the suspension. The plaintiff allowed the defendant to take away the crane. However, before the expiry of the suspension period, the Prime Minister visited the site and realized that the project was delayed and worse enough suspended. The Prime Minister ordered the plaintiff to resume the project. The Prime Minister further assailed the plaintiff for selling its shares to another company that did not recognise the ship-building 3 project of Tanzania. The Prime Minister ordered the plaintiff’s officers to surrender the travelling documents till the completion of the project. The Prime Minister further complained that the project was too far below 80 per cent. The speech of the Prime Minister was reported in different newspapers and tweeted on 07th May 2022 (exhibit D3). After the directives of the Prime Minister, the plaintiff wanted back the crane, albeit the suspension period had not expired. Therefore, the defendant could return the crane before the suspension period i.e. after 11th July 2022 (exhibit D4). DW1 blamed the plaintiff for breaching the contract by suspending and later requesting the crane before the suspension period. In his view, the plaintiff’s claim is baseless because the contract between the plaintiff and defendant does not provide for the charge of 0.1 per cent. Furthermore, the plaintiff failed to tender evidence proving that MSCL charged the plaintiff such an amount of money. Before the trial, the court framed the following issues for determination: 1. Whether the defendant breached a 70-ton crane rental agreement entered between the parties; 2. Whether the plaintiff suffered damages as a result of breach of a 70-ton crane agreement; 3. Whether the plaintiff contributed to the breach of the crane agreement; 4. Relief(s) that the parties are entitled. 4 In addressing the first issue of whether the defendant breached the rental agreement of the 70-ton crane, I am inclined to revisit the evidence adduced during the trial. The plaintiff having secured a tender for building a ship for the government of Tanzania, needed the services of a heavy-duty crane. On 03rd February 2022, the plaintiff hired the 70-ton mobile crane from the defendant at a monthly rental price of USD 10,000 (exhibit P2). The rental agreement was scheduled for three months commencing from 21st February 2022 to 21st May 2022. The crane was accordingly delivered and the plaintiff smoothly used it for two months and paid the rental price. On 11th April 2022, the plaintiff suspended the ship-building project for three months from 11th April 2022 due to financial instability (exhibit D2) and informed the defendant accordingly. According to the suspension notice the rental agreement would be paused for three months. However, the plaintiff convened with the defendant for a discussion regarding the compensation for the rental agreement. The outcome of the discussion was undisclosed. On 19th April 2022, the defendant requested the crane from the plaintiff for two weeks (exhibit P3). The plaintiff allowed the defendant take the crane from the site and return the same by 04th May 2022 (exhibit P4). On 13th May 2022, the 5 plaintiff notified the defendant that the project would resume on 16th May 2022. The plaintiff urged the defendant to return the crane on 15th May 2022 (exhibit P5). However, the defendant did not return the crane. On 23rd May 2022, the plaintiff served another reminder to the defendant (exhibit 7). The defendant replied and further insisted that the suspension period for the use of the crane was three months and was yet to expire, hence there was no breach of the rental agreement. The defendant promised to return the crane after the expiry of the suspension period (exhibit P8). Finally, the plaintiff indicated the intention of filing a legal suit for breach of contract (exhibit P9). In the defence, DW1 stressed that the project was suspended for three months from 11th April 2022. Therefore, by reckoning, the suspension period would expire on 11th June 2022. The defendant further indicated that the hasty resumption of the project was prompted by the visit by the Prime Minister who blamed the plaintiff for suspending the project (exhibit D3). In my view, the above evidence excludes the defendant from liability for breach of rental agreement. The defendant did not contribute, at any degree, on the suspension of the project. The plaintiff was under financial constraint hence suspended the project for three months. After, the discussion, they agree, interalia, the defendant to take the crane from the site. Any reasonable person would have banked on the information 6 provided by the plaintiff on the suspension period. In my view, as long as the plaintiff notified the defendant about the suspension of the project for three months, the defendant was justified to engage the crane for such a period. The defendant could have been in breach if the plaintiff had required the crane after 11th June 2022. In the current circumstances, the defendant cannot be condemned for breach of the rental agreement. What seems blatant is that, the plaintiff due to financial difficulties, halted the contract and notified the defendant accordingly. The plaintiff notified the defendant on suspension of three months as the plaintiff wanted to avoid the costs of the idle crane. I find it a bit awkward to condemn the defendant for breach of contract. In my view, if the defendant has to bear the blame, the plaintiff also contributed to the breach of the contract. Therefore, the first issue has not been proved. Also, the above analysis answers the third issue of whether the plaintiff contributed to the breach of the rental agreement. Also, the second and fourth issues crumble because the first issue has not been proved. The plaintiff has failed to prove the claim in its entirety and I consequently dismiss it with costs. Order accordingly. DATED at Mwanza this 27th Day of September 2024. 7 Ntemi N. Kilekamajenga JUDGE 27/09/2024 Court: Judgment delivered this 27th Day of September 2024 in the absence of the plaintiff and defendant. Right of appeal explained to the parties. Ntemi N. Kilekamajenga. JUDGE 27/09/2024 8 9