gokona ltd vs north mara gold mine ltd 2012 tzhccomd 20 14 december 2012

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM COMMERCIAL CASE NO. 48 OF 2009 GOKONA LIMITED........................................ PLAINTIFF VERSUS NORTH MARA GOLD MINE LIMITED............. DEFENDANT JUDGMENT BUKUKU, J. Facts which stand out uncontested and which form the background of this case are as follows: That, on diverse dates between the 2nd of May, 2002 and 7th August, 2008, the plaintiff supplied or rendered services and goods of various assortments to the defendant's company, for supplying of goods and casual labourers for cleanliness, grass cutters, movable fences, local and crushed aggregate and carpentry works, and other works and/or goods of the like nature, related to the defendant's line of business. Further facts also are that, within the aforesaid period, the plaintiff further rendered services to the defendant but not limited to, building toilets of double gates, installing security tower, dispatch new bases, ordered molasses, prepared and laid pipes at tailing pipe corridor and cleanliness of the same amounting to T.sh.64,420,340/= plus USD 134,944.00. According to the plaint, after the work was done by the plaintiff, the plaintiff raised all invoices including the claims for the missing invoices which were in the custody of the defendant for a total sum of T.shs.64,420,340.00 plus USD 134,944.00. The said missing invoices include invoice No. 146, 183, 194, 216, 232, 233 and 251. It is also alleged that, invoices No. 267, 270 and 271 were not signed by the defendant as, at the time of signing, the problems pertaining to the performance of the contract had cropped out and the defendant refused to sign though the services were already done by the plaintiff. Despite persistent reminder for payment of the amount due, the defendant has refused to settle the claim hence the filing of the present suit by the plaintiff, praying for judgment and decree against the defendant for orders as follows:- (i) . For payment of T.shs. 64,420,340.00 plus USD 134,944.00; (ii) . Interest at commercial rate from the date of failure to pay the claimed sum up to the date of filing the suit; (iii) . Interest at court's rate on (i) above from the date of judgment to the date of payment in full. (iv) . Any order(s) this honourable court may deem proper and fit to grant. According to the defence pleadings, they admit that there has been commercial transactions between the parties, and that, plaintiff, at the order of the defendant did supply various materials and services. However, they deny the claim saying that, there are no invoices which are unpaid. Furthermore, the defendant raised a counter claim whereby it is claimed that, using staff of the defendant, plaintiff obtained by fraud, USD. 180,000.00, without making any supply of 1500 packs of sample bags, which she now claims in the said counter claim. Issues framed during the final pretrial and scheduling conference are as follows:- 1. Whether there are unpaid invoices by the plaintiff against the defendant. 2. If the first issue is answered in the affirmative, what is the value of the invoices; 3. Whether the plaintiff committed any fraud through which the defendant paid USD. 180,000 for services not rendered; 4. Whether the defendant is entitled to a counter claim; and 5. To what relief(s) are the parties entitled to. The plaintiff who was advocated by Mr. Mafuru called three (3) witnesses, Mr. Gotora Charles, the Chief Executive Officer of the Plaintiff's Company (PW1), Ms. Erika Spaita, a business woman (PW2) and Mr. Ramadhani Hamisi, a peasant residing at Tarime (PW3), and the Defendant who was advocated by Mr. Mkoba called two (2) witnesses, Mr. Yiga Abel, a lawyer at the defendant's company (DW1) and Mr. Mark De Beer, a security superintendant at the defendant's company(DW2). 3 I will examine the first issue, as framed. It is not in dispute that the plaintiff did render services to the defendant. In his testimony, PW1 tendered as exhibit 27 invoices which were then admitted as Exhibit P l collectively. PW1 testified that, for the nature of business usage and conduct between the plaintiff and the defendant, were to the effect that, some works or services, were being ordered by the defendant to be performed, and the invoices were to be raised later on. The testimony of PW1 was corroborated by DW1, who confirmed that, where there is emergency work, that is the procedure. PW1 also tendered in court purchase orders issued by the defendant. The same were admitted as Exhibit P2 collectively. Having gone through the invoices together with the purchase orders, I am satisfied that, indeed the plaintiff did supply the goods and services as ordered by the defendant. The invoices submitted tallies with the purchase orders. Out of the 14 purchase orders tendered as evidence, only three do not have invoices and this goes to explain the averment in clause 7 of the plaint that, invoices No. 267, 270 and 271 were not signed by the defendant as at the time of signing, the problems pertaining to the performance of the contract had cropped out. In his final submission, counsel for the defendant averred that, PW1 has not proved that there are unpaid invoices. Unfortunately, I consider the defence case to be weak here. PW1 gives the total invoices as T.shs. 64,420,340.00 and USD 134,944.00 for the services rendered. He backs up the figures with Exhibits P l and P2 collectively. These are 4 copies of various invoices and purchase orders and some delivery notes. Naturally, the originals of Exhibit P l are in the defendant's names. The defendant has not disputed the purchase orders which he prepared himself. The testimony of DW1 should be taken with caution. In part, it says; "Z work as a lawyer. With regard to procurement, we have open tender or by quotation. I know Gokona Ltd. He was a supplier at Barrick and he stopped supplying since 2008. There is no outstanding debt. I was told by finance people that, the system does not allow payment o f the invoices". The outstanding invoices had no purchase order some had purchase order which were rejected by the system. Some of the invoices had no signature/authorjustifying or receiving person." From what DW1 has testified, it is obvious that, indeed there were unpaid invoices. This alone, answers issue No. 1 in the affirmative. Having answered issue No. 1 in the affirmative, I now move on to the second issue. While the plaintiff maintains that the value of the invoices is T.shs.64,420,340 and USD 134,944.00, the defendant is diametrically opposed. He denies that there are no unpaid invoices. In proving its case, PW1 tendered in court 27 invoices. Invoice No. 183 for USD 616.50; No.194 for USD 524.00; No.237 for USD 10,329.0; No.216 for USD T.shs.200,000; No.225 for T.shs.600,000; No.232 for T.shs. 3,663,000; No.233 for T.shs.2,640,000; No.235 for USD 3,330,000; No.246 for USD 7,487; No.252 for T.shs.7,068,000; No.256 for USD 4,325.92; No.259 for USD 3,595; No.262 for USD 7,507.50; No.267 for 5 T.shs. 1,419,000; No.270 for T.shs.810,000; No.271 for T.shs. 1,800,000; No.269 for USD 440.0; No.263 for USD 4,581.28; No.265 for T.shs.7,671,000; No.266 for T.shs,620,000; No.276 for T.shs. 18,120,000; No.277 for USD 12,600; No.278 for USD 12,100; No.279 for T.shs.5,267,500; No.281 for T.shs.900,000 and No.280 for T.sh.4,145,000. Let me pause here and first expose the position of the law regarding the burden of proof. This is provided is sections 110-113 of the law of evidence Act as follows; "110 - (1) Whoever desires any court to give judgment as to any legal rights or liability dependent on the existence o f facts which he asserts must prove that those facts exists. (2) When a person is bound to prove the existence o f any fact, it is said that the burden o f p ro o f lies on that person. 111. The burden o f p ro o f in a suit proceeding lies on that person who would fail i f no evidence a t all were given on either side. 112. The burden o f p ro o f as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided b y any law that the p ro o f o f that fact shall He on any particular person. 113. The burden o f proving any fact necessary to be proved in order to enable to enable any person to give evidence o f any other fact is on the person who wishes to give such evidence". 6 Of course, the burden of proof shifts defending on what is established by a party against the other. As the case proceeds, the onus must shift from time to time, section 102 makes it clear that, the initial onus is always on the plaintiff and if he discharges that onus and makes out a case which entitles him to relief, the onus shifts on to the defendant to prove those circumstances, if any, which would disentitle the plaintiff to the same. Now, according to the facts before us, once the plaintiff has established the supply of products, backed up by Exhibit P l and P2 respectively, the burden shifts to the defendant to show that either no supply was made or due payments were effected. Proof however, does not mean simply denied. There should be more that. Starting with Exhibit P l, the defendant was duty bound to prove that the invoice were never issued against supplies made to them and that, they did not issue Exhibit P2 either. I have carefully considered the defendants version of the story but with respect, I have not been convinced. I am say that, the defendant did not field material witnesses to corroborate its side of the story. Starting with DW1, obviously he was not a material witness. In his own testimony on cross-examination he said "I never received the goods, nor ordered goods and services. I am not an accountant. There is an audit report prepared by investigation department. When asked about the procurement procedures, he said: 7 "If it is emergence, they first agreed then he finance department prepares a purchase order and an invoice is raised. An invoice has to be signed". Definitely, with due respect, DW1 was not the right candidate to testify. All what he said is hearsay. The defendant could have easily call someone from the accounts department to testify. But he didn't. Time and again, it has be said that, failure to call material witness makes the court infer that, if the witness is called upon, may give evidence which is prejudicial to the case. Likewise, DW2 was also not a competent witness. In cross examination, he conceded that he was working for investigations department and that he had no involvement of ordering or receiving goods. In defending its case, the defendant did not produce any evidence to controvert that of the plaintiff. Under such circumstance, it is taken that, the invoices submitted by the plaintiff were yet to be paid. In his testimony, DW1 told this court that, some of the invoices had no signature/author or issuing or receiving person, making reference to invoices No. 183, 194 and 216. Upon my perusal of Exhibit P 2 ,1 have come across purchase orders issued with regard to the above invoices. For instance, purchase order No.49544 is for invoice No. 183, purchase order No.49832 is for invoice No. 194 and so forth. It is DW1 himself who told this court that, a purchase order is prepared first and then comes the invoice after work has been done, and if it is emergency work, then work is done first and the purchase order follows, for that 8 reason, this explains why even invoices No.246, 267, 270 and 271 are not signed but all have purchase orders. Having carefully gone through, the invoices, I am satisfied that, the plaintiff is entitled to a sum of T.shs.57,605,817.00 and United States Dollars 59,949.20 according to the invoices submitted. This answers issue No.2. I will now turn to the third and fourth issues which I will tackle them together. According to the testimony of DW2, he was the one who made the investigation relating to the supply of the plastic bags. He told this court that, upon investigation, the bags allegedly purchased by defendant's company and supplied by the plaintiff were not found. It is his further testimony that, some people who worked at Barrick and who were involved, resigned from work, naming Mr. Clemence, Mr. Msandu and Ms. Idda, some were from the warehouse and others from finance department. DW2 further narrated that at one time, he interviewed PW 1 and obtained a statement from him but then PW1 refused to sign the statement. DW 2 further testified that, the matter was reported to Musoma Branch (not clear which branch). Upon being cross examined, DW2 told this court that, there was paper work at the office which showed that the goods were received and signed by one, Mr. Clemence, and that, PW 1 did not supply invoices to show where he bought the goods. 9 In his final submission, the plaintiff's counsel strongly urged that, the defendant has failure to prove the existence of fraud. He further submitted that, there is no corroborative evidence or written one which showed that PW 1 promised to pay back or to supply the sample bags. He surmised that, the evidence given by DW 2 on the record has remained a proverbial search. It is his further submission that, the check of DW 2 in the warehouse and non findings of the sample bags has remained a mystery of proof, because it was not proved by evidence, since there was no evidence of stock taking and further, no evidence from the warehouse keeper. On the other side, counsel for the defendant submitted that, there is no dispute that the plaintiff received USD 180,000.00 from the defendant. That, DW2 interrogated PW1 and told him that he was willing to effect the supply of the sample bags or refund the USD 180,000.00. Further to that, counsel for the defendant submitted that, there is no reason of not believing the evidence of DW2 as true, that, in the balance of probabilities, it is his submission that, the defendant has proved fraud. Submitting further, counsel for the defendant averred that, the plaintiff never brought the receiving officer to testify or, at least, explain the source of the bags, and therefore, as DW2 put it in his testimony, that was only paper work and for that reason, he submitted that, the defendant is entitled to its counter claim. I do appreciate that, allegations of fraud requires a rather higher standard of proof than other civil matters in controversy, which is merely on a balance of probability (see; Ratilal Gordhanbhai Patel V. Lalji 10 Makanji (1957) EA 314). In here however, as has been demonstrated above, can one say that the evidence adduced by the defendant has sufficiently reached the standard required? Now, while the defendant maintains that there is fraud, the plaintiff negatives this in toto. Under such circumstance, the burden now is shifted to the defendant to prove that indeed there was fraud. The word fraud is not statutorily defined. It is a word of general application and no exhaustive judicial interpretation has been laid down. Allegations of fraud must be strictly proved: although the standard of proof may not be so heavy as to require proof beyond reasonable doubt, something more than a more balance of probabilities is required to establish such finding, proportionate to the gravity of the offence concerned. Sarkar on Law of Evidence, Volume 2, 16th Edition, 2008, at page 1593 has this to say on the shifting of the burden of proof: "As the case proceeds the onus must shift from time to time. But the Judge should not be blind to the facts established before him (Yellappa V. Tippanna, 56 1A 13: 53B 213:33 CWN 238: 144 1C 13)..........The party on whom the burden lies in the first instance may shift it to the other by providing facts giving rise to a presumption in his favour....... "(See also: Retilal Gordhanbhai Patel V. Lalji Makanji [1957] EA 314). Now, having carefully analyzed the evidence and the pleadings in general, I conclude that, the defence evidence regarding the allegation ii of fraud, falls short of the standard required in law - balance of probabilities. The reasons are clear. They are as follows:- First, I find difficulties in admitting DW2's evidence. To me, his evidence is not credible and did not carry any value of substantiating the claim. He admitted in his testimony that he is not engaged in the supply of the goods or services or accounts department, rather he only deals with security. He testified that the goods were not supplied, but he did not challenge Exhibit P3 collectively which was the delivery notes to that effect, and the documents annexed to the counter claim (annex NM2), which were pleadings which bound the defendant. My understanding is that, since the defendant denies having received the goods, and to cap it all DW2 branded it "paper work", it was now the duty of the defendant to prove that the goods were indeed not supplied and received. It was upon the defendant to call upon their witnesses, including the said receiving officers. To me, mere resigning of the said officers is not proof that by so resigning they committed fraud. If at all there was fraud, there is no evidence led in this court to show that, apart from resigning, the said officers were prosecuted or indicted for criminal offices or disciplinary proceeding in connection with the matters arising as per evidence of DW2. In actual facts, DW2 never told this court what happed after the investigation. Secondly, DW2 testified that, he interviewed PW1 and obtained a statement but PW1 refused to sign it. Much as the said unsigned statement was attached to the amended WSD, DW2 did not even bother to tender it as evidence. One would have expected that DW2 12 would tender in court the statement, the report and any other evidence that will assist the defendant in proving fraud. If the transaction were fraudulent as alleged by the defendant out of record, a crime was committed and the principles of criminal law must therefore apply in a civil suit. It must be established beyond reasonable doubt that the plaintiff colluded with Defendant's staff to defraud the defendant's company. As a matter of law, fraudulent conduct, being a criminal conduct, has to be proved on a rather higher standard than other civil wrongs, (See: Omari Yusuf V. Rahman Ahmed Abdulkadir [1987] TLR 169). In the instant case, it will not be fair in the circumstances to conclude that, the plaintiff, as a fact colluded with the defendant's staff without showing on a balance of probability that he aided or abated fraud or devised a scheme and artifice to defraud the defendant by faking invoices without supplying the bags. What I see here is that, the evidence of DW 2 on this allegation hangs by a narrow thread. Thirdly, in his submission, counsel for the defendant submitted that, the plaintiff never brought the receiving officer to testify at least to show the source of the bags. With due respect to counsel for the defendant, as correctly submitted by counsel for the plaintiff, it was the duty of the defendant himself to prove that the goods were not supplied and received. In other words, defendant had a duty to disprove Exhibit P3. It is my considered understanding that, the defendant here was in a better position to prevent fraud by exercising reasonable care and putting in place systems that could easily detect fraud/forgery. All records were at all times in the hands of the defendant's staff, who had not discounted the opinion of possibility of collusion of his staff with the 13 Plaintiff. The onus therefore is not on the plaintiff to prove otherwise, but on the contrary, it is on the defendant to prove that the invoices were actually forged by the plaintiff or by his staff with the plaintiff's fraudulent knowledge which evidence is lacking. I have dwelt at length on the testimony of DW2 because it was the only central evidence at hand and which is the only one relied by the defendant to show that there was a fraudulent arena. In my considered view, on the totality of the evidence adduced, the version of defendant's evidence does not incriminate the plaintiff into the fraudulent arena. There are shortfalls in the testimony adduced. I may add here that, in total, the defendant's behavior is pregnant with secrecy, half disclosures or not disclosures, thus supporting an inference that they knew what happened and that is why, DW2 told this court that, no charges were pressed over this issue. The shortfalls in the defence case as demonstrated above, are sufficient to dispose of the case. Under section 112 of the law of Evidence Act - Chapter 6 of the Laws, the burden of proving that there was fraud is on the defendant, that indeed, there was fraud committed by the plaintiff. Unfortunately, the defendant has failed to discharge that duty. Proof of fraud on the part of the plaintiff was vital for purposes of sustaining the counter claim. With this deficiency, I will hold that, the defendant has failed to prove its case, and I answer the third issue in the negative. This takes me to the fourth issue which is also answered in the negative. The defendant is not entitled to the counter claim. 14 Finally is the reliefs to which parties are entitled. Counsels for the defendant prayed for the dismissal of the plaintiff's case with costs and the counter claim be allowed as prayed. Counsel for the plaintiff on the other hand invited the court to examine the testimonies and exhibits on the face of record and hold that, the plaintiff's claim has been proved at the standard required in civil cases ie at preponderance of probabilities, and that the defendant's counter claim has not been proved at the standard required in civil cases based on fraud hence to be dismissed with costs. I have done exactly that and come to conclusion that it is the plaintiff who has proved its case. I have considered the pleadings, the testimonies and the evidence tendered in this court. I have come to the conclusion that, the plaintiff has proved its case on the standard required, that is, at preponderance of probabilities and that the defendant's counter claim has not been proved to the standard required in civil cases. Hence it is dismissed. Therefore judgment is entered for the plaintiff as follows: (i). The defendant is ordered to pay the plaintiff an amount of T.shs.57,605,817.00 and United States Dollars 59,949.20 being the principle sum. (ii). The above amount will attract interest at the rate of 18% for the T.shs. amount and 3.5% for the USD amount. The said interest shall be chargeable from the date of failure to pay the claimed sum up to the date of filing of the suit. 15 (iii). The defendant shall pay interest at court's rate of 7% from the date of judgment to the date of payment in full. (iv). The defendant is condemned in costs of this suit. It is accordingly ordered JUDGE 14t h DECEMBER, 2012 Judgment delivered this 14th day of December, 2012 in the presence of Mr. Mkoba, Advocate for the defendant, also holding brief of Mr. Mafuru, Advocate for the Plaintiff. JUDGE 14t h DECEMBER, 2012 Word Count: 3,886 16