incar tanzania limited vs ms magugu farm limited 1994 tzca 40 1 june 1994

IN THE COURT OF APPEAL OF TANZANIA A T _ DAK ES_SALAAM (C O M : K I S M G A ^ J.A. , R A M A D H A N I , J . A . t A n d LUB U V A , ,_J.A . ) CIVIL APPEAL NO. 30 OF 1993 BETWEEN INCAR TANZANIA LIMITED .............. APPELLANT AND M/S M A G U G U FARM LIMITED i CO-OPERATIVE & RURAL DEVELOPMENT B A N K f 1JiorUWU^ (Appeal from the decision of the H i g h Court of Tanzania at Arusha) dated the 14th day of May, 1992 in Ar u s h a H/C Civil Case No. 84 of 1989 JUDGEMENT OF THE C O URT KISANGA, J.A.: This appeal arises from the decision of the H i g h Court (Nchalla, J.) allowing the respondents' claim based on a b r e a c h of contract for the sale of goods. The background to the case m a y be summarized briefly as follows: Under a w r i t t e n contract, Incar Tanzania Ltd. Arusha, the appellant in this appeal, agreed to sell a set of farming implements to the respondent company. The implements consisted of a f i a t tractor, a harrow and a chisel plough. The contract w a s concluded at Arusha and delivery of the equipment was to be effected in D&r es Salaam. The contract price was p a i d partly thro u g h a loan of Shs. 4,000,000 from the C o - o p erative and Rural Development B a n k (C.R.D.B.), the - 2 - second respondent, and partly from the r e s p o n d e n t ’s own resources in the sum of Shs. 202,000/=. After the contract price was paid PV.1, Manag i n g Direc t o r of the respondent company, travelled to Dar es Salaam to take delivery of the implements there only to find that the items were not ready f o r collection. There was yet to be done pre-delivery service t o these implements and a customs clearance certificate in r e spect of them was yet to be obtained. It was not possible to register the tractor before a customs clearance certificate w a s obtained in respect of the equipment by the appellant company. The respondent was asked to go and come back on a n u m b e r of times but on each occasion he found the implements n o t yet ready for collection. Out of frustration he threatened t o rescind the contract and demanded a refund of the purchase price w h i c h he had paid at Arusha but in vain. T h e r e a f t e r the appellant company alleged that PW.1 d e c i d e d to take delivery of the implements despite the a b sence of a customs clearance certificate, P.W*1, however stated that a n e w arrangement was reached whereby he was to travel back to A r u s h a and the appellant company was to tran s ­ port the implements to its Arusha branch where he (PW»1) was to take delivery of the same. The trial judge believed the v e r s i o n of PW.1; we think he was entitled so to do. A g a i n the appellant company asserted that on FW.I's own request, it took the implements to the railway station, D a r es Salaam and loaded them on a railway wagon chosen by PW*1 himself, for transportation to Arusha. The consignment so loaded included a trailer sold by the appellant to one ./3 3 - Mr. M a r i o Gikas of A rusha. The appellant claimed that before PW.1 left Ar u s h a for Dar es Salaam, Mr. Gikas had arranged w i t h him (PW.1) to transport his trailer to Arusha. On the b asis of such arrangement, the appellant went on, it (the appellant) handed over the trailer to PW.1 in D a r es Salaam w h o d uly made his own arrangements to transport it together w i t h his own implements to Arusha. PW.1, however, denied c o m p l e t e l y making the alleged arrangement with Mr. Gikas, a d d i n g that at the time material to this suit Mr. Gikas was n o t an acquaintance of his. Y e t ?Mr. Gikas was not called in support of the alleged arrangement with PW.1 for the trans­ p o r t a t i o n of his trailer.' A c c o r d i n g to PW.1, however, it is the appellant company w h i c h u n d e r t o o k to transport the implements to Arusha, but as he was anxious that the implements should reach Arusha as soon as possible he did a number of things, on being asked b y the appellant company, in order to facilitate or speed u p the process. Thus for instance he was sent to look for a ra i l w a y w a g o n on w h i c h to load the implements, although the one he found proved to be too small and the appellant had to look for another one as an alternative. He also paid the charges for hiring the wagon and for the guard to escort the goods on a promise that these payments altogether amounting to Shs. 31,220/= w o u l d be refunded to him by the a p p e l l a n t ’s office at A r u s h a . ' U p o n making those payments he signed a c o n s i gnment note w h i c h shows the sender of the goods to be I n c a r Tanzania Ltd. Dar es Salaam and the consignee to be I n c a r Tanzania Ltd. Arusha. The consignment note also shows .A _ 4 - the goods to have been loaded by the sender. PW.1 took the c o n s i gnment note to the appellant's office in Dar es Salaam. T here he was instructed to take the said consignment note t o g e t h e r w i t h the cash receipts in respect of payment for t r a n s p o r t and escort charges and the contract documents to the appellant's office at Arusha where the implements would be delivered to him. He did as instructed. U p o n handing over the documents to the appellant's office at Aru s h a he was a s k e d to go away and that the office would take delivery of the implements, register the tractor in the name of his c o m p a n y and C.R.D.3. and then deliver it to him. In the meantiuie PW.'i on behalf of his company entered into a contr act to plough 200 acres of land for one Mr. K. Patel. H e did this in anticipation of the new tractor because a l t h o u g n he had seven other tractors these were old and were not enough to carry out the ploughing contract. The l e a r n e d trial judge accepted PW.I's account in preference to the claim by the appellant that PW.1 received the implements in D a r es Salaam and took it upon himself to t r a n s port them to Arusha. He found that it is the appellant co m p a ny w h i c h sent the implements in question together with Mr. Gikas's trailer as a single dispatch consigned from the a p p e l l a n t ’s office in Dar es Salaam to its Arusha office. F ollo w i n g the handing over of the documents by PW.1 at the appellant's office in Arusha, a representative of the a p p e l l a n t ’s office there visited the Railways office at A r u s h a a number of times to inquire if the consignment had arrived, and at least on one occasion he also telephoned --- /5 - 5 - t h e i r head office in Dar es Salaam w h i c h confirmed that the goods had been dispatched. Subsequently he was informed b y the Railways office Arusha that the wagon carrying the consignment had sustained an accident at a place called Hedaru, a long distance away from Arusha. He drove all the w a y to He d a r u to v i e w the scene for himself without asking PW.1 to accompany him or informing him about the accident. H e n o ticed that the tractor had been damaged in the course of the accident. A f t e r the consignment had reached Arusha, the railway a u t h o rities duly advised the appellant as the consignee to c o llect the goods.. The appellant did so, after showing some reluctance, and also paid demurrage charges arising from the d e l a y in collecting the goods. The appellant then asked PW.1 to take delivery of the implements but according to the a p p e llant PW.1 refused to do so because of the damaged tractor. T he damage was estimated at Shs. 300,000/= being the cost of p urchasing the necessary spares, plus about a half that a m o u n t being labour charges. PW.1 was asked to bear the cost of buy ing the spares while the appellant wo u l d bear the labour charges. PW.,1 , however refused and insisted on replacement of the tractor, and since no agreement could be reached, the respondent brought this suit alleging breach of contract and asking for the following reliefs;- :i(i) The plaintiff claims specific per­ formance by the defendant of the plaintiffs w r i t t e n contract to deliver the said TRACTOR HARROW and CHISEL PLOUGH as specified in the contract marked annexture 1A ' . *«■*/6 - 6 - (ii) Damages for loss of use of the said farm implements by the plaintiffs at the rate of Shs. 20,000/= per day from the day of none delivery to the date of judgement. (iii) Damages for loss of contract of ploughing 200 acres between M/s M a g u g u E’ arm Ltd. and Niru Patel totalling at the rate of Shs. 2,000/= per acre totalling Shs. 400,000/= see attached copy of contract between M/s Ma g u g u Farm & N i r u Patel. (iv) Costs of this action. (v) Interest at court rate In damages and costs from till payment in full. (vi) A n y other relief or further relief as the nature of this action may admit.'* U p o n finding that the appellant had failed to deliver the implements in accordance with the terms of the contract, the trial judge gave reliefs set out in the decree as follows: ''It i s ordered that t h e plaintiffs are entitled to, and are awarded the f o l l owing reliefs; (1) Specific performance, if the same is feasible, plus general and special damages, including costs and interest as claimed and set out herebelow; or .../7 - 7 - (2) R e f u n d of Shs. 4,283,420/= to the 1st plaintiff (Pv/.1) being prepaid price, plus the difference between the prepaid price and the full market price of the goods as at 15.8.89 with interest at bank rate from the date of payment of the purchase price on 24.7.89 till final payment. Thereafter if P¥i1 finds it reasonable to purchase similar goods elsewhere because the type and make of the goods (New Fiat tractor 100 horse power) he had contracted for is or may not be available, he can do so w i t h the m o n e y refunded to him, excluding the interest on the purchase price or principal sum and he may charge the defendant company w i t h the difference, if any, in pricey and (3) Special damages under head (ii) of the reliefs. These damages are to be computed in the following manner, that is to say 20,000/= per day from 15*8.39 to ,31.12*89. And thereafter for each succeeding year till the date of full payment, computation shall be Shs. 2 0 , 0 00/= per day from July, to December, respectively. It is considered that during the months of April to June annually, ploughing almost ceases in Arusha zone, and transportation dwindles, hence the reduction of 10,000/= from the 20,000/= daily rate earnings for that period. Also there will be a deduction of 40% from the total sum to be realized under* this head to cater for mitig a t e d damages and for service of the tractor; and *... / 8 3 - (4) Special damages in the amount of T.Shs. 400,000/*= for loss of ploughing contract (Exh. P.7) as indicated under head (iii; of the reliefs, however, less 5 0 /o to cater for mitigated damages; and (5) Costs to be taxed; and (6) Interest 011 damages and costs at court rate and in the appropriate scale effective from the date of filing the suit on 7.10.89 till full p a y m e n t ; and (7) General damages w h i c h deem fit and just to assess and award basing on the devaluation of our Tanzania shilling pegged to the US Dollar and the resultant inflation rate. In 1989 when PW;1 paid the purchase price to the defendant company, about T.Shs.110 was to the d o l l a r „ Todate the current exchange rate is about T . S h s *302/= to the dollar. If m y mathematical calculations serve me right, our shilling has from 1939 to 1992 fallen down to the dollar by about 274%. For this reason, and under the circumstances of this case, I award to PW.1 30% of the £aid d evaluation and inflation rate annually on the purchase price or principal sum of Shs. 4 , 2 8 3 »42jD/=_ from 15.3.89 till full satisfaction." It is against that background that this appeal has been preferred. ./9 - 9 - Before us the appellant was represented by r-lr. R» C. Kes a r i a and Hr. J . C. D ' S o u z a while the respondent was r e p r e sented by Mr. i. Maira and Mr. V7.A.L. Mirambo. Counsel f o r the appellant filed a total of 26 grounds of appeal and at the hearing we also granted them leave to argue another f o u r additional grounds. Essentially the issue raised in these grounds is that the appellant duly delivered the farm implements to P . W . 1 , or to the Railways (the carrier) at D a r es Salaam for transmission to P.W.1, in accordance with the terms of the contract, and that once that was done then p r o p e r t y in the goods passed so that the appellant was no lo n g e r responsible for the damage caused to the goods while in t r ansit to Arusha. Counsel for the appellant took the v i e w that this was a contract for the sale of unascertained goods w h i c h was governed by the provisions of Rule V of s e ction 20 of the Sale ox Goods Ordinance (Cap. 214). He therefore criticised the trial judge for failing to hold t h a t :1where t.iere is a contract for the sale of unascertained goods by d e s c r iption and goods of that description, and in a d eliverable state are unconditionally appropriated to the co n t r act (as was the case here) the property in the goods t h e r e u p o n passes to the buyer. We agree w i t h learned counsel that this was a contract f o r the sale of unascertained or largely unascertained goods b y description. This was so because the tractor which formed part of the goods was ascertained only by its chasis and engine numbers. That was not sufficient to ascertain it b e c a u se it was not known what the body looked like or what c o l o u r it was. W h a t is even more is that the other two ___ /10 - 10 - implements, namely, the harrow and the chisel were completely u n a s certained. We also agree that the goods were appropriated^' to the contract w h e n they were pointed out to P.W.1 in the appellant* s work s h o p at Pugu Road in D a r es Salaam or at the time of loading them on the w a g o n at the railway station D a r es Salaam for transmission to Arusha. However, we do not agree that the appropriation was unconditional. Our v i e w is that the appellant had reserved the right of disposal ox the goods, and this made the a p p r o p r i a t i o n conditional thereby preventing the property i n the goods from passing to P . W . 1 . Section 21(1) of the S a l e of Goods Ordinance provides that: "Where there is a contract for the sale of specific goods, or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled. In such case notwith­ standing the deliver^/ of the goods to a buyer, or to a carrier or other bailee or custodier for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled.'1 It is clear from the evidence that when P.w.1 arrived in D a r es Salaam the goods were not ready for collec t i o n be c a u se there was yet pre-delivery service to be done on t h e m and a customs clearance certificate to be obtained ______ /11 *» 11 m in respect of them. D.Y/.2 clearly stated that it was the duty of the appellant to obtain the certificate and D.W.1 d e m o n strated to P.W.1 the futility of collecting the goods w i t h o u t such certificate. This is what he said: (II replied him (P.W.1) that so long as the customs documents were not ready then it was not possible for him to collect and register the tractor. P.W.1 knew this v e r y w e l l . ” C o n s i s t e n t w i t h that stand, the appellant must have decided that in order to avoid further inconvenience of keeping P.W.1 longer in D a r es Salaam and in order to avert the t h r e a t by FW.1 to rescind the contract, he (P.W.1) could r e t u r n to Arusha and take delivery of the implements there a f t e r the appellant had done the needful. In other words the appellant, appreciating its obligation to carry out p r e - d e l i v e r y service to the implements and, in particular, to obtain a customs clearance certificate without w h i c h it w a s useless for P.W.1 to take delivery of the implements, a p p r opriated the goods to the contract but reserved its r ight of disposal thereof pending the doing of the two things. It was neces s a r y to reserve the right of disposal thus in order to enable the appellant to take delivery of the goods at its Ar u s h a branch for the purpose of doing those two things. The trial judge rightly rejected the appellant's claim t h a t P.W.1 insisted on, and eventually succeeded in, taking d e l i v e r y of the implements at Dar es Salaam. F o r that would be a useless exercise, and according to D.W.1 he (PW/l) knew. ____ / 1 2 ■ 14 m it. Then w h y should P.W.1 engage in such a useless exercise? A g a i n if he had taken delivery of the implements at D a r es Salaam, what was the point of consigning them to the a p pellant at Aru s h a instead of to himself? It is true that P.W.1 did a number of things in c o n n ection w i t h the dispatch of the goods to Arusha. For instance, he initially looked for a railway w a g o n on which to load the implements. He paid the transport charges i n cluding paying for the escort; he signed the consignment note. His explanation was that he did these things, upon b e i n g asked by the appellant, in order to facilitate the w h o l e exercise because he was interested to see that the implements reach Arusha as soon as possible. We can find n o ground for saying that the trial judge should have r e jected that explanation. Counsel for the appellant strenuously contended that » t h e r e was unconditional appropriation of the goods to the e o ntract w h e n the appellant handed over the implements to the railway authorities for transmission to Arusha. Learned counsel further contended that following such unconditional appropriation, the property in the goods passed to P.W.1 so that even if it is held that the appellant continued to be i n possession of the goods, it did so as a mere bailee. N o doubt, this v i e w is based on the provisions of Rule V (2) of section 20 of the Sale of Goods Ordinance w h i c h says that: "(2) V/here in pursuance of the contract the seller delivers the goods to the b uyer or to a carrier or other bailee . . / 13 - 13 - •r custodier (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the c o n t r a c t ." B u t as already demonstrated, this was a case of conditional a p p r o priation of goods to the contract by reason of the a p pellant reserving the right of disposal. This v i e w is reaffirmed by the provisions of section 21 (2) of the Sale of Goods Ordinance which provides that: "(2) W h e r e goods are shipped, and by the bill of lading the goods are deliverable to the order of the seller or his agent, the seller is prima facie deemed to reserve the right of disposal." S ince the appellant consigned the goods from its D a r es S alaam office to its Ar u s h a office, it is prima facie deemed to have reserved the right of disposal. The appellant gave no e x p l a nation to rebut that presumption, and on the evidence w e could find n o n e . On the other hand the presumption is co nfi r m e d by the a p p e l l a n t ’s intention to take delivery of an d repossess the implements at Arusha in order to do p r e ­ d e liv e r y service and obtain the requisite customs clearance c e rtificate in respect of them. Because of such reservation of the right of disposal, therefore, the property in the goods did not pass, and the appellant remained the owner after appropriating the goods to the contract. . . . ,/14 - 14 - Indeed the conduct of the appellant after appropriating the goods to the contract was consistent w i t h its ownership of those goods. The evidence shows that P.W.1 took the c o n s ignment note in respect of the implements in question to the appellant's representative at its D a r es Salaam office, w h e r e u p o n the said representative in turn instructed h i m to take it to the appellant's representative at its A r u s h a office for action and he did so. The trial judge ac c e p t e d that evidence and we could not fault him. The consignment note shows the consignor of the goods to be the a p pellant's office at Arusha. Neither the appellant's representative at Dar es Salaam office nor at Arusha e x p r e s s e d surprise that the goods were consigned by its office in D a r es Salaam to its office at Arusha. Quite c l e a rly such conduct is consistent with the v i e w that a l t h o u g h the appellant had duly appropriated the goods to the contract, it was still the owner of those goods. In fact u p o n the goods arriving at Arusha the railway authorities there completely refused to recognize anyone else but the a p p e l l a n t as the owner of the goods. The acts of the appellant's representative rushing to the scene of the accident at H e d a r u wh i c h is so far away w i t h o u t informing P.W.1 about the accident, the appellant's t a k i n g delivery of the goods at Arusha and paying demurrage charges in respect thereof are consistent with the appellant's o w n e rship of the goods. If the appellant was not the owner of the goods w h y should it take delivery of the goods and p a y demurrage charges in the sum of Shs. 376,000/=? And w h y has it (the appellant) not lodged a claim against P.W.1 f o r a refund of this sum? ____________ / 1 5 15 There is yet another mat t e r to be alluded to in this respect. The trial judge rightly accepted the evidence t hat there was no arrangement between P.W.1 and Mr. Mar i o Gikas to transport the latter's trailer from D a r es Salaai:. to Arusha. That goes to confirm that the whole consignmej,t comprising P.W.1's implements and Mr. Gikas's trailer had b e e n sent by the appellant. That is to say the appellant was the owner of the whole consignment, and that is w h y it (the appellant) accepted the responsibility of repairin g at cost Mr. G i k a s 1s trailer which was damaged in the accident. Now, if the appellant was the owner in respect of the trailer, h o w come that it was not the owner in respect of the implements c omprised in the ve ry same consignment? The evidence on record, therefore, amply justifies the f in d i n g that u p o n appropriating the goods to the contrac:, the appellant reserved the right of disposal. That rencsred the a p p r o priation only conditional and thereby prevented the prop e r t y in the goods from passing. The appellant remained the owner of the goods t o - d a t e . We heard lengthy arguments on whether or not there w a s any binding variation of the written contract to change the place of delivery from Dar es Salaam to Arusha, and w h e t h e r or not the goods were in a deliverable state. Vve w e r e also referred to numerous authorities in that regard. However, those questions are of little or no relevance row once it is held that there has been no transfer of ownership f rom the appellant, because the claim is that the a p p o l l m t has failed to deliver the goods, whatever state they be :Ln a nd whet h e r at D a r es Salaam or at Arusha. .. „ c,/16 - 16 -* It was also submitted that after the accident wh i c h caused damage to the tractor, P.W.1 wro n g l y refused to take d e li v e r y of the tractor at Arusha when the damage caused to it was only slight, the evidence being that P.W.1 was asked to bear the cost of buying the necessary spares amounting to Shs. 300,000/= while the appellant was to bear the labour charges. P.W.1 denied any such offer having been made to him. B u t even if the a p p e l l a n t ’s version is accepted that P.W.1 refused the offer and insisted on replacement of the tractor, such refusal in our v i e w cannot be said to be unreasonable. For, there is no legal basis for making P.W.1 responsible for damage caused to the tractor at a time when that tractor was owned by, and in the possession and care of, someone else. Thus on the evidence we are satisfied that the appellant failed to deliver the farm implements to P.W.1 in accordance w i t h the terms of the contract and therefore the learned trial judge was justified to find that the a ppellant was in breach of the contract. A s regards the award, counsel for the appellant c riticised the trial judge for giving the respondent an o ption to purchase a n e w tractor of similar type on an open ended price scale and to charge the price difference to the appellant. The learned judge was also criticised f o r allowing the respondent to recover the difference b e tween the pre-paid purchase price and the market price obtaining on the day of the accident w h e n there was no evidence of any such difference. We think that there is merit in the --- /17 ■r 1? w complaint. Acc o r d i n g l y that part cf the award is varied as follows:- The appellant is to refund to the first respondent (P.W.1) Shillings 4,483,420/= being the pre-paid purchase price w i t h interest at bank rate from the date of payment of the purchase price till final payment. Counsel criticised the award of special damages for loss of use at the rate of between Shs. 20,000/= and Shs. 10,000/= per day without proof thereof. In support of his claim for special damages P.W.1 said:- !,To-date I have not been supplied w i t h the tractor, harrow and chisel plough. I have sufferred great loss thereby. I used to realize 20,000/= per day from ploughing 20 acres per day at 1,000/= per acre at the material t i m e . I used to transport sand, stones, sugar cane. This is on hire basisi E a c h trip cost 7,000/=. At the material time I had contracted to plough 200 acres of Mr. Patel who had paid me Shs. 400,000/= in advance. Due to lack of tractor I could not p lough those a c r e s " . That evidence was not controverted and therefore the learned trial judge rightly took it into account when assessing the award. However, we could find no evidence to support his u s i n g different rates per day in computing the damages payable for loss of use depending on the different seasons of the year. W i t h that in mind, we think that a uniform rate of reckoning the damages w o u l d be a p p r o p r i a t e . . . ./18 - 18 - A c c o r d i n g l y we vary this part of the award to the extent of allowing the respondent (P.W.1) to recover damages for loss of the use at the rate of Shs. 10,000/= per day plus interest at court rate from the day of non-delivery i.e. October, 1989 till the date of judgement. Counsel objected to the award of Shs. 400,000/= on the grounds that P.W.1 had entered into the ploughing contract prematurely, that he had other tractors and ploughs and that in any event the award was a d uplication in the l i g h t of the award for loss of use already given. We find merit in the objection on this head especially on the ground that this was a duplication. For, the award of Shs. 400,000/= damages was in respect of loss sustained f or the period during which P.W.1 would have executed the ploughing contract. That period is not ascertainable; it m i g h t have been ten or fifteen days, for instance. But such period is included in the award already made for loss of use and calculated at Shs. 10,000/= per day from the day of n o n - d elivery to the day of judgement. Such award is cle a r l y a duplication wh i c h ought not to be allowed. We w o u l d accordingly set aside the award of Shs. 400,000/=. Once the awards which we have upheld were made, we t h i n k that the award for general damages, taking into account d e v a l u a t i o n and inflation was no longer justified. The award u n d e r that head is accordingly set aside. --- /1 9 - 19 - We now cone tc the question of costs. As stated earlier on in this judgement, both sides were represented' b y two advocates. At the conclusion of the hearing of the appeal each side asked for a certificate of costs for 'two counsel. The application has merit. The case was long and obviously complicated. It required a great deal of effort and patience to analyse the issues involved and to l o o k up the relevant provisions of the law. Accordingly, for the reasons set out hereinbefore, the appeal is substantially dismissed, with a certificate of costs for two counsel. D A T E D at DAR ES SALAAM this day of 1994. R. H. KISANGA J USTICE OF APPEAL A.S.L. RAMADHANI J USTICE OF APPEAL D. Z. LUBUVA JUSTICE OF APPEAL I certify that this is a true copy of the original. (B. M. LUANDA-)- SENIOR DE P U T Y REGISTRAR