SAMORA JDGT

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA DAR ES SALAAM SUB- REGISTRY AT DAR ES SALAAM. CIVIL APPEAL N0.9639 OF 2024. (C/f Civil Case No. 103 of2022 in the District Court of liaia at Kinyerezi) INTERNATIONAL COMMERCIAL BANK(T)LIMITED. APPELLANT VERSUS SAMORA SERVICE STATION LIMITED RESPONDENT JUDGMENT Date offast order:8-10-2024 Date ofjudgment:17-2-2025 B.K.PHILLIP,J The appellant and respondent were the plaintiff and defendant, respectively, before the District Court of Ilala at Kinyerezi. (Henceforth "the lower court") The appellant's case before the lower Court was that the respondent had been her customer for a long time. On diverse dates between and 26^^ March 2020, the respondent issued four postdated cheques worth Tshs 39,408,233.96. Out of those cheques, two cheques worth Tshs. 10,000,000/= each, were Issued in favour of Gapco Tanzania Limited(" Gapco" ) and the remaining two cheques worth Tshs. 450,000/= and Tshs.9,225,000/= were issued in favour of Msimbazi Street Petrol Station ( Msimbazi"). The appellant's Bank received the said cheques. It paid Gapco and Msimbazi the amount indicated in the cheques with the expectation that the same would be recovered later when they are presented to the relevant banks on the future specified dates. On the contrary, the plaintiff did not recover the money paid to Gapco and Msimbazi because, upon cashing, the cheques issued by the respondent to the relevant banks ( NDC and DTB bank) were not honored. The respondent's bank account had no sufficient funds. The Appellant demanded the respondent to pay back the amount paid to Gapco and Msimbazi but in vain; hence, a case was instituted against the respondent claiming payment of Tshs.59,181,385 .07 as of December 2022, being the amount resulting from the respondent's account withdrawal and her default to liquidate the same, interests, and penalties on the unpaid amount and costs of the suit. The trial court dismissed it with costs for lack of merit. Aggrieved by the lower Court's decision, the Appellant, through the legal services of the learned Advocate Augustino Rutakolezibwa, lodged this appeal on the following ground; a) The trial magistrate erred in law by falling to properly apply the legal principles governing implied contracts in the banker-client relationship context when considering the evidence on record regarding the presentation ofcheques by the Respondentand the Appellant cashing the same, thereby creating an Implied agreement for the resultant overdraft to be covered. b) That the trial magistrate erred in law and facts to evaluate evidence and hence reached unreasonable finding on facts and conclusion that the Appellantfailed to prove Its case. Is against the weight ofevidence on record, is perverse and cannot be sustained, in light of the undisputed facts regarding the overdraft incurred by cashing the respondent's cheques and failure by the respondent to repay the same. c) The trial magistrate erred in failing to properly address and apply the legal principles governing unjust enrichment, when considering that the respondent would be unjustly enriched if allowed to benefit from funds advanced by the Appellant without repayment d) That the trial magistrate erred in uncritically accepting the respondent's bare denial of any contractual agreement without examining the same against the documentary evidence showing the presentation ofcheques and impiied terms for repayment. e) That the triai magistrate misstated and/or misappiied the iegai principies of impiied contracts and the banker-ciient reiationship in arriving at the decision despite the evidence on record. The memorandum of appeal served to the respondent, and the learned Advocate Roman Lamwai appeared in Court for the respondent. However, on the hearing date, neither the respondent nor her advocate appeared in Court, even though the court fixed the hearing date in the presence of the respondents advocate. Consequently, upon the prayer made by Mr. Rutakoiezibwa, this Court ordered the appeal to be heard ex parte against the respondent. In his submission, Mr. Rutakoiezibwa conjointly argued the 1^, 2"'', 4th, and 5"^ grounds of appeal. His submission was to the effect that as per the facts stated in the Plaint, which were not disputed by the respondent in her written statement of defense in paragraphs 4 and 6, by presenting the cheques to the Bank (Appellant), the client (respondent) and the Bank impiiediy entered into a contract. The Bank, in turn, acted on this impiied contract, accepting and processing the cheques, thereby creating a legal obligation to the client to clear the debt in her account. He contended that due to a long bank and customer relationship, as addressed in evidence by the parties, a concept of an implied contract arises in banking transactions. It is a trite law in Tanzania that when a client presents a cheque to the Bank, there is an implied understanding that the Bank will honor the cheque on the specified date. Issuing a cheque and delivering it to the Bank creates a contractual obligation between the Bank and the client. The client is liable to pay the debt when the cheque presented becomes due. The evidence adduced proved that the Appellant paid to Gapco and Msimbazi the amount indicated in the cheques issued by the respondent. Mr. Rutakolezibwa argued further that as per the legal principles governing banking business, the respondent implicitly entered into a contractual relationship with the Bank by presenting postdated cheques. By its customary banking practices, the Bank processed the cheques. It made funds available to the client by paying Gapco and Msimbazi, based on the expectation that the defendant would pay the debt represented by the cheque would be paid on the specified future date. This created an overdraft into the defendant's account. Relying on the case of Philbert Krisantus Mpepo VS. NMB, Land Case NO. 297 OF 2017 (unreported ), he contended that an overdraft being an agreed line of credit operating directly through the current account, does not necessarily require a formal written agreement. Where a customer operating a current account in a bank overdraws in his account, by implication, creats an overdraft Further, he argued that the above position of the law is also stipulated in the Rules governing the operation of current accounts and other accounts, which the respondent accepted in opening the account, which provided as follows; Rule 1; The customer requests the Bank to honour and debit to his account aii cheques, drafts, biiis, promissory notes, acceptances, and other negotiable instruments, and orders drawn accepted or made out by him and to carry out an instructions he maygive in accordance with his account notwithstanding that any such debiting or carrying out may cause his account to be overdrawn or overdraft to be increased... Rule 6: Where the Bank receives several orders at approximately the same time total amount of which exceeds the customer's available balance, the Bank may honour orders and apportion funds in whatever manner it thinks fit" Mr. Rutakolezibwa maintained that cashing cheques created an implied overdraft agreement. The trial court should have examined the parties' conduct, including the cheques' cashing, to determine if an implied contract for the overdraft existed. On the other hand, in his testimony, DWl told the trial Court that there was a long relationship between the Appellant and the respondent. In the course of business, the respondent overdrawed his account and paid back the later days. To cement his arguments, he cited the case of Sasa Kazi Fuel Co Ltd vs Ferrant Processing Co Ltd, Civil Appeal Case 20 of 2022,in which the Court while elaborating section 9 of the Law of Contract Act Cap 345 R.E 2019 held as follows; "/a7 essence, the contract can therefore be in writing, orai or implied and the vita! elements include free consent of the parties competent to contract, for a lawful consideration and with a lawful object." About the third ground of appeal, Mr. Rutakolezibwa argued that the trial magistrate failed to properly address and apply the legal principles governing unjust enrichment since the respondent would be unjustly enriched if allowed to benefit from the Appellant's funds used to pay the respondent's creditors. The respondent does not deny issuing cheques without sufficient funds in her bank account; she blames the Appellant for paying her creditors and contends that it was negligence on the part of the Appellant to honor the postdated cheques. There is ample evidence of the respondent's acceptance that she benefited from the Appellant's money. Moreover, Mr. Rutakolezibwa referred this Court to the following cases to cement his arguments: Madhupaper International Ltd & another Vs. Kenya Commercial Bank Ltd & 2 others[2003]eKLR, the High Court of Kenya cited with approval various authorities and held as follows; 'The gist is that a defendant, upon the circumstances ofthe case, is obiiged by the ties ofnaturaljustice and equity to make restitution. As Lord GoffofChieveiey and Professor Gareth Jones state in their monumental treatise. The Law ofRestitution, 5th edt(1998), atpp 11-12 said 'Most mature systems oflaw have found it necessary to provide, outside the fields ofcontract and civii wrongs, for the restoration ofbenefits on grounds of unjust enrichment"" Fibrosa Spolka Akcyjna Vs. Falrbairn Lawson Combe Barbour Ltd, [1943]AC 32, and Saleh bin Ghaleb V Hussein al Qu'aiti,[1957]EA 55,and Amratlal D.M t/a Zanzibar Hotel Silk Stores vs. A.H. Janwala t/a Zanzibar Hotel[1980]TLR 31. In conclusion, Mr. Rutakolezibwa argued that this Court should not let the respondent walk court free despite having benefited from or been unjustly enriched with the Appellant's funds since this is against natural justice and equity. Having analyzed Mr. Rutakolezibwa's submission, let me embark on the determination of the grounds of appeal. I will deal with the 1^, 2"*^, 4^, and 5^ conjointly, as argued by Mr. Rutakolezibwa. To start with, let me point out that upon perusing the pleadings, I noted that the respondent In her defence admitted that she issued the posted cheques In question, that is cheque numbers 073145 dated 11^^ March 2020,073147 dated 11^^ March 2020, 073148 dated 13^^ March 2020 and 073054 dated 26*^^ March 2020 (exhibit PI collectively). The respondent also admitted that the Appellant honored those cheques by paying the respondent's creditors (Gapco and Msimbazi). However, she stated that the plaintiff made the payments due to her negligence since there was insufficient funds in the defendant's bank account. It is worth noting that DWl, Augustine Peter Mwasi, testified that the respondent did not issue postdated cheques contrary to the pleadings. The position of the law is that parties are bound by their pleadings, and the court is obliged to ignore evidence that contradicts the pieadings. In the case Gloria Irira Vs. SudI Mrisho Ngwambi and two others. Civil Appeal No.27 of 2021,(unreported), the Court of Appeal said the following; ... In avU cases, parties are bound by their own pleadings, and not allowed to travel beyond their pieadings. in Civil cases, parties to the litigation are the ones who set up the agenda ...It is for the purpose ofcertainty and finality that each party is bound by its own pleadings. For this reason, a party cannot be allowed to raise a different case from that which it has pleaded without due amendment being made." On the fate of the evidence adduced at variance with the pleadings court had this to say; Since the pieadings are the basis upon which the ciaim is founded, it is settied iaw that parties are bound by their own pieadings and that, any evidence adduced by any of the parties which is not based on or is at variance with whatisstatedin the pleadings must be ignored' (emphasis added) From the foregoing, this Court finds that the respondent admitted that she issued the posted cheques in question as pleaded and that the Appellant honored the respondent's cheques by paying the respondent's creditors( Gapco and Msimbazi), thus benefiting from the Appellant's money. 10 In his testimony PWl, Phiiip Grasper Amani testified that the Appellant honored the postdated cheques (exhibit PI coiiectiveiy) despite the fact that there were no sufficient funds in the respondent's bank account in the expectation that the respondent would later deposit the money as she used to do in the previous years, since 2018. The respondent did not deposit any amount to repay the Appellant's money, which was paid to Gapco and Msimbazi. The Bank contacted the respondent and visited her on 3'^ February 2021 and 5^*^ February 2021. In both visits, they held meetings, and the respondent promised to pay back the money but did not keep her promise. Further, PWl told the trial court that the Appellant served the respondent with demand letters (Exhibit P4 coiiectiveiy) to pay the money but in vain. PWl supported DWl's assertion that the Appellant and the Respondent had a long customer-banker relationship. He testified that the Respondent had been the Appellant's client for 10 years. From the foregoing, the crucial legal issue here is whether or not presenting the cheques to the Appellant created an implied overdraft contract between the Appellant and the respondent. PWl told the trial court that the 11 respondent requested the Appellant to honor the cheques even if insufficient funds were in her account. The Appellant heeded the respondent's request because of their long and good relationship. So, the Appellant honored the cheques after the respondent's request. She relied upon their iong relationship and believed the respondent's promise to pay the money made orally. Let me clarify here that it is well known that contracts involving banking transactions for loans and overdrafts are always in written form to avoid confusion during implementation. Before the trial court, the appellant's case was to the effect that, by issuing postdated cheques to the appellant to pay Gapco and Msimbazi, the respondent created a contract between her and the appellant. Mr. Rutakolezibwa argued that the respondent implicitly entered into a contractual relationship with the appellant by issuing posted cheques. Also, he argued that since the appellant honored the posted cheques as requested by the respondent and money was paid to Gapco and Msimbazi, the respondent impliedly entered into an overdraft agreement with the appellant. The respondent was required to clear the overdrawn amount and short of that interest accrued as it does in any overdraft agreement, that is why the appellant claimed for the amount paid to Gapco 12 and Msimbazi plus interests. Before going further, I think it is important to point out that I subscribe to the position held by this Court in Philibert Krisantus Mpepo(supra) relied upon by Mr. Rutakolezibwa in his submission in which this Court held as follows; "/isI understand the Jaw, an overdraft being an agreed tine ofcredit operating directiy through the current account, does not necessarily require a formal written agreement It is implied where a customer operating a current account in a bank overdraws in his account Therefore, M.L Tannan,one ofthe renownjurists in banking lawjurisprudence remarks at page 203 of this Tannan's Banking Law, the remark which I absolutely subscribe to, as foiiows; 'No express, oral or written agreement is necessary for overdraft. The agreement for the grant of overdraft facility can be implied from the conduct ofthe parties. Where a customer having a current account in a bank even without any express grant of an overdraftfacility, overdrafts on his accountand the chequesissued by him are honoured, without there being sufficient balance in the account, the transaction over amounts to a ban and the customer is bound to make good the ban to the Bank with reasonable interests." From the foregoing, I agree with Mr. Rutakolezibwa that, by issuing posted cheques and having them presented to the Appellant's Bank and honoured, the respondent overdrew his account and created an overdraft agreement with the appellant bank. He was duty-bound to pay back the money with 13 reasonable interest. PWl was a witness of truth, and as I pointed out earlier in this judgment, DWl's testimony supported PWl's testimony on the long banker-customer relationship between the appellant and respondent. Thus, it was not strange for the appellant to honor the posted cheques. The principle of unjustifiable enrichment is founded on equity and natural justice. It is an equitable remedy founded on equity .In the English case of Fibrosa Akcyjna (supra). Lord Wright had this to say on the principle of unjust enrichment; "It is dear thatany dvHized system oflaw is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit ... such remedies... are genericaiiy differentfrom remedies in contrad or in tort and are now recognized to faii within a third category ofthe common iaw which has been calledquasi-contract or restitution". Looking at the pleadings and evidence adduced by both sides, I agree with Mr. Rutakoiezibwa that the trial court erred for not taking into consideration the principle of unjust enrichment since it is not in dispute that the appellant honored the posted cheques by paying the respondent's creditors (Gapco and Msimbazi) the costs for the fuel consumed by the respondent. Thus, 14 there is no doubt that the respondent benefitted from the money paid to Gapco and Msimbazi, thus if the respondent will not pay back that money to the Appellant will definitely lead to unjust enrichment of the respondent. Leaving the respondent to walk court-free is unjust and against natural justice. The principle of unjust enrichment has been applied in our jurisdiction in several cases. (See the case of Trade Union Congress of Tanzania (Tukta) Vs Engineering System Consultants Ltd and others, Civil Appeal No.51 of 2016. It is also noteworthy that three demand letters (exhibit P4 collectively) were served to the respondent, in which the respondent was notified that failure to pay the demanded amount (Tshs. 35,072,723.18) attracts interest. Still, the respondent did not heed to the appellant's demand. In the upshot, it is the finding of this Court that the appellant proved her case to the standard required by the law. This appeal is allowed. The judgment of the lower Court is set aside. I hereby enter judgment for the appellant as follows; i) The respondent shall pay the appellant a sum of Tshs.59,181,385/= being the amount resulting from the respondent's account 15 withdrawal and accrued interests following default to liquidate the same. ii) Payment of interests on the decretal sum in item (i) herein above at the bank rate of 24% per annum from the date of filing the suit to the date of this judgment. iii) Payment of interests at the Court rate of 7% from the date of judgment to the date of full payment of the decretal sum. iv) The respondent shall bear the costs of this case in this court and the lower court. Date at Dar es Salaam this 17^^ day of February, 2025. o 0^ o y % o N B.K.PHILLIP JUDGE 16