20121010 TZHC Dar es Salaam 1

IN THE HIGH COURT OF TANZANIA (DARESALAAM DISTRICT REGISTRY) AT DARESALAAM CIVIL CASE NO. 79 OF 2012 1. IS SACK B. MWAMASIKA ................................. l ST PLAINTIFF 2. REGISTERED TRUSTEES OF DAR ES SALAAM INTERNATIONAL SCHOOL TRUST FUND ............................................. 2No PLAINTIFF 3. EDBP & GD CONSTRUCTION COMPANY LTD ........................................................... 3RD PLAINTIFF Versus· ' CRDB BANK LIMITED ............................ DEFENDANT. RULING 21/09/2012 & 10/10/2012. Utamwa, J. CRDB Bank Limited (herein called the defendant) raised a preliminary objection (PO) against the suit filed by one Issack B. Mwamasika (a natural person), the Registered Trustees of Dar es Salaam International School Trust Fund (a corporate person) and EDBP . . & GD Construction Company Ltd (also a corporate person) hereinafter . branded the first, second and third plaintiff respectively or plaintiffs cumulatively. The defendant maintains that the suit is incompetent before this court, hence liable to be struck out. I will herein below sketch out the nature of the claim according to the pleadings, for the sake of a better understanding of the PO. The first and second plaintiffs' claim against the defendant is in contract for redemption of mortgages, discharge of hypothecation of goods'- bond and for a tort of detinue arising from the defendant's alleged spiteful act of detaining their chattels including certificates of titles in respect of some landed properties, registration cards for motor vehicles, Page 1 of 11 excavator and wheel loader. They are also claiming for special and general damages and for permanent injunction restraining the defendant from selling the properties related to the above mentioned documents. The above mentioned transaction followed the fact that the first plaintiff as the chairman of the second plaintiff stood a guarantor for the second plaintiffs taking an overdraft and term loans from the defendant, and the above mentioned chattels were deposited by the two plaintiffs as securities for the loans agreements to facilitate the second plaintiffs business. Upon the two plaintiffs fully repaying the loans and overdrafts according to the loans, mortgage and guarantee contracts without default whatsoever, the defendant, without justification, chose not to discharge the mortgages and hand over the goods to the two plaintiffs though it was bound under the contract to do so. The defendant remained adamant despite the request by the first plaintiff to comply with the terms of the contract just mentioned above. On the other hand, the third plaintiff's claims against the defendant is for the tort of negligence arising from the defendant's alleged spiteful act of detaining the first and second plaintiffs chattels mentioned · above resulting in the third ... plaintiffs suffering from special and general damages. The transaction related to the third plaintiff is that, while the second plaintiff was conducting its business and repaying the overdraft and loans aforesaid, it (the third plaintiff), in its separate and cooperate self, was granted a separate loan by the defendant worth United=States Dollars (USD) 8, 500, 000. 00 not related to that of the second plaintiff in any way. The first plaintiff and two other natural persons (not parties in this suit) stood as guarantors to the third plaintiffs loan. The third plaintiff also gave its properties to the defendant as security for the loan, which said properties were different from those related to the second defendant's loan. The loan to the third defendant and the repayment was scheduled to start at the end of May, 2012. The plaint also show that, while the second plaintiff was repaying its loan, . the first and third plaintiffs planned for a business of earth moving equipment supply based on hire services in Tanzania (the new business), which said business had to be owned by the third defendant for the purposes of inter alia, conveniently repaying the third plaintiffs loan. The feasibility study conducted by experts hired by the third plaintiff showed that the new business could be very viable as the third plaintiff would earn a net profit of USD 205, 603, 528 from the year 2012 to 2021_. The third plaintiff thus applied for and was granted an offer for a loan (worth USD Page 2 of 11 . 70, millions) by the United Bank of Africa (UBA) in respect of the new business on condition of providing security within six months from the 21 st day of November, 2011 when the offer was communicated to the third plaintiff (in writing), which said third plaintiff accepted the offer. Upon been approached by the third plaintiff, the first and second plaintiffs agreed to provide sufficient security for the third plaintiff's loan with the UBA; It was also agreed as a term of the said security that the first and second plaintiff could benefit some percentage of the net profit realised by the third plaintiff from the new business. In order to ensure compliance with the UBA conditions, the first plaintiff requested the defendant to release and deliver the goods belonging to him and the second plaintiff (i. e. related to the 2nd plaintiff's paid loan), but the defendant, wrongfully and unreasonably refused to do so as aforesaid, as a result of that refusal the UBA has cancelled its offer in favour of the third plaintiff's loan. For the intermingled transactions demonstrated herein above, all the plaintiffs' have sought various reliefs including those mentioned above. The PO was argued by way of written submissions. In his submissions in chief supporting the PO, the learned counsel for the defendant (RK Reweyongeza and Co.) had only one point, that; The parties having agreed to submit their dispute to the commercial Division of the High Court of Tanzania for adjudication, this court is not competent to entertain the suit. In expounding this point the counsel for the defendant argued that it had been agreed by the third plaintiff and the defendant in the loan agreement that any dispute arising from or in connection with their agreement had to be resolved amicably failing of which, and where the amount involved is within the pecuniary jurisdiction of the High Court of Tanzania, then the dispute should be lodged in the Commercial Division of the High Court of Tanzania (the Commercial Division) for adjudication. This was vide paragraph 17 of the letter annexed to the plaint as annexture B and item D (the clause) of the loan agreement attached to the plaint as annexture F. For this reason, the defendant's learned counsel contended that this suit had to be filed in the Commercial Division as parties cannot now avoid the clause in their agreement . . The defendant's learned counsel further charged that, the first and second plaintiffs cannot disclaim the agreement between the third plaintiff and the • defendant in the clause because all the plaintiffs rely upon that agreement and their claims cannot be separated so that part of it can go to the commercial court and the Page 3 of 11 other goes to this Court. He further contended that, even the other agreements mentioned above (between the first and second plaintiffs on one hand and the defendant on the other) were to the effect that disputes between them had to be referred to the Commercial Division. In this respect he relied on annextures CRDB 1-5 to the WSD). The learned counsel added that, had it been not for the clause, this court would have jurisdiction to entertain this matter, but currently it cannot do so, otherwise that will amount to amendment of the clause by this court. He also that by signing the agreement (between the third plaintiff and the defendant), the - parties rightly compromised their rights to institute this matter before this court, because the law says; in civil cases parties are at liberty to compromise their rights by agreement and the courts are duty bound to respect such compromises u12-less it amounts to an abuse of court process or it violates the law or public policy. He supported this stance by the decision of the Tanzania Court of Appeal (TCA) in Ibrahim Said Msabaha v. Luther Symphorian and another, Civil Appeal No. 4 of 1997, at Dar es Salaam (unreported). The plaintiffs cannot thus be heard avoiding the clause because it is neither an abuse of the legal process, nor a violation of law, nor against public policy, he contended. Moreover, the learned counsel argued that the clause was indeed supportive to public policy on commercial litigations for, the Commercial Divisions was introduced to take care of commercial cases of this nature. He concluded by underscoring his concern that the suit is incompetent before this court and must be struck out. In their joint reply to the defendant's submissions in chief, the plaintiffs (through the services of Mgongo Fimbo and Co. Advocates and Marando, Mnyere and Company) argued that the PO must be dismissed with costs on the following four grounds; firstly the PO contravenes a well established rule that a PO must be based upon a pure point of law which must have been pleaded (on the assumption that all facts pleaded by the other side are correct) or which arises by clear implication of pleadings and which if argued as a PO may dispose of the suit. Examples of Pos, they submitted, are; objections to the jurisdiction of court, or a plea of limitation, or a submission that the parties are bound by the contract (giving rise to the suit) referring the dispute to arbitration. He also argued that a PO cannot be raised if any fact had to be ascertained or if what is sought is the exercise of judicial discretion. To fortify this principle the plaintiffs' counsel cited the case of Mukisa Biscuit Manufacturing Co. Ltd v. West End Distributors Ltd {1969) Page 4 of 11 EA 696. They added that, in the case at hand the PO relies on the clause and annextures CRDB 1-5 which is not proper in law. They fortified this argument by citing also the case of African Development Bank v. MIS East African Development Bank and another, TCA Civil Application No. 122 of 2010 (unreported) where it was decided that a PO could not base on evidence like affidavits as that is not a pure point of law. The plaintiffs' second reason was that, the plaintiff's case does not involve a pure commercial case as there are other causes of action such as the tort of detinue and negligence and the plaint does not allege any agreement between first plaintiff and the defendant. As to the third ground, the plaintiffs submitted that it is trite law that parties cannot, by agreement or otherwise, confer or oust jurisdiction of court, they cited the TCA decision in the case of Tanzania Electric &upply Company Ltd v. Independent Power Tanzania Ltd, Consolidated Civil Applications Nos. 19 and 27 of 1999, at Dar es Salaam (unreported) to back up their contention. They also referred this court to the case of East African Breweries Ltd v. G. M. M. Company Ltd, High Court of Tanzania (HCT) civil case No. 67 of 1999, at Mwanza (unreported) where it was held that, as long as the defendant had a registered place of business in Tanzania, the plaintiff had a right to file a suit in the HCT because, the parties were not competent in law to agree to oust the jurisdiction of the Tanzanian courts. The counsel also cited the .case of Tradex International Limited v. Pasific International Line (pte) Ltd, Commercial Case No. 308 of 2002, at Dar es Salaam (unreported) which held to the effect that, mere inclusion of a clause in standard contracts does not have an automatic effect on court's jurisdiction and the court has to consider various factors in deciding which law or court to apply. They thus argued that, loan agreements with banks like the defendant are standard contracts which parties sign without negotiations, but even if they were negotiated, parties could not do so to exclude court's jurisdiction. The plaintiffs' counsel also contended that, following the exorbitant filing fees of the Commercial Di vision, the first plaintiff could not afford filing this suit there, hence his convenience to file the matter before this court. In their fourth reason, the plaintiffs contended that the law does not grant exclusive jurisdiction to the Commercial Division over commercial cases because Rule SA of the High Court Registries Rules 1991 (GN. No. 335 of 1991 as Page 5 of 11 amended by GN. No. 141 of 1999) herein after called the Rules, made under the Judicature and Application of Laws Act, Cap. 358 (JALA), was not couched in mandatory terms as it makes provisions to the effect that commercial cases "may" be instituted in the established Commercial Division or its sub-registries. The counsel submitted further that the term "may" implies discretion, he supported the argument by the provisions of S. 53 (1) of the Interpretation of Laws Act, Cap. 1 R. E. 2002 and the decision in the case of African Development Bank (supra). The counsel also submitted that, the Rules, being subsidiary legislations could not oust the jurisdiction of this court granted by article 108 of the Constitution of the United Republic of Tanzania, 1977 (the Constitution) and S. 2 of the JALA. The plaintiffs' alternatively prayed that, if this court is inclined to act upon rule 5A of the Rules, then it may transfer the proceedings to the Commercial Division under rule 7 of the Rules. In the rejoinder submissions, the defendant's counsel argued that, the point raised fits as a PO because it touches the jurisdiction of this court and the plaintiffs do not dispute the clause. This is thus a point of law, he submitted. He added that the raised point is thus a PO under the auspices of the Mukisa case (cited supra by the plaintiffs) because the question of jurisdiction arises from the pleadings as defined by Order VI rule 1 of the Civil Procedure Code Act, 1966, Cap. 33 R. E. 2002. He contended further that annextures to the defendant's WSD (mentioned above) are part of pleadings as per the celebrate authors of Morgan's Law of Pleadings, by M. Singhal and G. C. Mogha, 15 th edition, published by R. C. Mogha for Swarj Publications, 1998, at page 4. The defendant's learned counsel distinguished the case of Tradex International Limited ( cited supra by the plaintiffs) on the grounds that the case considered a bill of lading agreement where parties do not negotiate, but in loan agreement like the one at hand, parties get opportunity to negotiate. They also argued that, the above cited case was before the Commercial Division and related to a clause of contract that ousted courts in Tanzania but in the case under consideration the oust is in respect of the High Court Registry only. It was a further contention by the defendant's counsel that, rule 7 of the Rules read together with S. 4 (2) of the JALA direct that all commercial cases should be heard and determined by the Commercial Division even where parties had not agreed so. Page 6 of 11 '• From the records and submissions by the parties it is not disputed that parties in fact entered into the above mentioned transactions though some facts related to them are in dispute. It is also not disputed that the clause in fact exists in the agreement between the third plaintiff and the defendant. The main issue is thus whether or not this court has jurisdiction to try this case in the subsistence of the clause. I will first discuss the argument raised by the plaintiffs that the protest by the defendant is not a legal PO for not basing on a point of law. As demonstrated above, the defendant's protest is based on the clause. In the first place I agree with the argument by the defendant's counsel that annextures are part of pleadings because in our civil practice, annextures play a vita] role in providing material details of the pleadings which include a plaint, a WSD, a reply to WSD, a defence to a set-off and a defence to a counterclaim as defined under Order VI rule 1 and VIII rule 13 of Cap. 33. Moreover, through pleadings and their annextures each party can properly understand his opponent's case and fairly arrange his own case. Annextures, as part of pleadings do thus enhance the doctrine of fair trial/fair hearing which is religiously preached by courts of this land and jealously protected by article 13 (6) (a) the Constitution. It is for this reason that in practice, courts determine whether pleadings (plaint) disclose a cause of action by considering it alone together with anything attached to it (i.e annextures ), see Dharssi Manji and Sons v. Amri Saidi [1972] HCD. N. 234 fol1owing African Overseas Trading Co. V. Tanshukh S. Achurya (1963) E. A. 468. Again, for the awareness that annextures are part and parcel of pleadings the TCA held to the effect that, it is fatally improper for a court to enter a default judgement under Order 8 Rule 14( 1) of Cap. 33 when a defendant fails to file a WSD in time on the ground that he had been served with an incorrect annexture to the plaint; see Tanzania Olympic Committee v. A Simbaulanga [1997] TLR 184, (at page 185-186). However, my approval that annextures are part of pleadings does not necessarily make the protest raised by the defendant a legal PO because, in law, as rightly argued by the plaintiffs' counsel a PO has to base on a pure point of law arising from pleadings as precisely underscored in the Mukisa case ( cited above). In that case objections to the jurisdiction of court, .or a plea of limitation, or submissions that the parties are bound by the contract giving rise to the suit referring the dispute to arbitration, were cited as good examples of POs legally so called. It is apparent that in his submissions the defendant's counsel in the case at Page 7 of 11 hand wanted to fit his PO into the principle in Mukisa case because the clause binds the parties to refer their disputes to Commercial Division (this was apparently because an example of a contract binding parties to refer their dispute to arbitration was cited in Mukisa case). But I do not think if the PO at hand fits in the Mukisa case principle for that reason because, there is a great different between parties agreeing to refer their dispute to ·arbitration on one hand, and those contracting to refer their dispute to courts of law of their own choice. The difference between the two scenarios arises from the fact that, arbitration is one of statutory alternative processes of dispute settlement apart from the normal court proceedings; this is by virtue of the Arbitration Act, Cap. 15, R. E. 2002 and the Second Schedule to Cap. 33 [The Civil Procedure (Arbitration) Rules]. It is for this statutory base, that parties can rightly agree to resolve their dispute by arbitration instead of using normal court proceedings, and one part can thus rightly raise a PO if another party seeks to resolve the dispute through normal courts. A protest based on this argument can thus safely be termed as a PO legally so called as envisaged in the Mukisa case principle because it is based on a point of law (in that, arbitration is a statutory process). On the other hand, parties who agree to resolve their dispute through normal court proceedings, must follow the tune of the law governing court proceedings. Their agreement related to a choice of the court in which to file the dispute for resolution, though may be made part of the pleadings, does not amount to any law. It follows therefore that, a protest against a suit, based on an argument that it (the suit) was filed in a court that was not agreed by the parties cannot be termed as a PO legally so called because it is not based on any point of law. For these grounds, the complaint by the defendant in the case at hand cannot be considered as a PO in law as rightly argued by the plaintiffs, and it is more so considering the fact that the defendant admitted in his submissions that, this court has jurisdiction to try the case save for the clause only. I would have overruled the PO for the above discussed ground only, but even if I was to take this complaint as a legal PO (though I do not take it so), I could not uphold it for the following ground; as rightly contended by the plaintiffs basing their arguments on the cases of Tanzania Electric Supply Company Ltd (supra), East African Breweries Ltd (supra) and Tradex International Limited Page 8 of 11 (supra), I agree that in law parties cannot agree to confer or oust the jurisdiction of any court. For this reason I will not positively consider the arguments by the defendant in distinguishing the case of Tradex International Limited (supra) because, whether a contract between the parties is negotiable or not, they do not have mandate to vest or erode the court's jurisdiction against the clear terms of the law. This finding is based on the fact that the law has granted mandate to this court to try cases the nature of which is like the one at hand for the following grounds; according to Article 108 (2) of the Constitution this court has unlimited original jurisdiction, without prejudice to the jurisdiction of the CAT, to hear any matter which according to legal traditions obtaining in Tanzania, is ordinarily dealt with by it unless the Constitution or any other law expressly provides that the matter shall first be heard by a court specified for that purpose, and those are the only constitutional conditions for this court to exercise its original jurisdiction. This stance was underscored by the CAT in Director of Public Prosecutions v. Daudi Pete [ 1993] TLR 22 at p. 29. It is also clear that neither the Constitution nor the Law directs that a case like the one at hand shall be heard first by another court before it is heard by this court. Again cases related to commercial transactions and torts like the one under discussion are, according to legal traditions obtaining in Tanzania triable by this court when the pecuniary jurisdiction is above that of subordinate courts as it is the case in this matter at hand. Moreover, under the circumstances of this case, its hearing by this court cannot, in any way prejudice the Jurisdiction of the CAT. In this case therefore, all the Constitutional conditions precedent for this court to exercise its unlimited original jurisdiction have been met, this court thus has the requisite jurisdiction. The above discussed unlimited original jurisdiction of this court is also echoed under S. 2 and 3 of the JALA. Again, as correctly put by the plaintiffs, the provisions of rule SA of t~e Rules cannot erode the jurisdiction of this court because the provide to the effect that proceedings concerning commercial cases may be instituted in the Commercial Division. In law, the term "May" implies discretion as differentiated from an obligation. After all, the claims in this suit are not purely concerning commercial cases, they are a combination of commercial claims and claims based on tort as demonstrated above, which said combination cannot be easily separated so that they can be lodged in different courts as rightly put by the defendant himself. Page 9 of 11 , The defendant also seemingly wanted to take shelter under the provisions of rule 7 ( 1) of the Rules and its proviso which provide inter alia that where original proceedings in a commercial case are instituted in a District or Sub-registry of the High Court, such proceedings shall as soon as practicable be transferred to the Commercial Division before further steps are taken in the proceedings, except where all parties agree to have the commercial case determined by the High Court at such District or Sub-registry. These provisions use the term "shall" which may imply an obligation in some circumstances. But I do not consider that under the circumstances of this case the term "shall" implies an obligation on the following grounds; that the contemporary interpretation of the law is to the effect that where the term "shall" is used in statutory provisions, it implies an obligation only if failure to comply with the provisions will occasion a miscarriage of justice, see S. 53 (2) of Cap. 1, the cases of Mkamangi Elifuraha v. Mwinyishehe Mwinyishehe 1991 TLR 191 (CA, at pages 192-193), Bahati Makeja v. The Republic, TCA Criminal Appeal No.118 of 2006, at Mwanza (unreported), Peter Thomas alias Peter Toshi v. Republic [1996] TLR 370 (HC) and many others. In the matter at hand the defendant did not tell this court which miscarriage of justice will be occasioned to him if the matter is not tried by the Commercial Division. At least the plaintiffs made it clear in their submissions that the exorbitant filing fees of the Commercial Division form an obstacle to justice as far as the first plaintiff is concerned, which said fact was not vehemently disputed by the defendant. Again, the law is expressly clear that, in the event any law conflicts with the Constitution, the Constitution shall prevail, see Article 64 (5) of the Constitution. Rule 7 (1) of the rules or any other law envisaged by the defendant's learned counsel could thus not overrule the express provisions of article 108 (2) of the Constitution vesting unlimited original jurisdiction to this court as underlined above~ Furthermore, the provisions of Rule 7 ( 1) of the Rules, being a mere subsidiary legislation could not overwhelm the provisions of S. 2 and 3 of the JALA being an Act of Parliament underlying the unlimited original jurisdiction of this court because, the law directs that a subsidiary legislation shall not be inconsistent with any Act of parliament; otherwise it shall be void to the extent of any such inconsistency, see S. 36 (1) of the Interpretation of Law Act, Cap. 1 R. E 2002. Under the circumstances depicted above, this court will not easily be moved by the defendant's wind merely for the force of the clause, and it is more so Page 10 of 11 . .• , I " considering the fact that the defendant admitted in his submissions as said before that, this court has jurisdiction to try the case save for the clause only. Jurisdiction of courts are statutory matters aimed to serve justice, they are not thus determined by mere cosmetic agreements of the parties. For these reasons, though I agree with the defendant's argument that the Commercial Division was established to take .care of commercial cases of this nature, I do not agree that the law meant to oust the jurisdiction of this court over commercial cases, and it is more so considering the fact that this case is a cocktail of claims, commercial cases and torts as hinted . previously. I also concede to the defendant's argument that parties are at liberty to compromise their civil rights, but in the matter at hand, their agreement in the clause, whether negotiated or not, contravened the provisions of law cited herein above, hence this court cannot respect the same. The defendant cannot thus hide _,. his argument under the umbrella of the case of Ibrahim Said Msabaha ( cited above), that decision is thus distinguishable in this case. Having observed a~ ~a~ove, I affs)Ner the main issue positively to the effect . court h as Juns t h at, th 1s . . d./Q,1/ rcti.<:m to.try t.h"1s c~~e. r. l~h e PO 1s . t h us overru 1e d , an d costs be in the main suit. It is ~~~r{~lf :, ,-,;\ WA ◊ J-:~·-__ ·. :,._. JUDG .£..,· ,c'-- ~ O, 10/10/201 Date; 10/10/2012. CORAM; Hon. Utamwa, J. For plaintiffs; Mr. Mwakisu (advocate). J For Defendant; MIS. Jackline Rweyongeza (advocate). BC; Mrs. Kaminda. Court; ruling delivered in the presence of Mr. Mwakisu (advocate) for the plaintiffs and MIS. Jaskli:n~Rwe½~ngeza (advocate) for the defendant in chambers · th 9'\":,V --- -...., t3',. · this 10 day of Octo1:5_,e~(201 ~- , ~\ (. r_,/ · v . ._. / :~>, ," ( .' ~:.,-;:--,,<;,.~ .~"' . ,, . ' ' ' .,~ ·, -~ ,.:.' . ·:::·- ~ '; .~ ::,- . ~ ·. .; 10/10/ G'~•· .......... ~ r-; Page 11 of 11