Jalalu Swalehe vs Finca

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA BUKOBA SUB-REGISTRY AT BUKOBA PC CIVIL APPEAL NO. 13781 OF 2024 (Arising from Civil Appeal No. 13 of2023 District Court of Bukoba and Originating from Bukoba Urban Primary Court in Civil Case No. 402 of2022) JALALU SWALE HE................................................................. APPELLANT VERSUS FINCA MICROFINANCE BANK...............................................RESPONDENT JUDGMENT 23rd October and 1st November, 2024 BANZI, J.: This is a second appeal which traces its root from Bukoba Urban Primary Court (the trial court) where the appellant sued Finca Microfinance Bank, the respondent, complaining that, the latter had breached their contract and was in the process of attaching and disposing of his properties which he had mortgaged as security. He prayed for the trial court to order the respondent to execute the terms of their contract. In his evidence before the trial court, the appellant stated that, he is a long-term customer to the respondent and the respondent has been giving him the loan and repaying the same as per their agreement. On 17/07/2022 while still on outstanding loan, he went to the respondent seeking for Page 1 of 19 another loan amounting to TZS 28,500,000.00. In order to acquire the loan, he was required to produce the sureties. However, while in the process of fulfilling the requirement to acquire that loan and to renew his licence, the respondent credited his account with the requested loan while he had not finalised the requirement to secure the loan. As he had yet commenced business, the respondent debited TZS 3,017,000.00 from his account as the money he was required to repay each month. According to him, while in the process of renewing his licence, he encountered some problems as the licence was not renewed timely. He approached the respondent informing her about the problems he had encountered but he was given a deaf ear. On 26/11/2022, the respondent wrote him a letter to repay the outstanding loan of TZS 27,000,000.00 before 10/12/2022 otherwise, the properties he had mortgaged would be sold to repay the loan. To him, warning to sell the security, was a breach of their contract. With such breach, he prayed to be compensated for the disturbance the respondent had caused to him. In his view, as he had no licence for fish business of which he took the loan for, he ought not to pay the loan because it was fish business only that would generate money for payment of the loan, hence he could not use the money generated from other business to recover the loan. Page 2 of 19 His witness, Agness Marcel (SM2) in her evidence conceded that the appellant was loaned by the respondent. She contended that, the respondent breached their contract with the appellant because they gave him the loan while the appellant had no licence for the business which he had requested the loan for. Further, she stated that, there were no guarantors who authorized the appellant to take the loan as required by procedures given by the respondent. In their defence, Frednand Mgaya (SU), the loan officer testified for the respondent. He conceded that, the appellant is their long-term customer who has been taking the loan for almost nine times. By 2022, he had an outstanding loan to the tune of TZS 10,000,000.00. On 15/07/2022, the appellant approached them seeking to top up the loan. He filled the loan form and he requested for TZS 28,500,000.00 so as to fund his three business; fish business, shop business and sports show business. In order to be given a loan, the appellant was required to have valid licence but when the said licence was presented, it was found have been already expired. Considering that he was their habitual customer, they decided to serve him despite having invalid licence, hence, on 22/07/2022 they deposited the requested money into his account. After the money was deposited, the appellant started to use that money on the same date by Page 3 of 19 withdrawing TZS 3,000,000.00. He continued withdrawing that money and after one month, in that account, there remained only TZS 4,416,000.00. The appellant managed to pay only two instalments of August and September. After he had failed to pay the subsequent instalments, the loan officer started to make follow ups on what challenges he had faced. They wrote him a warning letter and ordering him to pay the instalment according to their agreement but the appellant in his reply to that warning, he prayed to be forgiven the fine and to be extended time though he did not state the time he was praying for extension. They wrote him a letter requiring him to go to their office so as to sort out the challenges he was facing but the appellant did not show up. Therefore, by virtue of paragraph 9.3, the respondent had the right to sell the mortgaged properties to recover the loaned money, penalties and other costs incurred by the respondent in collecting that loan. While they were in the process to serve him a 60 days' notice to attach and sell those properties pledged as security for the loan, they were served with the order of the court to rescind the sale until the case is finally determined by the court. In respect of the sureties who did not witness the contract, SU stated that, where the borrower has securities sustainable for the loan and his spouse has consented to the loan, there is no need of other guarantors' Page 4 of 19 authorization in order to be given that loan. Therefore, as the loan was consented by his wife, Mwaija Ibrahim and he had sustainable securities, there was no need to have other guarantors. In his view, there was no proof if the appellant got the loss that prevented him to pay the loan because he merely alleged the loss without any proof to the same. In other way round, the appellant contended that as there is money that was deducted as insurance, that money ought to be used to pay the outstanding loan. On his side, Sil claimed that, the insured money can be used to pay the loan if the borrower is unable to pay due to death while he is still within the contract period or where his business burned by fire or any other natural disaster. If there is none among the above-mentioned challenges, the borrower is responsible to pay the loan as per their agreement. In cross examination, SU responded that, though the appellant had no valid licence, they approved his loan because he was in the process to renew his licence. After hearing both parties, the trial court found that the appellant had failed to prove his claims, hence his case was dismissed and ordered him to pay TZS 28,500,000.00, the loan advanced to him by the respondent. Aggrieved by the decision of the trial court, the appellant unsuccessfully appealed to Bukoba District Court (the first appellate court), hence this Page 5 of 19 second appeal against the concurrent findings comprising seven grounds thus: 1. That, the Honourable Court erred in law and fact by failure to consider the sufficient reasons and evidence before it by the Appellant which resulted him to loose the case. 2. That, the Honourable Court erred in law and fact by dismissing his appeal without considering that the Respondent acted unprofessional by depositing the loan to the Appellant's account without his final consent of which his consent was to be active after fulfilling all required procedures of business licences and bond before finalising such deposition ofloan to his account as it was being done under previous loans. 3. That, the Honourable Court erred in law and fact by dismissing the appeal without due regard to the appellant position as a weak Party on the purported contract and hence it was easy for the Respondent as a strong Party to fabricate and testify concocted testimonies and unnecessary evidence to win his case. 4. That, the Honourable Court erred in law and facts by failure to consider that the (Appellant) wrote a letter to the Respondent informing him about the loss he incurred after being issued with invalid licence, and that instead Respondent to listen and cooperate to solve the matter they only elected to issue him warning letters intimidating to capture all securities and sell them without taking into Page 6 of 19 considerations the risks he was facing as their long-term customer. 5. That, the Honourable Court erred in law and facts by ignoring the Appellant's watertight evidence during trial in which he tendered an invalid business licence which he was issued by the concerned authority. 6. That, the Honourable Court erred in law and facts for failure to reason deeply about the burden which was imposed to the appellant after the respondent deposited the loan to his account without appellant's final consent and that some withdrawals, he made were attempts to try to overcome such burden but the fake and invalid licence he was issued then hindered him to trade as it was aimed. 7. That, the Honourable Court erred in law and facts by finding in its judgment that all the appellant's grounds of appeal have no merits at all by relying only on concocted testimonies and unfounded reasoned arguments. At the hearing, the appellant appeared in person, unrepresented whereas, the respondent was represented by Mr. Stephen Kaswahili, learned Advocate. The appellant began his submission by adopting his grounds of appeal as part of his submission. He added that, although in his testimony before the trial court, he presented and produced documents such as letter dated 17/10/2022, loan application form dated 18/07/2022 and the agreement, the Page 7 of 19 first appellate court failed to consider such evidence. He further stated that, the respondent produced fabricated evidence as it is shown at page 7 of the judgment which stated that, he wrote the letter on 11/01/2023 and the respondent replied on 03/11/2023 while by that time, the case at the trial court had already been finalised. Apart from that, the respondent did not tender any letter to verify that, he had an outstanding loan of TZS 10,000,000.00 before he applied for another loan as reflected at page 6 of the judgment. In addition, at page 7 of the judgment, the magistrate stated that, the loan was issued and started to be used on 21/07/2023 while in reality the loan was issued on 21/07/2022. According to him, what is written in the judgment is quite different from what is stated in the testimony. Hence, the respondent adduced concocted evidence. He further argued that, paragraph 8.3 of the loan agreement provides that, in case he faces any challenge affecting his financial ability preventing him from repayment, he was required to inform the respondent on that challenge. Adhering to that provision, when he faced the challenge, he informed the respondent but instead of giving him approval as stipulated in the agreement, he was given warning letters and beaten under the order of the manager. Besides, he had no valid licence, therefore, in line of paragraph 10.5 of their agreement, he could not conduct business based on invalid Page 8 of 19 licence. Finally, he prayed for the court to allow the appeal with costs by quashing the judgments of the lower courts. He also prayed for the court to grant all prayers in the petition of appeal. Mr. Kaswahili who resisted the appeal, began his reply with a contention that, third, fourth and fifth grounds of appeal are new as they were not raised and determined by the first appellate court. In that regard, this court has no jurisdiction to determine them as it was stated in the case Seif Mohamed Seif v. Zena Mohamed Jaribu (Civil Appeal No. 84 of 2021) [2021] TZHC 731. However, he decided to argue them leaving it to the Court to decide. Responding to the first, third and sixth grounds, he submitted that, as per the loan agreement tendered by the appellant and admitted as Exhibit KI, there is no dispute that, the appellant took the loan amounting to TZS 28,500,000.00 from the respondent. After the loan was deposited in his account, on the same date, he withdrew TZS 3,000,000.00 as reflected in the evidence of SU. In respect of the complaint that the evidence was concocted, he responded that, the appellant was issued three letters which were warning letter of 3/11/2022, summons letter dated 19/11/2022 and demand letter dated 29/11/2022. He added that, the year 2023 appearing in the proceedings and judgment is a mere typing error which cannot Page 9 of 19 invalidate the rights of the parties considering that, the letters which were admitted before the trial court indicate that, they were written in 2022. Concerning the loan advanced to the appellant, the learned counsel argued that, the evidence on record proved that, before he was advanced the loan to the tune of TZS 28,500,000.00, the appellant had an outstanding loan of TZS 10,000,000.00 which he had to pay in six instalments. In other words, he applied for top up loan. In his view, since the loan was issued to the appellant and he acknowledged to have received that loan, he had a duty to repay it. He cannot denounce it with oral evidence to vary the written contract. He cited section 19 (1) of the Law of Contract Act [Cap. 345 R.E. 2019] and the case of Nuru Finance & Business Services Co. Ltd v. Benjamin Adamson Masuba (Civil Appeal No. 284 of 2020) [2024] TZCA 169 to support his argument. Reverting to the second and fifth grounds, the learned counsel submitted that, by the time when the appellant applied for the loan in question, he had already started the process to renew his business licence as reflected in Exhibit K3 and considering that he was their long-term customer, it could not prevent the respondent from issuing the requested loan. Besides, the appellant was not disqualified to be issued with the new Page 10 of 19 licence. According to him, if the appellant would have been disqualified to be issued with new licence, he could have returned the loan. Concerning the fourth ground, he argued that, despite the appellant claimed to have failed to repay the loan because the fish got rotten, that fact was disputed by SU for want of proof. According to paragraph 8.3 of the agreement, where the borrower faces any challenge, he must obtain approval from the respondent concerning the said challenge. However, there was no such approval. In that regard, the respondent had all rights to take valid actions to recover the loan such as by issuing the three letters and when she was about to issue 60 days statutory notice, she received summons after the appellant had filed the case in court. According to the learned counsel, the loan could not be recovered through insurance because there was no calamity which frustrated the contract. In respect of the first ground, Mr. Kaswahili contended that, the first appellate court was right to dismiss the appeal after finding that, the appellant failed to prove his claims at the trial court. He further submitted that, the appellant deviated from his pleadings because his claim was about specific performance of the agreement but in his evidence, he changed the goal post and claimed about the invalidity of the contract. Consequently, he Page 11 of 19 prayed for this court to uphold the decision of the first appellate court and the appeal be dismissed with costs. In his rejoinder, the appellant contended that, he applied for the loan of TZS 30,000,000.00 but he was reimbursed with TZS 28,500,000.00 following the deduction of TZS 1,500,000.00. Responding to the validity of the loan agreement, the appellant contended that, being a long-term customer does not qualify him to get invalid loan as the licence in question was never renewed. He further contended that, there was evidence that he faced challenges of the rotten fish and since that was his main business, he could not manage to repay the loan. Therefore, as the contract did not specify the calamities which are covered by the insurance, the challenge he faced is among the calamities covered by insurance. Having considered the submissions of both sides in the light of records of the lower courts, the main issue for determination is whether the appeal has merit. Upon examining the grounds of appeal, it is clear that, the appeal at hand comprises of matters of facts The principle on matters of facts on second appeal is well settled that, a court of second appeal will not routinely interfere with the findings of the two courts below except where there has been non-direction or a misapprehension of evidence causing injustice or violation of some principles of law or procedure. See the cases of Amratlal Page 12 of 19 Damodar Maltaser and Another t/a Zanzibar Silk Stores v. A. H. Jariwalla t/a Zanzibar Hotel [1980] TLR 31 and Bomu Mohamedi v. Hamis Amiri (Civil Appeal No. 99 of 2018) [2020] TZCA 29 TanzLII. Considering the fact that, the appellant is faulting the findings of the lower court on facts, this court is enjoined to consider whether there was misdirection, non-direction or misapprehension of the evidence on the findings of the lower courts before reaching into their findings. Having examined the evidence on record and the submissions made by both sides before this Court, it is undisputed that, on 21/07/2022, the respondent advanced the loan of TZS 28,500,000.00 to the appellant who was supposed to repay TZS 3,015,350.93 per month for 12 months. This is proved by Exhibit KI (the loan agreement and loan repayment schedule) which was produced by the appellant himself. It is also undisputed that, the loan in question was advanced to him following his application which he made on 15/07/2022 through loan application form (Exhibit KU1). According to Exhibit KU1, the appellant applied for loan of TZS 28,500,000.00 from the respondent for purpose of running fish business, the shop and sports shed. According to "Hatiya Madai", which was filed by the appellant before the trial court, he clearly stated that, the respondent advanced him TZS 28,500,000.00 on 21/07/2022 and the loan was anticipated to have been Page 13 of 19 completely repaid by 22/07/2023. In the same claim form, the appellant complained that, the respondent was in the process of attaching the properties he had mortgaged before the time of their agreement had elapsed. Surprisingly, in his evidence before the trial court, he contended that, the loan was deposited into his account without his consent as he was not yet issued with a renewed licence and thus, he was not qualified to be given the said loan. It is without doubt that, according to Exhibit KI, having a valid licence was not a prerequisite for the respondent to issue the said loan to the appellant. Besides, if he knew he was not qualified, he couldn't have proceeded to withdraw the loaned amount and started to use it for his personal benefits by purchasing the fishes which he claimed to have rotten because he could not transport them without the valid licence. His act of spending the loaned money amounts to acceptance of the loan in question and denouncing it at later stage is as good as an afterthought. Apart from that, there is no evidence that was tendered to prove that, the fishes in question were actually got rotten and the respondent witnessed the same. It was also the appellant's evidence that, after he had failed to pay, the manager followed him inquiring him on why he was not timely paying, that is when he informed them that, he had not started the business because his licence was not yet validated. Thereafter, he went to their office to inform Page 14 of 19 them that he faced challenges and suffered loss. With such evidence, it goes without saying that, the respondent knew nothing about the loss the appellant had incurred. Hence, they were proper to require him to reimburse the loan. Moreover, even if he would have incurred loss as he claimed, I do not think if it would be proper to compel the insurance to cover that loss because, having decided to purchase the fishes while knowing that he could not transport them without the valid licence, it is clear that he contributed to that loss. Legally, the insurance cannot cover for losses that are negligently caused. Apart from that, according to paragraph 10.6 of the loan agreement, the appellant was supposed to report for the natural disasters which made the contract to be unexecuted. Obviously, the act of rotten fishes is far­ fetched to be part of natural disasters. Furthermore, by scrutinizing his evidence at the trial court and his submission before this Court, the appellant is complaining for the respondent to deposit that money while he had no valid licence. That is contrary to the nature of complaints he had filed before the trial court. As it was rightly argued by Mr. Kaswahili, the appellant has changed the goal post, as his evidence was quite different from what he had pleaded in his claim form. It should be noted that, the parties are bound by their pleadings. This has been Page 15 of 19 stated in various decisions of this Court and the Court of Appeal. For instance, in the case of James Funke Gwagilo v. Attorney General [2004] TLR 161 it was stated: "That patties are bound by their own pleadings and no party should be allowed to depart from his pleadings thereby changing his case from which he had originally pleaded." That being the case, upon filing a complaint against the respondent that she wanted to attach his properties while the time of payment had not come to an end, it was expected that his evidence would confine itself to that angle. However, changing the story and starting to complain on validity of licence and the loss he had incurred, definitely, that was out of his pleadings. Apart from that, the appellant also complained about the respondent to adduce concocted evidence simply because, the judgment is referring to the different year from the year when the appellant began to withdraw the loaned amount and letters of complaint and warnings were written. I had opportunity of perusing the judgment of the trial court. It is apparent that, at page 7 of the typed judgment when the trial magistrate was referring to the evidence of SU, she stated as follows: Page 16 of 19 "Na kuwa mnamo tarehe 21/07/2022 waiimpa mdai mkopo wa Tsh 28,500,000/= (mi/ioni ishirini na nane na iaki tano) kama alivyoomba kwa riba ya asi/imia 3.83 kwa mwezi kwa muda wa mize 12, hivyo mkopo huo ulitakiwa kumaiizika tarehe 22/07/2023 na mdai aiiweka pesa hiyo kwenye akaunti yake na aiianza kutumia heia hiyo siku hiyo hiyo tarehe 21/07/2023 na a/itoa kiasi cha tsh 3,000,000/= na aliendelea kutoa pesa kwa kipindi cha mwezi mmoja na hadi inafikia siku ya rejesho take ia kwanza tarehe 22/08/2022 mdai aiikuwa amebaki na tsh 4,416,000/'= kwenye akaunti. ''(Emphasis is added). According to the extract above, it is undisputed that, the loan in question was advanced to the appellant on 21/07/2022 and it was supposed to be repaid by 22/07/2023. Contextually, the fact that, the appellant started to withdraw the money on the same date, it means, it was on 21/07/2022. In that regard, I am constrained to agree with Mr. Kaswahili that, the date 21/07/2023 mentioned in the extract above as the date when the appellant started to withdraw the money is a mere typing error which has no legal effect to invalidate the judgment of the trial court. The same goes to the date 3/11/2023 appearing at page 12 of the judgment as the date of warning letter considering that, the letter itself (Exhibit K4) is dated 03/11/2022. Page 17 of 19 Delivered this 1st day of November, 2024 in the presence of the appellant, Hon. Audax V. Kaizilege, Judge's Law Assistant and Ms. Mwashabani Bundala, RMA and in the absence of the respondent. Right of appeal duly explained. I. K. BANZI JUDGE 01/11/2024 Page 19 of 19 Thus, it is the considered view of this Court that, those were mere typing errors which did not occasion failure of justice to both parties. In the final analysis, I find nothing to fault the concurrent findings of the lower courts. Both courts evaluated and considered the evidence of the appellant which in totality, it failed to prove the claim of specific performance of the contract contained in his pleadings (Hati ya Madai). In that regard, the lower courts reached into proper consensus findings. In other words, there is no misdirection, non-direction or misapprehension of the evidence on the findings of the lower courts which could call for my interference with the concurrent findings of the two courts below. That being said, I find this appeal with no speck of merit and I dismiss it entirely. However, considering the circumstance of the case, each party shall bear its own costs. It is so ordered. I. K. BANZI JUDGE 01/11/2024 Page 18 of 19