Misc

IN THE HIGH COURT OF TANZANIA (LAND DIVISION)

AT PAR ES SALAAM MISC. LAND APPLICATION NO. 747 OF 2023 {Arising from Order of the Court ofAppeal of Tanzania in Civil Revision No. 6 of 2015 and Land Case No. 4 of 2010) JEHANGIR AZIZ ABDULRASUL............................................. APPLICANT

VERSUS MS BENANDYS LIMITED................................................ . 1st RESPONDENT JOSHUA E. MWAITUKA t/a RHINO AUCTION MART.........2nd RESPONDENT

RULING 18/03/2024 & 23/4/2024 A. MSAFIRI, J. The applicant have brought this Application under Section 2(3) of the Judicature and Application of Laws Act, Cap 358 R.E 2019 (herein JALA) and Section 95 of the Civil Procedure Code, Cap 33 R.E 2019, (herein the CPC) praying for this Court for the following orders:- 1. This Honourable Court be pleased to lift the veil of incorporation for (Ms Benandys Limited) the 1st respondent herein and hold liable, Ian A. Moshi, Awamsuri B. Moshi, Maria A. Moshi, Alex S. Moshi, Apaisaria Sofari and Ian A. Moshi, Ben Ian Moshi, Ben and Company Limited, Andy Ian Moshi being the Directors and shareholders for the 1st respondent respectively so as to satisfy the decretal sum of 7Z5^(Jj- i 3,909,318,674.

2. Costs of this Application.

3. Any other order(s) and reliefs as this Honourable Court may deem fit andjust to grant. The Application has been taken out at the instance of Lyson Law Group and is supported by the affidavit of Victor Mwakimi, advocate for the applicant. The Application was heard exparte against the respondents upon the court being satisfied that they were properly served and for the reasons known to themselves, failed to enter appearance and filed their counter affidavits. At the exparte hearing which was oral, the applicant was represented by Mr Denis Kahana, learned advocate who was assisted by Mr Makori Lucas, learned advocate. Mr Kahana submitting in support of the application, started by praying to adopt the contents of the affidavit supporting the application and all the attached annexures. He said that the conditions under which courts of law may issue an order of lifting corporate veil has been stated in numerous decisions and cited among them to be the case of Saguda Magawa Salum & 3 others vs. NAM Company Limited &another, Misc. Civil Application No. 34 of 2021, HC at Dodoma at pages 6&7. He argued that the existence of a company as a legal person should not 2 act as justification for the company to avoid legal responsibility. That in the instant application, the applicant was the 3rd respondent in Civil Revision No. 6 of 2015 which was decided by the Court of Appeal.

That following the said decision and order, the applicant has filed an application for execution, however the applicant has been unsuccessful as the Directors of the 1st respondent are hiding the property of the 1st respondent under the veil of incorporation for their benefit to escape liability. Mr Kahana added that the respondents have failed to honour the order of the Court of Appeal. That the applicant believes that the Directors of the company (1st respondent) knows of the existence of the company property but they are concealing the said property for their own benefit. He said further that this Court can pierce the veil so that the Directors will be held liable to honour the decree of the Court. To bolster his points, Mr Kahana also cited the case of Ibrahim Ally Kigombe vs Mara Microfinance & 2 others, Reference Case No. 2024 01800000417, HC at Musoma. He prayed for the application to be granted. Before the determination of the application, I feel the brief background of the matter is apposite. Basing on the affidavit and the attached annexures, the applicant claims he was the bonafide purchaser of a 3 property located at Plot No. 62, Msasani Area registered under the Certificate of Title No. 78887. The said land property was purchased in a public auction where the applicant emerged the highest bidder and purchased the property for TZS 5,350,000,000/=. The auction

was conducted by the 2nd respondent to satisfy a court decree issued in favour of the 1st respondent in Land Case No. 4 of 2010. That however the Court of Appeal through Civil Revision No. 6 of 2015, nullified the said sale and purchase and ordered the applicant who was the bonafide purchaser to be refunded with all the purchase price. That since then the applicant has deployed numerous measures to ascertain that the 1st respondent who is responsible for payment, fulfil the obligation but the measures have proved futile. That the applicant has filed an application for execution against the respondents but the said application has proven futile. The applicant strongly believes that the Directors of the 1st respondent are deliberately concealing the 1st respondent's property, hiding under the veil of incorporation, the fact which has prompted the applicant to file the application at hand. After looking into brief background, the issue is whether this application has merit and in particular, whether there are sufficient reasons for the Court to lift the corporate veil of the 1st respondent. The principle of lifting the veil of incorporation was enunciated in the 4 case of Salomon vs Salomon & Co. Ltd (1897/ A.C 22. This principle was reiterated by the Court of Appeal in the case of Yusufu Manji vs. Edward Masanja &another, Civil Appeal No. 78 of 2002. This case was referred to the

Court by the counsel for the applicant. In the referred case, the Court of Appeal observed the general principle set in the case of Salomon (supra) that the company is at law a different person altogether from the subscribers. However the Court of Appeal held that in certain special and exceptional circumstances, the court may go beyond the purview of the above principle set in the Salomon's case. In the case before them i.e. Yusufu Manji, the Court of Appeal was of the firm view that it was in evidence that there was an effort to conceal the assets and identity of the appellant's company. That in the circumstances, the respondents in the said matter would be left with an empty decree as it was against the company. The Court of Appeal held that it would not serve the interest of the justice to shield the appellant behind the veil of incorporation. Furthermore, in the case of Hotel Continental Limited vs. Lamada Limited, Misc. Land Appeal No. 466 of 2021,HC, Land Division, DSM (Unreported), Hon. Makani, J, reiterating the exceptional circumstances set in the case of Yusuf Manji (supra), held that it is now a settled 5 law that where the Directors of the company fails to satisfy the decree, the court may lift the veil of incorporation and hold the Director personally. I have read the order issued by the Court of Appeal in Civil Revision No. 6 of 2015 which was between Balozi

Abubakari Ibrahim &another (the applicants) against Ms Bernandy Limited (1st respondent), Joshua E. Mwaitika t/a Rhino Auction Mart (2nd respondent) and Jehangir Aziz Abdulrasul (3rd respondent). In the said application, the Court of Appeal among other orders, it set aside the sale of the applicants' house located on Plot No. 62 Msasani area, Dar es Salaam(in that case the applicants were Balozi Abubakar Ibrahim & Bibi Sophia Ibrahim). The Court of Appeal further ordered that the 3rd respondent (who is now the applicant) to be refunded his purchase price by whosoever is holding. From this order, it was apparent that in this instant dispute, the "whosoever is holding", according to the applicant is the 1st respondent. And that the applicant has attempted to recover his purchase price through attaching the properties of the 1st respondent but have been unsuccessful as the Directors of the 1st respondent have been deliberately concealing the 1st respondent's property and hiding under the veil of incorporation. Guided by the principle set in the case of Yusufu Manji vs Edward L 6 Masanja & another (supra), I find that the circumstances in the instant application falls within the exceptional circumstances where the court can lift the corporate veil and held the Director(s) of the company responsible. This is for the reason that by the evidence from the affidavit supporting the

applicant and its annexures, the applicant has been making efforts to execute the order of the Court of Appeal in order to recover the purchase price from the 1st respondent but there has been deliberate efforts by the named Directors of the company to conceal the assets of the 1st respondent hence making the efforts of the applicant to get his right to be in vain. For the above reasons, and analysis, I find the application to have merit and it is hereby granted to the extent that the veil of incorporation of the 1st respondent is lifted with costs. 7