KURINGE REAL ESTATE CO LTD VS NMB BANK PLC COMM CASE NO

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM COMMERCIAL CASE NO. 104 OF 2023 BETWEEN KURINGE REAL ESTATE CO. LTD........................................................ PLAINTIFF VERSUS NMB BANK PLC.................................................. DEFENDANT JUDGMENT Date of last order: 19/04/2024 Date of judgment: 21/06/2024 MKEHA , J: The plaintiff is a legal entity registered and incorporated under the laws of Tanzania, while the defendant is a financial institution also registered under the laws of Tanzania. In this suit, the plaintiff prays for judgment and decree against the defendant on the following reliefs: i. Declaration that, the defendant breached the sale agreement of a landed property located on Plot No. 696 Block C with Certificate of 1 | Page Title No. 96163 and Land Office No. 411245 at Sinza, Kinondoni Municipality, Dar es Salaam. ii. Refund of the purchase price of the landed property located on Plot No. 696 Block C with Certificate of Title No. 96163 and Land Office No. 411245 at Sinza, Kinondoni Municipality, Dar es Salaam. iii. The Defendant be ordered to pay the costs of transfer of the disputed property to the Plaintiff, amounting to Tanzanian shillings 17,390,000/=. iv. Payment of commercial rate interest of 22% per annum of the sum stated in paragraph (ii) and (iii) hereinabove, from 2018 when it was paid to the date of full payment. v. Payment of interest at court's rate of 10% from the date of judgment to the date of full payment. vi. Payment of general damages at the discretion of the court. vii. Payment of the costs of this suit. viii. Any other reliefs this Honourable court deems fit to grant. The above stated claims arise from an alleged breach of contract of sale of a house located on Plot No. 696 Block C, Sinza, within Kinondoni Municipality, Dar es Salaam hereinafter "the suit property"). The same is 2 | Page registered with Certificate of Title No. 96163, Land Office No. 411245. Material facts pertaining to such allegations as per the plaint, are as stated hereunder. On 3rd April 2018 the defendant sold the suit property to the plaintiff via a public auction. The plaintiff paid purchase price to the tune of TZS. 145,000,000/= In officiating the said sale, the plaintiff and defendant executed a sale agreement on the same date. In addition, on 24/02/2018, the defendant issued a Certificate of Sale by Public Auction to that effect. It is further stated in the plaint that, prior to the alleged sale, the plaintiff conducted an official search and found out that, the owner of the suit property was one Mr. Wilson Salmon Ngui t/a MEKU SPARE PARTS. The search also revealed that, the suit property was mortgaged in favour of the defendant to secure the sum of Tanzanian shillings 536,000,000/=. Upon completion of the said sale, the defendant transferred the certificate of title of the suit property (Certificate of Title No. 96163) to the plaintiff with the view to having the same registered in the plaintiff's favour. Through this process, the defendant was exercising its power of sale of mortgaged land following default by the mortgagor, Mr. Wilson 3 | Page Salmon Ngui. In the aforementioned transfer process, the plaintiff claims to have paid stamp duty and transfer fee totaling TZS. 8,700,000/=. Also that, the plaintiff had paid legal fees for facilitating the transfer process. The plaint indicates further that, on 27th May, 2020 the plaintiff alleges to have discovered a proclamation of sale issued by this court in respect of the suit property, and in contest thereto, it instituted various applications in this court which bore no fruits. It thus instituted the instant matter for the above stipulated reliefs. That was after receipt of a notice from the Registrar of Titles on 2nd August 2023, informing the plaintiff of an intention to have the suit property transferred into the name of one Mr. David Godwin Urio. The plaintiff claimed that, the fact that the defendant had knowledge of the encumbrances on the suit property amounts to nothing else but material breach of the contract of sale executed between the plaintiff and the defendant. On the other hand, the defendant filed its written statement of defence. Therein, it disputed almost all the facts stated in the plaint including the allegation of breach of contract of sale. However, it did not dispute the fact regarding existence of the alleged contract of sale of the suit property 4 | Page between itself and the plaintiff as well as the fact of it having transferred the Certificate of Title of the suit property in favour of the plaintiff. Upon completion of pleadings and during final pre-trial conference, this court in consultation with the parties" counsel, framed the following issues for determination, namely; 1. Whether the defendant breached the sale contract. 2. To what reliefs are the parties entitled. When this matter proceeded for hearing, the plaintiff and the defendant were respectively represented by Mr. Francis Makota and Ms. Asia Tokutola, learned advocates. Each party procured one witness to prove its case. While the plaintiff's sole witness was Mr. Edward Eugen Mushi (PW1), the defendant's was Mr. Erick Aloyce Shinda (DW1). When PW1 appeared for examination, he commenced his testimony by tendering his witness statement earlier on filed in this court. The same was admitted in court as his evidence in chief. He further tendered the following documents which were admitted as exhibits, namely; Board Resolution (Exhibit Pl), Sale Agreement between NMB PLC and Kuringe Real Estate (Exhibit P2), Official Search dated 27/04/2018 (Exhibit P3), 5 | Pa ge Copy of Certificate of Title No. 96163, L.O. No.411245, KMC/LD/19267 (Exhibit P4) and Ruling in Land Case No. 132 of 2020 (Exhibit P5). Through his witness statement, PW1 stated that, he was one of the directors and principal officers of the plaintiff. The most relevant paragraphs of PWl's witness statement were paragraphs 10 and 13 of the statement. The witness stated that, the Registrar of Titles was in a process of registering the suit property in favour of another person known as Mr. David Godwin Urio which meant that the plaintiff would lose ownership of the disputed property. The witness stated further that, notice of intention to deregister the plaintiff as owner of the suit property dated the 02nd day of August 2023 had already been served to the plaintiff. According to PW1, the defendant sold the suit property to the plaintiff while having knowledge that the property had other encumbrance, not revealed to the plaintiff at the time of sale. In the rest of the paragraphs, PW1 substantially reiterated the facts contained in the plaint to the extent summarised hereinabove. He finalised that, since the defendants did not honour the terms and conditions of the contract of sale, they were in breach of the said contract. He then prayed for the reliefs as indicated hereinabove. 6 | Page Upon being cross examined, PW1 stated that, NMB had breached the sale contract as it had failed handing over the suit property to the purchaser. That, the said property came to be owned by another person apart from the plaintiff. On the other side, DW1 tendered his witness statement whereby the same was admitted in court as his evidence in chief. He also tendered a letter dated 27th December, 2016 which was admitted into evidence as Exhibit DI. According to his witness statement, DW1 acknowledged existence of a credit facility between the defendant and one Mr. Wilson Salmon Ngui t/a MEKU SPARE PARTS. He also revealed that the said credit facility was secured by the suit property herein. He went on to state that, Mr. Wilson Salmon Ngui defaulted in 2017 hence, the defendant sold the mortgaged property (the suit property) to the plaintiff by auction whereby all necessary documents including Sale Agreement, Certificate of Sale and Power of Sale were handed over to the plaintiff. During cross examination, DW1 stated that, clause 4 of the Sale Agreement indicates that, the defendant handed over the property to the purchaser. He therefore denied the allegation of the defendant being in breach of contract. In no way did 7 | Page DWl's witness statement attempt to challenge what had been stated by PW1 in paragraphs 10 and 13 of his witness statement (PWl's). What PW1 stated in paragraphs 10 and 13 of his witness statement had been pleaded by the plaintiff in paragraphs 10 and 13 of the plaint. The determinative issue is whether the defendant is in breach of the sale contract. The defendant acknowledged having entered into a sale contract with the plaintiff in which the former received from the latter, TZS 145,000,000/= being purchase property of the suit property (Exhibit P2). The court received no evidence regarding the actual amount of money spent by the plaintiff to effect transfer of the property into its favour. The plaintiff did not dispute having received from the defendant, a certificate of sale and relevant documents which enabled it to effect transfer in its favour, from the mortgagor. Exhibit P4 indicates that, by 21/12/2018, the suit property had been transferred to the plaintiff. However, given the fact that the Registrar of Titles had issued notice indicating his intention to deregister the plaintiff as the owner of the suit property and that, instead of the plaintiff one Mr. David Godwin Urio had to be registered as the owner, this fact having not been disputed by DW1 in his witness statement, this leads me into concluding that, the defendant 8 | Page sold the suit property to the plaintiff while aware of the other encumbrance over the suit property which could not be discovered by the plaintiff at the time of sale as it happened. I hold this to be constructive breach of the sale contract on part of the defendant. The first issue is therefore answered in the affirmative. For the foregoing reasoning, it is decreed in favour of the plaintiff as hereunder: (i) A declaration is made that the defendant breached the sale agreement with the plaintiff in respect of landed property located on Plot No. 696 Block 'C' with a Certificate of Title No. 96163 LO No. 411245 at Sinza, Kinondoni Municipality, Dar es Salaam. (ii) The defendant is ordered to refund the purchase price of TZS 145,000,000/= to the plaintiff. (iii) The defendant is ordered to pay to the plaintiff, commercial rate interest (compound interest) of 15% per annum on item (ii) above from the 24th day of February, 2018 to the date of judgment. 9 | Page (iv) The defendant is ordered to pay to the plaintiff, court rate interest of 10% per annum from the judgment date to the date of payment in full. (v) The defendant is ordered to pay TZS 25,000,000/= as general damages to the plaintiff. (vi) The defendant is condemned to bear the plaintiff's costs of the suit. DATED at DAR ES SALAAM this 21st day ofJUNE 2024. C.P.MKEHA JUDGE 21/06/2024 COURT: Judgment is delivered this 21st day of June 2024 in the presence of Mr. Makota learned advocate for the plaintiff and Ms. Tokutola learned advocate for the defendant. .MINDE g DEPUTY REGISTRAR 21/06/2024 10 | P a g e