Leisure Tours and Holidays Limited vs AGRO Fresh Limited Civil Case No

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (DAR ES SALAAM SUB-REGISTRY) AT DAR ES SALAAM CIVIL CASE NO. 189 OF 2023 LEISURE TOURS AND HOLIDAYS LIMITED............................ PLAINTIFF VERSUS AGRO FRESH LIMITED........................................................DEFENDANT JUDGMENT Date of last order: 28/08/2024 Date of Ruling: 08/11/2024 A.A. MBAGWA, J. The dispute in this suit arises from the Agreement for Acknowledgement and Undertaking to Pay Debt dated 23rd January 2023 entered into between the plaintiff and defendant. The said agreement resulted from three contracts for vehicle hiring dated 13th September 2021, 30th December 2021 and 25th May 2022. The plaintiff is a body corporate licensed among others, to carry on car rental services whereas the defendant is a registered body corporate dealing with loading recycled plastic wastes from Rufiji to Pwani/Coast Region. 1 The Plaintiff has instituted this case against the defendant praying for judgment and decree in the following orders; i. Declaration that the defendant has breached the car rental agreements and its ancillary agreement. ii. Payment of TZS 425,235,641.96 being the specific damages for the car rental outstanding balance. iii. Payment of TZS 447,253,120/= being the loss of the anticipatory incomes from the rented motor vehicles. iv. Payment of general damages as shall be assessed by the court. v. Interests of 18% per annum from the date of filling this suit until Judgment. vi. Court's interest of 12% per annum from the date of judgment until full Payment. vii. Costs of this suit be provided in favour of plaintiff in any event. viii. Any other relief(s) this Court deems fit and just. The background to this suit as gathered from the pleadings and evidence may briefly be recounted as follows; In the year 2021, the defendant approached the plaintiff to hire various motor vehicles for the purpose of 2 the transportation business. After a fruitful discussion, the parties herein entered into three car rental agreements as follows; One, on the 15th day of September 2021 the parties executed a three-year car rental agreement for hiring two motor vehicles registered as T476 CVH and T786 CEN Toyota Land Cruiser V8 effectively from 01st day of September 2021 to 31st day of August 2024 subject to further renewal upon a mutual agreement by both parties. It was also the agreement term that the defendant would be charged a sum of USD 3,800 on a monthly basis for both cars. Two, on the 30th day of December 2021 the parties executed a four-year car rental agreement for hiring three motor vehicles registered as T281 DXT, T282 DXT, and T284 DXT both Eicher Pro 1055 effective from the 27th day of December 2021 to 26th December 2025. It was the agreement term that the defendant would be charged a sum of TZS 8,278,800/= on a monthly basis for all cars. Three, on the 25th day of May 2022 the parties executed a one-year car rental agreement for hiring five motor vehicles registered as T548 DQR, T308 DNC, T221 DNB, T647 DNC, and T355 DFK both Eicher Tipper Trucks effectively from the 30th day of May 2022 to 29th day of May 2023. It was the agreement term that the 3 defendant would be charged a sum of TZS 32,500,000/= on a monthly basis for all cars. However, in the course, the defendant defaulted payments contrary to the agreement terms. Thus, up to December 2022, the defendant had a total outstanding sum of TZS 277,445,922.05. Following the growing debt, on 23rd January 2023, parties entered into settlement agreement whereby the defendant agreed to clear the outstanding liabilities liabilities thereof as per the terms and schedule of payment. The defendant issued post-dated cheques but the same were dishonoured by the bank (Exim bank) for the reason that the defendant's bank account had no sufficient funds to pay the Plaintiff. It was further alleged that the plaintiff issued to the defendant several reminders for payment as agreed in the settlement deed dated 23rd January 2023. Despite all the efforts, the defendant still failed or neglected to pay the outstanding amount to the tune of TZS 388,217,465/= being outstanding rental arrears and interests accrued thereof, hence this suit. Upon service, the defendant filed her written statement of defence vehemently disputing the allegations on the plaint and prayed for among 4 other things, for the dismissal of the suit. The defendant stated further that she lost a huge contract to supply soil material at Chalinze Power Substation and Mwalimu Nyerere Hydro Power Project (TANESCO) due to the underperformance of plaintiff’s trucks. In fine, the defendant prayed for the suit to be dismissed with costs stating that there is no valid claim whatsoever against her. On 1st July 2024, when the suit came for the Final Pre-Trial Conference (Final PTC), this court, with the consensus of the parties, framed and recorded issues as follows; 1. Whether the Defendant breached the agreement dated 23rd January 2023. 2. To which reliefs are parties entitled? During the hearing, the plaintiff was represented by Mr. Ngassa Ganja, learned advocate whilst the defendant had the services of Mr. Alex Balomi and Mr. Ngumi Samadani, both learned advocates. In a bid to establish her claims, the plaintiff paraded two witnesses namely, Mustafa Rashid (PW1) and Saad Haroub Fereji (PW2) whose 5 witness statements were adopted and admitted to form part of their testimonies. In addition, the plaintiff tendered nine (9) documentary exhibits namely; an agreement for vehicle hiring dated 25th May 2022 (exhibit P1), an agreement for vehicle hiring dated 30th December 2021 (exhibit P2), an agreement for vehicle hiring dated 15th September 2021 (exhibit P3), agreement for outstanding settlement dated 23rd January 2023 (exhibit P4), The demand notice dated 15th May 2023 (P5), The board resolution of 10th day of September 2023 (exhibit P6), Ten (10) Cheque Return Advices collectively (exhibit P7), Summary outstanding balance and other information both dated 14th September 2023 collectively (exhibit P8) and document titled ‘Claims of Loss of Income from Contract Terms and Conditions’ (exhibit P9). On the other hand, the defendant, without good reason, failed to bring its witness whose statement was filed in court on 13th August 2024. Consequently, this Court struck out the witness statement of Munawal Kassim in terms of Order XVIII Rule 5(5) of the Civil Procedure Code. The plaintiffs’ witnesses namely, Mustafa Rashid and Saad Haroub Fereji who introduced themselves as the plaintiff's Director of Finance and 6 Senior Accountant respectively in their witness statements and oral testimony recapitulated the contentions in the plaint. Having recounted the plaintiff’s evidence and the obtaining circumstances albeit in a nutshell, it behooves me now to determine the issues framed. Starting with the 1st issue to wit, whether the defendant breached the agreement dated 23rd January 2023. It is to be noted, at the outset, that the parties are at one that the defendant hired motor vehicles from the defendant. As indicated earlier, it was PW1’s and PW2’s testimony that following the defendant's failure to remit the monthly installments to the plaintiff, and upon several demands, the plaintiff and the defendant on 23rd January 2023 entered into an agreement for settlement of outstanding amount (Exhibit P4) to which they agreed to adjust the outstanding amount up to 31st May 2024. Clause 2 of exhibit P4 speaks for itself and I quote; - " That the parties to this agreement confirm that the total outstanding balance arising from the above Motor vehicle and Trucks hire agreements is as follows; - a. The agreed outstanding Rental arrears for the Land Cruiser Prados and Mini Trucks as of October 2022 is Tsh.81,118463.99/= 7 b. The agreed outstanding Rental Arrears for the Tippers Trucks is Tsh. 237,027,741.94. However due to the efforts to settle the claims amicably the agreed outstanding amount shall be Tshs. 196,327,258.06/=” (Emphasis added) It is worth noting that under clause 6 of Exhibit P4, the parties had agreed on 4% penal interests per month in case of a delay in payment of the monthly installments as provided under clauses 3 and 4 of the same. Sequel to the agreement for outstanding settlement (Exhibit P4), the defendant issued post-dated cheques in favour of the Plaintiff for payment of the agreed outstanding balance but when the said cheques were presented to the bank for encashment, they were all dishonoured by the bank for the good reason that the Defendant’s bank account had no sufficient funds to pay the Plaintiff (exhibits P5 and P6). On the adversary, there was no evidence to counter the plaintiff’s evidence. Remarkably, this being a civil suit, the standard of proof is on the balance of probabilities as underscored under sections 3(2) (b), 110(1) and (2) and 111 of the Evidence Act, [Cap. 6 R.E 2022] that, he who alleges must prove that a certain fact exists, and the onus of proof lies on the plaintiff. 8 See also the case of Anthony M. Masanga vs Penina (Mama Mgesi) and Another (Civil Appeal 118 of 2014) [2015] TZCA 556. To begin with the first issue as to whether the defendant breached the agreement dated 23rd January 2023. Having gone through the pleadings, the testimony of PW1 and PW2 together with exhibits P4 (the settlement agreement), and exhibits P7 (dishonoured cheques), I am satisfied that the plaintiff has established that the defendant indeed breached the agreement dated 23rd January 2023. The plaintiff established the existence of the agreement for acknowledgment and undertaking to pay a debt by tendering the original agreement (exhibit P4). There were also ten (10) dishonoured post-dated cheques (Exhibits P7) which further prove that indeed, the defendant pretended to be honouring the terms of the said agreement. In addition, exhibits P5 and P6 demonstrate the efforts that were taken by the plaintiff to make the defendant honour the agreement terms pacifically but to no avail. It is trite law that parties are bound by the terms of the contract which they freely entered. The authorities on this are without a number. They include; Miriam E. Maro vs. Bank of Tanzania, Civil Appeal No. 9 22/2017, CAT at Dar es Salaam, Unilever Tanzania Ltd vs. Benedict Mkasa t/a BEMA Enterprises, Civil Appeal No. 41 of 2009, CAT at Dar es Salaam, Philipo Joseph Lukonde vs. Faraji Ally Saidi, Civil Appeal No. 74 of 2019, CAT at Dodoma, Simon Kichele Chacha v. Aveline M. Kilawe, Civil Appeal No. 160 of 2018, CAT at Mwanza, and Kilanya General Supplies Ltd. and Another vs CRDB Bank Limited and Two others, Civil Appeal No. 1 of 2018, CAT at Dar es Salaam, to mention but a few. Since the defendant freely signed the agreement, it goes without saying that it is duty-bound by its terms. In view of the above, I am opined that the defendant was truly indebted to the plaintiff in the sum of Tshs. 338,934,013.83 as of 31st May 2024. On the foregoing observations, I am inclined to hold that the defendant, breached the agreement dated 23rd January, 2023. Consequently, I proceed to answer the first issue in the affirmative. The 2nd issue is to what reliefs are parties entitled? It has been established through Exhibit P4 that the defendant undertook to pay the plaintiff TZS 277,445,922.05 in installments as scheduled under Clauses 3 and 4 of 10 Exhibit P4. As hinted above, the defendant failed to remit the agreed payments thereby attracting a 4% penalty for each default which ultimately resulted in the total debt of TZS 338,934,013.83 as of 31st May 2024. This constituted a breach of contract and for that reason, the defendant is duty bound to remedy the plaintiff. The plaintiff under paragraph 3 of the plaint had prayed for the payment of TZS 425, 235, 641.96 being outstanding rental charges which is being corroborated with Exhibit P8 (briefly outstanding balances as at 4th September, 2023). However, under exhibit P4, the parties never agreed on payment of the alleged Weighbridge and Traffick Fines and the named current outstanding for Trucks and Prado. While being cross-examined by Mr. Balomi for the defendant, PW2 alleged that the tippers were once penalized at the weighbridges and the plaintiff aided in paying the fine on behalf of the customers (disbursement). PW2 also conceded that the disbursement was not part of the contract. In the case of UMICO Ltd vs Salu Ltd, Civil Appeal No. 91 of 2015. CAT at Iringa (unreported) on pages 4-5 of the typed judgment had this to say;- 11 “ We wish to begin by stating that it is a trite principle of law that generally if the parties in dispute had reduced their agreement to a form of a document, then no evidence of oral agreement or statement shall be admitted for the purpose of contradicting, varying, adding to or subtracting from its terms (see Ss. 100 and 101 of the Evidence Act, Cap 6 RE 2002.” (Emphasis Added) From the foregoing above, it is my findings that the plaintiff has proved TZS 338,934,013.83 being the outstanding payment and interests resulting from the settlement agreement. However, claims of TZS 66, 575,037.16 are neither justified in law nor proved by the plaintiff. It is trite law that special damages must be specifically pleaded and proved as held in the case of Zuberi Augustino v. Anicet Mugabe, [1992] TLR 137, at page 139 that; - “It is trite law, and we need not cite any authority, that special damages must be specifically pleaded and proved.” (Emphasis Added) See also; Stanbic Bank Tanzania Limited vs Abercrombie & Kent (T) Limited Civil Appeal 21 of 2001. CAT at Dar es Salaam (unreported). Based on the above-cited authorities, I, therefore, decline to award the payment of TZS 66,575,037.16. 12 Further, under prayer (iii) in the plaint, the plaintiff had prayed for payment of TZS 447, 253, 120/- being the loss of the anticipatory incomes from the rented motor vehicles corroborated by Exhibit P9. Nonetheless, there was no proof of how the said figure was arrived at. PW1 when being cross-examined by Mr. Balomi on the loss of anticipated income, had this to say;- “I have no calculations here. We discussed with sales persons and arrived at that figure. Indeed, I have not brought the breakdown of how we arrived.” (Emphasis added) It should be underscored that loss of anticipated income is one category of specific damages. Thus, the principle remains that it should be pleaded and strictly proved. With the understanding of the above principles, I find that the plaintiff’s evidence did not prove the claimed amount to the required standard. Instead, the figures were only mentioned without giving the basis for arriving thereto. In fine, I dismiss this claim. I now turn to consider prayer (v) on payment of 18% interest per annum from the date of filing the suit until judgment. Indeed, this prayer is also 13 declined for being unjustified. PW1 when being cross-examined by Mr. Balomi, he averred that the same was based on the allegations that the plaintiff borrowed money. However, he conceded that, under the witness statement, there was no proof that the plaintiff borrowed money that attracted 18% interest. For clarity, I let the relevant part of PW1’s testimony speak for itself;- “With regard to interest of 18%, we considered the costs of borrowing money. I have no evidence in the witness statement that our company borrowed money.” (Emphasis added) In view thereof, this claim is also refused. Subsequent is the claim of general damages as may be assessed by the court. As the law stands, general damages are awarded at the court's discretion and judiciously exercised. Its purpose is to put the plaintiff in the same position as money can do if his rights have been observed. As it could be gleaned from the evidence adduced in court, the defendant had breached the Vehicle Hiring Agreements (exhibits P1, P2, and P3). Out of goodwill, the plaintiff reduced the outstanding amount in the 14 settlement agreement (Exhibit P4). Unfortunately, the defendant breached even the settlement agreement. As per evidence, failure, neglect, or refusal to pay the plaintiff the claimed amount has caused the plaintiff some cashflow hurdles. In the meantime, it should be noted that the plaintiff claimed and has been granted the outstanding amount which included 4% interest. In that regard, I am of the view that a sum of Tanzania shillings five million would meet the ends of justice in the circumstances of this case. Since the suit has succeeded, the plaintiff is also awarded costs for prosecuting the suit. In the circumstances, I hereby enter judgment and decree against the defendant with the following consequential orders; (1) The defendant is hereby ordered to pay the plaintiff Tanzania shillings Three Hundred Thirty-Eight Million Nine Hundred Thirty- Four Thousand and Thirteen and Eighty-Three Cents (TZS 338,934,013.83) being outstanding rental charges plus penal interests resulting from the defendant’s breach of the Agreement for Outstanding Settlement. 15 (2) General damages to the tune of Tanzania shillings five million (TZS 5,000,000/=). (3) The interest of 4% per annum of item (1) above from the date of filing the suit to the date of judgment. (4) The interest of 7% of item (1) per annum from the date of judgment to the date of payment in full. (5) Costs of the suit be borne by the defendant. It is so ordered. The right of appeal is explained. A.A. Mbagwa JUDGE 08/11/2024 16