mantrac tanzania limited vs goodwill ceramics tanzania limited 2023 tzca 17506 21 august 2023

IN THE COURT OF APPEAL OF TANZANIA AT DAR-ES-SALAAM fCORAM: MUGASHA, J. A.. KITUSI. 3.A. And MPEMU, 3.A.Q CIVIL APPEAL NO. 269 OF 2020 MANTRAC TANZANIA LIMITED.............................................. APPELLANT VERSUS GOODWILL CERAMICS TANZANIA LIMITED.........................RESPONDENT (Appeal from the Decision of the High Court of Tanzania (Commercial Division) at Dar-es-salaam) (Fikirini, 3.^ dated the 11th day of 3une 2020 in Commercial Case No. 16 of 2018 JUDGMENT OF THE COURT 15th & 21st August, 2023 MUGASHA, J.A.: The appellant is a private limited liability company licensed to carry out the business of selling and hiring of construction, mining and engineering machines and equipment On the other hand, the respondent (Goodwill Ceramics Tanzania Limited) is also a private limited liability i company carrying out the production of ceramics, tiles, and related products. Sometimes in July 2016, the parties entered into an Equipment Sale Agreement whereby the appellant was to supply four gas generators to the respondent at the purchase price of USD 3,280,000.00. It was also agreed that, after the delivery of the generators to the respondent, the appellant would supervise installation and commissioning process. Then, after testing the generators, upon being satisfied with the performance of the generators in question, the respondent would release a Final Acceptance Certificate to the appellant and pay to her the remaining balance of USD 984,000.00. The generators were delivered as agreed and installed at the respondent's factory premises which was followed by the initial payment of USD 2,296,000 to the appellant. However, later the respondent who claimed that the generators were defective, neither released the Final Acceptance Certificate nor paid the remaining balance of USD 984,000.00 to the appellant It was the appellant's contention that, according to the terms of the agreement the generators were already commissioned because the defendant had commenced to utilise the same and the warranty was operative. It is against the said backdrop, the appellant sued the respondent claiming for payment on the outstanding balance; 15% interest at the commercial rate per month from when the balance was due up to the date of judgment and decree; 12% interest on the outstanding balance plus interest from the date of decree up to final payment; general damages, costs of the suit and any other relief deemed fit and just. On the other hand, besides refuting the appellant's claim, the respondent raised a counter-claim demanding to be paid USD 4,314,068.73 being the costs she incurred due to shut downs of the factory which were allegedly occasioned by the defective generators; general damages, interest on the grand total, costs of the suit, and any other reliefs deemed fit and just. The controlling issues at the trial were: one, whether the respondent breached the Agreement by failing to pay the outstanding purchase price; two, whether the appellant breached Agreement by supplying generators contrary to the Sale Agreement; and three, to what relief (s) are the parties entitled. After a full trial, the learned High Court Judge was satisfied 3 that as none of the parties had established its claims, dismissed the appellant's case and the counterclaim. Unamused, the appellant has preferred the present appeal on the following grounds: 1. That, the honorable Court erred in law and fact by acting with bias by allowing the respondents to testify orally after holding that its witness statements were defective and the plaintiffs case had been dosed. The High Court should have expunged the witness statement and given judgment in favor o f the appellant. 2. That, the Honourable trial Court erred in law and fact by mishandling the evidence and failing to properly assess the evidence by taking into account that the appellant had proved its case for the balance o f the purchase price and hence entitled to be paid the outstanding amount o f 984000.00. The trial Court failed to interpret clause 3:3 o f the Equipment sale agreement which required the respondent to pay the balance amount 120 days after the arrival o f the equipment at Dar es Salaam Port. 3. That, the Honourable trial Judge erred in law and fact by failing to properly assess the evidence to the extent that the respondent has failed to establish any defects in the supplied generators as alleged in the statement o f defence and therefore the appellant was entitled to the balance o f the contract price. 4. That, the Honourable trial Judge erred in law and fact by holding that there were defects without specifying the nature o f the defects while clearly admitting exhibit D2 which showed that the generators had surpassed even the warrant period o f16000 hours or 24 months. 5. That, the honorable trial Judge erred in law and fact by holding that the respondent was not required to return the generators or refuse the acceptance even after a reasonable time o f more than two years had passed. This is contrary to the law on the Sale o f Goods Act, Cap. 214 RE 2002 as the buyer must reject the goods within a reasonable time. 6. That the honorable Trial Judge erred in law and fact by holding that, there was no commissioning o f generators contrary to the evidence submitted by the appellant and only relied on weak evidence o f the respondent The duty to prepare and sign the final acceptance certificate as exhibit C under clause 9 o f the Agreement was on the respondent which could be blamed or shifted to the appellant 7. That, the Honourable trial Judge erred in law and fact by dismissing the appellant's claims after holding that, the respondent had failed to prove any alleged defects in the written statement o f defence and damages in the counterclaim. 8. That, the Honourable trial Judge erred in law and fact by failing to award interest, damages■ , and costs o f the suit after holding that the respondent does not dispute the outstanding amount o f USD 984,000.00 and dismissing the counterclaim for lack o f proof of damages. At the hearing of the appeal, in appearance were learned advocates Roman Masumbuko and Dr. Wilbert Kapinga for the appellant and the respondent respectively. They both adopted the written submissions filed earlier on to constitute an integral part at the hearing of the appeal. In the course of hearing the appeal, with leave of the Court, Mr. Masumbuko abandoned the complaint against the trial Judge that she acted with bias which features in the 1st ground of appeal. In the premises, the resulting complaint of the appellant is to the effect that, after the close of the appellant's case and having held that the witness statement of DW1 was defective, it was not proper to allow the respondent to testify orally. Instead, the trial Judge ought to have struck out the defective affidavits and proceed to enter judgment in favour of the appellant. In this regard, it was argued that, procuring the respondent's witnesses to testify orally 6 violated Rule 48 of the High Court (Commercial Division) Procedure (Amendment Rules), 2019 (the Commercial Court Rules) and it was contrary to the direction given by the learned trial Judge at the Final Pre- Trial Conference (the FPTC) that the evidence of the parties be given by way of witness statements. Thus, the appellant's counsel implored the Court to expunge the witness statements of the respondent, the oral testimony given on behalf of the respondent and enter judgment in favour of the appellant and proceed to allow the appeal with costs. In the reply submissions, the respondent's counsel opposed the ground of complaint arguing that, although the witness statements were not struck out, the record shows that the trial Judge acted on the oral testimony of the respondent to determine the matter and proceeded to dismiss the suit and the counterclaim. Dr. Kapinga was also of the view that, the learned trial Judge was justified to allow the respondent to give oral account in order to achieve substantive justice and expedited disposal of the dispute between the parties which is in line with the dictates of Article 107A (2) (e) of the Constitution of the United Republic of Tanzania, 1977 (the Constitution) which enjoins the Court not to be tied with technicalities. However, Dr. Kapinga did not make any submission on the fate of the two sets of the respondent's evidence that is, the witness statements and the oral evidence of the respondent's witness. Having scrutinized the record before us and the rivalling submissions, apparently, the crux of the contention can be traced prior to and after the trial Judge sustained the preliminary points of objection which resulted into disregarding the respondent's witness statement and allowing the respondent to testify orally. This was after the appellant/plaintiff had closed its case. According to the record of appeal at pages 1780 and 1782, on 18/11/2019 when the respondent (DW1) was about to be cross examined in connection with his witness statement, an objection was raised by the appellant's counsel who urged the trial court to expunge the witness statement of DW1 on grounds that: 1. The respondent's witness statement was in the English language instead of being in Chinese language with English translations contrary to the provisions of Rule 50 (1) (c) of the Commercial Court Rules 8 2. The witness statement contained arguments contrary to the provisions of Rule 50 (1) (f) of the Commercial Court Rules. It was not disputed that the respondent's witness statement was in English language and not in Chinese language with English translations and that DWl's witness statement contained arguments contrary to the provisions of Rule 50 (1) (f) of the Commercial Court Rules. Thus, the appellant prayed that the respective witness statement be expunged. While the respondent's counsel made a concession to the purported anomaly and pointed out that it befalls the other two witness statements, he prayed to be given time to amend the witness statements which was declined by the trial court and thus, the preliminary points of objection were upheld to the effect that the respondent's witness statement was in contravention of Rule 50 (1) (c) and (f) of the Commercial Court Rules. In the premises, the controversy is whether the trial Judge was justified in failing to expunge the witness statement for the alleged contravention and instead, allowing the respondent's witnesses to give oral evidence. With respect, the first limb of objection, was not on a pure point of law as it required to be substantiated through facts and evidence because it is a requirement of the law that, points of objection should not be subject to proof by some other material facts. See: HEZRON NYACHIYA VS TANZANIA UNION OF INDUSTRIAL WORKERS UNION AND ANOTHER, Civil Appeal No. 79 of 2001; KARATA ERNEST AND OTHERS VS THE ATTORNEY GENERAL, Civil Revision No. 10 of 2010 (both unreported). In the latter case, the Court relied on the case of MUKISA BISCUITS MANUFACTURING COMPANY V WEST END DISTRIBUTORS LTD [1969] EA 696 where, besides Sir Charles Newbold castigating on the increasing practice of preliminary points of objection on matters which should be heard in normal ways, defined what constitutes a preliminary objection on the point of law as follows: "...A preliminary objection is in nature o f what used to be a demurer. It raises a pure point o f law which is argued on assumption that aii facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained.... The improper raising o f points by way o f preliminary objection does nothing but unnecessarily increase costs, and on occasion, confuses issues. The improper practice should stop." 10 In the light of the settled position of the law, given that the preliminary point of objection raised by the appellant's counsel was on the English language used in the witness statements as not constituting actual words of the respondent's witnesses who were Chinese, this is a factual matter which required proof so as to establish if the witnesses were not conversant with English language used in their witness statements. As the preliminary point of objection did not meet the required threshold, it ought to have been dismissed. The remaining ground of the preliminary point of objection was that the witness statement offended the provisions of Rule 50 (1) (f) of the Commercial Court Rules for containing argumentative facts in paragraphs 11 and 12 of the witness statement. We agree with the learned trial Judge that the respective paragraphs of the respective witness statement contained arguments contrary to the requirements of Rule 50(1) (f) of the Commercial Court Rules. However, with respect, we do not agree with the course taken by the trial Judge in disregarding the witness statement without considering and determining if the remaining paragraphs of the affidavit could sustain the witness statement. We say so because it is li settled law that where the offensive paragraphs of the affidavit are inconsequential, they can be expunged leaving the substantive parts of the affidavit remaining intact. See: STANBIC BANK TANZANIA LIMITED VS KAGERA SUGAR LIMITED, Civil Application No. 57 of 2007 and PHANTOM MODERN TRANSPORT (1985) LIMITED VS D.T. DOBIE (TANZANIA) LIMITED, Civil References No 15 of 2011 and 3 of 2002 (both unreported). In the premises, since there was room to salvage the witness statements, it was not proper to disregard them instead of expunging the offensive paragraphs and let the respondent's witnesses to be cross-examined. That said, next for consideration is the propriety of the oral testimony of the respondent. It is on record that, the learned trial Judge acted on the oral account to determine the appellant's case and the counterclaim which were both dismissed. The trial of Commercial cases is regulated by the Commercial Court Rules which stipulate the modus of adjudicating a commercial dispute. This entails, among others things, giving the evidence in chief by a statement on oath or affirmation. In terms of Rule 48 (a) and (b) the Commercial Court Rules, it is incumbent on the trial Judge, at the 12 FPTC to determine the manner in which evidence is to be given at any trial or hearing by giving appropriate directions as to: one, the issues, on which evidence is required; and two, the way in which any matter is to be proved. In the present matter, pursuant to the FPTC conducted on 24/6/2019, at page 1753 it was ordered that witnesses were to come to court for tendering documents, cross examination and re-examination only and the hearing was scheduled on 2nd to 3rd September, 2019 at 10.00 am whereas the witness statements were to be filed by or on 8/7/2019. In the premises, disregarding the witness statements of the respondents and instead allowing oral testimony was against the trial Judge's directions at the FPTC made in accordance with the dictates of Rule 48 of the Commercial Court Rules. Thus, besides allowing the respondent to give oral testimony which is irregular, while the appellant gave evidence by way of witness statements, the parties at the same trial were subjected to different treatment which is against the tenets of a fair hearing and equality before the law. 13 Furthermore, with respect, we do not agree with the learned trial Judge that she had to do away with technicalities so as not to deny the respondent a right to be heard. Apparently, Dr. Kapinga was of the view that such action was justified. With respect, we found such a stance wanting because having filed the witness statements the respondent was accorded a right of hearing in terms of the law. That apart, since mode of adjudicating commercial disputes is regulated by the Commercial Court Rules, with respect, it was incumbent on the learned trial Judge to comply with the law to the letter because under Article 107B of the Constitution, in exercising the power of dispensing justice all courts are enjoined to comply with the provisions of the Constitution and laws of the land. This was emphasized in the case of ZUBERI MUSSA VS SHINYANGA TOWN COUNCIL, Civil Application No. 100 of 2004 (unreported) the Court stated thus: "The courts are enjoined by the Constitution to administer justice according to law only without being unduiy constrained by rules o f procedure and or/ technical requirements. The word unduly here should only be taken to mean "more than is right or reasonable; excessively or wrongfully. See: 14 CHAMBERS TWENTIETH CENTURY DICTIONARY, at page 1469. One cannot be said to be acting wrongfully or unreasonably when he is executing the dictates o f the law." Thus, it was irregular to allow the respondent to testify orally whilst she had earlier on filed witness statements and the omission occasioned a failure of justice. As such, the impugned judgment of the trial court cannot be salvaged because it is based on the evidence not procured according to the law and so is the Ruling of the High Court which permitted the respondent to give oral evidence. Consequently, although we sympathize with the parties on this being an old matter which has been lying in the courts for the past seven (7) years, our hands are tied by the law as we are obliged to follow the law to the letter as enjoined by article 107B of the Constitution as to what we are about to order. In the circumstances, save for the respondent's witness statements, the judgment, ruling and proceedings subsequent to the close of the appellant's/plaintiff's case are hereby quashed and set aside. We further direct the case file to be returned to the High Court for expedited continuation of the trial in accordance with the law. Thus, on account of 15 the stated reasons, we find the appeal merited and it is allowed to the extent shown. Given the nature of circumstances surrounding the matter, we make no order as to costs. DATED at DAR ES SALAAM this 21st day of August, 2023. S.E.A. MUGASHA JUSTICE OF APPEAL I.P. KTTUSI JUSTICE OF APPEAL G. J. MDEMU JUSTICE OF APPEAL The Judgment delivered this 21st day of August, 2023 in the presence of Mr. Roman Masumbuko, learned Counsel for the Appellant and Mr. Alen Lema, learned Counsel for the Respondent, is hereby certified as a true copy of the original. R.W. Chaungu DEPUTY REGISTRAR COURT OF APPEAL 16