20101206 TZHC Dar es Salaam

"ORIGINAL" IN THE HIGH COURT OF TANZANIA {DAR ES SALAAM DISTRICT REGISTRY) AT DAR ES SALAAM CIVIL CASE NO. 91 OF 2010 MARK AD AND PR INTERNATIONAL {T) LTD . .............. PLAINTIFF VERSUS STANBIC BANK TANZANIA LTD . ................................ DEFENDANT Date of last order: 26/10/2010 Date of Ruling: 06/12/201 0 RULING Twaib, J: In a Notice of Preliminary Objection filed on 13th _Sept~mber 2010, the Defendant raised a point of preliminary objection that runs thus: " ...This suit is barred· by Res Judicata pursuant to section 9 of the Civil Procedure Code, Cap 33 R.E. 2002 as the matters and issues in this case have been directly and substantially in issue in a former suit between the same parties in the Commercial Division of this Court, namely Commercial Case No. 21 of 2009." The same counsel advocated for their respective clients in both cases: Mr. Masatu, Advocate, of MM Attorneys appeared for. the Plaintiff, while Mr. Dilip Kesaria of Kesaria & Co., Advocates, appeared for the Defendant. Before I deal with the preliminary· objection raised by the Defendant, it is pertinent that I first dispose of two points that in essence amount to points ,,. "ORIGINAL" of objection raised on behalf of the Plaintiff .at the beginning of their reply submissions. A third point, which complains about the Defendant's counsel's invocation of Order II rule 2 and 3 of the CPC in support of his preliminary objection without notice, will be dealt with at the end of this ruling. For convenience, let me start with the second point raised. It was to the effect that the filing of the Notice of Preliminary Objection was contrary to Order VIII rule 13 of the CPC, which states that no pleading subsequent to the Written Statement of Defence other than by way of defence to a set- off or counter claim shall be presented except by the leave of the Court. Since the Notice of Preliminary Objection at issue herein was filed after the WSD and without the Court's leave, Plaintiff's counsel argues, it should not be entertained. The Defendant's counsel said nothing in response to this contention. However, I think the point should not detain us. Order VIII ·. rule 13 of the CPC telates to pleadings subsequent to the filing of the WSD. A pleading is defined under Order VI rule 1 of the CPC as: "a plaint or a written statement of defence (including a written statement of defence filed by a third party) and such other subsequent pleadings as may be presented in accordance with rule 13 of Order VIII." A Notice of Preliminary Objection is clearly not a pleading envisaged under Order VI rule 1 and/or Order VIII rule 13. Hence, the second objection raised by the Plaintiff has no merit, and I would dismiss it. I will now deal with the first point raised by the Plaintiff's counsel. It is to the effect that the Notice of Preliminary Objection was wrongly filed as the Defendant ought to have included it. in his Written Statement of Defence (WSD) and notori a separate document as he did. 2 "ORIGINAL": Plaintiff's Counsel cited as his authority for this proposition Order VIII rule 2 of the CPC. Relying on the decision of the Commercial Division of this Court in CRDB Bank Ltd. v Noorali K.J. Dhanani and Shiraz H.K.J. Dhanani, High Court of Tanzania, Commercial Case No. 102 of 2001, Counsel submitted that such omission rendered the Preliminary Objection improper and liable to dismissal. Order VIII rule 2 of the CPC, whose marginal notes state "New facts must be specially pleaded", stipulates as follows: "The defendant must raise by his pleading all matters which show the suit not to be maintainable, or that the transaction is either void or voidable in point of law, and all such grounds of defence as, if not raised, would be likely to take the opposite party by surprise, or would raise issues of fact not arising out of the plaint, as, for instance, fraud, limitation, release, payment; performance, or facts showing illegality. In CRDB's case, the learned Judge (Nsekela J., as he then was) interpreted the above rule to mean that a Defendant is enjoined -to raise every preliminary issue in his defence. He stated: "My reading and understanding of this rule is that if Defendant wants to raise an issue that the suit is not maintainable according to law, then this point must be raised in the body of the Written Statement of Defence. It must be in the body of the defence and not otherwise .... A piece of paper called "NOTICE", in my humble view, contravenes Order VIII rule 2 of the Civil Procedure Code and should be discarded. It is not properly before me to adjudicate upon." However, the learned Judge did not stop the're. Indeed, as Mr. Kesaria argued in his rejoinder submissions, the above holding appears not to be the ratio decidendi in the ruling, but simply obiter dicta: His Lordship did not dismiss the preliminary objection on this ground. He went further to 3 Q, "ORIGINAL" determine it on merit before dismissing it. In doing so, he expressed the view that he might be wrong in his interpretation .of Order VIII rule 2. Mr. Kesaria argues that I am not bound by the decision in CRDB's case, since it is a decision of a Judge who was, .at the time, a Judge of this Court. That is true. However, such decisions must be taken to be highly persuasive and, for purposes of consistency, ought ordinarily to be followed. While as High Court judges we are free to depart from earlier decisions of our sister and brother Judges, we must do so. with a lot of caution, and only where there is good reason to do so. Coming back to the present case, I do not think I need depart from the decision in CRDB's Case. That decision is distinguishable from .the present case. It is trite that certain matters of law may be·tSO fundamental that they go the root of the case. These do not have to be raised in the defence. They . can be brought up at any time. Among them are matters of jurisdiction and limitation. I do not think it is open to a Court of law to decline to · determine such matters simply because they have not been raised in the WSD. In any case, the law enjoins us to ensure that we only entertain matters that are brought to us where we are satisfied that we have the requisite jurisdiction. Otherwise, in appropriate cases, we are even bound to raise the issue suo motu. Hence, my interpretation of Order VIII rule 2 is that the requirement for raising every issue in the WSD cannot be insisted upon where the matter or issue touche_s upon the Court's jurisdiction. And, as pointed out by Mr. Kesaria, res judicata goes to the Court's.jurisdiction. Even the wordin·g of. the· rule of· res judicata ·(section 9 of the CPC) ·is couched in clear terms · 4 "ORIGIN.llL" that prohibit Courts from exercising jurisdiction in matters barred by it. Section 9 states: "No court shaU try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties or between parties under whom they or any of them claim litigating under the same title in a court competent to try such subsequent suit or the suit in which such issue has been subsequently raised and has been heard and finally decided by suc_h court." The section bars Courts from entertaining any "suit or issue" to which the rule of res judicata applies. Hence, I am of the view that a plea that raises a fundamental issue of law can be raised at any time and not necessarily in the body of the Defence._ Having set out the law as I understand it, I think, with respect, that Nsekela J's ruling in CRDB's Case is distinguishable from the present. In the first place, the point of law raised in the former suit was to the effect that the suit was premature. That issue does not amount to a fundamental point of law that goes to the jurisdiction of the Court as I have endeavoured to explain above. I would therefore distinguish the holding by Nsekela J. in CRDB's Case and hold that the Notice of Preliminary Objection filed by the Defendant herein on 13th September 2010 is properly on record. -The preliminary objection against the manner of its filing stands dismissed. Having dismissed the two objections raised by the Plaintiff against the Defendant's Notice of Preliminary Objection, I now proceed to· determine the Defendant's objections. .5 "ORIGINAL" In· view of the rival submissions from counsel for both parties with regard to the preliminary point of law raised by counsel for the Defendant, I am of the view that the main issue for determination is whether the defendant could or ought to have raised the issue that form the basis of this claim in the earlier suit (Commercial Case No. 21 of 2009). This is the main question. However, in response to the preliminary objection, the Plaintiff has also raised sub-issues with regard to the conditions precedent for res Judicata to apply, arguing that the matters directly and substantially in issue in the two suits are not the same, that the objection relates to matters that require evidence, that the parties were not litigating under the same title, and that the suit is not constructively res Judicata. In . support of his preli.minary objection, Counsel for the Defendant · contended that it is clear from the pleadings in both cases that as at 12th March 2009 when the Plaintiff filed the former suit (Commercial Case No. 2f of 2009), he was aware of the dishonoured cheques. The cheques in question were issued and dishonoured in October 2008 and January 2009 respectively, five months and two months respectively before the institution of the former suit. The question that arises at this juncture is: What were/are the matters directly and substantially in issue in the two suits? In the present case, the Plaintiff Mark AD and PR International (T) Ltd., is suing the Defendant, Stanbic Bank Tanzania Ltd., for payment of various amounts of money consisting of special and general damages. The basis of the claim is wha~ the Plaintiff terms: " ... the dishonor of cheques and [thus the Plaintifff] claims damages arising · out of the Defendant's breach of duty arising out of Banker-Customer relationship." 6 "ORIGINAL" ·In the earlier ·casJ, Commercial Case No 21 of 2009, the Plaintiff therein, Mark AD and P~ International (T) 1:-td., sued the Defen~ant, Stanbic Bank Tanzania Ltd., in what the Plaintiff terms as: " ... a suit between the same parties that arose out of their relationship as le!"lder and borrower. The relationship was governed by the facility letter and the Loan Agreement. In the said· suit the Plaintiff sought Court intervention to prevent the Defendant from putting the Plaintiff under receivership and an order or restructuring of the outstanding loan." It was submitted by counsel for the Defendant that the question to be determined is whether or not what is complained of and claimed by the Plaintiff in the present suit could have been raised and claimed by the Plaintiff in the former suit. If the answer to that question is in the affirmative, th_en the suit is barred by res judicata. Having said that, however, since there are clear differences in the reliefs claimed in the two suits, in that the first one was aimed at avoiding being placed under receivership and the present one being a claim for damages arising out of dishonoured cheques, the issues directly in issue do not come out very clearly. It is thus important to look at other factors that may further explain the situation. · The Plaintiff has invoked Explanation IV to the provisions section 9 of the CPC, which enacts the rule of res judicata. Explanation IV reads: Any matter which might and ought to have been made a ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit. 7 "ORIGIN.AL" Explanation IV recognizes what is known as constructive res judicata. It brings into the realm of matters directly and substantially in issue in two relevant suits, matters which might or oughtto have been made a ground of defence or attack in the former suit.· As the learned author Mulla puts it in his The Code of Civil Procedure, 16th ed. Vol lat page 193: " ....Though [a matter] has not been actually in issue directly and substantially, it will be regarded as having been constructively in issue directly· and substantially. This section draws no distinction between a claim that was actually made in a suit and a claim that might or ought to have been made. If the parties had an opportunity of controverting it, that is the same thing as if the matter has been actually controverted and decided." Counsel for the Plaintiff has cited three cases to buttress his argument. He quoted Lord Somerveil in Breenhalgh Mallard [1947]2 All ER p. 255 where ~ . . the learned Judge said: "Res Judicata for this purpose is ·not confined to issues which the Court is actually asked to decide but that it covers. issues or facts which are so clearly part of the subject matter of litigation and clearly could be raised that it would be an abuse of the process of the Court to allow a new proceeding to be started in respect of them." To me, perhaps the most instructive comment on the issue herein is the . statement by Law, Ag. J., in Kamunye & Anor v The Pfoneer Gene,ral Assurance Society ltd. [1971] EA 263 at 265~ which states: The test whether or not a suit. is barred by res judicataseems to me to · .. . be: is the Plaintiff in the second suit trying to· bring before the Court in another way and in the form of a new cause of action a transaction which he has already put before a Court of competent jurisdiction .in earlier proceedings and which had been adjudicated upon? If so, res Judicata 8 "ORIGINAL" applies not only to points upon which the first Court was actually required to adjudicate but every point which properly belonged to the subject and which the parties, exercising reasonable diligence might have brought forward at the· time." In Green v Weather (1929) 1 Ch. 221, Maughan J., was of the view that a party will not be allowed to bring to Court a matter which he ought to have brought up in a former suit but did not, whether due to negligence, or even accident. As I said earlier, in response to the Plaintiff's submissions, learned Counsel for the Plaintiff raised a number of sub-issues. On the authority of Mukisa Biscuit · Manufacturing Co. Ltd. v West End Distributors Ltd. [i969]1 EA 696 at 700 and Unilever Tanzania Ltd. v Benedict Mukasa and Bata Limited Canada v Bora Industries Ltd., Counsel argued that a preliminary objection does not qualify to be so if it calls for evidence to establish a certain disputed fact. Both these cases were applied with approval by my brother, Makaramba J., in the case of Addax BV Geneva Branch v Kigamboni Oil Co. Ltd., Commercial Case No. 72 of 2008. However, while, I fully agree with the exposition of the law in those cases, the issue herein does not require any evidence. All that is required, according to the decision of the Supreme Court of India in the case of Ramchandra Dagdu Sonavane (Dead) by L.Rs v. Vithu Hira Mahart (Dead) by L.Rs & Ors, Civil Appeal No. 7185 of 2001, is to place on record in this case, all the necessary facts, including pleadings of Commercial Case No. 21 of 2009. The Defendant has done ·exactly that: Counsel has appended to his Notice of Preliminary Objection copies of the Plaint, the WSD (which also included a Counter Claim), annexures thereto, Compromise of Suit and. the Decree. That is enough to satisfy the requirement of Ramchandra Dagdu Sonavane's Case (which I - approve) for purposes of res Judicata. 9 - - -------- - - - irJI ~ "ORIGINAL" The Plaintiff has also relied on Explanation III to support his argument that . the matters directly and substantially in issue in the two suits are not the . same. Explanation III states: The matter above referred to must in the former suit have been alleged bY. one party and either denied or admitted, expressly or impliedly, by the other. However, with due respect to learned Counsel Masatu, Explanation III is not the relevant explanation in this case. As Mr. Kesaria submitted, the issue herein is constructive res Judicata which is covered by Explanation IV. It seems to me that the several explanations set out in. section 9 are not necessarily inclusive, in the sense that all must exist for res Judicata to apply. But even .if Explanation III was to apply, it would still be satisfied in this case. For, as I shall soon be demonstrate, the Plaintiff did raise the matter in his Plaint. In order to determine whether or not the matters substantially in issue in this suit could or ought or have been made a ground of attack or defence in Commercial Case No. 21 of 2009, let me take a look at the pleadings in the two cases. A close reading of the Plaint in the former suit brings to the surface a statement contained in paragraph 32, in which the . Plaintiff states: "The Plaintiff does not deny the Defendant's outstanding loan and interest thereon and is committed to the repayment of the· loan and interest though she is being hampered by the problems highlighted in paragraph 28 to this Plaint, as well as the Defendant's conduct of blocking the Plaintiff's account thus preventing the Plaintiff from operating the account. .. " 10 "ORIGINAL" Responding to this averment, the Defendant in its WSD simply noted the Plaintiff's admission of liability to the Defendant. It is thus not in dispute that at the time the Plaintiff filed the former suit, it knew of the Defendant's decision to freeze the Plaintiff's account because of its failure to repay the loan and that the two cheques had been dishonoured. It was open to the Plaintiff to raise the matter as a ground of attack in its Plaint (as a further point to paragraph 32 of the Plaint). The fact that the Plaintiff did not do that cannot, and should not, give it an excuse for opening a new litigation based on a purportedly new cause of action. Alternatively, it could have made it a ground of defence in its WSD to Counter Claim. Again, it did not do so. Following Mulla in his treatise on the Code of Civil Procedure, Law Ag. J in Kamunyu's Case {Supra), the Plaintiff in the second suit cannot bring before the Court, in his Lordship's words " .... in another way and in the form of a new cause of action", a transaction which he ought to have brought up in. the former suit but did not. - Learned counsel for the Plaintiff also argued that the parties did not litigate under the same title in the two suits. He submitted that in the former suit, the Plaintiff was standing as a borrower suing his bank as a lender while in the present case he was a customer suing his bank for breach of contract and dishonouring its cheques. The answer to this argument is that res Judicata cannot be ousted simply by the Plaintiff cleverly formulating his claim by bringing in a new cause of action. All that -is required is for the Defendant to establish that the matters could or ought to have been brought up in the former suit. As I have already found that to be the case herein, the argument lacks merit. I am not persuaded by it. 11 "ORIGINAL" Given my finding that this suit is res Judicata in terms of section 9 of the CPC as further explained by Explanation IV to that section, the -Plaintiff's complaint over the Defendant's counsel's invocation of Order II rules 2 and 3 of the CPC in support of his preliminary objection. remains merely academic. I do not think that the same would warrant consideration by this Court .. Indeed, public interest dictates that there must be finality to litigation. This rule seeks to protect parties from over-litigious individuals who would wish to continue with litigation against the same person on the same subject matter without end. In the final analysis~ therefore, this suit is not maintainable by reason of being res Judicata. I dismiss it with costs. DATED AND DELIVERED AT DAR ES SALAAM this 6th day .of December, 2010. FauzTwaib Judge 12