MASKI SONS CONSTRUCTION CO LTD VS REIME T LTD COMM CASE NO

IN THE HIGH COURT OF TANZANIA COMMERCIAL DIVISION AT DAR ES SALAAM COMMERCIAL CASE No. 101 of 2017 BETWEEN MASKI & SONS CONSTRUCTION CO. LIMITED.... PLAINTIFF VERSUS REIME (T) LIMITED........................................... DEFENDANT JUDGMENT MRU MA, J, The plaintiff MASKI & Sons Limited instituted this case against the defendant REIME Tanzania Limited seeking orders for immediate payment of:- (a) USD 120,064.03 and T.shs 3,599,000/=being the total amount which was to be paid by the Defendant to the Plaintiff for Transportation of different tower materials and generators to various destinations within Tanzania; (b) Interest on the principal sum at rate of 25% monthly from the date of breach of the agreement to the date of judgment; i (c) Interest on costs at the court's rate of 12% per annum from the date of judgment until payment in full (d) An Order that the Defendant pay the Plaintiff costs of and incidentals to this suit and; (e) Any other reliefs as the court may deem fit and just. The Plaint sets out the facts constituting the cause of action as follows:- That sometimes in 2011, the plaintiff company entered into an oral agreement with the Defendant to provide transportation services among others, to transport tower materials and generators to various destinations within Tanzania. The plaintiff after entering into the contract performed the contract and transported various tower materials and generators to different destinations in the country as directed by the Defendant officials. It is the Plaintiff's case that upon delivery of the cargoes to the Defendant in the designated point, the Defendant would sign the delivery notes in her name and the Plaintiff's drivers would counter sign. The Delivery notes showed the nature and quantity of the cargo transported. After the work, the Plaintiff raised several invoices which were directed and delivered to the Defendant for payments but the Defendant didn't pay for services done. Up to 2014 the Defendant was promising to pay through telephone conversations with the Plaintiff officials but they couldn't. It the plaintiff's further statement that her officials made several physical visits to the Defendant's offices but the Defendant kept on promising to pay but she never paid. 2 The defendant filed a written statement of defence in which she denied every allegation raised by the Plaintiff. She denied having knowing the alleged oral contract and any telephone conversations or communications with the Plaintiff on the alleged agreement. At the commencement of the trial the following issues were framed, 1. Whether o r n o t in the year 2011 the p la in tiff transported Defendant's tow er materials a n d generators to different destinations; 2. I f the answ er to the first issue is in the affirmative whether o r n o t the Plaintiff raised a n d delivered a n y invoices to the Defendant; 3. I f the answ er to the second issue is again in the affirm ative whether o r n o t the Defendant p a id fo r a ll invoices raised. 4. W hat rem edies are available to the parties. At the trial, Mr Castor Rweikiza, learned advocate represented the Plaintiff while Dr. Onesmo Kyauke, learned advocate represented the defendant. The parties filed witness statements upon which the witnesses were cross examined. Issue one, 7s whether o r n o t in the year 2011 Plaintiff transported Defendant's tow er materials a n d generators to various destinations. As correctly observed by the counsel for the parties in their closing submissions, before answering this issue court 3 has to determine whether in the first place there was an oral agreement as alleged by the Plaintiff. To prove that there was contractual agreement between the parties plaintiff called four witnesses. The first witness is Awadhi Iddi Mbaga (PW1), who testified that he is the Managing Director of the plaintiff's company. He stated that from 2011 up to 2014 the defendant company contracted the plaintiff company to transport tower materials and generators to different destinations in Tanzania mainland. His company transported the materials as agreed. According to this witness before and upon transporting the said consignments the Defendant signed delivery notes which showed the nature and quantity of the goods transported by the Plaintiff and delivered to the Defendant. The Plaintiffs drivers signed. To prove this assertions PW1 tendered in evidence a bunch of delivery notes (Exhibit P l) exhibiting the materials transported to various destinations. It is further evidence of PW1 that after delivering the materials to the Defendants sites, the Plaintiff raised invoices and delivered them to the Defendant for payment but the Defendant couldn't pay. The witness tendered in evidence invoices (Exhibit P2) to exhibit demands for payment for services rendered. The witness testified further that despite several demands through phone calls and e-mail communications the Defendant didn't make any payment In cross examination, PW1 testified that he produced in evidence photocopies of Invoices because originals were submitted to the Defendant for payment and the plaintiff had filed a notice to produce but the Defendant didn't bring them. He further testified that although 4 payments were due since 2011 but the Plaintiff couldn't institute legal action as the Defendant was keeping on promising to pay up till 2017 when they realized that the Defendant was making empty promises. Regarding issuance of ERV Receipts, it was the evidence of PW1 that in 2011 when this transaction started there were no ERV Receipts and further that even if they were there, ERV Receipts are issuable after payments and because no payment was made the Defendant cannot be heard demanding the receipts. On his part Lameck Emanuel Mmasa PW2 testified that he was an employee of the Plaintiff's company as a driver. He said that on several occasions in the year 2011 onwards he was instructed by his employer i.e. the Plaintiff to go to the Defendant's Warehouses and load some cargoes and take them to various destinations within the country. He stated that upon arrival of the cargo to the Defendant's site officials of the Defendant would sign delivery notes in acknowledgment of receiving of the same. Similarly, the driver including himself would sign to prove that he had delivered the cargo as instructed. Similar evidence was given by Nelson Eliaza Msami (PW3), who like PW2 was working with the Plaintiff as a truck driver. Further for the Plaintiff, there is evidence of Patrick Daniel Mpinzi (PW4), who was an employee of the Defendant's company (REIME Tanzania Limited) as a store keeper whose task was to receive, verify and acknowledge cargoes transported by different clients of the Defendant. He told the court that the Plaintiff was one of the transporters who was engaged by his company to transport tower materials and generators to various destinations in the country. He said 5 that he was among the employees of the Defendant who were issuing the Plaintiff's truck drivers with the delivery notes (Exhibit P l) for purposes of witnessing the Defendant's cargo delivery. He said that after the cargo was transported to its destination, the Defendant officers and the driver who took the cargo to that destination would sign the notes and return them to him (i.e. PW4). Upon receiving the same he would keep the original for Defendant's records. He testified further that the Defendant received invoices from the plaintiff (Exhibit P2). In cross-examination by Dr. Kyauke for the Defendant PW4 testified that he was still working with the Defendant at the time of giving his evidence against his employer. He said that he had been working with the Defendant's company since September 2011. He said that was the one charged with duty of signing delivery notes. He said that before 2014, there was different procedure for procuring transport services. Currently there must be a purchasing order before one can be engaged in the transportation of any Defendant's cargo. According to PW4 this procedure was not there during the transaction in issue. On her part, the Defendant called one witness Mr. Christian Sadikiel Marandu (DW1) its Project Manager. He testified that according to their records they could not trace any records of the alleged oral agreement with the Plaintiff for the later to transport the Defendant's goods. He said that even the delivery notes (Exhibit P l) have not been accompanied with purchase orders. He said that in practice the Defendant's company has been entering into written agreements with service providers and government taxes including stamp duty are paid accordingly. He denied to be aware of tax invoices (Exhibit P2) and 6 stated that in any event tax invoices are accompanied with EFD receipts which should indicate n N number and VAT numbers for both parties. He said that apart from a demand letter dated 5th May, 2015 the Defendant didn't receive any other letter from the Plaintiff. On that note he said that the Plaintiff's claims should be dismissed with costs to the Defendant as they are unjustifiable. Counsel for the plaintiff submitted that in view of the evidence of PW1, Awadh Idd Mbagga the Managing Director of the plaintiff which was to the effect that the defendant the delivery notes (Exhibit P l) were issued by the Defendant coupled with that of PW2 Lameck Emanuel Mmassa, and PW3 Nelson Eliaza Msami who are plaintiff's drivers who carried the towers and generators to various destinations. In cross-examination DW1 conceded that Roy Sebarua was an employee of the Defendant at the position of Logistic and Warehouse Manager and that Yunus Yangin was the Managing Director of the Defendant's company, REIME (T) Limited. Counsel for the parties made final submissions. In this respect counsel for the Plaintiff submitted that on the evidence of PW1 who is the Managing Director of the Plaintiff taken together with that of PW2 and PW3 who were the drivers in the Plaintiff's company coupled with that of Patrick Mpinzi (PW4) who was an employee of the Defendant at the time he gave his testimony and the exhibits tendered including delivery notes (Exhibit Pl), invoices (Exhibit P2) and E-mail correspondences between the parties (Exhibit P3), the Plaintiff has been able to prove her case on the balance of probability. On my part I do agree to that conclusion. 7 The oral and documentary evidence as adduced by the Plaintiff point out to the fact that there was actually an oral agreement between the parties under which the Plaintiff was contracted to transport tower materials and generators of the Defendant. The delivery notes (Exhibit P l) tendered as exhibit showed that they were prepared by the Defendant's employees including Mr. Patrick Mpinzi (PW4). For instance in Delivery Note No. 2136 of 25th February, 2014 (Part of Exhibit P l) which was prepared by Patrick Mpinzi (PW4) for the Defendant the Plaintiff was contracted to transport a used generator (Yanmar typ, Engine No. 61743,3 TNV 88 white housing) together with its battery from Karangas site to Mbagala HTT Warehouse and it was loaded in truck No. T.632 AZY driven by one Rashid. The consignment was received by one Hassan and approved by Aloyce Masesa. In delivery Note No 0848 dated 27th April 2013 which was prepared by PW4 another generator was loaded in truck No. T.632 AZY driven by Nelson Eliaza Msami (PW3) and was transported to Katoro Bukoba. This evidence supports the allegation that there was an oral agreement between the parties. I therefore answer the self posed question in the affirmative. That is to say there was oral agreement between the parties under which the Defendant contracted the Plaintiff to transport her tower materials and generators to various destinations as would be instructed by her. The answer to the above self posed question paves way to the answer to the first issue which asks whether or not in the year 2011 the Plaintiff did transport tower materials and generators of the Defendant. This issue is answered in the affirmative. There are several transactions (Exhibits P l, P2 and P3) which took place in 2011 onwards which 8 supports the Plaintiff's assertions in the plaint. This court therefore finds that between 2011 and 2014 the Plaintiff did transport Defendant's tower materials and generators to various destinations upon instructions. Having answered the first issue in the affirmative the next issue is whether the Plaintiff raised invoices and delivered them to the defendant. It was submitted by the Counsel for the defendant that the documents tendered as Exhibit P2 do not qualify to be invoices because exhibit P2 consists of the so called "Mchanganuo" and only three Tax Invoices. He added that according to Section 86 and 87 of the Value Added Tax Act, 2014, a registered person who makes a taxable supply has to issue a serially numbered true and correct tax invoice. He stated that the invoice must be generated by Electronic Fiscal Device (EFD) and shall include the following information (i) The date on which it is issued (ii) The name of Tax payer Identification Number and the Value Added Tax Registration Number of the Supplier; (iii) The description, quantity and other relevant specifications of the things supplied; (iv) Total consideration payable for the supply and the amount of the Value Added Tax included in that consideration. He stated that Exhibit P2 cannot be said to be invoices as they do not comply with Section 86 (1) of the Value Added Tax Act, 2014. 9 Counsel for the plaintiff submitted that DW l's evidence that Exhibit P2 do not qualify to be invoice calls for definition of what is an invoice. The learned counsel referred this court to a definition of the term as defined in Dr. Basanti Lali Babel Law Dictionary where the term was defined to mean " A list o f the particular items o f goods shipped or sent to a factor or purchaser with their value or price and charges; a list o f goods with prices and particulars" From the evidence and submissions of the parties in this case question which calls for immediate answer here is whether an invoice is the same thing as a tax invoice. In Black's Law Dictionary 7th Edition at page 833 the term is defined as an itemized list of goods or services furnished by a seller to a buyer. The Value added Tax Act, which is an Act to make a legal framework for the imposition and collection of administration and management of the value added tax defines Tax invoice as a document issued in accordance with Section 86 of the Act and regulations made there under. Thus, from these two definitions it goes without saying that a tax invoice is not the same thing as an invoice. From the evidence on record what the Plaintiff issued to the Defendant were invoices and not tax invoices. The invoices issued by the Plaintiff and received by the Defendant (Exhibit P2) as confirmed by the testimonies of PW1 and PW4 were documents containing lists of items transported by the Plaintiff at the request of the Defendant and the transportation charges the Defendant ought to have paid the Plaintiff for services rendered. They were the documents sent to the Defendant which established an obligation on the Defendant to pay for 10 the service rendered. They were not ta x invoices within the ambit Value Added Tax Act of 2014 as the Defendant's counsel would love this court to believe. They were not tax invoices because they had nothing to do with collection of and management of Value Added Tax as the matter before the court is not a tax matter. Moreover, the Value added Tax Act No. 15 of 2014 came into force on 11th December 2014 and the last invoice was raised in May 2014 which is over seven months before the Act came into force. As a matter of principle there is no law in this country which works retrospectively therefore, even if we assume that Exhibit P2 were Tax Invoices (which is not the case), Section 86 of the Value Added Tax No. 15 of 2014 would not be applicable. Thus the Second issue which asked whether or not the Plaintiff raised and delivered invoices to the Defendant is answered in the affirmative. That is to say the Plaintiff did raise and deliver invoices (Exhibit P2) to the Defendant This conclusion is supported by the evidence of PW1 and PW4. According to PW1 the Plaintiff issued and delivered invoices (Exhibit P2) to the Defendant but the Defendant didn't pay. There is also evidence of Patrick Mpinzi (PW4) who at the time he gave his testimony was the employee which was to the effect that the invoices (Exhibit P2) were actually delivered to the Defendant's offices but were not acted upon. He said that he personally saw the documents (i.e. delivery notices and invoices) being presented and they were forwarded to the Defendant's Warehouse Manager offices' where they got lost. The next issue is whether or not the Defendant paid for raised invoices ii Counsel for the plaintiff submitted that there is evidence from PW1, PW4 and Exhibit P4 to the effect that the Plaintiff is claiming from the Defendant USD 120,064.03 and T.shs 3,599,000/= being the amount due and payable to her for the transportation of Defendants tower materials and generators. Counsel submitted that the defendant didn't pay for any of the transported materials and when demand letters were sent to her (Exhibit P4), she didn't make good of the payments demanded. Counsel for the defendant submitted that the delivery notes (Exhibit P l) cannot help the Plaintiff because they do not indicate the number of Kilometres prices etc and that apart from tendering the documents there is no evidence given to link the delivery notes with invoices submitted. I have carefully considered the facts and arguments of both counsel in this issue. The brief findings of this court as stated hereinbefore are that the plaintiff was contracted by the defendant to transport tower materials and generators to different destinations within the country. That the Plaintiff did transport the said cargoes as contracted. That the Plaintiff raised and delivered invoices demanding payments for the services rendered. The Plaintiff demanded payments for the work done (Exhibit P4). The defendant didn't pay the plaintiff the contract price. This is clear from a series of e-mail correspondences between the parties up to December, 2015 (Which form part of Exhibit P3). It appears that the claim of USD was submitted to the Defendant way back in 2014. In the e-mail dated 3rd June, 2014 the Plaintiff Maski & Sons wrote: maskisons@yahoo.com to Munene.gachau@reimenis.com that:- 12 "This is to respond to yo u r em ail regarding the statem ent showing a ll unpaid invoices. Please be inform ed th a t a ll the documents have already been subm itted to yo u r office a n d are within y o u r reach. Kindly make correspondence within y o u r office a n d a c t accordingly" That was in response to Mr. Munene Gachau who on 26th May, 2014 wrote: "Dear Mr. Mbaga, Please send us y o u r statem ent showing a ll the unpaid invoices a n d correspondences" On the same day, Mr. Yunus Yangin (the Managing Director o f the Defendant had wrote to the Plaintiff's Managing Director as follows: "Mr. Mbaga, I w ill lo o k in to this a n d come b a ck" This was a reply to the Plaintiff's e-mail requesting fo r payment earlier on the same day where she w rote:­ " Hello Mr. Yunus, I hope yo u are doing fine. I am w riting this to inform you regarding delay o f o u r payments. Over the course o f this business we were doing g o o d so fa r a n d you have been g o o d as w ell in term s o f disbursements. B u t o f recent the trends o f disbursements have deteriorated which ultim ately lead to slowdown o f o u r business transaction, We are kindly request y o u r go od office to effect o u r 13 claims as soon as possible to facilitate smooth operations o f ou r business transactions and m ain ou r business reputation as w e ll" On 3 rd November 2014 there were some e-mail correspondences between the parties. It all started an e-mail from rov.sebarua@reinemis.com to Maski Sons where Roy Sebarua w rote:- " I hereby provide you the Email address o f o u r Finance Manager to whom w ant him to handle i t personally. I w ill be available fo r any question as everything is straight forward. Come and talk to him and hope be finalized" On 4 th September, 2015 Christine Kahale Christine.kahale@reimenis.com wrote to Advocate Makubi who was acting for the Plaintiff that: "Dear Makubi, Sorry belated, Was busy day fo r m e Please note th a t the m a tte r under team discussion, I am sure w ill come to the end (payments). Will update you soon, teams (Christian Project Manager/Patrick Warehous/Yunus MD- NBO an d Basil MD Raime TZ) a n d Rajesh M anager..." All these correspondences were in respect o f the demand for payments o f USD 120,064.00 and T.shs 3,599,000/= by the Plaintiff against the Defendant which payments the Plaintiff is claiming in this suit. In all 14 those correspondences nowhere did the Defendant dispute the amount claimed and as quoted above in one of those correspondences the defendant is quoted to have said all well be settled because everything "was straight forward". There is also admission by the Defendant officials that all documents regarding the Plaintiff's demand were submitted to the Defendant. This corroborated the testimonies of PW1 and PW4 which is to the effect that original invoices were submitted to the Defendant during negotiations. The fact that the Defendant didn't dispute the Plaintiff's claims of USD 120,064.03 and T.shs 3,599,000/= during e-mail correspondences and physical meetings held by the parties in 2015 coupled with the undisputed evidence of PW1 and PW4 that original invoices were submitted to the Defendant and in absence of any evidence of payment of any sum for the services rendered is sufficient proof that the amount is outstanding. This answers the third issue in the negative. The defendant didn't pay for invoices raised. Accordingly this court finds that the Plaintiff has been able to prove her claims of USD 120,064.03 and T.shs 3,599,000/= as against the Defendant. The Defendant is also claiming interest on the claimed sum at the rate of 25% accruing monthly from the date of breach to the date of judgment and further interest at court's rate of 12% per annum from the date of judgment till payment in full and costs of the suit. Under S. 29 of the Civil Procedure Code where interest was not agreed upon by the parties, Court should award interest that is just and reasonable. In determining a just and reasonable rate, courts take into account the currency under which the claim is pegged, the ever rising 15 inflation and drastic depreciation of that currency. A Plaintiff is entitled to such rate of interest as would not neglect the prevailing economic value of money, but at the same time one which would insulate him or her against any further economic vagaries and the inflation and depreciation of the currency in the event that the money awarded is not promptly paid when it falls due. Although the transaction out of which the breach of contract arose was commercial in nature but the parties had not agreed on payment of interest, to allow interest at the rate of 25% accruing monthly on USD currency which is one of the strongest currency in the world as demanded by the Plaintiff would be harsh and unconscionable. Interest allowed by the court for an amount to be refunded where there was no agreement for its payment should be simple interest. The rate of interest charged on the US dollar is far less than interest charged on Tanzania Shillings. That is evident from the exchange rate and the Central Bank rate. The law prohibits award of interest that would amount to unjust enrichment or benefit to one of the parties. For all those reasons this court grants interest to the Plaintiff on the US dollar decreed sum at the rate of 10% per annum from the date of filing the suit until payment in full. On the Tanzania Shillings the Plaintiff is awarded an interest at the rate of 16% per annum form the date of judgment to the date of full payment. The plaintiff is awarded further interest at court's rate of 3% per annum on the US dollar and 7% per annum on the Tanzania Shillings both from the date of judgment up till payment in full 16 Regarding costs, it is the established principle of law that costs of any action, cause or matter shall follow the event unless court for good cause orders otherwise [See S. 30(1) of the Civil Procedure Code]. The Plaintiff being the successful party in this case is therefore entitled to costs of the suit. As mentioned earlier in this judgment, the Defendant had sought for dismissal of the suit. However, he only stopped at mentioning in her pleading and evidence that she does not recall having entered into any oral agreement with the Plaintiff. Since the plaintiff has been able to establish the contractual relationship with the Defendant and that the Defendant was the one in breach of that contract he is not entitled to the prayer for dismissal of the suit. Her prayer is dismissed for those reasons. In the result, Judgment is entered for the plaintiff against the Defendant in the following terms: 1. The Plaintiff is the sum of US$ 120,064.03 and T.shs 3,599,000/= being the amount which was to be paid by the Defendant to the Plaintiff for transportation of different tower materials and generators to different destinations. 2. Interest is awarded on the Us dollar Sum at the rate of 10% per annum and 16% per annum on the Tanzania shillings from the date of filing the suit until payment in full. 3. The Plaintiff is awarded interest at court's rate of 3% per annum on US dollar and 7% per annum on Tanzania Shillings from the date of judgment till payment in full 4. Costs of the suit are also awarded to the Plaintiff. 17 Dated at Dar Es Salaam this 2nd day of August 2018. 18