20060324 TZHC Arusha

1 1 IN THE HIGH COURT OF TANZANIA ATARUSHA MISCELLANEOUS CIVIL APPLICATION NO. 81 OF 2005 (CF CIVIL CASE NO. 27 OF 2000) 1. MESSRS AGM HOLDINGS LIMITE.D ] 2. MESSERS SEIDEL FOUNDATION ' ] 3. MESSRS MOSES WAHOME ] ~- 4. MESSRS KIJENGE ANIMAL PRODUCTS ]. ................. '.................. APPLICANTS 5. MR. STEPHEN MOLLEL ] 6. MRS MICHALIDES ] 7. MR ANDREW GEORGE MOLLEL ] Versus 1. REGISTERED TRUSTEES SOCIAL ACTION TRUST FUN.D .. 15T RESPONDENT 2. MR. COLMAN MARK NGALO .......................................... ;.. 2No RESPONDENT 3. MICHAEL J.T. NGALO.................................................... i .• 3Ro RESPONDENT I 8 th November 2005 and 21 st March, 2006 RULJING R. SHEIKH, J. High Court Civil Case No. 27 of 2000 has ipdeed seen a fair ' number of interlocutary matters, the instant application being the latest of a string of applications/ interlocutary proceedings commenced by the contending parties. I 2 On 14/06/2000 Messrs. Happy jSausages Limited (the first plaintiff) and Ten (10) others instituted an action against the 8efendants (1) The , I . Registered Trustees of SOCIAL ACTION TRUST FUND and (2) Mr. : Colman Mark Ngalo and Michael J. "J!. Ngalo (Rec~ivers/Managers), who are together the respondents in this application b~fo1e me; for damages for breach of contract to wit clat;1se 12.0 of 'the Loan Agreement ' I between the first Plaintiff and the fi~st Defendant arid for a declaration that the appointment of the second 6oint) defendantt Mr. Colman Mark ; I ' I Ngalo and Mr. Michael J. T Ngalo ~s receivers and managers, by the first defendant is null and void. The suit was l;>rought under a loan 1 agreement (entered into by the 1st plaintiff and ~hJ 1st defendant/ 1st Respondent,) which contained a general submission ~o arbitration, of all disputes arising out of the agreeme~t. In other wo~ds the agreement I contained a provision for referring ~o arbitration ·all disputes between the parties thereto. In the plaint it :is alleged that the appointment of the 2nd defendant as receivers and managers was i in breach of contract ~ '. I and in particular in breach of Artiicle 12 of t~e Agreement which I provided for amicable settlement of disputes and for referring disputes to arbitration. On 10/1/2001 the defendants fi,led a written sta1 ement of defence ' denying the plaintiff's claim and by vJay of defence pl,eaded that the 1st plaintiff / 1st applicant herein had defaulted in the r~p,yment of the loan and that the 1st defendant was .legally entitled I under the loan I 31 i. I Agreement to appoint Receivers an:d Managers;· th~ defendants also counter-claimed for payment of the total loan balatJce) plus interest. I Subsequent to the delivery of ,the counter-claim apparently Civil case No.27 of 2000 has had a rather chequered ~nd\ protracted history ., I owing to a number of interlocutory hiatters arising therefrom some of 1i' which went on appeal to the Tanzania Court of Appea:I, culminating with an order of this Court rejecting a rrfotion to pronounce judgement on · I I . the counterclaim against the plaintiffs/defendants to\ the counter-claim 1 made under Order VIII Rule 14 (1) of the CPC as amended by G.N. 422 :i I of 28/10/1994. The matter was thereafter fixed for orders and then ' i i finally on 11/05/2005, in the presence of both parties the case was I marked for hearing on 8th and November 2005. I th ' I I Then on 8 November 200 when the ca;se came up for 7 hearing/trial the instant application "'{as filed in court by the applicants ' I I namely Messrs AGM Holdings Limited~ Messrs Seidel Foundation. Messrs Moses Wahome, Messrs Kijenge Anii~al Products, Mk Stephen Molle!, I Mrs Michalides and Mr. Andrew George Mollel whd a~e 2nd, 3rd , 4th, 9th, th and 11 plaintiffs respectively in Ci✓il Case No.27 9f 2000. The 7th , applicant Mr. Andrew George Mollel was joined as a 12th plaintiff/defendant to the counter-clair:n in the coun,tertclaim filed by the defendants/respondents herein. The: applicants in this application are seeking the following orders:- ' ! I I I I I ! 1 I 4; I · 1 a) That the following persons be /emoved as 'being plaintiffs in the suit:- ! · \ (i) Plaintiffs numbered 2,3,4,'.:5,9,11 and 12 \ (ii) Plaintiffs numbered 6,8 rnd 10 who are Inot the applicants herein also be removed from the plaint in qivil case No. 27 of 1 2000. I b) That the plaint in Civil Case ::No. 27 of 200b be amended to . accommodate prayers in paragr'aph (a) here9t. I The application has been brouJht under the privisions of Order I . ' Rule 10 (2) and Order VI Rule 17, of the Civil Proctedure Code and is ' I I supported by:- 1. the affidavit of Andrew George Molle! as Managing Director of ; I I the 1st and 4th applicants and also an behalf' of the 2nd and 6th ·• 'i I applicants. 2. an affidavit by MOSES WAHO.ME (3 rd appli9ant) and 3. an affidavit by STEPHEN MO¼LEL (5th applica1t) ; ' Mrs. Mulebya learned counsel fbr the resporidehts who had been evidently served with the chamber application und~r ~onsideration only 11 : 1 that very morning strongly resisted tfue application. Opting to proceed to argue the application without filing a counter-affidavit Mrs. Mulebya contended that the application was i;ncompetent ~a,\ng been filed on I 5 : ,, 1' ,I the date fixed for the hearing of the suit; that all interlocutory , proceedings had been disposed of, ahd that as such rlhe applicants have 1 no locus to file this application. : \ ! I In response Mr. Merinyo learn~d counsel for thl respondeflts had 1 submitted that the applicants being plaintiffs in the suit I I ' do have locus to ' bring this application as the plaintiffis to be removecl were improperly joined as plaintiffs in the main suit, bnd that the prtisions of Order I · ·, ' i rule 10 (2) of the CPC under which :the applicaticim is brought provide that the court may remove parties wJ,o have bee~ i~properly joined at · 1 any stage of the proceedings. Mr. Mbrinyo also souglht leave to amend : the chamber summons by deleting orlder VII and i~stead inserting order VI Rule 17 which is the rule providingjfor the amendm~nt of pleadings. A lot more was argued by the two sides which in my view is not " relevant at this stage for reasons whi~h will emergd, in this Ruling. I i I have carefully considered thJ respective sub~issions. I have also carefully perused the chamber $ummons. Aj glance at the three affidavits filed in support of the appli~ation has brouJht into my notice material defects in the aforesaid affid1vits. Clearly th~ respective jurats ,I I I, of attestation in the aforesaid affidavits do not disdosr the place where or the date when the respective affidavit/oath wa~ syvorn/taken. This I means that the aforesaid affidavits ,\are incurably dlefective for non- compliance with the mandatory requirements under S.8 of the Notaries ' 1 6 i Public and Commissioner for Oaths Ordinance (chapter 12). Section 8 of Cap 12 provides as follows:- "Every Notary Public and Cofiilmissioner for Oaths before whom. ' any Oath or affidavit is taken or made under this O~dinance shall state ! I in the jurat of attestation at what place and on what date the Oath or I affidavit is taken." The jurat is without doubt incomplete if it does not disclose at what place and on what date the Oath or affidavit is taken or made. (See the decision of the Court of Appeal of Tanzania \in the case of D.B. i Shapriya and Co. Ltd. v. Bish International. Due to \the non-disclosure I of the place(s) and date(s) in the respective jurats I find that the I affidavits filed by the applicants are ,incurably defecti've, and cannot be acted on by this court and the same are accordingly hereby struck out. The application itself is incurably defective and accprdingly is hereby struck out with costs. Having said that, it appears to me from the allegations and claims being made in the plaint and the Written Statement of Defence and Counter - claim, the persons who ought to have been made parties in this suit by the plaintiffs are only t~ose who were party to the loan agreement which is the subject matter of the suit. Now under Order I Rule 10 (2) of the CPC this court may strike oJtI or add parties I improperly joined. i 7 Order I rule 10 (2) of the CPC provides: "(2) The court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant,\ be struck out, and . I that the name of any person who ought to have bebn I joined, whether as plaintiff or defendant, or whose presence beforel the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all the questions involved in the suit, be added." I When considering the issue of striking out thJ name of a party "improperly joined" the learned Scholar Mullah on his " Code of Civil Procedure Vol. II (15th Edition at page 1018) said:- " The impropriety referred to in this rule is in introducing a party who has no connection with the relief claimed in the plaint, and is I therefore neither a necessary or proper party." Nec,essary parties are I parties " who ought to have been joined," that is, pcirties necessary to the constitution of the suit without whom no decree at all can be passed (see Mullah supra). " In order tha,t a party may be considered a necessary party/ defendant, two cond\tions must be satisfied, first, there must be a right to some relief for / against him in respect of the matter involved in the suit/counter claim, and second, that hi~ presence should be necessary in order to enable the court effectively and completely to 8 adjudicate upon and settle all the qµestions involved in the suit." (See ' i . . , II Mullah at page 1018 - 1019). It has: been stated thaf a necessary party is one without whom no decree can be effectively 'ma de. A proper party. 1 is one in whose absence an effective order can bel made, but whose presence is necessary for a complet~ and final deCisifn on the question involved in the proceeding. A persor1 may be impleatfed as a defendant ! in a suit, though no relief may be cla/med against ihiml·, if his presence is necessary for a complete and final adjudicatipn of the questions 1 involved in the suit- if he has a direct interest in th; subject matter of ,, I the litigation. In Moser v. Marsdrn (1892) Ch.9 487 Lindley L.J. explained that this " direct interesff is a direct interest in the issues between the plaintiff and the defendant. As regbrds who may be · impleaded as a defendant, it has also been held that only a party who • I has a legal interest in the subjecti matter of the litigation may be ' . I impleaded. It is not enough that he has a commerfial interest in the . ' i case. In other words a proper party is one who has a defined, ~~bsi~ting, di.rect and s~bsta~tive in~e~est in th_e ·isfes arisi~g in the ht1gat1on, an interest which will be cogrnsable and enforceable m a court · . of law (Mullah). A person who is only indirect!~ or commercially ' ' ; I I interested in the proceedings is not e:ntitled to be fd9ed as a party and ought not to be added as a party. : I 1 ' I I I Now in the plaint filed by the ~laintiffs it is avJred that the 2nd, ; I 3 rd 1 4 th , 5t\6th ,7th, st\ gt\ 10th i!nd 11 th plaintiffs are holders of ' st ordinary shares in the 1 . plaintiff; company. . These are neither J - ·,t. l 9 necessary nor proper parties in the suit filed by thel plaintiffs. In my I considered opinion all the plaintiffs save for the 1st plaintiff have no direct legal interest in the suit filed, by the plaintiffs. The position of I these plaintiffs vis-a-vis the respondents/defendants is such that they 1 have no direct claim against the 1st defendant. If at all their right as 1 I shareholders is only against the 1st pl,aintiff in the suiti. The presence of i these plaintiffs who do not have a direct claim of; relief against the I defendants is not required for purposes of adjudicating the dispute ; I st between the 1 plaintiff and the defendants. The h ve no right which 9 they can enforce against the defendahts as seen in the prayers made in I the plaint. The court can effectively and completely dispose of the suit I filed by the plaintiffs with only the 1st plaintiff on r~cord. They were . I improperly joined as plaintiffs. As a matter of fact I their presence as plaintiffs in the. suit will only cause further delay to the contesting 1 ' parties and may allow to be brought on record irrelevant matters. , I 1 As regards the counter claim all the allegations in my view relate I to issues involving the 1st plaintiff and the 1st defen~ant. It is alleged I that the 1st plaintiff had defaulted in the repay~ent of the loan extended to it by the 1st defendant under the loan agreement which is I the basis of the plaintiff (s)' suit. Paragraph 22 of the counter claim I states:- 1 " That as of 30 th December 20Gl0 the entire loan amount stood at Shs. 525,992,599.00 .......... bninging the total loan ! balance at shs. 715,564,228 ........................................ " , ,l I I 10\ I : I In the Counter-claim the deferidants have ~raJed for judgement and decree against the plaintiffs joint!~ and severally f1r:- i (i) Payment of shs. 715,564,228 . (ii) interest, etc. 'I Clearly the relief claimed by theidefendants can be only awardable and enforceable against the 1st plaintiff (the borrower of the loan) and st not its shareholders. To my min~ save for the! 1 plaintiff (the borrower) all the other plaintiffs wer~ improperly ~oiled as defendants to the counter-claim. The 1th plaintiff also was wrongly impleaded as a 1th plaintiff/1th defendant to thJ_ counter claim 1s he is evidently 1 J only the Managing Director of the 1st plaintiff/defend~nt company. All these persons have no direct interest in the matters at issue as I : I disclosed by the pleadings - i.e th~ plaint and written statement of I ' I 1 Defence and Counter-claim. · ; . , ·_: ·1 I ' In the light of the provisions df Order I Ru;le [0(2) I have also . . , I pondered on the position of and th~ propriety of irpleading the 2nd defendant(s)/respondents, as defend~nts/counter claimants, who were allegedly appointed receivers and .~anagers by the! 1st plaintiff, and I • I whose appointment the plaintiffs se~k to nullify. In the plaint the ; following reliefs are claimed:- ' I 111i I I I a) Declaration that the appointment of Receivers Managers Mr. i I I Mark Colman Ngalo and I Michael J.T.Ngalo by the first I defendant is null and void. l i \ b) Payment of general dama~es for breach of contract to wit. Clause 12.0 of the Loan Ag~eement betweeh the First Plaintiff , I and the First·oefendant. i I :1 In my view both these prayers 11relate to matters in dispute and/or ' I I st st issues involving the 1 plaintiff anq the 1 defen1ant. The reliefs claimed by one side and withheld by (he other rel 9te Ito issues in which only the 1st plaintiff and 1st defendant have a direct i~terest as opposed to a commercial interest. The secant!. joint defendfadts I too were in my view improperly pleaded as defenda~ts/counter dai~ants. However I would hesitate to exercise this Court~s discretion Jndtr order I Rule 10 (2), to strike their names out as p1rties/defendantl/counterclaimants without first giving both sides the opJortunity of bJinJ heard i.e hearing ;1 . I the contending sides on the pr~priety of jo ini~g the 2nd joint 1 defendants/counter claimants that is as to whether tpey were properly 1 joined as parties to the plaint/counter+claim. In the final result in the exerci~e of this cotlJrt'~ discretion under : . I Order I Rule 10 (2) I hereby order tha't the names of tre 2nd, 3rd , 4th , 5th , 6th , ih, st\ 9th , 10th and 11 th plaintiffs who were imhroperly joined as 1 ·• I plaintiffs be and are hereby struck out from the plaint. This will in my ' I I view enable the court to effectively and more expeditiously determine , I 12 I I • the real questions in controversy / iaispute between the remaining parties. For the avoidance of doubts the remaining parties are (subject 1 to the court being otherwise moved by the contendin:g parties on the i propriety of the parties to the counter ..... claim as they are): I I ' I a) In the suit filed by the plaintiffs the 1st pla:intiff is the only remaining plaintiff, with the original defendants as defendants. ' b) In the counterclaim the parties will remain undisturbed that \ ..s ' I the counter - claimants versus the defendants to the counter - claim that is the original l 5\,2 nd, 3rd , 4th, 5th,: 5th, ih, 9th , 10th 1 and 1ith defendants to the counter - claim.; : I It is so ordered. ' I R_{, R. SHEIKH JUDG:E 21/03/2006 Ruling read this 24th day of March 2006 )n ;the presence of I Messers. D'souza and Merinyo·. learned ,counsel for · the applicants/plaintiffs and in the presemce of Mr. Ngalb as a defendant ' I I I 1, ____ , _:~ .,. . 13 I I and also holding brief for Mrs MulelJ a, Advocate: fdr the defendants _and Mariam court Clerk. II I i II I I ' r t I l •I ! '. r .tl. ., ·,, _._ ·: ~~ ;j ; : 1· ,_ I I I ' ! ••:, f I . ;~! . '' '.