METRO PETROLEUM T LTD VS UNITED BANK OF AFRICA MIS

Page 1 o f 15 IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION ) AT PAR ES SALAAM MISC COMMERCIAL APPLICATION NO 96 OF 2015 (from Original Commercial Case No 98 of 2014) BETWEEN 1. METRO PETROLEUM TANZANIA LIMITED-------------------1st APPLICANT 2.BILL KIPSANG ROTICH----------------------------------------- 2nd APPLICANT 3. FLORENCE CHEPKOECH--------------------------------------- 3rd APPLICANT 4.PREMIUM PETROLEUM COMPANY LIMITED ---------------- 4th APPLICANT VERSUS UNITED BANK OF AFRICA ------------------ RESPONDENT RULING Date of the Hearing; 16/6/2015 Date of the Ruling; 24/7/2015 SONGOROJ On the 23/4/2015, three applicants namely, Metro Petroleum Tanzania Limited, Bill Kipsang Rotich, Florence Cheokoeche and Premium Petroleum Company Limited, hereinafter referred as Applicants filed an application, applying for extension of time within which to make an application to set aside a default Judgment and Decree entered against them in Commercial Case No 98 of 2014 on the 15/10/2014. The Applicants stated that, in their application that, the issued Court Decree from the default judgment was against their company and themselves. Page 2 of 15 So, their application was made under Section 14(1) of the Law of Limitation Act Cap 89 rR.E.2002] and Rules 23(1) and (2) of the High Court Commercial Division Procedural Rules , 2012 and is supported by three affidavits sworn by Bill Kipsang Rotich, Florence Chepkoech and Mugo Ruthiru. Applicants prayers in the application, were for an extension of time as explained above and for costs, and any other reliefs the Court deems fit. In response to the Application, United Bank of Africa (T) Limited, the Respondent, also filed a Counter Affidavit sworn by Elizabeth Muro, the Principal officer of the bank, and opposed the application. Thus on the 12/6/2015, when the application was called for hearing, Mr. Bwana, Learned Advocate appeared for Applicants, and informed the Court that, he is holding a brief of Mr. Msuya, Learned Advocate for Respondent. Then, Mr. Bwana briefed the court that, Applicants and Respondent have filed in court comprehensive skeleton arguments and it was their prayer that, the Court relies on their skeleton arguments, and determine application as it deems fit. In a nutshell, the Learned Counsel indicated to the Court that, parties would not make any oral submissions. So going by the fact that, the parties requested the court to rely on their skeleton arguments in determining the application, the court straight perused the application, counter affidavit of Respondent, and skeleton arguments , and find the Applicants are applying for an extension of time within which to file an application to set aside a default Judgment in Commercial Case No 98 of 2014. Also, the court noted three officials of 1st and 4th Applicants' companies have sworn affidavits to support the application, and they explained reasons, as to why the application should be granted. On their part, Bill Kipsang Rotich, Florence Chepkoech the and Mugo Ruthiru all of them sworn affidavits to support of the application, and their affidavits raised almost the same reasons, and arguments in support of the application for extension of time, within which to file an application to set aside a default judgment. The arguments, and reasons advanced by three deponents may be summarized in the five following points First, the deponents in their affidavits stated they were guarantors of loan of USD 5,000,000, which was advanced in a form of a Letter of Credit to the 1st Applicant Company to trade in Petroleum products. Page 4 of 15 Secondly, they explained that, they believed, that, the 1st Applicant company was paying smoothly the loan. Being residents of Kenya were not aware if there was default in paying the loan. Also were not served with Court Summons, and was not even aware of on going court proceedings against them. Thirdly, Applicants stated in their Skeleton argument that, , pursuant to Order V, Rule 28 of the Civil Procedure Code, Cap 33 [R.E, 2002], Respondent Bank was aware that, , Applicants were residing in Nairobi- Kenya and were supposed to be served with court summons, at place of their residences in Nairobi. But they stated that, they were not served with court summons, therefore the provisions of Order V, Rule 28 of the Civil Procedure Code, Cap 33 [R.E. 2002] were not complied with by the Court. Fourthly, Applicants, then stated that, they were aware of "Commercial Case No 98 of 2014" and a "Court Decree" after reading its publication in the East Africa Newspaper published on the 18/10/2014. They also added that, by the time they read in the newspaper about the default judgment, it was four days after the judgment was delivered and that means they had less than 21 days to file an application to set aside a default judgment. Page 5 o f 15 Fifth, they stated that, their failure to file an application to set aside a default judgment within statutory period of 21 days, is because they are residing in Kenya, and they took long time to co-ordinate and institute the present application and that was after saw the notice of default Judgment in newspaper. It was during that period, they decided to hire an Advocate, and they filed an application for extension of time to set aside a default Judgment. They then explained that, their application was struck out by this court on the 23/3/2015 on the ground that, it was made under the wrong provisions of the law. Due to the fact that, they were not aware, if the 1st Applicant defaulted to pay the loan, also were not served with the Court Summons, and were not even aware of on going court proceedings they argued that it is ideal if the court may grant them leave to file an application for extension of time. They insisted at page 5 of their skeleton argument that, in the circumstances of this case it was difficult for Applicants to file an application to set aside a default judgment within 21 days due to logistical challenges of obtaining Counsel to represent them. It was also their argument at Page 4 of their skeleton arguments that, since in their application they have advanced reasonable and Page 6 o f 15 sufficient cause as to why they failed to file the application for setting aside default Judgment on time. Then they submitted that under Section 14 (1) of the Law of Limitation Act, Cap 89 [R.E 2002] ,the Court has powers to grant the application, and extend time of filing an application to set aside default Judgment. To support their argument that, the court has powers to grant an extension of time under Section 14 (1) of the Law of Limitation Cap 89 [R.E 2002] once there is "reasonable and sufficient cause" they referred the court to the case of Masha Versus Shija and Another [1997] T.L.Pp 154. So on the reasons they advanced, Applicants prayed to the court, to grant them an extension of time to file an application to set aside a default Judgment. For the above-mentioned reasons, Applicants submitted and prayed that, it will be just, and ideal if the court may grant them an extension of time within which to file an application to set aside a default Judgment. In response to the application, and submission of the Applicants, Mr. Msuya, Learned Advocate for Respondent made detailed submissions, and opposed the application. Page 7 o f 15 Relying on Paragraph 2.2 of Counter Affidavit, Sworn by Ms. Elizabeth Muro , Learned Advocate explained to the court, that, Applicants were sued by the Respondent bank for repayment of overdraft facility of USD 5,000,000 advanced to the 1st Applicant's Company. He also pointed out that, the 2nd and 3rd Applicants were guarantors of the loan. The Counsel then pointed out that the 1st Applicant Company defaulted to pay the loan. Due to the default in payment of the overdraft loan, Respondent said he instituted a suit and made attempts to serve Applicants to their previously known address of NIC House, 6th Floor and Wing "C" but they failed because the office was closed. Then Respondent said with the leave of the Court, they served Applicants with substituted service through East Africa Newspaper, and Citizen Newspaper. To support his assertion that, Applicants were served by substituted summons, he annexed to his counter affidavit copies of the said Newspapers as Annexure TMA 3. Respondents then submitted that, despite that fact that the substituted summons was served to Applicants but still they defaulted to enter appearance in court, also they failed, or neglected to file a Written Statement of Defence. Due to Applicants failure to Page 8 o f 15 heed to the court summon, and to file a Written Statement of Defence, the Court entered a Default Judgment in favour of Respondent. The Learned Counsel then maintained that, in view of above mentioned set of facts, it is certain that attempts were made to serve the Applicants through their last known physical address, and then were properly served by substituted Court Summons. On reasons for the delay to file an application to set aside default Judgment within requisite statutory period, Respondent submitted that, the delay was due to laxity and lack of diligence to act within prescribed statutory period on the part of the Applicants, and there was laxity and failure, which may not constitute reasonable and sufficient cause to warrant an extension of time. More, Respondent contested that, Applicants also filed an application for extension of time to file an application to set aside a default Judgment, but the said application was struck out by the court on the 23rd March, 2015 because applicants cited the wrong provisions of the law. Then the Counsel submitted that, Courts have consistently and persistently stated that, the filing of defective application is not good and sufficient cause for granting extension of time. Page 9 of 15 To strengthen his point, Mr. Msuya, referred the court to the decision in the case of Calico Industries Ltd Versus Pyarali Ismail Pranji |~1987] TLR at p l in which the Court of Appeal held that, failure of a party's advocate to check the law properly does not constitute any sufficient ground for extension of time. Next, Respondent' s Counsel pointed out that, even after Applicant's application, for extension of time to file an application to set aside a default Judgment, was struck out by this court on the 23/3/2015, applicants took about 31 days to file the present application and that, again demonstrated in ordinate delay in the filing the present application, which was not accounted for in the application. It was Respondent's views that, in filing this application there was inordinate delay which demonstrates negligence on the part of Applicants. To support his assertion that, applicants delay in filing the instant application has no merit, Respondent referred the Court to case of Fortunatus Masha Versus William Shija and Another [19971 T.L.P p 154. and Salvand K.A Rwegasire Versus China Henan International Group Co Ltd Civil Reference No 18 of 2006 CAT Dsm at p 9, where the Court of Appeal in the two cases emphasizes the need to act Page 10 o f 15 diligently in pursuing court actions, without undue delay, and once there is a delay, reasons must be advanced for such delay. For the above- stated reasons, Respondent prayed for dismissal of the application for lack of merit. The Court has carefully considered Applicants application for extension time within which to file an application to set aside a default Judgment, submissions from the parties, and find determination of application for extension of time like the present one, to greater extent governed by Section 14 of the Law of the Limitation A c t , Cap 89 and Rule 23(1) of the High Court Commercial Division) Procedure, GN 250 of 2012. In deed Section 14(1) of the Law of the Limitation Act, provides as follows; "Notwithstanding the provisions o f this Act, the court may, for any reasonable or sufficient cause, extend the period o f limitation for the institution o f an appeal or an application, other than an application for the execution o f a decree, and an application for such extension may be made either before or after the expiry o f the period o f limitation prescribed for such appeal or application". Also Rule 23 (2) states that, in considering whether to set aside or vary the Judgment under this Rule, the Court shall consider whether the aggrieved party has applied to the court within a specified period of 21 days, and if the party has given sufficient reasons for failing to file a Defence. Page 11 of 15 Thus from the wording of Section 14 of the Law of Limitation Act cited above, it appears the powers of the Court are discretionary and may be exercised once Applicant in the application has established that, there are reasonable or sufficient causes to warrant an extension of time. In a nutshell, it seems to me overriding consideration, in determining the application for extension of time, is to find out if Applicants has assigned "reasonable or sufficient cause" for doing so. What amounts to reasonable or sufficient cause has not been defined, and it depends on the circumstances of each case, and reasons assigned. In addition to what is stated above, it is important for the Court to state that, the purpose of the court discretion provided in Section 14 of the Law of Limitation, Cap 89 R.E. [2002], cited above, is to assist a party who has acted diligently, but due to "reasonable or sufficient cause" has failed, or has been obstructed, to file his application within requisite statutory period. Guided by the above -mentioned guidelines which requires Applicants to furnish the court with "reasonable and sufficient cause" which prevented them to file an application within statutory period, and if they acted diligently in pursuing the application, I revisited Applicants' application, and noted that, a Default Judgment of Commercial Case No 98 of 2014 was entered on the 15/10/2014. Page 12 of 15 Applicant said they knew about default and requisite time for filing an application to set aside a default Judgment according to Rule 23 (1) of the High Court (Commercial Division) Procedure Rules GN 250 of 2012, was 21 days from the date of default judgment. Then the Court noted from applicant affidavit of Bill Kipsang Rotich that Applicants said, they knew about a default judgment through East Africa Newspaper published on 18/10/2014, and that was about three days from the date of Judgment. The applicants statement , shows Applicants had about 17 days in their custody to act and file application to set aside a default Judgment on time, but they failed to utilize those days. Honestly I did not find any reasonable, and sufficient cause which prevented them from filing an application to set aside default Judgment on the statutory prescribed period. The fact that, Applicants are residing in Kenya, or they needed time to coordinate and hire an Advocate to pursue the application to set aside a default Judgment, in my view is not reasonable and sufficient cause because, the period of 17 days was sufficient enough to coordinate, to hire the lawyer and promptly to file their application to set aside a default Judgment. Page 13 o f 15 Secondly, the Court found even when Applicants chanced and file application for extension of time, to set aside a default Judgment, they filed Misc Commercial Cause No 292 of 2014 which was defective, and the court struck it out. Quite frankly, I find the filing of defective application shows merely laxity of observing the law, and as properly stated by Mr. Msuya, such laxity may not be reasonable or sufficient cause for granting an application for extension of time to file an application. It is now a settled principle of law as stated in the case of Yero Transport Services Limited & Hassani A Mkumbwa Versus Attorney General and Other Civil Application No 58 of 2001 Par es Salaam Registry (Unreported) that, failure by an advocate to check the law is certainly not reasonable and sufficient cause for extending the period of limitation. On the present application, the court noted, from 23/3/2015 when Applicants' Misc Commercial Cause No 292 of 2014, was struck out to 23/4/2015 when Applicants filed the instant application there was a lapse of about 27 days, and that was in ordinate delay in filing the present application, which was not accounted for by applicants. Page 14 of 15 Rule 23 (2) (a) of the High Court (Commercial Division) Procedure Rules GN 250 of 2012, requires the court to consider why the application to set aside a default Judgment was not filed on time. On their p a rt, Bill Kipsang Rotich, and Florence Chepkoech the 2nd and 3rd Applicants stated their affidavits, that, they took a long time, than the time permitted by the law to co-ordinate how to institute the application. Honestly, I find it is good to co-ordinate and consult how to institute the application, but it seems to me that, 21 days given by the law are sufficient enough to make coordinate and file the application on time. In other words it is unreasonable to use long time, and utilize the time permitted by the law to institute the application, for coordination purposes alone, on how to institute the application. For the foregoing reasons, I find the grounds advanced by Applicants for extension of time to file application to set aside default Judgment are not reasonable or sufficient cause to warrant the court to exercise it discretion and grant the application, because there was laxity on the part of Applicants in filing the instant application for an extension of time to file an application to set aside default judgment. For reasons, explained above, I decline to grant the application, and dismiss it with costs in favour of the Respondent. Right of appeal is fully explained to the parties. Dated at Dar es Salaam this 24th (te^ofJuly, 2015 H.T.SONGO] JUDGE * The Ruling has been delivered in 'of Mr. J, Bwana, Learned Advocate, for the Applicants and holding a brief of Mr. Msuya, Learned Advocate for Respondents.