miiso eliakimu kaaya vs national ranching company limited 2020 tzhc 3586 30 october 2020

THE UNITED REPUBLIC OF TANZANIA JUDICIARY IN THE HIGH COURT OF TANZANIA (DISTRICT REGISTRY OF MBEYA) AT MBEYA LAND CASE 05 OF 2019 MIISO ELIAKIMU KAAYA...................................................................................... PLAINTIFF VERSUS NATIONAL RANCHING COMPANY LIMITED............................................ DEFENDANT JUDGEMENT Date of Hearing : 12/08/2020 Date of Judgement: 30/10/2020 MONGELLA, J. Miiso Eliakim Kaoya, the plaintiff herein, is suing the defendant for breach of contract, to wit, a lease agreement entered in respect of Farm no. 721/5 Usangu Ranch located in Mbarali district within Mbeya region. The facts giving rise to the cause of action are as follows: the defendant being a lessee of the government in Plot with Title No. 13957 MBYLR, sublet part of it, being farm no. 721/5 measuring 2,448.9 hectares, to the plaintiff for 33 years in 2007. A specific title deed for farm no. 721/5 was issued to the plaintiff in 2011. After signing of the lease contract, the defendant unilaterally changed the terms of the lease contract varying the agreed lease rent something which was disputed by the plaintiff. The last attempt to change the lease rent was done by the defendant in 2018 whereby the defendant through a letter required the plaintiff to treat the former lease contract as terminated and in lieu thereof to sign a new lease contract with new rates of the lease contract. That, while negotiations were still going on to reach a resolution, the defendant, on 15th March 2019 through media, issued a public notice inviting members of the public interested in commercial livestock keeping to apply for allocation of ranch block. The blocks included the 12 blocks located at Usangu Ranch- Mbarali district in which the plaintiff’s farm is harboured. Claiming that the defendant’s acts have curtailed the plaintiff from peaceful enjoyment of the leased farm and from effectively investing commercially on the said farm he filed this suit seeking for the following reliefs: (a) A declaration that the plaintiff is the lawful lessee on farm no. 721/5 Usangu Ranch, Mbarali district-Mbeya region. (b) A declaration that the defendant’s intention and or threats to evict the plaintiff from farm no. 721/5 Usangu Ranch, Mbarali district-Mbeya region are unjustifiable, illegal, inoperative and null and void. (c) A declaration that the defendant’s act and or decision of repeatedly increasing lease rent contrary to the terms of contract and at an amount not unanimously agreed by the parties is null and void and a frustration to the plaintiff to efficiently commercially develop the leased farm. (d) A declaration that the defendant’s act of advertising and offering for bid of the plots on Usangu Ranch to other investors while there are other pending lawful contracts with other investors including the plaintiff is illogical and unlawful. (e) An order restraining the defendants from breaching and or acting contrary to the terms of contract between him and the plaintiff. (f) An order restraining the defendant from disturbing the plaintiff from quietly commercially developing and enjoying the subleased farm no. 721/5 Usangu Ranch, Mbarali district-Mbeya region. (g) A declaration that the plaintiff’s failure to pay the new unilaterally and illegally assessed rent by the defendant is lawful and justifiable. (h) An order that before the defendant sublets the farm in dispute to another person it should pay compensation to the plaintiff for developments made on the said farm. (i) General damages. (j) Costs of the suit. Two issues were framed for determination of this matter to wit: h Whether there was breach of contract by the defendant. 2. To what reliefs are the parties entitled to. To prove his case, the plaintiff was the only witness (PW1). He as well mounted four exhibits. In his sworn testimony he stated that he is a tenant of the defendant, with a license contract, at Usangu Ranch in Mbarali District on plot no. 721/5. The plot measures 2,448.9 hectares equivalent to 6200 acres. He said that the lease contract is for 33 years starting from 1st July 2007 to 2040. To prove his assertion he tendered a lease agreement which was admitted as “Exhibit Pl.” He proceeded saying that he filed this suit following the defendant breaching the contract, especially the clause directing on the time and process of reviewing the lease rent. He said that as per clause 5 of the lease contract the review of the contract is to be done after every five years. He claimed that in 2007 when they entered into the contract, the rent was T.shs. 220 per acre. In 2012/2013 financial year the rent was reviewed (but did not state the figure). Then in 2015/2016 financial year, that is, after three years, the rent was again reviewed (did not again state the figure). Then after another three years, that is, in 2018, the defendant reviewed the rent from T.shs. 1000/- to T.shs. 7,500/- per acre, being an increase of 750%. He said that he was informed of the changes in the rent through a letter by the defendant, the landlord, in May 2018. The said letter was admitted as “Exhibit P2.” He continued that the said letter informed that the new rent was to start being implemented on 1st July 2018, being in two months period from the dale of the letter. He said that after receiving the said letter, he wrote a letter to the defendant’s General Manager sometime in August 2018. The purpose of his letter, he said, was to inform Psoo A cif 1 Q J1L the General Manager that he has gone contrary to the procedure provided in the lease agreement, particularly, that the review was to be done after the span of 5 years. In the same letter he reminded the General Manager that since the last review was conducted in 2015, the next review was to be done in 2020. The said letter was tendered in evidence and admitted as “Exhibit P3." PW1 continued to state that, what followed thereafter, the secretary of ranch owners called them and informed them that there is a draft lease brought by the defendant for them to go through. That, after going through it he realised that most of the terms are not implementable. Thereafter, a meeting was conducted with other lessees and their secretary whereby they formed a delegation to meet with the General Manager for further discussion. However, he said, before the said delegation could meet with the General Manager, an advert was issued in a newspaper offering their plots for lease. It was through Daily News of 15th March 2019. In his view, the advert meant that they were already removed from the ranch. He said that his contract being for 33 years, he had only used the plot for 12 years on the date the advert was issued. He described the procedure for termination of the lease contract saying that under clause 6 (r) of the lease contract, a notice of six months had to be issued first. He said that he was given no notice and therefore had to pursue his rights in a court of law. During cross examination he said that he did not object on the increase of rent on the first two changes, that is, 2012/2013 and 2015/2016. He denied to have been indebted with arrears of rent up to 2018/2019 financial year. He claimed not to have breached any contractual term. He said that the ranch owners have their association named UWARATA “Umoja wa WanaRanch Tanzania" but could not sue as a group through the association because it was not officially registered. He as well denied to have entered into any agreement with the defendant in paying the new imposed rent. On the other hand, the defendant mounted two witnesses who are officials from the defendant company. DW1, one Bwire Kafumu Mwijarubi, an acting production and operations manager of the defendant’s company started by saying that the defendant has been sued following the increase of lease rent in the ranches. Just like the plaintiff testified, DW1 also stated that the investment started in 2006/2007 financial year and up until 2011/2012 financial year, the rent was at T.shs. 220 per acre per annum. He said that in the year 2012/2013 to 2014/2015 the rent was raised to T.shs. 1,500/- per year per acre. Then in 2015/201 6 to 201 7/2018 it was reduced to T.shs. 1,000/- per year per acre. However, in 2018/2019 financial year, the rent was planned and categorized under specific blocks. Under the specific blocks those with 1 to 1,999.9 hectares were to pay T.shs. 5,500/- per acre per year; those with 2,000 to 4,999.9 hectares would be required to pay T.shs. 7,500/- per acre per year. Those with 5,000 and above hectares were to pay T.shs. 10,500/- per acre per year. These new rates were to be implemented in the financial year 2019/2020. DW1 continued to testify that the increase in rent in the financial year 2012/2013 to 2014/2015 followed participatory methods between the lessor, the lessees and other stakeholders, including the responsible ministries being the Ministry of Livestock and Fishing and the Ministry of Lands. He said that since the ranch owners have an association, they consulted and worked closely with the association. He said that the change in rent in the financial year 2018/2019 was also participatory. DW1 added that the Minister for Livestock and Fishing created a team to evaluate the ranching activities in all national ranches and other farms under the Ministry. The team was charged with a task of advising him on the proper ways in collecting government levies from its sources including national ranches and farms under the Ministry. The said team, in consideration of other opinion gathered, recommended for increase of the lease rent by the figures he mentioned above depending on the area owned by the respective investor. The said recommendations were approved by the Minister and taken to the Parliament on his budget speech of 2018/2019 financial year. The Parliament approved the same to be used as legal payments on all national ranches. He said that among the members of the team, was the secretary of the Livestock Keepers Association. He insisted that the whole process in arriving at the new rent rates was participatory whereby all stakeholders including the plaintiff were involved. On cross examination, when asked about the legal status of the association, that is, UWARATA, which he claimed to have worked with, he stated that he is not sure if the association is registered. He also stated that the lease contract between the plaintiff and the defendant does not include or mention UWARATA anywhere. He conceded that the lease contract provides for review after every five years and that the recent D^>r,Q 7 1CI / review was done whereby five years had not elapsed. He however disputed that the defendant deliberately breached the lease contract. He disputed the allegation on the reason that there were written communications and meetings held before effecting the new rates. He said that he never saw the letter from the plaintiff in response to the defendant’s actions, but only noted later that a suit was filed in court against the defendant. When cross examined about the terms of termination in the lease agreement, he conceded that the termination of the lease agreement is to be preceded by a six months’ notice. He said however, that he does not remember the date the plaintiff was issued the notice and if an advert was issued inviting new investors to take over the ranch plot. He only remembers the rent to have been increased. He concluded that the lease agreement between the parties was for 33 years renewable, but the said agreement has not been breached as the plaintiff is still using the ranch to date under the existing contract. DW2, one CPA Nestor Kaiza, an acting finance manager of the defendant company, testified that until June 2020, the plaintiff was indebted about T.shs. 80,37],306.22/-. He said that his debt results from rent arrears in the year 2018/2019 and 2019/2020 plus a previous debt before the new rates were issued, which amounts to T.shs. 734,669.50/-. He said that the plaintiff had already breached the contract and therefore they took steps to issue notice to terminate the contract. On cross examination he conceded that as per the agreement the rent is to be reviewed after every five years and fhat from 2016/2017 to 2018/2019 five years had not elapsed. He however, disputed that the defendant had breached the lease contract saying that the plaintiff was also indebted with not less than 44 million Tanzanian Shillings by the year 2018/2019. He said that the financial year is closed on every 30th June of the year and when closing the year they calculate the interest. The said interest is charged cumulative. He averred that by the time of closing there was fine charged which led to the debt of 44 million and that they issued a notice to the plaintiff (but did not tender the said notice). He said that the debt was calculated at the rate of T.shs. 5,500/-. He conceded that this rate was effected before the expiry of five years as per the lease contract. He as well conceded that the plaintiff wrote a letter rejecting the new lease rent rates. The plaintiff was represented by Mr. Timotheo Nichombe, and Mr. Samson Suwi, both learned advocates. In the final submissions drafted and filed by Mr. Suwi, it was cemented that the defendant breached the lease agreement. Mr. Suwi argued that the breach is twofold whereby first the defendant unilaterally raised the lease rent without adhering to the terms of the contract; and second that the defendant without notice regarded the lease contract terminated and advertised in tender the leased farm to other aspiring investors. Referring to Exhibit Pl, he argued that there existed a written contractual relationship between the parties built on express terms. He contended that the lease contract expressly provided for review of the lease rent Paee 9 of 19 after every five years and witnesses from both sides conceded to the fact that the reviews on the rent were done before the expiration of the five years period. He challenged the defence by the defendant to the effect that the increase in rent was due to the instructions by the Minister of Livestock and Fishing and effected in the 2018/2019 budget that was approved by the Parliament. He argued that these were mere words of mouth as the said Minister was not called as a witness to prove the allegations. He invited the court to be guided by the provisions of section 122 of the Evidence Act, Cap 6. R.E. 2019 in drawing an adverse inference to such evidence. Referring to exhibit P2 and P3 he contended that the plaintiff informed the defendant that his act of revising the lease rent before expiry of five years was contrary to the lease agreement, however, the defendant ignored the warning and adamantly revised the rent to T.shs. 7,500/- per acre. He as well challenged the amount of rent arrears claimed by the defendant against the plaintiff to the tune of T.shs. 80,371,306.22/- and T.shs. 734,699.50/- arguing that the figure came from an illegally unilaterally assessed lease rent and was not specifically proven as required under the law. He reiterated the plaintiff's testimony that until the year 2019/2020 he had no debts on rent. Referring to section 101 of the Evidence Act and the case of UMICO Limited v. Salu Limited, Civil Appeal No. 91 of 2015 (CAT at Iringa, unreported) he argued that where there exists written evidence on a particular fact then no oral evidence shall be admitted in contradiction thereof. He further argued that the defendant through his witnesses agreed in evidence and through paragraph 13 of the Written Statement of Defence (WSD) that farm no. 721/5 Usangu Ranch was advertised in tender through Daily News and Habari Leo newspapers welcoming new investors to invest because the plaintiff had refused to pay the newly assessed lease rent of T.shs. 7,500/- per acre. He was of the position that this act was in itself a further breach of the lease agreement, specifically clause 7(b) which requires a six months' notice to be issued prior to termination of the lease agreement. He urged the court not to accept the oral assertion that the plaintiff was informed prior through UWARATA arguing that the organisation is unknown and not part of the contract between the parties. He added that the defendant never tendered any agreement showing that communications were to be made through UWARATA. Further, referring to the case of Yusuru Kiluke v. Khamis Kimwenge and Another, Civil Appeal No. 130 of 2003 (HC at DSM, unreported) he said that the defendant admitted to have advertised the plot in dispute under paragraph 13 of the WSD thus needing no further proof from the plaintiff on the same. The defendant was represented by Mr. Joseph Tibaijuka, learned State Attorney. In his final submissions, Mr. Tibaijuka argued that the plaintiff did not dispute or was never aggrieved by the defendant’s actions when he reduced lease rent in 2015 from T.shs. 1,500/- to T.shs. 1,000/-, but is now aggrieved by the increase to T.shs. 5,500/- while both actions were done contrary to the terms of the contract. Reiterating what DW1 testified, he submitted that in both actions, that is, in 2015 and in 2018/19 the deduction and increase of the rent, respectively, was done in „ /A participation of both parties and the Ministry of Livestock and Fisheries and the Ministry of Lands. He further went ahead to blame it on the court that the letter and minutes of the meetings and the approval issued by the Parliament that the defendant wanted to file and tender as additional evidence were denied by the court. Just like DW1, Mr. Tibaijuka maintained a stance that all investors participated through their union named UWARATA whereby the proposed rent was agreed. He said that as of today the ranch investors have started paying the new rates with the exception of few of them including the plaintiff despite the fact that they participated in the said meetings. Mr. Tibaijuka challenged the assertion that the plaintiff's farm was among the ones advertised by the defendant. He said that the assertion is hearsay as there is no proof tendered showing that farm no. 721/5 Usangu Ranch was advertised inviting the general public for lease. Referring to the testimony of DW1 he said that the plaintiff is still the lessee of the defendant and shall continue to be so because there still exists a valid contract between the two. He concluded that DW1 informed that the defendant has many farm plots in the country which he continues to advertise but the same do not include the ones already leased to investors including the one in dispute. I have given the testimonies of witnesses of both parties and the final submissions by their counsels due consideration on this first issue. To start with, there is no dispute that the plaintiff and the defendant signed a 33 years lease contract over the land in dispute. The dispute lies on whether the terms of the said contract, particularly on review of lease rent and on termination of the contract were breached by the defendant. To start with the terms on review of rent, I find it pertinent to reproduce the wording of clause 5 of the lease contract providing for the same for ease of reference as hereunder: “5. Subject to service of a notice of intention, the LESSOR hereby reserves the right to revise the lease rent after every 5 years of the lease.” Considering the above clause, it is crystal clear that the review of the lease rent is entirely the right of the lessor, that is, the defendant. However, the said review is not to be done at the whim of the defendant but after every 5 years of the lease. From the testimony of witnesses of both parties, it is undisputed that the defendant revised the rent by increasing or reducing the same without adhering to this provision. All reviews were done before the elapse of 5 years. Mr. Tibaijuka’s main line of argument was that the plaintiff never complained to the initial changes in the lease rent and thus lacks base to complain over the recent changes. I in fact do not subscribe to his line of argument. On this fact I wish to borrow an English saying that “two wrongs do not make it right.” Parties are bound by the terms of their contract. Where the contract has been reduced in writing, the terms of that contract remain intact unless expressly changed by signing of another contract or an addendum to that effect. DW1 testified that the process of changing the rales was participatory involving all the stake holders including the plaintiff. He later changed and stated that the ranch owners were involved through their association whereby the secretary of the association was part of the team created by the Minister for Livestock and Fishing. This assertion was cemented by Mr. Tibaijuka who also blamed the court for refusing to admit additional documents to wit, a letter and minutes of the meetings and the sanction issued by the Parliament. It appears that Mr. Tibaijuka has forgotten the prayers he made before this court. Under Order 13 rule 2 additional documents can only be admitted upon furnishing of good cause which includes tangible reasons as to why sucti documents were not filed or presented on the first day of hearing. It is on record that Mr. Tibaijuka prayed for a short adjournment to find proof on efforts made by him and the defendant to get hold of the said documents. Upon failure to get concrete proof to convince the court and in consideration of the fact that the documents he wanted to tender were never even pleaded in the WSD he prayed to withdraw his request to file the additional documents. Under the circumstances, it is therefore really absurd of him to blame it on the court. Regarding the assertion that the process was participatory, initiated by the Minister for Livestock and Fishing and sanctioned by the Parliament, I find the argument not carrying any weight. The defence, like I pointed out earlier averred that the plaintiff together with other ranch investors were represented by their association named UWARATA. In my considered view, the obligation of UWARATA was fo facilitate communication but not to enter into agreements charging financial obligations on the parties because parties had individual contracts and were liable to the terms of the contracts of individual level. UWARATA not being a registered association or not mentioned in the lease agreement as an organ which can enter into agreements on behalf of its members had no legal base to act on behalf of the ranch owners to the extent of committing them into liabilities contrary to the contract they signed at individual level with the defendant. Whatever agreement entered between the defendant and the so called UWARATA has no legal base and thus not binding between the parties. It is trite law that parties are bound by the terms of their contract until when they expressly agree otherwise. See: Miriam E. Maro v. Bank of Tanzania, Civil Appeal No. 22 of 2017 (CAT at DSM, unreported) and Uniliver Tanzania Ltd v. Benedict Mkasa t/a Bema Enterprises, Civil Appeal No. 41 of 2009 (unreported). The contract between the plaintiff and the defendant was an individual contract. It is clear from the testimony of both parties and Exhibit P3 that there was no consensus between the parties on the change in the rent rates before expiry of 5 years. Though the provisions of the lease contract do not oblige the defendant to consult with the plaintiff, it mandates him to adhere to the term limit of 5 years. Therefore, the unilateral change of the rent before expiry of 5 years was contrary to the existing legal contract between the parties to which they were bound to. Under clause 7 (b) of the lease contract, the defendant was duty bound to issue a six months' notice to the plaintiff on termination of the contract. I agree with the plaintiff’s assertion that re-advertising the farm to prospective investors connotes that the contract between the parties had ended and the farm in dispute was free and open to new investors. Non­ adherence to the provision requiring six months’ notice was a further breach of the lease contract. DW1 and Mr. Tibaijuka asserted that the defendant never advertised the farm in dispute. This assertion of theirs is contradicted by the testimony of DW2 who categorically testified that the farm was re-advertised because the plaintiff refused to pay the newly imposed rent rates. Such admission was also made under paragraph 13 of the defendant’s WSD thus requiring no further proof. DW2 claimed that the plaintiff was also indebted with more than 80 million Tanzanian Shillings being arrears of rent. The figure arises from the newly imposed rent which is being challenged in this suit. This court can therefore not admit the claim as the plaintiff had a reason to challenge the same. Besides, the figure has not been substantiated with any documentary evidence. To this juncture, I find the first issue being answered in affirmative. The defendant breached the lease contract between him and the plaintiff for changing rent rate before expiry of 5 years and for re-advertising the farm in dispute without issuing six months’ notice to the plaintiff on termination of the lease contract. I now turn to the second and last issue on the reliefs entitled to the parties. The plaintiff’s prayers are as listed earlier on in this judgment. The defendant in essence did not dispute the reliefs prayed, except for damages and costs of the suit. Mr. Tibaijuka argued that the defendant has not removed the plaintiff from the farm in dispute and the plaintiff is continuing with his activities undisturbed. Under the circumstances, he argued that the court should not grant general damages and costs of the In consideration of the prayers and arguments of both parties, this Court grants the plaintiff the following reliefs: (a) The plaintiff is declared to be the lawful lessee on farm no. 721/5 Usangu Ranch, Mbarali district-Mbeya region. (b) The defendant’s threats to evict the plaintiff from farm no. 721/5 Usangu Ranch, Mbarali district-Mbeya region are declared to be unjustifiable and illegal. (c) The defendant’s act of changing the rent rates contrary to the terms of the legally enforceable contract between the parties is declared to be unlawful. (d) The defendant’s act of advertising and offering for bid farm no. 721/5 Usangu Ranch, Mbarali district-Mbeya region while there is a pending legal contract between him and the plaintiff is declared to be illegal. (e) The plaintiff’s failure to pay the newly assessed rent rate is justifiable. It is further ordered that the plaintiff’s rent arrears, if any, should be calculated basing on the last agreed rates. (f) The defendant is ordered to adhere to the terms of the lease contract between him and the plaintiff, until when such terms are expressly varied in accordance with the law. Further, with regord to general damages, I find the same not being substantiated by the plaintiff. For general damages to be awarded, the claimant must provide proof of injury suffered. See: National Bank of Commerce Limited v. Lake Oil Limited, Commercial Appeal No. 5 of 2014 (HC Commercial Div. at DSM, unreported); and MS FishCorp Limited v. Ilala Municipal Council, Commercial Case No. 16 of 2012 (HC Commercial Div. at DSM, unreported). The injury suffered must as well be attributed to the acts of the defendant. In Tanzania Saruji Corporation v. African Marble Company Ltd. [2004] TLR 155, it was held: “General damages are such as the law will presume to be direct, natural or probable consequence of the act complained of; the defendant’s wrongdoing must, therefore, have been a cause, if not a sole, or a particularly significant, cause of damage." See also: See: National Bank of Commerce Limited v. Lake Oil Limited, Commercial Appeal No. 5 of 2014 (HC Commercial Div. at DSM, unreported); MS FishCorp Limited v. Ilala Municipal Council, Commercial Case No. 16 of 2012. In my settled view, the plaintiff has not provided any explanation on the injury suffered by the defendant's act to entitle him the award of general damages. It is on record that the plaintiff continued to utilize the farm land to date. The general damages are therefore not awarded. With regard to costs of the suit, I do not Find the argument by Mr. Tibaijuka that since the plaintiff is still in use of the suit premises he should not be awarded costs. These are costs which the plaintiff incurred in pursuit of this suit. The defendant did not initially agree on any claim by the plaintiff necessitating the suit to proceed to finality on merits. The plaintiff is therefore awarded costs of the suit. Dated at Mbeya on this 30th day of October 2020. L. M. MONGELLA JUDGE Court: Judgement delivered in Mbeya in Chambers on this 30th day of October 2020 in the presence of the plaintiff and his advocate Mr. Timotheo Nichombe, and Mr. Joseph Tibaijuka, learned State Attorney for the defendant. L. M. MONGELLA JUDGE