mpegav auto link t limited vs john frederick musira 2023 tzhclandd 16797 25 august 2023

IN THE HIGH COURT OF TANZANIA (LAND DIVISION)

AT DAR ES SALAAM LAND CASE NO. 27 OF 2022 MPEGAV AUTO LINK (T) LIMITED.................................................... PLAINTIFF

VERSUS JOHN FREDERICK MUSIRA............................................................... DEFENDANT

JUDGMENT 22nd to 25th August, 2023 E.B. LUVANDA, J The Plaintiff above named is claiming against the Defendant mentioned above for a sum of Tsh. 856,000,000.00 incurred in improving, renovating, constructing and developing into business premises Plot No. K3 located at Mivinjeni, Kurasini, Dar es Salaam done by the Plaintiff for purpose of operating motor vehicle show room and bonded warehouse, as per the lease agreement entered on 1/02/2010 and 1/02/2017 allegedly extended from 1/02/2018 to 31/12/2021. The plaintiff also claims general and punitive damages; interest on decretal sum at the court rate from the date of judgment to the date of full settlement; costs and other relief. The Defendant dispelled the Plaintiff's claim on explanation that the costs for renovating, improvement and constructing the suit premises was done for i purpose of the Plaintiff's business to meet the requirement of Tanzania Revenue Authority (TRA) and not for landlord purpose. He averred that the valid lease agreement was that of 1/02/2017 with all extensions made up to 31/12/2021 together with deeds of undertaking, arguing that a lease agreement of 2010 was only for twelve months and was not extended. And by way of counter claim, the Defendant/Plaintiff to the counter claim, claimed for an order to evict the Defendant from the suit premises for lack of lease agreement, payment of USD 181,695.20

being the outstanding rent for bonded warehouse; payment of Tsh 106,920,000 the loss of expected business for clearing and forwarding. The Plaintiff was represented by Mr. Rashid Said learned Counsel and the Defendant was under the service of Emmanuel Marwa learned Advocate. At the final pre trial conference the following issues were framed: One, whether there was an existing lease agreement between the parties; Two, whether there was an agreement of selling the developed structure, office or other improvements to the landlord at the expiration or termination of the lease agreement; Three, whether there is unlawful termination of the lease agreement; Four, whether the Defendant is owed the Plaintiff arrears of rent for the lease term; Finally, to what reliefs are the parties entitled. 2 It was the Plaintiff case (by Peter Daud Gamale who testified as PW1) that they executed a written lease agreement with the Defendant on 01/02/2010, where clause 3(vi) contained a term that the Plaintiff could develop the rented premises at her costs and when vacating, would convene and discuss regarding selling the constructed structures to the Defendant. Among the development carried out at an area measuring 2398 square meters including construction of a main office, walls of boundaries, pavements, guard house, culvert for entrance, deep borehole, security wire fence, drainage system, base for

generator and gates, which works were done by the contractor at a labour charge of 78,000,000 as put by Desdery Rutakyamirwa Selestine (PW2). Another contractor Engineer Stanley Kitundu (PW3) stated that he supervised construction offence wall, forecourt, pavements on 2900 square meters, get installation, some demolition, trench, office building for forwarding and clearing, public toilets for bond and clearing and forwarding, for a labour charge between 40 to 50 milion. PW1 stated that they continued to enforce the lease agreement which was ending on 31/12/2021, but the Defendant terminated the lease agreement before expiry, where on 7/10/2021 the Defendant served the Plaintiff a demand notice asked the later to pay outstanding rent within two weeks, and vacate the premises with thirty days for reason that the contract is being terminated. 3 On defence, John Frederick Musira (DW1) stated that the lease agreement for bonded warehouse (measuring 2690 square meters) was for one year (twelve months), ending on 31/01/2016 and on a section of bar (measuring 1,606 square meters) they had a lease agreement from 2012 it was one year which come to an end on 31/01/2016 and on a section of custom and bonded warehouse the lease agreement expired on 31/12/2021, while there was pending arrears of rent USD 181,695.20, including a sum of Tsh 106,000,000 which the Plaintiff continued to use an

area section of a bar for clearing and forwarding, without any agreement. DW1 stated that they did not agree for convening in view of discussion on refunding development carried out by the Plaintiff in case of termination, because the development were carried out for the benefit of the Plaintiff's business. Issue number one, whether there was an existing lease agreement between the parties. According to a lease agreement for a yard at Plot No. K3 Mivinjeni dated 1/02/2010 (exhibit Pl or Dl(a) indicate that it was for a period of twelve months commencing from 1/02/2010 but renewable. In between it is silence. Another lease agreement was executed on 1/2/2015 for a yard at Plot No. K3 Mivinjeni (exhibit P9 or Dl(b)) for twelve months commencing from 1/02/2015 for square meters 2,398 plus 420 and another one executed 4 on the same date to wit 1/02/2015 for a space at Plot No. K3 Mivinjeni (exhibit D7) for a period of twelve months commencing from 1/02/2015. In 2016 a lease agreement (No. 1) in respect of a yard on Plot No. K3 Mivinjeni was executed on 1/02/2016 (exhibit P10 or Dl(c) for a period of twelve months commencing from 1/02/2016. On 1/02/2017 a lease agreement was executed for a period of twelve months commencing from 1/02/2017 exhibit Pll or Dl(d). On 14/02/2019 a lease agreement dated 1/02/2017 was extended for a term of one year up to 31/01/2019 (exhibit D2(a), it

was accompanied by a deed undertaking dated 14/02/2019 of acknowledging or confirming that the tenant is indebted rent. On 1/07/2020 a lease agreement dated 1/02/2017 was extended for another period up to 31/12/2020 exhibit D2(b) with a deed undertaking dated 9/7/2020 for indebtedness of rent exhibit D3(b). On 1/01/2021 an extension of a lease agreement dated 1/02/2017 was amended to read it will expire on 30/06/2021 exhibit D2(d). On 1/07/2021 captured a lease agreement dated 1/02/2017 and its subsequent extensions were amended to the effects that the agreement shall expire on 31/12/2021 exhibit P4 or D2(c ). These were accompanied by deed of undertaking confirming indebtedness of the tenant (Plaintiff) exhibit D3(c ) and D3(d). Generally speaking, the lease agreement was valid up to 31/12/2021 when it was the expiry of all extensions made as exhibit 5 P4 or D2(c ). Therefore I nod with the submission of the learned Counsel for Plaintiff and Defendant that, the first issue is in affirmative that there was an existing lease agreement between the parties. Issue number two, whether there was an agreement of selling the developed structure, office or other improvements to the landlord at the expiration or termination of the lease agreement. The Plaintiff claim was hinged on what he called implementation and enforcement of clause 3(vi) in exhibit Pl, on what he explained that it

was agreed that on expiry of a lease agreement, the Plaintiff would sell the developed structures to the Defendant. The Defendant on the other hand maintained that there was no such a clause for refunding the Plaintiff, citing clause 3.1 to the lease agreement that it was agreed that the Plaintiff will construct at his own costs and the like to suit his business. DW1 stated that clause 3.6 has nothing to do with refund, rather provide that in case a lease agreement come to end, they can sell at a mutually agreed price. It is true that clause 3(i) of exhibit Pl or Dl(a), provide that all structural and office accommodation/yard shall be constructed by the tenant at its own costs and the like to suit his business or company's requirements. Essentially both parties were in agreement to 6 these terms and conditions. However, the glaring arear of contention is on clause 3(vi) in exhibit Pl or Dl(a), for easy of reference, I reproduce it, 'To keep and maintain at his own expenses and at ait times, the Leased Premises in good and safe condition and to dispose off by selling all structural/office accommodation/yard area to the Landlord at mutually agreed price at the expiration or termination of the term hereby created in good tenable condition, reasonable wear and tear expected' As per the above quotation, indeed parties had contemplated disposal by sell of all structural/office

accommodation/yard to the Defendant, at the expiration of the lease agreement. However, the sell was to be at mutually agreed price and subject to reasonable expected wear and tear. To this end, the Plaintiff tendered a valuation report exhibit P12 where the Valuer opined that the market value of the property is Tsh 856,000,000. But to my view, this report exhibit P12 fall short, on that it was not mutually done as at a front page of exhibit P12 speak louder to the effects that it was prepared exclusively in favour of the board of directors of Mpegav Auto Link (T) Ltd, the Plaintiff herein. Also the valuer did not take into consideration the aspect of wear and tear. It is not stated plausibly in exhibit P12 if that amount is inclusive labour charge or not, because at the executive summary at page 7 34, there is no mention of labour charge. At a summary page 34 of a report exhibit P12, there is a sum of Tsh 9,000,000 which had no description or explanation whatsoever. PW3 who is professional Engineer, said the work he executed/supervised including a fore court concrete on 1,600 square metres and pavements on 2900 square metres, while the Valuer said concrete yard was 2,441.56 square metres and paved parking yard 1,623.78 square metres (at pages 32 and 31 respectively, in exhibit P12). These discrepancies are so glaring and therefore is material, rendering the report exhibit P12

suspect. On the other hand, the Plaintiff summoned two contractors PW2 and PW3 (the later is also professed to be a professional Civil Engineer), to explain on the work executed including an aspect of labour charges. Both PW2 and PW33 explained to have executed the same work, but differed on labour charge, PW2 charged 78,000,000 while PW3 charged between 40 to 50 milion, he was guessing. It is to be noted that PW2 bragged to be a building contractor, PW3 was a professional Civil Engineer and contractor as aforesaid. The duo is unknown as to whether are mutually exclusive. PW2 and PW3 executed similar work., although it was not certain whether were jointly contracted of were contracted individually, though PW2 was suggesting to be semi attached to the Plaintiff. PW2 said a labour charge range between 15% to 40% of the material used, while PW3 said a labour 8 charge vary between 20% to 40%. PW2 said the work was done between March 2010 to August 2010, while PW3 said the work was executed in piecemeal between 2016 to 2021. PW1 said the development was worth around 503,800,000 and was effected first phase in 2016 and second phase in 2016. These disparities and inconsistence, cast doubt on the evidence of the Plaintiff regarding the extent of development effected, by who and its value, to be a stake. While it is in agreement as alluded by the Plaintiff's Counsel in his

closing submission, that indeed the Defendant was under obligation to purchase the development carried out by the plaintiff, but I decline to agree with the Plaintiff regarding the extent of development and the value thereof. Be as it may, parties are bound to abide to the dictate of the terms and conditions of the lease agreement exhibit Pl or Dl(a). Having premised as above, it is ruled that sell of structural/office accommodation/yard should be sold or disposed to the Defendant at a mutually agreed price subject to reasonable wear and tear. Therefore issue number two is answered in the terms hereinabove. Issue number three, whether there is unlawful termination of the lease agreement. According to exhibit P4 or D2(c ), the expiry date of a lease 9 agreement was on 31/12/2021. PW1 alleged that the Defendant terminated the lease agreement before its expiry. According to PW1, a demand notice exhibit P5 which was served to him on 07/10/2021 demanding them to pay outstanding rent and vacate the premises within thirty days, had the effect of terminating the lease agreement. Also, the Plaintiff relied on exhibit P7 a letter from TRA. But exhibit P7 is dated 10/06/2022, therefore at any rate had nothing to do with termination of the lease. Again, PW1 was contradicting, because on re-examination, PW1 stated that they continued to occupy the premises until 31/12/2021. Above all, PW1

was reluctant and avoided to say as to when exactly he vacated the suit premises or as to when the alleged unlawful eviction (as referred by PW3) was effected. PW3 said he heard that the Plaintiff was unlawfully evicted since 2021. DW1 on the other hand, stated that on 24/01/2022 he wrote a letter to TRA informing the later that there was no valid tenancy agreement with the Plaintiff, as per exhibit D5(a), where TRA responded on 18/02/2022 exhibit D5(c ) that the Plaintiff's operation of Customs Bonded Warehouse were suspended by a letter dated 4/02/2022. According to DW1, on 10/06/2022 it is when TRA closed the Plaintiff's bond and added further that the current status, the Plaintiff quitted at a place where she was trading. On cross examination, DW1 stated that the Plaintiff quitted at the suit premises in January this year. io DW1 dispelled a fact that he evicted the Plaintiff. Now in the circumstances where the Plaintiff could not tell as to when exactly the lease was prematurely terminated by the Defendant. Neither said as to when exactly he quitted at the suite premises, let alone as to when he was evicted and by who or modality, it cannot be said a mere notice exhibit P7 suffices to terminate the lease agreement. Indeed, there is an overwhelming evidence that the Plaintiff continued to occupy the suit premises up to 31/12/2021. Therefore, a claim for termination of a

lease agreement is invalid. This is because even in the relief claimed by the Plaintiff at relief (i) he is claiming for an order restraining the Defendant from terminating lease agreement/evicting the Plaintiff from the leased premises until when is refunded as sum of 856,000,000 allegedly being costs incurred in improving, renovating, and constructing the suit premises. It is to be noted that the plaint was signed by the Plaintiff on 10/02/2022 and presented for filing onll/02/2022, by implication, up to this period the Plaintiff is deemed to have been in occupancy of the suit premise. In the circumstances, a claim for pre mature termination of the lease agreement is legally untenable. Therefore I am in agreement with the submission of the learned Counsel for the Defendant that there was no any kind of termination done by the Defendant before the expiration of the lease agreement. ii Issue number four, whether the Defendant is owed the Plaintiff arrears of rent for the lease term. The Defendant/Plaintiff to the counter claim stated that for a lease agreement ended on 31/12/2021, the Plaintiff/Defendant to the counter claim is indebted USD 181,695.20 as arrears of rent and Tsh 106,920,000 for a space formerly rented by the Defendant to the counter claim for a business of a bar which its lease agreement ended on 31/01/2016, thereafter the Defendant to a counter claim continued

to occupy it for a business of clearing and forwarding without any agreement or paying rent up to 31/12/2021. This claim of 106,000,000 is baseless, and was not supported by any documentary evidence. Nowhere the Plaintiff to a counter claim demanded it formerly for the whole tenor alleged from 31/12/2016 to 31/12/2021. Even in the formal demand letter to the Defendant in the counter claim exhibit D4, this claim of arrears of rent a sum of 106,000,000, was not demanded. There is no even an invoice which was raised to claim for the same. Therefore, a defence by PW1 that this claim does not exist, is valid. As such a claim for specific damages Tsh 106,000,000 is dismissed. Regarding a claim for USD 181,695.20. PW1 conceded that he is indebted a sum of USD 164,133. It is to be noted that in exhibit D4 it was indicated 12 that a sum of USD 164,133.90 was due up to the date of the demand notice dated 7/10/2021. As such a claim of USD 181,695.20 arrears of rent up to 31/12/2021, to my view is valid. To sum up, parties are bound to abide the dictate of the terms and conditions of the lease agreement exhibit Pl or Dl(a), specifically clause 3(vi), regarding sell of structural/office accommodation/yard should to the Defendant at a mutually agreed price subject to reasonable wear and tear. The Plaintiff to the counter claim is entitled payment of USD 181,695.20 arrears of rent up to 31/12/2021 by the Defendant to the counter claim. The main suit and counter claim are partly granted to the extent demonstrated above. Because the matter ended in a win win situation, I will not award cost. E.Bl LUVANDA -

JUDGE 25/08/2023 Judgment delivered through {yideo conferencing attended by Mr. Shaban Mlembe learned Advocate for the Plaintiff and Mr. Emmanuel Marwa Advocate for the Defendant. e.b/Ijvanda /JUDGE £5/08/2023 13