mps oil co ltd vs oasis energy co llc 2010 tzhccomd 27 27 october 2010

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION)

AT PAR ES SALAAM COMMERCIAL CASE N0.106 OF 2009 MPS OIL CO. LTD.......................................................... PLAINTIFF

VERSUS OASIS ENERGY CO. LLC................................................DEFENDANT Date o f last order- 08/07/2010 Date o f final submissions - 08/07/2010 Date o f ruling- 27/10/2010

RULING MAKARAMBA, J.: This is a ruling on a preliminary objection on a point of law that the Plaint does not disclose a cause of action against the Defendant. The preliminary objection was argued orally by Mr. Laizer, learned Counsel for the Defendant and Mr. Hyera, learned Counsel for the Plaintiff. This indeed is a very interesting matter. As Mr. Laizer submitted in terms of paragraph 3 of the Plaint, the main claim of the Plaintiff against the Defendant is for the latter to return to the former five (not six) post 1 dated cheques the former issued to the latter under a contract which later was terminated by consent of the parties. In terms of paragraph 4 of the Plaint, sometimes in or around early October 2009 the Plaintiff had agreed to buy from the Defendant 6000 metric tons of gas oil at a total price of USD 3,8887,752.00 (Ann. PL-1). According to paragraph 5 of the Plaint, as part of the arrangement, the Plaintiff issued to the Defendant five post dated cheques of the value of USD 777,551.00. The Plaintiff claims that to this date the Defendant has not returned the cheques to the Plaintiff and has come to this Court to seek its assistance in making the Defendant to return to the Plaintiff the said cheques unconditionally. This is what prompted the Defendant's Counsel to spring up with a preliminary objection thus bringing to the fore the issue whether the Plaint and its

Annextures discloses any cause of action. Mr. Laizer, Defendant's Counsel, is of the strong view that the Plaint not only offends the mandatory requirement of Order VII Rule 1(e) of the Civil Procedure Code, by not containing the facts constituting the cause of action and when it arose, but also Rule 1(f) of the Civil Procedure Code as to the facts showing that the court has jurisdiction. In order to buttress his point that the Plaint does not meet the test of cause of action, Mr. Laizer referred this Court to N.S. Bindra's Pleadings and Practice, 8th Edition Vol.l (1997) at page 221 on the meaning of cause of action, which is the sum total of allegations founding a claim; and also Muiia on the Code of Civil Procedure, Vol. 1 at page 206 on the essential elements of cause of action; as well as section 5 of the Law o f 2 Limitation Act, [Cap.89 R.E. 2002] to the effect that the right of action accrues on the date cause of action arose. In summary as per Mulla on the Code of Civil Procedure, Vol. 1 at page 206, the essential elements of a cause of action include (i) the existence of a legal right in the Plaintiff antecedent to the suit but not future expectation with a corresponding duty in the defendant; (ii) infringement or breach of that duty by the Plaintiff; (iii) consequential injury/damage to the Plaintiff; and (iv) maintenance of action by showing the sum total of

allegation founding the claim for relief. Amplifying further on the issue whether the Plaint and its annextures meet the elements of cause of action as outlined above, submitted that the obligation the Plaintiff had to do first in order to trigger those of the Defendant specifically included the Defendant issuing a postdated cheque for the sum of USD 476,035.00 being outstanding payment of actual costs of the gas oil sold to the defendant. Secondly, the Plaintiff was required to release control and ownership in MT-Foucenat shipment in the custody of World Oil Ltd back to the Defendant. Thirdly, the said cheque of USD 476,035.00 was to be paid to the Defendant by 10th November 2009, which to this date has not been paid. The Plaintiff cannot therefore be heard to have discharged its obligation under the Agreement (Ann-PL3), Mr. Laizer surmised. Mr. Laizer submitted further that indeed the postdated cheque was issued to the Defendant for the said amount of money. Secondly, ownership of the said shipment was also released to the Defendant as agreed. In consideration of the Plaintiff doing all of the above, the 3 Defendant was required to return back to the Plaintiff five and not six (as pleaded) postdated cheques of USD 3,887,755.00 as clearance of any indebtedness, Mr. Laizer submitted. Further, on the signing date of Ann. PL-3, the Defendant had handed to the Plaintiff copies of

the said five postdated cheques as agreed as clearly provided for in the last page of Ann PL-3, Mr. Laizer submitted further. The original cheques were to be given back to the Plaintiff after the postdated cheque No.933684 for the sum of USD 476,135.00 was cleared on 10th November 2009, which to date has not been cleared, Mr. Laizer surmised. The Plaintiff's obligation to pay the Defendant the sum of US 476,135.00 has not been fulfilled and as such the right to sue not only has not accrued but does not exist, Mr. Laizer concluded and prayed that the Plaintiff's suit be rejected under Order VI Rule 11(8) of the Civil Procedure Code for lack of cause of action buttressing his point by citing the decision of the Court of Appeal in JOHN BYOMBALIRWA [1983] TLR p .l where the Court upheld the objection that the plaint did not disclose cause of action. Mr. Hyera responding to the submissions of Mr. Laizer, submitted that the suit is not based only on paragraph 3 of the Plaint but also on paragraph 8, where the Plaintiff contends that after the agreement had been terminated or vacated , the Defendants were going around with the cheques before big oil companies trying to discredit the plaintiff as per attached Ann PL-4, a letter to M/S Diamond Trust Bank Ltd, where the defendant regrets that the Bank has misled them on the defendant's credit worthiness subjecting them to huge financial

loss. Mr. Hyera surmised that 4 the Plaintiff's credit worthiness has badly been damaged by the Defendant by releasing information entrusted to them to unconcerned third parties. On the six cheques issued to the Defendants, Mr. Hyera submitted that as the Agreement was terminated, the Plaintiff does not have the right to retain the cheques, which even after being formally reminded/demanded to release them the Defendant has not returned them to the Plaintiff. Mr. Hyera submitted further that there is nothing in the Plaint to show that the said cheques have been dishonoured. Mr. Hyera surmised that as the arrangement was terminated, the Defendant had no right to retain the cheques going around mudslinging the Plaintiff by attacking it's credit worthiness, and to that extent the Plaintiff has cause of action, and that the facts in the case go hand in hand which if the Plaintiff is given opportunity to prove them he can support his right to judgment. Mr. Laizer in rejoinder attacked the submissions by Mr. Hyera on the issue of mudslinging arguing that there is nothing in the Plaint to suggest that the Plaintiff is claiming for damages on those allegations. In any event the letter which the Plaintiff's Counsel claims that it carries the mudslinging does not have anything in that respect but what it says simply is that it is a reference the Bank gave to the Defendant about the

Plaintiff's credit worthiness, Mr. Laizer pointed out. The Plaintiff's Counsel has not disputed the fact that the payment of USD 476,135.00 payable to the Defendant has not been paid to this date to the Defendant, which fact alone tells that they have no right to bring this matter before this Court, Mr. Laizer reasoned. Furthermore, the time frame for the return by the Defendant of the said five cheques to the 5 Plaintiff was not agreed upon in the said Agreement PL-3 and therefore the Plaintiff cannot be heard to say that the said return of the cheques has been delayed, Mr. Laizer hinted out. It is not disputed that the gas oil purchase Arrangement between the parties (Ann. PL-3) was terminated by their consent. Furthermore, as correctly submitted by Mr. Laizer, the Plaintiff does not dispute the fact that the payment of USD 476,135.00 payable to the Defendant has to this date not been paid by the Defendant. If that is the case then logically one would have expected the Defendant would be the one suing the Plaintiff and not vice versa. The allegations by Mr. Hyera about mudslinging, if anything and as correctly submitted by Mr. Laizer, do not found anything in the Plaint to suggest that the Defendant is claiming for damages on those allegations. In the present matter, the basis of the claim by the Plaintiff against the Defendant is for the return of the originals of the five

postdated cheques, the Defendant issued to the Plaintiff under the gas oil purchase Arrangement, which the parties by their consent decided to bring to an end. Furthermore, as correctly submitted by Mr. Laizer there was no time frame within which the originals of the five postdated cheques were to be returned to the Plaintiff by the Defendant and thus entitle the Plaintiff to cry foul over delay in their return to them by the Defendant. I should point out here that for a cause of action to exist that which ought to have been done has not been done or that which ought not to have been has been done. In the present matter, the Plaintiff ought to have settled the payment of USD 476,135.00 payable to the Defendant but 6 to date this has not been done by the Plaintiff. Time is not therefore ripe yet for the Plaintiff to come to this Court for its assistance in seeking what they were under obligation to do in the first place. In that regard the Plaintiff does not have a legal right with a corresponding duty in the Defendant which has been breached resulting into damage or injury to the Plaintiff for which the Plaintiff can validly maintain an action in this Court for relief. In the upshot the Plaint together with its Annextures the Plaintiff lodged in this Court on the 4th day of December 2009 clearly offends the mandatory requirement of Order VII Rule 1(e) of the Civil Procedure

Code by not containing the facts constituting the cause of action. This Court is therefore not seized of jurisdiction to entertain the matter. In the event and for the foregoing reasons, the Plaint together with its Annextures is hereby rejected under Order VII Rule 11(a) of the Civil Procedure Code [Cap.33 R.E. 2002] with costs for failing to disclose a cause of action. It is accordingly ordered. R.V. MAKARAMBA

JUDGE 27/10/2010 7 Ruling delivered this 27th day of October 2010 in the presence of Mr. Mwakipesile, Advocate for the Plaintiff and Mr. Mark, Advocate for the Defendant. R.V. MAKARAMBA

JUDGE 27/10/2010. Words count: 1,841 8