ms njake enterprises and oil transport ltd vs ms energy and water utilities regulatory authority 2010 tzhccomd 35 28 june 2010

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT ARUSHA COMMERCIAL CASE NO.3 OF 2010 M/S NJAKE ENTERPRISES AND OIL TRANSPORT LIMITED............................................. APPLICANT VERSUS M/S ENERGY AND WATER UTILITIES REGULATORY AUTHORITY.................................. DEFENDANT Date of last order: 28/05/2010 Date of oral submissions: 09/06/2010 Date of ruling: 28/06/2010 RULING MAKARAMBA, J.: On the 25th day of May 2010, the Applicant/Plaintiff filed in this Court an application under a Certificate of Urgency by way of Chamber Summons under Section 68(e), section 95 Order XXXVII Rules 2(1) and (4) of the Civil Procedure Code [Cap.33 R. E. 2002] and any other enabling provision of laws. The Application is supported by the affidavit of JAPHET i L A I Y A N D U M I L E M A , the Applicant Managing Director who is seeking for among others the following orders: In te rp a rte s: (i) The Honourable Court may be pleased to issue a temporary order against the Respondent by its servant, workmen, employees, agents or otherwise suspending operation o f three Compliance Orders dated the 11th May 2010 resulting into allowing smooth operations o f the Applicant three Petrol Stations namely Njake Petrol Station at Meserani, Njake Petrol Station at Kwa Idi and Njake Petrol Station at Kikatiti pending determination o f the main commercial suit or for the coming six months, whichever comes first. E x p a rte : (i) The Honourable Court may be pleased to make an exparte interom order in line with and or nature o f prayer (i) herein above pending the hearing o f the Application interpartes. On the 28th day of May 2010, this Court after hearing Mr. Maro, learned Counsel for the Applicant, and considering the sensitivity of the matter involved in this application, allowed for summons to issue to the Respondent to file counter affidavit, and set the 9th day of May 2010 for the hearing of the application inter partes. On the 4th day of June 2010, the Respondent filed two counter affidavits, that of D E U S M A G E S A and M ISH A K A W ILE M E LW A , Petroluem Inspectors of the Respondent, together with a two point Notice of Preliminary Obection that: 1. This Honourable Court has no jurisdiction to hear and determine this matter as the powers to do so are vested into the Fair Competition Tribunal in terms o f the Fair Competition Act, 2003 2 read together with the Energy and Water Utilities Regulatory Act [Cap.414 R.E. 2006]. 2. The dispute between the parties is not a commercial dispute to be determined by this Honourable Court thus improperly pending before the Court. On the date set for the hearing of the preliminary objections, Mr. Kabakama learned Counsel for the Respondent elected to abandon the second point of preliminary objection and instead present his arguments only on the first point, which prayer this Court readily granted. In support of the preliminary objection, Mr. Kabakama learned Counsel for the Respondent, submitted that the Compliance Orders which are the subject of the application pending before this Court were issued by the Respondent as Regulator of the Petroleum Industry, apparently exercising its powers under section 39 of Energy and Water Utilities Regulatory Act [Cap.414 R.E. 2006] (the EWURA Act). As a regulator of the petroleum industry, the powers and functions of the Respondent are stipulated in the Petroleum Act, 2008 [Act No.4 of 2008]. Mr. Kabakama submitted further that under both the EWURA Act and the Petroleum Act there are organs established for handling complaints and settling "disputes" arising from the petroleum industry. It was the further submission of Mr. Kabakama that under section 52(1) of the Petroleum Act any aggrieved party may "appeal" to the Fair Competition Tribunal (FCT), which is established under section 84 which falls under Part XIII of the Fair Competition Commission Act, 2003 (the FCC Act). Among the functions of 3 the FCC as stipulated under section 85(c) of the FCC Act is to carry out the functions conferred upon it under the EWURA Act. Mr. Kabakama submitted further that under section 29(1) of the EWURA Act, a person aggrieved by a decision and other decisions may appeal to FCT. Mr. Kabakama submitted further that the avenue with jurisdiction to hear appeals against decisions of EWURA is the FCT and not this Court. Mr. Kabakama was of the opinion that as to where litigation is to be submitted is not a matter of choice but of law, and therefore the Applicant was bound to present its complaint to the FCT and not to this Court. Mr. Kabakama drew the attention of this Court to an analogous situation in the case of FATEBALI MURJI V. H.P. BHANJI [1988] TLR 8, which although involving matters of a landlord and tenant, the Court there was addressing itself to a situation where the case it was dealing with was tried in ordinary court instead of a tribunal as provided under the law and whereby the Court proceeded to quash the decision. Mr. Maro learned Counsel for the Applicant responded by giving a brief analysis of the various provisions in the relevant laws to distinguish between what he categorized as the " adjudicativd' and "enforcement" duties imposed on EWURA by the EWURA Act. Mr. Maro submitted further that a decision made by EWURA in terms of section 27 of the EWURA Act, which provides for internal organs within EWURA touches on general matters, where an aggrieved party appeals to the Internal Review Committee within EWURA. Mr. Maro submitted further that under subsection (7) of section 27 of the EWURA Act, the powers conferred on 4 EWURA are in the nature of a quasi judicial, since it import receiving submissions from affected parties and the Committee submits its report to EWURA with recommendations either to dismiss, set aside, vary etc. Mr. Maro submitted further that for decisions arising under Part III of the EWURA Act an aggrieved party proceeds under section 29 to the FCT and the controlling word in that section is "the decision." It was the further submission of Mr. Maro that section 29(2) of the EWURA Act enumerates grounds of appeal which clearly depicts a hearing and decision made based on adduced evidence. Mr. Maro submitted further that the other scheme under the EWURA Act is found in Part VI of the Act, headed "Complaint and Dispute Resolution", which provides for a scheme of adjudication. In terms of section 34(6) of the EWURA Act, a complaint received by the Authority is referred to a Division of the Authority for a decision, which in the opinion of Mr. Maro is a decision of the Authority which may make several orders under section 35 of the EWURA Act after hearing the parties. Mr. Maro submitted further that a decision by the Authority in terms of section 36(2) of the EWURA Act is appealable to FCT. Mr. Maro submitted further that the EWURA Act proposes possible grounds under section 36(3) of the Act for evidence based decision making, which means a hearing and decision taken. Mr. Maro referring to Black's Law Dictionary 6th Edition at page 407 on attributes/elements of a decision, submitted further that a decision presupposes submission of a dispute or controversy followed by hearing 5 and leading of evidence on the facts and if on merits apply facts to law and render a decision. Mr. Maro posed a question as to whether the applicant has come to this Court to challenge the decision of the Authority, to which he responded negatively that the Applicant has come to this Court to challenge an "enforcement order" in the nature of the Compliance Orders which fall under the other limb of categories of duties of the Authority (EWLIRA). Mr. Maro submitted further that the impugned Compliance Orders were issued under section 39(1) of the EWURA Act, which is in Part VII of the Act. Mr. Maro insisted that the Compliance Orders were not a result of adjudication and further that in addition to suspension, the Respondent also called on the Applicant to show cause, why severe punishment should not be meted out on the Applicant. Mr. Maro submitted further that according to Para 9 of the counter affidavit of the two Petrol Inspectors, the closure of the Applicant's three petrol stations was made pending the Applicant presenting defence followed by a determination. The main argument of Mr. Maro learned Counsel for the Applicant is that the Compliance Orders issued by the Respondent under section 39 of EWURA Act was not a decision since it does not have the attributes or elements of a decision and therefore it cannot be taken to the FCT by way of appeal or review. In the opinion of Mr. Maro and drawing inspiration from section 39(4) of the EWURA Act, a compliance order is equated to an injunction order of the High Court and therefore if injunction was to be executed, accordingly the aggrieved party cannot go back to the FCT, and 6 therefore the only available forum will be for the Applicant to approach the High Court which has unlimited jurisdiction. It is comforting to learn from the submissions of Mr. Maro that in terms of section 85 of the FCC Act, the FCT can entertain appeals from the utilities authorities, such as EWURA ect., but this has to be against a decision, and given that under the present circumstances no decision has been taken out by EWURA capable of being appealed to FCT, the only available avenue is to come to this Court particularly considering that the Applicant does not seek to challenge a decision of the Authority but an enforcement order deemed or equated to be an injunction order of the High Court. Mr. Kabakama in rejoinder pointed out the absurdity of challenging the Compliance Orders in this Court and then the final decision in yet another avenue. In the opinion of Mr. Kabakama a decision entails a process which has to come to an end. Mr. Kabakama submitted further in rejoinder that the process leading to the issuance of the Compliance Orders by the Respondent was preceded with inspection and sampling which was carried out by the Respondent's Officers, and by allowing the Applicant to give defence to show cause, which was to have brought the decision process to an end. According to Mr. Kabakama, the Compliance Orders should therefore have been taken to the FCT as per section 52 of the Petroleum Act, which does not make the kind of distinction between appeals in decision arising in "adjudicative" and "enforcement" functions, as it directs all appeals to be referred to the FCT. Mr. Kabakama submitted further that in event of inconsistency, in terms of section 37 of the EWURA 7 Act, the provisions of the Petroleum Act prevails over the EWURA Act. On the issue of the compliance orders being equated with injunctive orders of the High Court, Mr. Kabakama submitted in rejoinder that an order of the High Court cannot be appealed against in the same High Court. The Respondent claims that this Honourable Court has no jurisdiction to hear and determine this matter as the powers to do so are vested into the Fair Competition Tribunal in terms o f the Fair Competition Act, 2003 read together with the Energy and Water Utilities Regulatory Act [Cap. 414 R.E. 2006]. The application which has attracted this preliminary objection is based on a suit the Applicant/Plaintiff instituted in this Court on the 25th day of May 2010, wherein it is claiming among other things for declaratory orders nullifying the three compliance orders dated 11th day of May 2010 issued by the Respondent/Defendant to close down the Applicant's/Plaintiff's three Petrol Stations. The whole episode unfolded when the Respondent's Officers paid a visit to the Applicant's Petrol Stations, with the purpose of checking and verifying the quality of petroleum products offered for sale by the Applicant in performance of its functions under the Petroleum Act read together with the EWURA Act. The Respondent's Officers took some samples of petrol and gas oil from the Applicant's dispensing pumps and subjected them to Laboratory Analysis, whose result was communicated to the Applicant through "Compliance Orders" issued by the Respondent informing the Applicant that the samples the Respondent's Officers collected from the Applicant's three petrol stations during their visit revealed that the 8 Research Octane Number (ROS) was below the minimum required number. The Respondent ordered the Applicant to stop with immediate effect selling and/or offering for sale petroleum products from those three petrol stations. Not only that, but the Applicant was also required to show cause in writing within seven days as to why severe punishment should not be imposed on him for selling petroleum products which were out of specification. Immediately after delivery of the Compliance Orders, the Respondent's Officers closed down the three petrol stations and sealed off all the pumps inclusive of Gas Oil and Kerosene pumps. In order to put a time scale of the unfolding events, briefly the visit by the Respondent's Officers at the Applicant's three petrol stations was done on 22nd day of April 2010. The Compliance Orders issued by the Respondent are dated 11th day of May 2010, and they were delivered at the Applicant's three petrol stations on three different days, on the 16th, 18th and 19th of May 2010. The Applicant/Plaintiff filed the main suit and the application the subject of the preliminary objection on the same day, the 25th day of May 2010. The main issue for determination by this Court is whether this Court has jurisdiction to hear and determine this matter. In the opinion of Mr. Maro, this issue is interrelated to the issue whether or not the Compliance Orders was a decision of the Authority. That being the case then, in the opinion of Mr. Maro, which Mr. Kabakama does seem to share is that if this issue is answered affirmatively, then the Compliance Orders will be amenable to be challenged through the appellate scheme set out in the 9 FCC Act, which establishes the FCT with powers to hear appeals from all utility authorities including EWURA, and therefore this Court will have no jurisdiction to hear and determine the matter. Otherwise if the issue is answered negatively, then the Compliance Orders issued by the Respondent were not a result of adjudication but an enforcement order and therefore this Court will have jurisdiction to entertain the matter. It is the main contention of Mr. Kabakama, learned Counsel for the Respondent, that the powers to hear and determine this matter are vested in the Fair Competition Tribunal in terms of the Fair Competition Act, 2003 [Act No.8 of 2003] read together with the Energy and Water Utilities Regulatory Act [Cap.414 R.E. 2006]. Mr. Maro, leraned Counsel for the Applicant on his part contends that this Court has jurisdiction over this matter since the Applicant has not come to this Court to challenge a decision of the Authority, but an enforcement order in the nature of Compliance Orders issued by the Respondent under section 39(1) in Part VII of the EWURA Act and as such the Compliance Orders was not a result of adjudication and therefore not amenable to appeal to the FCT. It is without much controversy that both the Respondent and the Applicant are at one that the Compliance Orders was issued by the Respondent exercising its powers under section 39 of the Energy and Water Utilities Regulatory Act, [Chapter 414 of the Laws] which stipulates as follows: "39.-(1) Where the Authority is satisfied that a person has committed or is likely to commit an offence against this Act or a io sector Act it may make a compliance order under this section." (the emphasis is o f this Court). One thing comes out clearly from the wording of section 39 of the EWURA Act that a Compliance Order is issued with respect to the "commission of an offence against this Act or sector Act."The effect of this provision is that before the Authority issues a Compliance Order under section 29 of the EWURA Act, it has first to be satisfied that a person has committed or is likely to commit an offence against the EWURA Act or sector legislation. The issue is whether the alleged conduct of the Applicant amounted to a commission or likelihood of commission of an offence against the EWURA Act or sector legislation. The Compliance Orders was issued by the Respondent following results of Laboratory Analysis carried out on the samples taken by its Officers from the three petrol stations of the Applicant. The Laboratory Results which were communicated to the Applicant vide the Compliance Orders in my view constituted what Parliament envisaged by the rendering " where the Authority is satisfied..." under section 39(1) of the EWURA Act. In terms of subsection (4) of section 39 of the EWURA Act, a compliance order has to be in writing. Further, it must set out the grounds for its making and it is enforceable as an injunction of the High Court. In my view what the law provides is that a Compliance Order is to be enforced as injunction order of the High Court but this does not necessarily import it to be equated to an injunction. There is nothing therefore under the said section suggesting that a Compliance Order is equated with an injunction of the High Court. It is a general rule however, that a person ii against whom an injunction is made and who disregards it is liable to be dealt with for contempt. It means that regardless of the form or type of the inunction and whether it is made ex parte or interpartes it must implicitly observed and is operative for a period of six months unless extended for a similar further period only and no more. In terms of subsection (3) of section 39 of the EWURA Act, a compliance order may require a person to refrain from conduct which is in contravention of the provisions of the EWURA Act or a sector Act or to take actions required to be taken in order to comply with the EWURA Act or a sector Act. During the pendency of the Compliance Orders, whose enforcement the law treats as that of an injunction order of the High Court, EWURA gave the Applicant seven days to show cause why severe punishment should not be metted out on the Applicant. In its reply to the counter affidavit, the Applicant claims that prior to the expiration of the seven days, one Mr. Titus Kaguo informed the public that the Respondent has already set out punishment in the sum of shillings 3,000,000/- payable by the Applicant. In the course of making his submissions, Mr. Maro learned Counsel for the Applicant re-revisited some provisions relating to various procedures for appealing against certain decisions by EWURA or to its delegated organs. I should point out here that in terms of section 7. (l)(e) of the EWURA Act, among the functions of EWURA is to facilitate the resolution of complaints and disputes. In my view, the Authority does not resolve complaints or disputes but what it does is to play a facilitative role, which means that there are other organs either internal or external to 12 EWURA with the mandate to resolve complaints or disputes. Section 34.- (1) of the EWURA Act apply to any complaint against a supplier of regulated goods or services in relation to any matter connected with the supply, possible supply or purported supply of the goods or services. In terms of subsection (7) of section 34 of the EWURA Act, for the purposes of dealing with consumer complaints, EWURA establishes a dedicated unit in each Division to receive and follow up on complaints from consumers. With regard to dispute resolution, EWURA is empowered to delegate its functions save for those expressly prohibited in terms of section 22(3) of the EWURA Act, to either a Division of the Authority established under section 21.-(1) of the EWURA Act; or one or more members or employees of the Authority. In terms of section 27.-(1) of the EWURA Act, any person aggrieved by any substantive decision made on behalf of the Authority under delegated power by a Division of the Authority; or one or more members or employees of the Authority may, within fourteen days after receipt of the record of the decision apply to the Authority for it to review the decision in question. In terms of section 26. (1) of the EWURA Act, the Authority can establish a Review Panel. According to subsection (3) of section 27 of the EWURA Act upon receipt of an application under subsection (1), the Authority appoints an Internal Review Committee, which according to subsection (9) of section 27 of the EWURA Act, it may recommend to- (a) dismiss the application; (b) set aside the original decision and make a different decision; 13 (c) vary the decision; or (d) set aside the decision and delegate the matter to a Division or to one or more members or officers of the Authority for a fresh decision without directions as to ways in which that decision will be made. In terms of subsection (10) of section 27 of the EWLIRA Act, EWURA has to make a determination on the recommendation by the Internal Review Committee by a vote of the majority of its members and may either confirm, vary or dismiss the decision subject of review. According to section 29.(1) of the EWURA Act, any person aggrieved by the decision of the Internal Review Committee or any other decision made in connection to the purposes of this Act may, appeal to the Fair Competition Tribunal (FCT). In terms of subsection (2) of section 29 of the EWURA Act, the grounds of appeal are on the following (a) the decision made was not based on evidence produced; (b) there was an error in law; (c) the procedures and other statutory requirements applicable to the Authority were not complied with and non-compliance materially affected the determination; (d) the Authority was not in possession of evidence required for the determination of the matter; (e) the Authority did not have power to make determination. 14 Subsection (3) of section 29 of the EWURA Act stipulates categorically that notwithstanding the provisions of this section, the decision of the Fair Competition Tribunal shall be final. The finality clause in the decisions of the FCT comes out clearly under section 84.-(I) of the FCC Act which provides that a judgment or order of the Tribunal on any matter before it shall, subject to sub-section (2), be final. According to subsection (2) of section 84 of the FCC Act, judgments and orders of the Tribunal shall be executed and enforced in the same manner as judgments and orders of the High Court. Clearly, the Applicant having been aggrieved by the substantive decision of the Respondent's Officers of closing down his three petrol stations which decision was made on behalf of the Authority under delegated power by one or more members or employees of the Authority, was to have asked for review of the decision in question, whereupon the Authority would have appointed an Internal Review Panel. In the event the Applicant was dissatisfied with the decision of the Review Panel then he would have appealed to the Fair Competition Tribunal whose decision would be final. This is what the law provides and until such time it is stipulated otherwise, the Applicant was bound to follow this legal route, and not to come to this Court. The matter however has become an academic exercise considering the fact that the Respondent has already imposed a monetary penalty of Tshs. 3,000,000/- payable by the Applicant, which the Applicant claims that it was made even before the expiry of the seven days within which the 15 Applicant was required to show cause. The pending application in my view has been rendered nugatory. The Applicant however, in my view can still take advantage of the provisions of section 29. (1) of the EWURA Act and appeal to the FCT against the decision of the Respondent as "any other decision made in connection to the purposes o f this Act" and set out the grounds for the appeal as per subsection (2) of section 29 of the EWURA Act. As submitted by Mr. Kabakama and rightly so in my view, under section 52(1) of the Petroleum Act a person aggrieved by a decision of the Authority (which in terms of section 4 of the Petroleum Act, means EWURA established under section 4 of the EWURA Act), may appeal to the FCT in accordance with the provisions of Part XIII of the Fair Competition Act. The conduct of the Applicant which led to the Respondent issuing Compliance Orders against the three petrol stations of the Applicant in my view amounted to allegations of contravention of the provisions of the Petroleum Act, [Act No.4 of 2008], which is a sector legislation, providing among other things for wholesale and retail distribution of petroleum and petroleum products in a liberalized market. The Compliance Orders in my view amounted to a "decision" made in connection to the purposes o f the Ewura Act, particularly as it is enforceable as an injunction order of the High Court which in the present circumstances was made exparte, which is why the Applicant was given opportunity to show cause. The decision making process as submitted by Mr. Kabakama and rightly so in my view had yet to be completed considering that the provisions of section 52(1) of the Petroleum Act envisage "a person aggrieved by a decision o f the Authorit)/' which means a " decision"of the Authority while performing its 16 functions in relation to matters governed by the Petroleum Act, as a sector legislation, and not according to the fine meaning attributed to the term "decision" a la Black's law Dictionary as cited by Mr. Maro in his submissions. The provisions of section 52(1) of the Petroleum Act falls under Part XI of the Petroleum Act titled "Disputes Settlement." It is trite to note here that section 51(2) of the Petroleum Act, which falls under the same Part XI of the Act provides for "disputes arising between licensees in petroleum supply industry and the Authority' regarding application of the Act, which are to be brought before the Fair Competition Tribunal for determination. Section 52(1) of the Petroleum Act on the other hand provides an avenue for any person who is aggrieved by the decision of the Authority to appeal to the Fair Competition Tribunal in accordance with the provisions of Part XIII of the Fair Competition Act. The law therefore envisaged the FCT to deal with appeals arising out of disputes between licensees in the petroleum supply industry and the Authority without giving a distinction as whether the decision arises out of adjudicative or enforcement functions of the utilities authorities. If Parliament had intended otherwise it would have provided so expressly. The mandatory finality clause in the decisions of the FCT under section 84.-(I) of the FCC Act and the execution and enforcement of the judgments and orders in the same manner as judgments and orders of the High Court under subsection (2) of section 84 of the FCC Act, did not intend to create contending jurisdiction which could result into conflicting decisions over the same 17 subject matter thus plunging parties into the abysis of uncertainty to the determent of smooth operation of the liberalized market in the petroleum industry. In the upshot and for the foregoing reasons the preliminary objection is hereby upheld. The Application is hereby struck out with costs. Order accordingly. R.V. MAK ARAM BA JUDGE 29/06/2010 18 Ruling delivered in Chambers this 29th day of June 2010 in the presence of Mr. Tobias Laizer for Mr. Maro, Advocate and Mr. Galeba, Advocate for the Respondent. R.V. MAKARAMBA JUDGE 29/06/2010 Words count: 4,602 19