Msimbazi Creek v Diamond Trust Injunction

1 IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA COMMERCIAL DIVISION AT DAR ES SALAAM MISC.COMMERCIAL APPLICATION NO. 2 OF 2024 (Arising from Commercial Case No. 2 of 2024) MSIMBAZI CREEK HOUSING ESTATES LTD……………………………… APPLICANT VERSUS DIAMOND TRUST BANK TANZANIA PLC…………………………. RESPONDENT RULING May 29th, 2024 & July 19th, 2024 Morris, J In need of a temporary protection of his Plot No. P2-409 under Title Deed No. DSMT 1004584 (the property) from disposition, the applicant has filed this application. He is seeking for the Court’s injunctive remedy against any form of disposition by the respondent pending hearing and determination of Commercial Case No.2 of 2024 by this Court. The affidavits of Yasirali Jahangir Poptani support the application. However, the application is being challenged by the respondent who has filed the affidavit sworn in contention by Victoria Lupembe. 2 During the hearing of the application, both parties were represented by own advocate. Messrs. Ashiru Lugwisa and Kephas Mayenje entered appearance for the applicant and respondent respectively. The learned counsel commenced their hearing by adopting the corresponding affidavits as part of their submissions. For the application, advocate Lugwisa argued that the applicant is seeking temporary injunction (the injunction) to restrain the respondent from disposing the property. The application is based on Order XXXVII Rule 2(2) and section 68 (c) of the Civil Procedure Code, R.E. 2019 (the CPC). He stated that the facts given in the applicant’s affidavits fully support the application in line with Atilio v Mbowe [1969] HCD 284. To him, principles governing the remedy sought herein are three (3). One, there must be triable issues to be determined in the (pending) main suit. Two, the applicant must show that he stands to suffer irreparably if the injunction is not issued. Three, on a balance of convenience, the applicant is likely to be more inconvenienced if the subject remedy is denied. To him the above conditions are adequately exhibited by the applicant herein. As for the first condition, Mr. Lugwisa stated that paragraphs 7,14, 3 17, 18, 19, 20-22 of the affidavit are relevant. According to him, while the applicant avers that he settled the loan fully, the respondent is contesting this averment under paragraph 2(ii) of the counter affidavit. Thus, the parties’ contentious matters include, the repayment of the loan; appropriateness of the registration of the second mortgage; variation of debentures; and the legality of the demand notices issued by the respondent-mortgagee. It was the applicant’s conclusion that such points of contention will fully engage the court in the trial. That is, there is a serious triable issue between them. Further, the applicant argued that the second condition is in paragraph 24 of the affidavit. The applicant indicates that he will suffer most because the respondent does not seriously challenge this suffering. Submitting on the last condition the applicant stated that, on the balance of convenience; as paragraphs 26 and 12 of the affidavit and reply to counter affidavit indicate, the sought injunction will not prejudice the respondent howsoever. To him, the property is immovable and its disposition will cause significant and irreparable loss to the applicant. He referred to Ramadhani Ally & Others v Shaban Ally, Civ. Appeal No. 3/2008; and Jaluma Gen Supplies Ltd & 4 Others v ICB (T) Ltd, Misc. Civ. Appl. 175/2022 (both unreported); and prayed for the application accordingly. Advocate Mayenje opposed the application. He hastily stated that, it is apparent in his affidavit that the applicant does not dispute the outstanding amount of the loan (paragraph 6). Further, under paragraph 7 the applicant alleges that he repaid USD 200,000.00 in full settlement; but annexure 11 referred to under paragraph 16 of the affidavit indicates that the failure to repay the loan was caused by financial constraints. He was thus, applying for reconsideration of the loan amount and the repayment schedule. To the respondent, the reason for failure to repay the loan does not constitute a triable issue in law. Hence, he maintained that the applicant has failed to establish a prima facie case for subsequent trial. It was also submitted by the respondent that, principally, all three conditions in Atilio’s case (supra) must co-exist for injunction to issue. Hence, since the prima facie case is missing hereof, the application is without merit. He made reference to Sango Petrol Station Ltd & Another v Stanbic Bank (T) Ltd, Comm. Case No. 25 of 2023 (unreported, page 6 last paragraph). 5 Regarding irreparable loss, Mr. Mayenje submitted that, it is the respondent who is suffering the most because of the non-payment of the debt by the applicant. He cited paragraphs 2 (i-xv) of the counter affidavit to support his argument. He also contented that; the respondent is a financial institution with necessary financial muscles to compensate the applicant in case the outcome of the main suit will be unfavourable to the former, the disposition of the property notwithstanding. For the balance of convenience, the respondents argued that he is the most prejudiced party than the applicant. To him, the money he keeps belongs to the customers. Thus, in the event the application is granted, the outstanding loan will hamper the lender-respondent’s operations. To buttress his point, he argued that the law enjoins the banks and borrowers to fulfill their respective obligations under security agreements as per General Tyres E.A Ltd v HSBC Bank PLc [2006] TLR 60; and Lukolo Co Ltd v Bank of Africa, Misc. Civ. Application No. 494 of 2020 (unreported, line 10 of the quotation). Consequently, he submitted that the application lacks merit and should be dismissed with costs. 6 Having considered submissions of parties impassively, the Court is to determine whether or not the application should be allowed. As matter of principle, the temporary injunction is not the parties’ automatic right. It should be granted only when the ends of justice so dictate. Subsequently, the Court should exercise its discretion herein if three conditions are met by the applicant conjunctively. As both parties herein correctly argued, these conditions were well articulated in the celebrated case of Atilio v Mbowe (supra). They have been recited and followed in a number of subsequent cases including Abdi Ali Salehe v Asac Care Unit & Another, Civ. Revision No.3 of 2012; Stanbic Bank Tanzania Ltd. v Kiribo Ltd and Others, HC Misc. Land Application No. 17/2023; National Furnishers Ltd & Another v Exim Bank Ltd & Others, Misc. Land Appl. No. 1002 of 2016 (all unreported). The subject conditions are that: i. On the facts alleged, there must be a serious question to be tried by the court and a probability that the plaintiff will be entitled to the reliefs prayed for (in the main suit); 7 ii. The temporary injunction sought is necessary in order to prevent some irreparable injury befalling the Plaintiff while the main case is still pending; and iii. On the balance of convenience, greater hardship and mischief is likely to be suffered by the Plaintiff if temporary injunction is withheld than may be suffered by the Defendant if the order is granted. I will discuss one condition at a time. Obviously, I begin with the first one. Within this condition, three elements are fused: pendency of the suit; existence of the serious triable question in such suit; and the probability of the plaintiff to emerge the victor therein. In the matter at hand, undisputed is the fact that, Commercial Case No. 2 of 2024 is pending before this Court for determination. The first element rests here. As for the second element, parties are at loggerheads on the existence or otherwise of the serious triable question in such case. The applicant maintains that parties will engage the Court to determine if he is indebted and whether perfection of the alleged mortgage and other securities was legally and procedurally right. However, the respondent contends that as the 8 applicant acknowledges being indebted, there is no pending matter worth the Court’s exercise of its learned mind. In resolving the foregoing contention, I am watchful that, at this stage the Court refrains from overreaching to the merit of the pending case. Nonetheless, the onset details cannot be avoided. I have studied the parties’ depositions in the respective affidavits. The obvious congruence is on a couple of things. One, the parties above maintain the borrower-lender relationship to date. Two, the applicant enjoyed various loan facilities from the respondent. Three, one of such facilities involved USD 200,000 (paragraphs 5 and 7 of the affidavit). Four, the applicant alleges that he repaid the amount (in three) above; such that, by necessary deduction, the other loan amount has not been repaid by the applicant [paragraphs 15 and 16 of the affidavit; and 2(viii) of the counter affidavit]. Five, the landed property in dispute is Plot No. P20409 with the certificate of title No. DSMT 1004584. The above undisputed aspects notwithstanding, the affidavital depositions indicate that the parties’ dispute is projected to be more intensive in regard to the mortgage/security appropriateness than the 9 indebtedness or repayment of the loan. I hold such reasoning because the applicant blatantly avers that the fully repaid loan is the one which given to him on 16.01.2020 (paragraphs 5 and 7 of the affidavit). Further, the securities involved herein other than the property, are not in any imminent threat of being altered or appropriated by the respondent. On the same footing thus, the remaining major portion of the dispute is on the rights to land; and on the basis that the pending suit is a commercial case; I am disposed to finding that the question to be tried in the suit is not likely to be so serious, commercially speaking. I will accordingly peg the second element of ground number one on such conclusion. In relation to the third element, it is excessively tricky for one to assess the probability of either party to win the suit at the preliminary stages. Hence, it is not that easy to quickly establish that the plaintiff will be entitled to the reliefs. However, some indicators will normally jut out to lead the court to early assessment that a certain case is weak or bad on either party. I have in mind aspects such as claims without any supporting document where there otherwise supposed to exist; evasive denials; direct or incidental 10 admissions; incoherent causes of actions; strong counter claims or set offs; and or allegations that are tainted with or likely to be defeated by illegalities. I will, however, not venture into naming which one of the foregoing elements is evident in the pending case hereof. Be that as it may, one would not conclusively hold that none exists hereof. Alike the analysis and findings of the Court in respect of the second element above, it remains inconclusive the observation that the reliefs sought by the plaintiff in the suit are easy to substantiate or otherwise. All the examined factors above put in a single wrap; the first ground is unfavourable to the application. As for the second condition, the applicant should prove that it is necessary to grant the injunctive order herein so as to prevent some irreparable injury to him. The applicant states in the affidavit (paragraph 26) that the intervention by this Court is necessary because the respondent still holds the property and other securities. But the respondent states that the loan amount has been outstanding in the applicant’s hand for quite some time and that, if the injunction will issue; the bank will continue to suffer loss. 11 I agree with the applicant that when the lending bank is having an immovable property as security, it primarily cushions itself against irreparable injury, lest the objective of security is rendered obsolete. That is, it can still realise its debt by exercising its rights under the mortgage. Nevertheless, I am not naïve to the fact that in the present case, the applicant deposed that he recognises no legitimate mortgage or guarantee between the parties herein (paragraphs 14, 18 and 19 of the affidavit). Technically stated, the applicant denies the loan, valid mortgage and binding guarantorship. In other words, if the debt were to be established, the same will be unsecured unless the mortgage or other securities are validated too. Hence, the applicant’s argument that the respondent is unlikely to suffer injury is defeated by his contention over the validity of the securities herein. He is shooting himself in the foot. Further, it is a cardinal law under this condition that the injury which the applicant shall suffer must be irreparable. That is, which cannot be atoned by award of damages. See, for instance, the case of America Cyanamid v Ethicon Limited [1975] AC 396. Testing such principle to the matter at hand, the applicant averred that amongst the limbs of dispute 12 between the parties herein is the loan amount. Further, the applicant asserted that the property is occupied by tenants with families; eviction of whom may lead to further litigations and loss of reputation on his part. To me, all such aspects have significant bearings on monetary claims and/or involvement. They can be redressed by money. In principle, the respondent also argued that he has the capacity to recompensate the applicant should the latter emerge the victor in the suit. On such basis, the injury alleged as likely to befall the applicant is capable of being recompensed monetarily. Therefore, the legs for the second condition are too feeble for the applicant to stand on in this matter. I now move to the third and last condition. Hereof, the applicant is enjoined to prove that, on balance of convenience; he stands to suffer greater hardship and mischief than the respondent. From the affidavit and submissions of the applicant it is laid an allegation that the applicant and/or tenants will be subjected to greater inconvenience than the respondent. The respondent also argued that the debt is affecting the bank’s smooth operations [paragraph 2(xv) of the counter affidavit]. As I have reasoned in regard to the first ground, the applicant does not exhibit repaying the entire 13 loan amount save for USD. 200,000 (paragraphs 5, 7, 15 and 16 of the affidavit). However, he did not disclose the reason for his non repayment of the subject balance of the loan. It is equally manifest that the said amount was disbursed in 2015, subject to renewals; repayment extensions; reschedulments; restructurings; and moratoria. Seemingly, in the deposition proving full repayment of the same, it is safe to infer that it has been at the disposal of the applicant for quite some time. Ostensibly, the claimed inconvenience by the applicant has come after the alleged default or mismanagement of securities. In all fairness, circumstances of this case beat logic and conclusion that the applicant is likely to suffer most hereof. Further, to me, the alleged likelihood of the applicant being sued by his tenants; may lead to perceived loss to the applicant. However, as the respondent has deposed that failure by the applicant to repay the loan is causing him immediate loss; I hold that the alleged prospective loss by the applicant is inferior to the exact loss being suffered by the former at the present. Consequently, save for element number one of the first condition (existence of the suit), the other conditions of injunction stand unsatisfied by the applicant. That is, the present application fails to meet the major 14 conditions for the Court to grant the reliefs sought in this matter. Henceforth, it is barren of merit. I accordingly dismiss it. Costs to follow the outcome of the suit. It is so ordered. C.K.K. Morris Judge July 19th, 2024