National Board Of Accountants And Auditors vs National Bank Of Commerce Ltd Commercial Case No 132 of 2002 2003 TZHCComD 22 22 September 2003

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM COMMERCIAL CASE NO. 132 OF 2002 NATIONAL BOARD OF ACCOUNTANTS AND AUDITORS................................................................. PLAINTIFF VERSUS NATIONAL BANK OF COMMERCE LIMITED................ DEFENDANTS JUDGMENT KALEGEYA, J: A background to the controversy between the parties is centred on facts as follows. On 22/11/2001 the Plaintiff received Exh.P2, a garnishee order issued by the court in execution of a decree obtained by the Tanzania Building and Civil Engineering Constructing Company against the Plaintiff in this case, in RM Civil Case No. 396 of 1996. The order was prohibiting and restraining the Defendant in this case, until further order o f the RM ’s Court from remitting the said money or part thereof to any person. The Defendant vide Exh.Pl duly notified the Plaintiff of the pending danger hovering over their account. On 3rd December 2001, the Defendant received another order from the court (Exh.Dl) whose content are as follows:- “RE: ORDER TO REMIT THE DECRETAL AMOUNT TO THE JUDGMENT CREDITOR WHEREAS by the Garnishee order dated 22 November 2001 you were prohibited and restrained from remitting the decretal amount o f sh s.l 7,267,690/= or p a rt thereof to any persons until fu rth er orders o f this court, N O W YOU A RE H EREBY ordered to remit the said decretal amount in fu ll to the judgm ent Creditor. ” Treading on this, the Defendants issued cheque No. C 000127655 for the sum stated, in the name of Tanzania Building and Civil Engineering (decree - holders). This was on 4th December, 2001. Meanwhile, the Plaintiff (the judgment debtor), on 4th December 2001, filed a chamber summons (Exh.P3) to raise the garnishee order. The application was heard on 6th December and the drawn order (Exh.P4) granting the application was made on 10th December, 2001. When the same was served upon the Defendant on 11th November 2001, vide Exh.D2 dated 12 December 2001, the court was duly informed of what had transpired on 4 th - that the garnishee order had already been complied with. This did not amuse the Plaintiffs who after failing to strike an amicable settlement with Defendants duly instructed an advocate hence issuance of a letter of Demand (Exh.P5) claiming immediate payment of shs.25 million being loss, inclusive of the sum allegedly illegally drawn from their account. The Plaintiff was represented by Ms Tenga, Advocate, while Mr. Kabakama, Advocate represented the Defendants. Each of the parties fronted a sole witness. The Plaintiff tendered five documentary Exhibits while the Defendant tendered two. The sole witness for the Plaintiff, one Agnes Kessy, the Plaintiff s senior legal officer, insisted that the Defendants are liable because - - they delayed in notifying Plaintiff of both the 1st and 2nd Garnishee orders - that while aware that the garnishee order was being contested they proceeded to honour it - that they honoured documents without due scrutiny as some were undated and unstamped with obvious ambiguity in that, for example, the first order displayed that it “Originated at Kisutu, stamped at Ilala, signed at Kivukoni Resident M agistrates Court and stamped by a Senior Resident M agistrate. ” - that they acted on the last order with such a speed that left a lot to be desired. As regards the Defendant’s version, DW1, the Branch Manager of the NBC Ltd Corporate Branch, one Mshana, insisted that they acted in compliance with court orders and disputed any carelessness or negligence. Issues framed are as follows: 1. Whether the debiting o f Plaintiffs account with a sum of shs. 17,267,690/= by Defendants was wrongful 2. Whether the Defendants’ issuance of the cheque for the debited amount in the name of the decree - holder instead of the court was wrongful. 3. If any of the Defendants’ acts was wrongful, whether the Plaintiffs suffered loss of shs.25,000,000/= 4. To what reliefs are parties entitled. The Counsel made lengthy final submissions - that of the Plaintiffs Counsel is eleven paged while that of the Defendants’ is ten paged. I will consider them chronologically with the issues as framed. On issue one, the Plaintiffs Counsel cementing Agnes’s contention, strenuously submitted that the garnishee order was “obtained on the basis o f exparte judgment which was fraudulently obtained and the garnishee procedures were faulted” and deeps at length on what happened at the subordinate Court until issuance of the order and which she brands fraudulent; attacks the Defendant for honouring documents which contained anomalies, charging, “Cross checking to establish authenticity would have been done before paym ent and in the process the Defendants would have known that the order was not even issued by the right court. In addition to the aforesaid factors, the order would not have been executed because on that material date i.e. 4th D ecem ber 2001, when paym ent was done the Defendants would have been informed that there was already in place an application to raise the garnishee order. That would have saved the Plaintiffs money and costs o f this suit ”. The Counsel made Reference to Felix Rutazengelera vs. Cooperative and Rural Development Bank [1996] TLR 382 which decided that garnishee order procedure governing in our jurisdiction is the English procedure ruling as at 22nd of July, 1920; Halsbury’s Law of England regarding the definition of a garnishee order; again sunk into details of procedure governing issuance of garnishee orders; J. Milnes Holden on The Law and Practice of Banking, Vol. 1, 5th Edition page 134 regarding the Bank’s duty to notify the customer of the garnishee order immediately; The Leader [1868] L.R. 2 A & E, 314 and Roberts vs. Death [1882] 8 Q.B.D. 319, CA, that “it is the duty o f the garnishee to inform the court before the order is made absolute that the judgment Debtor is not entitled to the money for his own use” ; Turner vs. Jones [1858] 26 LT Exch 262, IH & N 878 and Rewebster 1907, I KB 623, impressing that Defendants, under the law were not compelled to pay and concluded, ‘‘Ignorance o f court system in Tanzania cannot be taken as a defence because the Defendants had both internal lawyers and external lawyers at their disposal, they should have consulted them on any legal issue. In addition, one does not need knowledge o f court to identify a dubious document and the wisdom to know that it is not right to act on it ”. On his side, the Defendant’s Counsel argued that the order was issued by the court which subsequently raised it hence it was not a forgery; made reference to Felix’s case as well as The H alsbury’s Laws of England, 4th Edition page 333, para.535 and page 338 para.541, insisting that upon receipt o f a garnishee nisi a garnishee is bound to hold the sums indicated and to pay it out once the final order is made; that Banks are only enjoyed to comply with Court Orders and not to question the validity, and that a Banker of D W l’s type is not expected to have good knowledge of the Court system in Tanzania so as to be able to tell the difference in the various courts in Dar es Salaam. I will start by stating that the Counsel are substantially agreed as regards the position o f the law governing garnishee orders. Our legal system has no specific legislation which provides for garnishee orders procedure and we have to fill up this lacuna by falling back to Judicature and Application o f Laws Ord. which empowers our courts to apply the laws obtaining in England as at 22nd July, 1920 (Felix Rutazengelera’s, Supra). As rightly pointed out by the Plaintiffs Counsel, the Halsbury’s Laws of England define the attachment process under garnishee procedure as “...a process by which Judgm ent Creditor is enabled to reach money due to the judgm ent debtor which is in the hands o f a third person. For this purpose the ordinary methods o f execution are inapplicable, but there is pow er to order the third person to p a y the judgm ent creditor the debt due from him to the judgm ent debtors or much o f it as may be sufficient to satisjy the judgm ent creditors claim. In this connection, the third person in whose hands is the money sought to be attached is called the Garnishee, the requisite proceedings and the necessary order as a garnishee Under the laws of England the garnishee order has two stages - garnishee order nisi and garnishee order absolute. Before the first order is issued the judgment creditor applies to the court calling upon the garnishee to show cause why the garnishee order nisi should not issue. In my view, this is intended to ascertain the indebtness of the garnishee to the judgment debtor. If the garnishee order nisi is issued the garnishee’s hands in relation to the garnished amount are tied. He cannot part with it in anyway until further order of the court which generally would be garnishee order absolute. The P laintiffs Counsel was at pains giving the details of the obtaining procedure in England, charging that no application to show cause was issued upon the garnishee and fronts this as one ground for faulting the payment that was subsequently made. With respect to the Counsel, although indeed the courts are legally empowered to adopt the laws in existence in England as o f 22nd July, 1920, at the sametime they are empowered to adopt them with necessary modifications to suit our local circumstances. In that vein, while the procedure referred to by the Counsel may be befitting in England, in my view, it is not necessary in our situation regard being had to our business transactions and economic status. Experience has shown that, in our jurisdiction, generally, the garnishee orders are directed to Banks, and very rarely, to other financial institutions. In my considered opinion, the English procedure is unnecessarily cumbersome and I am sure, financial institutions would not support a procedure which would make them make unnecessary appearances in courts simply to be asked why they should not pay sums of money held by them for their customers in satisfaction of their liabilities as decreed by courts. The practice obtaining now is the most convenient as it simply calls upon the garnishee to hold the customer/judgment debtor’s monies as per decree until further orders of the court and subsequently to pay the same to whoever will be stated by the said court. Under this system, the garnishee’s duty is simply to notify the customer of the first order and pay once the final order is made. Now, back to the facts before us, the first order was properly served on the Defendant and this fits a garnishee order nisi. They were commanded to hold intact shs. 17,267,690/= from the Plaintiffs account till further orders. And, they did not keep silent. On 26th November 2001, they wrote a letter to the Plaintiff (although the latter claim to have received it on 30th November 2001). Next was the garnishee order absolute received on 3rd December 2001 (and not 28th November 2001 as claimed by Plaintiffs. The order, Exh.Dl, though authored on 28/11/2001 is uncontradictorily stamped 3rd December 2001 by Defendants, and Plaintiffs did not adduce evidence to the contrary) ordering them to pay the decree holder directly. With respect to the Plaintiffs Counsel, I have failed to comprehend the gist o f the alleged blame on the Defendants. First, it should be noted that although the Plaintiffs cry w olf on the alleged forgery of the orders, they have not established that indeed the orders were forged. As rightly pointed out by Mr. Kabakama, what they fronted in their chamber summons of 4th December 2001 was the unprocedural procurement of the same based on the alleged wrongly secured exparte judgment. There was no allegation let alone proof of forgery of the garnishee orders and indeed, this is negated by the order which was subsequently secured (as per Exh.P4) because the court could not have raised a non - existent order. Why? If at all it had been a forgery the court would not have had a hand in it and therefore there would have been nothing to raise. Contrary to this however, the court constructively admitted to be the author of the orders but on further impressions by the Applicant/judgment - debtor it acceded to the prayer, raised it and set the matter again on table for hearing interpartes. Thus, the Defendant did not act on forged orders but on properly issued orders of the court. A garnishee is not concerned with whether the order was obtained fraudulently, mistakenly or even corruptly. The garnishee does not inquire as to the validity of the order. He has only to satisfy himself that the same was issued by the court. Once he is so satisfied he proceeds to comply with what is directed therein. Secondly, following on heels with the above, the Banker is not an expert on court forms and procedures let alone the Tanzania Court system. Yes, Exh.P2 and D1 may, to an eye of a person acquitted with court forms, procedure and Tanzania Court System, contain some minor questionable details as alleged, to a layman these cannot easily ring bell in his mind, and, in any case, the question of failure by the Bank to make scrutiny or otherwise could only arise if the court had said, “ I am not the author o f these orders ”, but to the contrary, it does not disown the same. What does this mean? It means that even if the scrutinous Banker had discovered the so called “anomalies” and contacted the court, the end results would not have been to raise the orders but to rectify them. The net results would not have changed the effect of the orders in relation to the Plaintiff. Their monies would still have been attached, deducted and paid to the Decree - holder. Thirdly, the charge of delay in notifying them is also of no assistance to Plaintiffs. Even if it was true that Exh.Pl was served upon Plaintiffs on 30th November 2001 though authored on 26th, the Banker should not be splashed with any blame at all. At one point in the submissions (and purposely quoted) the Plaintiffs charged that the Defendants could have employed the knowledge of both internal and external lawyers at their disposal. I hope they themselves are not excluded from this proposition. That being the case, with this arsenal at their disposal, is it not surprising that the very people with a loaming danger over their account, took three days to come up with an application (the chamber summons filed on 4 th December 2001) to raise the dangerously posed order! Is the Defendant in anyway th involved in this inaction which subsisted between the alleged 30 November when Exh.Pl was received and the time of filing the chamber th summons (4 December 2001)? The answer is negative. It should be noted that the disastrous hammer (garnishee order absolute) though issued on 28/11/2001 was not enlished till 3rd December 2001 (that is, placing it in the hands of the garnishee). Fourthly, regarding the charge that the Defendants acted on the order when they knew that the same was being contested, and did so with a speed which leaves a lot to be desired, I can only say, it is unfounded as much as it surprising. In the first place there is no evidence that Defendants knew o f the Plaintiffs plan, that they would have filed the chamber summons on 4th secondly, and more importantly, as the Counsel well knows, once a garnishee order absolute is served upon the garnishee he has simply to pay and nothing more. Even, the Halsbury’s Laws o f England she relies th upon, and as rightly pointed out by the Defendant’s Counsel, (4 Ed. Page 338, para.541) is clear on this, “Upon the garnishee order being made absolute, the garnishee becomes liable to p a y the judgm ent creditor the amount due fro m him, the judgm ent debtor, or as may be sufficient to p a y the judgm ent debt and costs o f the suit What did the Plaintiff expect Defendants to do - go back to them (Plaintiffs) and ask what to do! I am satisfied that the Defendants simply complied with the court orders and that there is no blame whatsoever that can be assigned to them. With the above conclusion, issue one is answered negatively. With this finding the answer to issue 2, and which is also negative, follows suit. The P laintiffs Counsel very strenuously argued that the money should have been paid to the court “to minimise risks because in the court at least the money would have been safe and would only have ended in the rightful hands ”, and interestingly goes on, “I f this conduct will remain unchecked, Bankers will be unfairly protected and Bank Customers will suffer a lot. Judicial intervention is crucial at this point in tim e ................” I have used the term “interestingly” to describe the last part of the Counsel’s submission purposely. Which risks is she referring to and what “judicial intervention” is she envisaging. We have already concluded that the two orders are not forgeries but were properly issued by the court. Exh.Dl is very explicit, “N ow you are hereby ordered to remit the said decretal amount in fu ll to the judgm ent - d eb to r”, and in compliance thereof the Defendants issued the cheque as directed. And, commendably, cautiously, routed the cheque through the hands of the court. And there are no complaints that the decree - holder did not receive the cheque. What wrong did Defendants commit? The Defendant’s Counsel wrightly pointed to O. X X I, Rule 1, CPC, when he insisted that the Defendants never went out of the ordinary when they issued the cheque straight away in decree - holder’s name. The said rule provides: “1 (l)A ll money payable under a decree shall be p a id as follow , namely:- (a) into the court whose duty it is to execute the decree, or (b) out o f court to the decree - holder; or (c) otherwise as the court which made the decree directs The court decided to issue an order under O. XXI, Rule 1 (1) (c) and the Defendants complied. No scintilla of blame can even microscopically be traced from what they did. With the findings above made, it becomes unnecessary to deal with issue (3). I should however observe that in view of what was stated by the sole witness (Agnes) for the Plaintiff that the case between that company and Plaintiff is still going on, the filing of this case was unnecessary or at least premature, because in the event the decree - holder (in relation to the disputed garnishee orders) finally succeeds, the present Plaintiff will still be obliged to pay but this time, depending on the decretal sum, it will be a different matter as the said decree - holders would be lying with their monies. It will only be a question of adjustment. And, in the event the present Plaintiff succeed then they will be entitled to their money back with interest, and, possibly damages. In conclusion, for reasons stated, the Plaintiffs case stands dismissed with costs. L.B. KALEGEYA JUDGE Delivered in the presence of Mrs Tenga and Mr. Ishengoma. L.B. KALEGEYA JUDGE 22/9/2003 t CMl t y th ' ( a an ortect jt tiu. or." na ! .......- 'i -,strar ^ o .imer.ia Cour Dated