19980511 TZCA Dar es Salaam

IN THE COURT OF APPEAL OF TANZANIA AT DAR ES SALAAM (CORAM: NYALALI, C. J., RAMADHANI, J . A., And MFALILA., J - A..) CIVIL APPEAL NO. 18 OF 1996 NATIONAL HOUSING CORPORATION ........ APPELLANT VERSUS ARUSHA MCJNI CI PAL COUNCIL ............ 1ST RESPONDENT MR. ROBERT MAMIRO ... . ................ 2ND RESPONDENT M/S TRANS AUTO EXPRESS LIMITED ....... 3RD RESPONDENT (Appeal from the decision of the High. Court of Tanzania at Arusha) (Hon. Justice MUNTJO) dated 22nd March 1995 in Civil Case No. 19 of 1993 JLJDGEMENT OF THE COURT NYALALI, C.J. This is an appeal by the National Housing Corporation, hereinafter called the Appellant, against the judgement and decree of the High Court at Arusha in a suit instituted by the Appellant jointly against the Arusha Municipal Council, one Robert Mamiro and Trans Auto Express Ltd, hereinafter referred to as the First Respondent, the Second Respondent and Third Respondent respectively. That suit was in respect of an alleged unlawful sale of the Appellant's immovable property and sought, inter alia, the nullification of the sale, the restoration of ownership of the property and damages for loss of business reputation. Third Respondent counter claimed for loss of income • -2 - occasioned by the Appellant's caveat which prevented the transfer of the immovable property to the Third Respondent, who claims to be a bona fide purchaser. The High Court dismissed both the suit and the counterclaim. The Appellant was dissatisfied with the High Court decision, hence this appeal. Mr. D'Souza, learned advocate, represented the Appellant in this appeal, whereas Mr. F. Mushi, learned advocate, represented the Second Respondent and Mr. Mwale, learned advocate, represented the First and Third Respondents. From the proceedings both in this Court and the High Court there is no dispute between the parties that the Appellant, a parastatal body, owns many immovable properties in the Municipality of Arusha and that, at the material time, the Appellant was in arrears of payment of a substantial sum of money to the First Respondent, being the balance of property tax. It is also undisputed that in 1992, the First Respondent engaged the Second Respondent, who is an auctioneer and court broker, to assist in recovering the arrears of property tax. Towards that end, the Second Respondent travelled to the headquarters of the Appellant in Dar-es-Salaam and got some shs.5,000,0001= part- payment made on that occasion. Furthermore, there is no dispute that thereafter in December 1992, the First Respondent instructed the Second Respondent to seize and sell by public auction the immovable property of the Appellant situated on plots 7 and 8, Block "E", Goliondoi, in Arusha Municipality, in order to recover .. -3 - the balance of tax in respect of various properties of the Appellant. Similarly no dispute exists between the parties that on the 8th January 1993, the Second Respondent sold the property concerned at an auction conducted at plots 7 and 8 mentioned earlier. The highest bidder was one Zam Zam whose bid stood at sh.55 million. The property was however not sold to him but was sold to the Third Respondent for shs.50 million. Appellant was not satisfied with the actions taken by the First and Second Respondents and consequently instituted this suit in the High Court and filed a caveat to block the transfer of the property to the Third Respondent. With regard to matters which are in dispute between the parties, it is the Appellant's contention that the First Respondent was not entitled in law to sell the Appellant's immovable property and that the sale conducted by the Second Respondent was unlawful not only because there was no legal authority for such sale, but also because of irregularities in the conduct of the public auction. The case for the First Respondent on the other hand is to the effect that since the Appellant had failed to pay the arrears of property tax inspite of appropriate demands for payment being made, the First Respondent, being an Urban Authority, was entitled to take the action it took within the scope of the Urban • - 4 - Authorities (Rating) Act, 1983(Act No 2 of 1983). The Case for the Second Respondent is essentially that there was legal authority to seize and sell the property in question and that the sale by public auction was in accordance with the law. It is part of the Second Respondent's case that the property was not sold to the highest bidder but to the next ranking bidder in accordance with previously announced terms of the public auction. Under those terms, the highest bidder had to deposit on the spot cash amounting to 25% of the bid, in default of which the property was to be sold to the next ranking bidder upon a similar cash deposit. The Third Respondents's case is brief and rests essentially on the basis that he was a bona fide purchaser for value of the property sold to him at the public auction, after the highest bidder had failed to make the cash deposit as required by the terms of the auction. It is thus the contention of the Third Respondent that he acquired a good title to the property in question. The most important issue in this case upon which all other issues depend is whether the First Respondent was entitled to have the immovable property in question seized and sold. The learned trial judge, Munuo, J, considered this issue at length and in so doing accepted the submissions made by Mr. Mwale, learned advocate, to the effect that an urban authority intending to recover unpaid property tax has a number of options under the -- t• 1 % -5- Urban Authorities (Rating) Act 1983. Those options are under sections 26, 29, 43 and 44 of the Act. The trial judge stated, inter alia: "According to Mr. D'Souza the 1st defendant ought to have sued for the recovery of the property tax in dispute under section 43 and 44 of the Urban Authorities (Rates) Act No 2 of 1983 and not proceed arbitrarily under section 29 of the said Act. While I agree with the interpretation of 'proceedings' reflected above by the various cases and dictionary, I think the situation under the Urban Authorities (Rating) Act No.2 of 1983, is distinguishable basically because the 1st defendant has options to recover property tax under the provisions of sections 26, 29 or 43 and 44 of the said Act. The Act gives the 1st defendant the flexible options of recovering property taxes under section 26 or 29 or by summary proceedings and 1st defendant opted to invoke the provisions of section 29 of the Act whichdid not necessitate the summary action stipulated under sections 43 and 44 of the Act The provisions of sections 29 and 26 have not been declared unconstitutional so the 1st defendant rightly invoked section 29 to recover the due property tax from the plaintiff... Mr. D'Souza, learned advocate for the Appellant has strenuously challenged the conclusion of the learned trial judge. He has submitted before us that none of the sections cited by the judge do authorize out of court seizure and sale of immovable property for purposes of recovery of unpaid property tax. It is part of Mr. D'Souza's submission to the effect that the course of action authorized by law is provided under sections 43 or 44 both of which involve using the Court. % -6- We propose to closely examine the provisions of sections 26, 29, 43 and 44 of the Act. In so doing, we shall deal with section 29 last, since it is the section which the learned trial judge found to have been correctly acted upon by the First Respondent in having the premises on plot Nos. 7 and 8 seized and sold by the Second Respondent. We begin with section 26 which states: If any person fails to pay any rates due to be paid by him, the rating authority may cause a demand in writing to be made upon such person, requiring him to pay the amount due within fourteen days of the date of such demand. If, after such demand, such person fails to pay such sum, it shall be lawful for the Director of the rating authority, upon a resolution of the rating authority in that behalf, to issue a warrant to the court broker requiring him to distrain upon the personal goods and chattels of such person to the value of such sum, whether or not such goods and chattels be found upon the hereditament in respect of which the rates are due. Provided that such warrant shall not be issued unless the notice referred to in sub- section (1) was served personally upon such person, or was left at his normal place of work or residence or at his registered office. Notwithstanding anything contained in sub-section (2), the rating authority may, at its discretion, recover the sum due from any person by civil action without further notice or d emand.!! It is apparent under the provisions of section 26, particularly the parts we have underlined, that there are two courses of action provided under the section for recovery of -7- unpaid property tax which must however be rates levied under the Act. The first course takes place out of court and involves the Director of the rating authority issuing a distress warrant to a court broker after a written demand notice has been made and on the basis of a resolution of the rating authority. However, it is clear that only property in the nature of movable property may be attached by the court broker. The second course of action is stated under sub-section (3) and involves filing a civil suit in Court. That being the position, it is clear that the action taken by the Arusha Municipal Council does not lie within the scope of the provisions of section 26. Let us see if it lies within the provisions of section 43 of the Act. That section states: 11 (1) If after the time fixed for the payment of any rate, any person fails to pay any rate due by him, it shall be competent for the local authority to cause a printed or written demand to be made upon such person to pay the amount stated in such demand within fourteen days after service thereof. Where any person who shall have had such demand delivered to him personally or left at his ordinary place of residence or place of business or office shall make default, it shall be competent for the local authority to apply to a competent magistrate having jurisdiction within the local authority for a summary warrant in the form contained in the Third Schedule to this Act to recover such rates from the person liable to pay the same, which warrant such magistrate shall grant on production of a list of the names and addresses of the persons so in default, and the amount due by them, with a certificate by the Director or Township Executive Officer as the case may be, that they have been severally required to make payment of the said rates by notice as aforesaid, and do not exceed the rates fixed by or under this Act; and every such warrant shall contain every authority and be executed in all respects k - 8 as though it were both a warrant of attachment and a warrant of sale issued out of the Court of such magistrate. (2) Anything in the Magistrate Courts Act, 1963 to the contrary notwithstanding, a District Magistrate shall be deemed to have jurisdiction to issue warrants under this section. The Third Schedule referred to under section 43 is a Summary Warrant of Attachment and Sale commanding a Court Broker to attach and hold movable property of the debtor and authorizing the sale by public auction of such property after due notice and proclamation of sale unless the debtor pays the unpaid rate together with consequential interest and costs. It is apparent that the proceedings or course of action prescribed under section 43 read together with the Third Schedule of the Act do not apply to immovable property. It follows therefore that the course of action taken by the First Respondent lies outside the scope of section 43. What about the provisions of section 44 which states: Notwithstanding the provisions of the last TI(l) preceding section, the local authority may at its discretion, after the time fixed for the payment of any such rates as aforesaid, recover from the person in default (without further notice or demand) the amOunt of the rates due by such person, irrespective of the amount thereof, by action in the court of a Magistrate of the first class having jurisdiction within the area of the local authority, whether the person liable for the same shall be resident within the jurisdiction of such court or not. In case it shall not be possible to effect service of summons within court as aforesaid, then such service shall be effected in such manner as the said court shall direct. -9- (2) Anything in the Magistrates Courts Act, 1963 to the contrary notwithstanding, a District Magistrate shall be deemed to have jurisdiction to hear and determine claims for the recovery of rates under this section. The meaning of these provisions is obvious, and it is to the effect that a local authority which gives a printed or written demand pursuant to the provisions of sub-section (1) of section 43 is not precluded from taking normal legal action in court to recover the unpaid rate. It is apparent that the course of action prescribed under section 44 is an action in a magistrate's court of competent lurisdiction f or recovery of the amount of the rates due by such person. That action can be taken by a local authority instead of acting under section 43. Section 44 however does not say anything about action for the sale of the premises inrespect of which the rates are due. This means that the course of action taken by the First Respondent in having the premises on plots Nos 7 and 8 seized and sold by the Second Respondent is not within the scope of section 44. Let us now turn to the provisions of section 29 which read as follows: (1) If the amount of a general or special rate or any instalment thereof payable inrespect of any premises is not paid within sixty days from the date when it was due, the Council shall cause to be fixed on a conspicuous part of the premises a notice in the form prescribed by the Minister to the effect that if the amount of the rate payable inrespect of the premises is not paid within twenty one days, proceedings will be taken for the sale of the premises for the purposes of defraying such amount. (2) Where any person claiming to be the owner of any assessed premises has given notice to the Council of - 10 - his name and postal address no notice as aforesaid shall be affixed on such premises until a demand in writing for payment of the rate due thereon has been sent by registered letter by the Council to such person, and default has been made for one month after the date of posting of the registered letter." It is apparent that section 29, like sections 26, 43 and 44 concern the recovery of unpaid rates levied on property under the Act and not any other kind of property tax. For purposes of section 29, the rate may be general, which is defined under section 18(2) as being, "rate made and levied over the whole area within the jurisdiction of the Council for the general purposes of the Council", or special, which is defined under section 18(2) as being, "a rate made and levied over a specified area within kthe jurisdiction of the Council for the purpose of a specified project approved by the Council for that area." On a proper construction or interpretation of the provisions of section 29, it seems clear that they provide for a course of action directed at the sale of premises for the purposes of recovering the amount of rates due for payment in respect of such premises. The circumstances which make this course of action available are: a period of sixty days must expire after the rates have become due for payment in respect of such property; a notice by the Council in a form prescribed by the Minister has been fixed on a conspicuous place of the premises for a period of twenty one days to the effect that the premises will be sold to recover the rates due in respect of the premises if the rates are not paid within such period of twenty one days; • ,. - 11 (iii) a failure to pay the due rates within the period of twenty one days stated in such notice. It is also apparent from the provisions of sub-section (2) that where the person claiming ownership of assessed premises has notified the Council of his or her name and postal address, the Council is prohibited from affixing the demand notice on the premises until after such person has failed to pay the due rate for a month after a demand letter was sent to such person by registered post. Furthermore it is apparent that the course of action for the sale of the premises concerned has to be the end result of proceedings. The important question here is what does the expression proceedings in section 29 mean? Mr. D'Souza, learned advocate for the Appellant, cited a number of English cases both in the High Court and before us. These cases included the case of HOOD v CATRCART (1894) 3 Ch.D 376, LAW SOCIETY v ELDER (1956) 2 ALL ER 65 and CROSTON v VAUGHAN (1937) 4 ALL ER 249. Unfortunately all these cases involve statutes which do not concern actions by local authorities for the purposes of recovering unpaid rates. He also cited in the High Court the Concise Oxford English Dictionary 4th Edition as to the ordinary meaning of the word in question. That dictionary meaning is ITlegal steps, steps taken in legal action, as shall institute legal steps (go to law) . It seems to us that the meaning given in the Concise Oxford English Dictionary is consistent with the meaning given in BLACK's LAW DICTIONARY, 6th Edition concerning the word, - 12 - Proceeding. It is stated therein that: "In a general sense the form and manner of conducting juridical business before a court or judicial officer. Regular and orderly progress in form of law, including all possible steps in an action from its commencement to the execution of judgement. Term also refers to administrative proceedings before agencies, tribunals bureaus, or the like . . . 11 There is a further consistency with the meaning of the expression 'Legal Proceedings' stated in BLACK's LAW DICTIONARY as "Term includes all proceedings authorized or sanctioned by law, and brought or instituted in a court of law or legal tribunal, for the acquiring of a right or the enforcement of a remedy". We are of the considered opinion that in the light of what is stated both in the Concise Oxford English Dictionary and BLACK's LAW DICTIONARY, the proceedings envisaged under section 29(1) for the recovery of unpaid rates, are legal proceedings and that the basis or cause of action for such legal proceedings are the circumstances within the scope of sub-sections (1) and (2) of section 29 which we have already explained. The question which arises is in which forum are the proceedings for the sale of premises to be instituted. We think that in view of the scheme of the Constitution of the United Republic of Tanzania as explained in the case of ATTORNEY-GENERAL vs (1) LOHAY AKNONAAY and (2) JOSEPH LOHAY, decided by this Court in Civil Appeal No. 31 of 1994 (1995) 2 LRC399 the forum must be the Court of law, since there is no express provision creating a I - 13 different forum under the Urban Authorities (Rating) Act, 1983. It follows therefore that the course of action taken by the First Respondent in acting out of court by instructing the Second Respondent to seize and sell the premises in question fell outside the provisions of section 29 and was therefore unlawful. The answer to the first issue before us must therefore be that the First Respondent was not entitled to have the premises seized and sold by the Second Respondent. For purposes of clarity we need to emphasize here that had the First Respondent, that is, the Arusha Municipal Council, followed the procedure we have explained earlier, involving the fixing of a prescribed notice on a conspicuous place on the premises concerning the rates due on such premises, it would have been entitled to have the premises sold as a consequence of proceedings instituted in a court of competent jurisdiction. The second issue for consideration and decision is a simple one, and it is whether the sale of the premises conducted by Second Respondent was lawful. Obviously since the First Respondent was not entitled to have the premises sold, it must follow that the sale was unlawful, regardless of the manner in which the public auction was conducted. The third issue in this case is whether the Third Respondent acquired any title to the premises purportedly sold to him as a bona fide purchaser for value. The answer here is obvious. Since the Second Respondent purported to sell to the Third 40 - 14 - Respondent the premises in question on behalf of the First Respondent, and since the First Respondent was not entitled to sell those premises, there was no title which could in law pass to the Third Respondent. The final issue in this case is a consequential one, and this concerns the reliefs to which the parties are entitled. Obviously the judgement and decree of the High Court have to be reversed. But is the Appellant entitled to all the reliefs sought in the High Court? In the plaint filed in the High Court, the Appellant sought judgement as follows: as against all defendants, an order declaring the auction held on 8.1.93 illegal; as against 1st defendant and 2nd defendant jointly and severally, an order for damages for loss of business reputation in the sum of shs .50,000,000/=; as against all defendants, a declaration that the property held under Title 055019/32 is still plaintiff's property; as against 2nd defendant the sum of shs.1,269,942/20 plus interest thereon at the commercial rate of 31% per annum from 23.10.92 to date of judgement; interest on the decretal amount at court rate from date of judgement to payment in full; any other or further relief as the Court deems fit. We have found no problem with the reliefs sought under item (iii), (v) and (vi) and this Court will grant them. There are however problems concerning the reliefs sought under items and (iv) -p ,( 4 I Let us start with the relief under item (ii) . According to the evidence adduced at the trial, the Plaintiff, who is the present Appellant, claimed to have suffered loss of business reputation as a result of the action taken by the First and Second Respondents in unlawfully seizing and selling Plaintiff's premises by public auction. We fail to see the basis of this claim. Undoubtedly, the First and Second Respondents took a wrong course of action, but the truth remains that the Appellant was in substantial arrears of payment of property tax to the First Respondent. It is our considered opinion that since the First Respondent was entitled to take legal action against the Appellant, there is no justification for the Appellant to complain about loss of business reputation, if there was any. As to the relief sought under item (iv) it is apparent from the evidence adduced at the trial and the pleadings, specifically paragraph 9 of the Plaint and the evidence of Robert Makao (PW1) and the Second Respondent (D.W.2) that the sum of shsl,269,942/20 was paid by the Appellant to the Second Respondent as Court brokers charges when the latter visited the headquarters of the Appellant in Dar-es-Salaam on a debt collection errand in October 1992. This was well before the seizure and purported sale of the premises concerned. Since the payment of these charges are not related to the subsequent unlawful seizure and sale, we fail to find a basis for the Appellant's claim for refund of the payments. 0 ~ 1z' - 16 - In the final analysis therefore, this appeal is allowed by setting aside the judgement and decree of the trial High Court with costs in this Court and substituting instead judgement for the Plaintiff/Appellant as prayed under items (i), (iii) and (v) with costs in the High Court as prayed under item (vi). We order accordingly. DATED at DAR-ES-SALAAM this 11th day of May, 1998. ft F. L. Nyalali CHIEF JUSTICE A.S.L. Ramadhani JUSTICE OF APPEAL L. M. Mfalila JUSTICE OF APPEAL • . (: If'