20071030 TZHC Dar es Salaam

1

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION)

AT DAR ES SALAAM COMMERCIAL CASE NO. 97 OF 2005 NATIONAL OIL {T) LIMITED.......................................... 1ST PLAINTIFF EXIM BANK (T) LIMITED ............................................... 2ND PLAINTIFF

VERSUS STANDARD CHARTERED BANK {T) LIMITED ............... DEFENDANT

JUDGMENT Date of Final Submission - 8/10/2007 Date of Judgment - 30/10/2007 MASSATI. J The First Plaintiff in this case, is an oil Company dealing with the distribution of petroleum products in and outside Tanzania. The 2nd Plaintiff and the Defendant are both commercial banks operating in Tanzania. The First Plaintiff alleges that sometime in April 2005, it drew a cheque on the 2nd Plaintiff in the sum of shs.175,809,754/= in favour of the Commissioner for Customs and Excise, in discharge of its tax obligations. The cheque was presented to the Defendant, cleared and debited in the 1st Plaintiff's account by the 2nd Plaintiff. However, as at July 2005, that sum had not reached the beneficiary payee, the Commissioner for Customs and Excise, as the latter-wrote . r,'t: _;:3·: ·(mJ Was the acoount of MSG· lntematlonal Tanzania JN THE HIGH COURT OF TANZANIA (COMMERCIAL OMSION) Umlted, credited.with the proceeds of the cneque? AT PAR I;$ SAWM COMMERCIAL a.s·E NO. 07 OF 2005 (Iv) Whether the Defendant endorsed cheque No. 815213 drawn by the 1st PlalnUII and payable to the NATIONAL OIL (TJ UMITTO.......................................... 1ST PLAINTIFF. EXlM BANK (T) UMITED ........................................ ,,, •... 2ND PLAINTIFF Commissioner ror Customs and Exdse for dearano:, VERSUS. _ _ _. ._ · through the clearance house? STANDARD CHARTERED BANK (T) UMITED...............

DE~ND~NT (v) Whether the clleque No, 815213 drawn by SKY OIL JUDGMENT INVESTMENTS ror the sum of Tshs.175,809,754/c In Date of Fina! Submission - 8/10/.2007 . favour of MSG ·International Tanzania .Umlted, does Date of Judgment-·J0/f0/2007 exist? (vi) ~ Whether the Defendant wrongMly converted the The First PlalnUII In this case, Is an oll Company dealing with · proceeds of clleque No. 815213, drawn by the 1st the distribution or petroleum products In and outside Tanzania. The PlalnUII In raVQ\lr of the Commissioner? 2nd PlalnUII and the Defendant are both commercial banks operating In Tanzania. (vii) . Whether the 1st PlalnUII handled the drawn and signed cheque No. 815213 negligently? The First Plaintiff alleges that sometime In April 2005, It drew a • · cheque on the 2nd PlalnUff In the sum of· shs.17S,809,754/c in (viii) · To what reI1ers are the partJes? favour of the Commissioner for Customs and Excise, In discharge of Its tax obligations. The cheque was presented to the Defendant, Although the _plaint was d ~ and filed by MS. EPITOME deared and debited In .the 1st PlalnUffs account by ·the 2nd. Plalntlff. · ADVOCATES, and Mr. Mwandambo appeared In the lnlUal stages for · However, as at July 2005, that sum had not reached the benefldary the PlalnUffs, the trlal was ably ainducted by Mr. Lutema, learned payee, the Commissioner for Customs and Excise, as the

latter•wrote ·eounseI ror the Plaintiffs and Mr. Duncan, learned Counsel ror the a· letter to demand the assessed· tax. It was then that the Plaintiffs Defendant On record, 4 witnesses testified for the PlalnUffs and 5 belleVed that the Defendant wrongftllly converted the proceeds of the .ror the Defendants. A total of 3. d.ocumentary exhibits were tendered cheque In question. So on 6th October 2005, the Plaintiffs .filed the for the Plaintiffs; whereas, the Defendant deposited a total of 6 present Joint action against the oerendant for a reftlnd· of the said documentary exhibits, although the first two were extracted from the shs.175,809,75'4/=, general damages for conversion, Interest ~nd Plalnttffs' witness PW3, SAUM HASHAM. costs. From the evidence on record, the cases of eac:11 or the .parties However, the Deiendant would hear none of this. In a tersely can be summed up as follows. worded statement of defence, the Defendant disputes the cheque In question or that It was ever drawn In favour of the commissioner of PWl ASP SALUM KISAI said he was assigned to Investigate Customs nor to have endorsed,. the cheque and collected the the case regarding the loss of cheque No. 815213 drawn by the 1st proceeds thereor, putUng the Plaintiffs to strict proor thereof. PliilnUII In favour of the Commissioner for QJstoms and Exdse, which neyer reached the payee. As a· result of the

complain~ a criminal Predictably, and despite all the energy put In by Klmaro J, (as case has been ~pened and Is now pending .at the Resident she then was) mediation between the. parties could not sua:eed. Magistrates Court at Kisutu. He tendered the cheque as Exh.PI. There has to be a bial, and a protracted one. The trlal attempted to .PW2 NELLA SHASHMWARI RAO Is the Branen Manager or EXIM answer the followtng Issues: - BANK, the 2nd PlalnUff.' He ·said that he recognized Exh.PI. 11 Is a . cheque for the sum of ·shs.175,809,754/m drawn by the 1st Plaintiff ·(1)· Whether the first Pla_lntlf! drew cheque No. 815213 on. · In favour of-the c:ommJssloner for Customs and Excise, and I~ Is dated the 2nd Plaintiff for an amount 'of slis.175,809,754/m 18/4/2005. It was presented by the Defendant, to EXIM through the In favour of the Commissioner for Customs and Excise? clearing process of the Bank of Tanzania on 16/5/2005. After cheddng on Its authenticity EXJM passed the cheque. This was (II) Who received the proceeds or the cheque? however, one of the 20 cheques presented by the Defendant on that day. He tendered the cheque Ust as Exh.P2. The essence of PW2's GABRIEL did deliver Exh.Pl to TRA, although on Inquiries he was evldente Is that the cheque has three Important lderittfication later shown the receipt from TI\A for the cheque, which was shown numbers, the cheque No; (815213 Is

the cheque number) the _to_ TRA. pers6nnel ~ho visited him to follow up the payment. He number In .the middle Is the bank code Issued by the _Bank of. ··admitted that GABRIEL had since been suspended and charged with Tanzania to all EX!M Bank's cheques.• This Is No. 67130107, -This Is the offence of conspiracy to defraud, and that he Is the one who the security oode or MSR Code; fitted with a magnetic recognition lnstll\rted those criminal proceedings. The charges facing GABRIEL oode, which would detect any alterations If passed through a reader also lndude forgery of cheque No. A 815213 and TRA receipt No. or security machine, and thus reject the cheque. This Is therefore a 228968 dated 29/4/2005. PW3 was also led to produce the 1st tcchnologkal dearance mechanism. SO no similar number can be · Plaintiff's replies to TRA as Exh.01, and TRA's reaction thereto as used In two different cheques. It was PW2's evidence that this Exh,02 which denies receipt of the. cheque. PW3 also alluded In cheque passed all the security tests, and so they, as the 1st PlalnUff's cross examlnatlon that sometlmes TRA officials would come to collect banker passed It. He said that they did not receive any other cheque cheques ttiemselves but he was not sure whether th~ particular of the same number nor did _they have a custom<ir In the name of '_ ctieque (Exh.Pl) was collected from the office because

all that he SKY OILS Umlted. The last number In the cheque Is the customer's knew was that after signing It, It was taken to the Anance aca>unt number. In this cheque It was No. 0300346014. department. In cross examlnatlo~. PW2 clarified that he was hot ~rsona11y· The last witness for the Plaintiffs was BWENE UBERATUS Involved In the day to day clearance process, but he receives 'the MASHAURI GABRIEL IPW4). He said that he was working with cheque lists, and hands them over to the dearance department. On the 1st Plaintiff as Import and Export officer from 2001 to 2005, but a dose look, PW2 admitted that although the cheque and leaf was subsequentiy suspended due to loss of money at NATOIL (I.e. appears to bear the Standard Chartered Bank's stamps the two do the 1st Plaintiff). Among his duties at NATOIL was to dispatch not appear to be the same. PW3 SAUM SADRUDIN HASHAM cheques to TRA. After explaining the procedure obtaining In paying said that between 2004 and 2006 he was the 1st Plaintiff's country various taxes to TRA, ·PW4 ldenUfied Exh.Pl, and that he was the one manager with overall duty of overseeing the operations of the ~ took It to TRA and left It there, for the receipt to be collected the company. He recognized Exh.Pl as the cheque Issued by the Isl followlng day; one of the methods then. prevalllng. He would not Plaintiff In favour of the commissioner for eusioms

and Excise, In the remember whether there was a dispatch that had registered that sum of shs.175,809,754/s signed by the Ananoe Manager and cheque. hlmseff. However, to his knowledge, the proceeds of the_ cheque were never received by the payee. They came to realize this when PW4 said that as far as he could recollect, he had retumed to they received a letter of demand from the Customs and Excise the TRA offices the following day and collected, the particular SSE department. He tendered that letter as Exh,PJ. It Is dated (I.e. Slngle sm of Entry) and official receipt and returned It to the 11/7/2005. On checking with their bankers, EXlM BANK assured office and showed them to the finance boss, who filed th~m. them Ihm the cheque.was deared_by theOefendant Bank, and·_even showed to them copies of the deared cheque. _On.acoount of TAA In aoss examination, PW4 said that he remembered to have not receMng the proceeds of the cheque, their dalm Is for the refund sent the cheque In question (Exh.Pl) and deposited It with counter of the money, Interests, and costs. ln cross examination, PW~ number one at the TRA. payments office, but did not remember darlfied that although the 1st Pl_alnUff had an ac;cou~t.' with the 2nd · whom he met. However, on depositing the cheque, the TRA cashier Plaintiff and not with the Defendant they sought to recover the . gave him a single blll of entry, and

a receipt which Is normally Issued amount of the cheque because according to the clearance stamp, It by the cashier In the third counter, but In this case he obtained the was the STANDARD OiARTERED BANK which deared this cheque, receipt from the first counter. However, after four to five months, but their money·was with EXIM BANK, whose duty It Is, to keep It TRA officials visited their office and cialmed to have not received safe. On the company's payment procedures, PW3 admitted that he those payments. They also dalmed that the receipt was forged. He was usually satisfied on seeing the signature of the Rnance Manager, admitted that he was treated as a suspect In the scam, but he was and upcn scrutinizing the payment voucher to ascertain the purpose also himself, wonderlng how the cheque was diverted. He admitted of the payment. To PW3 that was enough safeguard. The cheques .that he was facing crtmlnal charges at Klsutu RM's court, on aca,unt to TRA are then forwarded by way of dispatch by operations of the cheque (Exh.Pl) and the receipt In question. In re- personnel. That person was UBERATUS MASHAURI GABRIEL He examination, PW4 said that In presenting the cheque to TRA he had was the one who was assigned to delivering all the TRA cheques, and followed an the procedures obtaining then. he was the one who sent this particular. cheque, Exh.PI. This was before · the Introduction

of the Tanzania · interbank Central' Bank System (TIS). However, he would not ascertain whether and when went on to distinguish the two receipts. He said that apart from the On the defence side. DW1 PmR MICHAEL JUMAMQ$I address and general descriptions, the size of the prints, the testified that he was an Investigator with the police _force. He and handwriting and slgnarures were different. By way of emphasis, others were assigned to lnvestJgate the case of theft of money as DW2 said that on 29/4/2005 he was on duty, and he never received complained by the 1st Plaintiff. As at the date of his testimony, the said cheque, and If It was = received, a receipt would have lnvestlgatlon was _still going on. In the course of the Investigation, they have already collected several documents, Including the receipt been Issued on the same day. In aoss examination, DW2 said that he did . oot know how soon should oil tax be paid, as he was oot · allegedly Issued by TRA. He admitted a copy .of that receipt as · charged with followlng up paymen~ but only receipt of revenue. He · Exh.03. He also said they had· by then arrested and tharged was not aware whereby 1RA officials would ring the tax payers to· GABRIEL (PW4) with the offences of conspiracy to defraud; forgery, find out ff cheques were ready for oonecllon. and uttering false documents. DW2 $AID MWAMJUYA, Is an official from TRA. ·

Before moving to the Airport. lie _was stationed at •, Before OW3 .took to the witness stand DWI was recaned to longroom, Mapato House, between.1993 to 2006. His main duties 0 :admit the Cheque Deposit Sllp of 13/5/2005 for shs.175.809,754/a were to compile daily revenue collection reports and to receive as Exh.D5. pwl ALEYQ NGQYAJ LQWASSA testified that she cheques. Acoordlng to the obtaining procedures, cheques would be was the Defendant's Manager, 5upport and Compliance, the position aooompanled by single bills of entry and deposited at his counter. On she held In May 2005. Her main duty was to see that all the controls receipt of the cheque, the cheque Is entered In a register together In the branches and operatiOns were Intact and Impermeable. with the name of the payer, the date and the cheque number, the amou~ and the name of the _person who presented the cheque, who She then took time to explain the plllCedures obtaining In the would then be required to sign In the register. After which, the dearance of cheques: There was special dearance, ·which on presenter would take the cheque to the second counter where. a a,mplylng with certain conditions cheques took only a day to pay. receipt would i,;, Issued. Then he moves i.; the third counter, where On the other hand, the normal outward dearance process would take the payment Is recorded and credited. Next day the cheque Is

taken more than one day, depending on the terms agreed by the members to the Bank of. Tanzania where TRA keeps Its aooount. They don1 · of ·the dearance house, the rules and regu1attons, Bankers, such as send cheques to any other bank. In the present case; OW2 said that the Standard Chartered were members of -the dearance house, he knew PW4 as the person who used to bMng cheques from NATOIL 12 10 where the Bank of Tanzania and other commerdal bankers are also (the 1st Plaintiff) for over 6 years and was well versed with the then members. prevalllng procedures. He said that all on companies had to follow only those procedures In paying their taxes. The. only other way Skipping the other 'detalis, DW3 Identified Exh.05 as the now, ·was the Tanzania Interbank Central System (TIS) •. It was· not cheque deposit slip which deposited with them a cheque for permissible for the presenter to Just deposit the cheque and come for shs.175/a mllllon In favour of Ms. MGS lntemattonal, by SKY Oil the receipt the following day, because on presenting the cheque he iNVESTMENT UMITTD. She was able to tell that dearance was by had to sign In their register. And besides, he knew of no case, where ·_normal process, It was received by TELLER NO. 83 K, Stamp No. S. lRA offlclais had gone for cheques from the taxpayers. As far as he It was her opinion that this cheque was deared through the c:ou1d

remember, at no tfme had PW4 ever left a cheque and come dearance house, and It was never .retumed by EXIM BANK unpaid for the recel~ the followtng day. Refreshing his memory from his within the agreed period of time of 4 working days. When shown register, DW2 said that he could not see any entry of cheque No. Exh.Pl, DW3 denied to have seen or rece1ved the cheque, because 815213 of 18/4/2005 for shs.175,809,754/= from the entries of they have no aooount with the commissioner for customs and Excise. 29/4/2005. Upon seeing Exh.PI, DW2 said he did not remember to Acoordlng to her, the cheque.•nevet _passed "through their bank have seen that cheque before. If they had received the cheque they ·although the stamps oh the face of the cheque appear to be of the would have deposited It with the Bank of Tanzanja. bank, but she was not sure whether the said stamps were genuine. The basis of her opinion was that not only did they not have an As to Exh.03, DW2 said that the receipt resembled ones Issued aooount with the COmmlssklner of customs but also, that the "For by TRA. It Is for shs.175,809,754/= a_nd refers to the same cheque, and On behalf" stamp affixed at the reverse side of the cheque, was (Exh.PI). However, DW2 opined that the receipt was' not signed by only appllcabie for special dea;ance, and not for normal dearanoe.as am, of the lRA offidals. Having ~ed there f~r 11 years,

he ·Was was the case here. 8ut what Is even more perplexing, was that the famlllar with all the slgnarures and handWritings of their cashier. cheque also carries an OlflWARD ClEARANCE stamp, nonnally used DW2 was then asked to compare this receipt (Exh.03) and another In normal dearance _processes, but then the two stamps oould not one number 228968 of 27/6/2005 also Issued by TRA. He said that have been affixed In the same cheque. Asked to examine Exh.05, the latter was a genuine receipt Issued by the Commissioner for Sales DW3 told the a,urt that, whereas fn Exh.03 the teller's Identification for SBES. He tendered a copy of that receipt as Exh.04. He then \ ll MULA. He ldenUfled Exh.D5 asthe relevant deposit slip. The cheque IS 83K, and not 83R, and the same teller could receive both the and the deposit slip passed an the bank's Internal control tests. It cheque and the pay In slip, it was different with the two documents was scrutlnlzed·by'Teller _83 K, lniUaled by the dearing manager, on shown to the witness. She also recognized Exh.P2 as the "electronic the .right hand comer of the slip, and the proceeds of the cheq'!" Journal. summarizing_ all the cheques li!ken to EXIM BANK, .generated ;.,.re aedited II! the custome(s aCXDUnt. by their bank. Item 18 of the Journal Is cheque No. 81.5213, although It does not show the name of the payee, It was properly . On ~Mng the

complaints he visited the · cusl0mer who stamped by the dearance officer on 1~/5/2005 but the stamp also confirmed lhe transactions wliti SKY OIL · INVESTMENTS. The appears In the cheque. The'stamps In the two·lnstiUments do not customer showed to them, a number of documents to evidence the however tally, which was another anomaly. transactions, with which hlS team was saUsfled. In aoss examination, DW3 said that Exh.P2, was not prepared DW4 also repeated the tesUmony of DW3 to the effect that by a teller but by a dearance officer. Asked about ihe MiCR EXI_M SANK did not a,mpialn within 4 days, but two months later In a (Magneuc Ink Olaracter Recognition) process, DW3 said It was not letter dated 22/7/2005 although In the sea>nd week of July they had meant to check on the genu!neness or.otherwise of the cheques but · aiso iecelved a demand ietter. from Kesarla & Company, on behalf of only to sort them out according to their drawing .banks and aeatlng the 1st PlalnUrt. Their response was to deny liability for payment of . electronic journals such as Exh.Pi.' She said mlao_filmlng was Just a the cheque for the reasons also advanced by DW3. He was of the process of keeping duplicates of vouchers used by banks, but It was view that the Proble!" originated with the drawer or the cheque, neither a step In the dearance process, nor_ a. legal. requirement. She NATOii.., who for some

reason did not dellv,,r the cheque to where It said that she was not sure whether they had a mlaofilm or hard_ copy was lntended,_-and from thereon, a sea>nd similar cheque may have of the SKY Oil's cheque. She said that she became aware of EXIM's been made. complaints In August 2005, long after the cheque had been deared. Aa:crdlng to her, MGS lnternaUonal Ltd had been paid the cheque In aoss examination, DW4 said that he did not have any for good value. It was not part of the clearance process to call on documentary proof of his visit to the customs department but he had the drawing bank to ascertain the authenUdty of a cheque. She a written record of what he reported to the police. He did not know denied that the Defendant bank colluded with fraudsters to effect the 16 JAMES MOLO or where he was woridng, but he said that he saw his payment In question. Rather, the. bank acted prudently In the .name In the pay In slip In the archives and lntelvi<!wed the teller (83 drcumstani::es: K). It was also his evlde!'O' that the MICR process.basically reads and rea,gnlzes · the ·characterization of the Ink used to print the· ln re - examination, OWJ said that mlcrofilmlrlQ was a separate cheque numbers and that the Defendant also uses the same method. unit In the bank, dealing with archMng. It Is Just a back up system If for some reason the figures cannot be printed, they are punched

and not mandatory process. As a collecUng bank, all that STANDARD by a MICR oodellne repair. CHARTERED BANK was concerned with, was to ensure that the Instruments presented to It were genuinely drawn and credited to the .He said further that a<XOrdlng to the Dar es Salaam dearance custome(s ao:ount.. In thlS case, their duty did not go ,beyond ..·rules It ·1s ·the receiving bank which verifies the genuineness .or Its aediUng MGS lnternational's a<X:oullt The duty of seeing to the stamps; but ac:x:ordlng to the Defendant's standard procedures, the genuineness of the cheque .was on the drawing bank as owners of Outward_ Oearanoe Stamp and the endorsement stamp cannot be the leaf. used slmultaneously. Although at the aearanoe house, there Is not much Ume to check all the details of a cheque, the rules allow that . The next witness was GODFREY SlGALA /DW4), A holder of this .<X>Uld be done within 4 days. C.PA; OW4 was employed _by ttie Defendant bank, 1,n ··2002 as an.·. auditor, and In 2004 he was p ~ to the position of Head of It was finally his view that the Defendant processed the cheque Internal Audit'and Investigation.' .. lndue course of business, and the customer was paid the mone/for good value. In his evidence, which to a large exten~ was similar to that of DW3, DW4 drew a long check list of steps that the bank had set up In re-examination, DW4 said that as a receMng bank

the to prevent and detect fraud, and to comply with Internal controls. Defendant'had ~ duty to ascertain the ldenUty of a depositor, or ID know the nature of the tran-saCUons entered Into by Its customers. According to DW4 his lnvestlgaUon showed that on 13/5/2005 Their primary duty Is to ensure that the name of the payee Is there · their bank received a cheque from SKY OIL In favour of MGS In the ·and the cheque has been endorsed all of which were complied with sum of over shs.175/= mlllJon. It was deposlted by one JAMES .·... 19 17 endorsed IL If they 'did not receive It, they had paid It In good faith In In the present case. He said that the MiCR process Is not used to the normal course of business. detect the genuineness of a.cheque. In fuJther re examination PW2 said as a bank, their. main pws JDDRISSA MOHAMED MJAMJKE Is the sales and concern .;as with the genuineness of a cheque. This Is do~ by Mal1<ettng Manager of MGS lntemattonal (T) Ltd, but before· 2006 he scanning the cheque with ultra violet llght. The MICR process Is an was the Commercial Business Manager. He Informed the Court, that addltlonal method of countercheddng the genuineness or otherwise someUme In lanuaiy 2005 SKYOIL INVESTMENT LTD deposited of cheques. It Is a mandatory process. So If the Defendant had money In their account with STANDARD CHARTERED SANK. The passed lhe cheque through the Ultra vlOlet

light and MICR process, representative of SKYOIL went by the name o_f DO_NALD and the they would. have discovered that the cheque had been tampered amount deposited was_Tshs.175/= million. He brought back the pay with. According to the requirements of banking procedures, eveiy In slip._ He produced a copy of the pay In slip as Exh.06 _Issued by bank must keep copies of all the cheques It has processed. I~ this the Defendant bank. Having been satisfied that the cheque was . case, the Defendant never produced the cheque which they received Indeed cleared, they opened an account for SKYOIL after obtaining · for MGS payment It was a prudent practice to keep copies either by such Information as his TIN oertlflcate. A receipt was Issued to photocopies or mlCJOfilms of all Inward and outward cheques. SKYOIL It was then that they proceeded to supply on worth the value of money deposited. He finally said that this was not the fiJSt And with that, the defence dosed Its case. This was followed transactton with SKYOIL. In the past they had had a transactton by the final submissions of the learned Counsel which was done In worth 214/= million but this account was dosed for being Idle. wrtUng. In cross examination DWS told the Court that when the On the first issue: whether tt,e 1st Plaintiff drew dJeaue Defendant bank visited them they showed them the deposit slips the NO, 81SlU on the 2.n~

Plaln\Jff for DD ,mount of tax Invoice and their customer's account. Since he was not there shs.,175,809,754/= 1n favour of the commlu1oner for physically he could net be sure of who really deposited the cheque In_ . Customs and Exdsc? Mr: · Duncan, feamed Counsel for the the bank, neither had he seen the cheque In question. · He said Defendant, submitted that although PW3 and PW4 ldentlfled Exh.Pl although he did not know where SKYOIL's offJC.es were, he knew that 20 ·" the evidence as to the drawing of the cheque was not dear. On the they operate In Mbeya. He said_.~ DONALD did not produce any other hand, Mr. Lutema, learned Counsel for the Plalnttff, submitted Identification papers or reveal his position In SKY OIL, although that all the Plaintiffs witnesses testified to the effect that the cheque ordinarily they would demand those partlculars from their customers. was d_rawn In favour of the Commissioner for CUstoms. Therefore In He said that after this Incident, all the details were given over to the his view, the answer to the fiJSt Issue should be In the afflrmatlVe. police. Slnoe he did not follow up with TRA he could not tell whether the TIN certificate for SKYOIL was genuine. The fiJSt Issue relates to the ldentlflcatlon of the cheque. The evidence of f'W2, MR•. NELi.A SHAHWARI RAO, Exh.Pl, P2,' and OS Shown a letter dated 16/5/2006 · from· the Registrar_ of are

cnx:lal In resoMng this Issue. Aa:ordlng to PW2, a cheque has companies, DWS said that he knew that MGS Intemattonal (T) Ltd Is ·three ldenttflcatlon numbers. a real company, duly registered and operating In Tanzania, and Is reportedly one of the la~ .tax payers in the countiy_- He Went "TIie first number from the left Is cheque No.- 81S213. Next further and named some of Its directors. numbet is the bank a,de given by the bank of Tanranla. • em was then recalled for further CJOSS examination. He The bank code for Ex!m bank Is 67130107. This code number also emphasized that they are demanding the money back because the appears In Exh.P2, Item No.

18. The third ldentlflcatton Is the cheque paid to STANDARD CHARTERED was not that of their Account Number of the CUstomer which Is also shown In Exh.P2 and customer. Asked about the use of the "For and On Behatrstamp In which.also appears In Exh.PL It Is No.·0300346014. On the faoe of the cheque In question, PW2 said that . although Its presence Is the cheque, It· IS dear that the cheque Is drawn on EXIM SANK, for superfluous, It could sometimes be used In large sums cheques, as shs.175,809,754/• In favour of the Commissioner for CUstoms and an additlonal comfort, and a guarantee of Its genuineness. In Exh.Pl Exdse, by NATIONAL OIL (T) LTD, the PlalnUff herein, Then, there Is both OUTWARD stamp and the 'For and On Behalf' stamp are there the evidence of PWJ, SALIM SADRUDIN HASHAM, who Identified the but the most Important one Is the QIJTWARD CLEARANCE ·stamp. If signab.Jres In· the cheque as those of ~ .Anance Manager and .. only the "for and I?" -~half" sta~P'wa; tf:terc, the ~ue-WOUld have himself, on behalf of the 1st Plalntlff. been cleared without further endorsement. The Commissioner of customs stamp shows that they had received the cheque and .. 2J 21 amount payable, and •the drawer, the cheque deposited to the aedlt From all this evidence, I am satisfied that cheque No. 81S213 or MGS INTERNATIONAL (T) LTO must be the same one as the one was drawn by the 1st Plaintiff

on the 2nd Plaintiff, tn f"""'!r of the drawn In favour or the Commissioner for eustoms. COmmJssloner for Customs and Excise, In the sum of shs.17S,809,754/•. The first Issue Is therefore answered In the ·My answer to ihls Issue cannot be different from those In the affirmative. first two Issues. · All the evidence, .Exh.PI, P2, PS points to the fact · that the partles were toying with the same cheque number and .'The second Issue, Is whO ,:eceiYect the Pfoceeds of the· therefore, with the same proceeds that were eventually credited In ~ M r . Duncan has submitted that the answer to that Issue . the aa:ount of MGS lnternatiOnal. Whether or not SKY -OIL remains a puzz1e In _view of the numerous disaepancles In :the INTESTMENT LTO exlsts, may be .relevan~ but I think the most evidence -on record. He submitted. that that mystery can only be · · auclal part of the evldenoe Is that. of PW2 who testified that EXIM · explained by the Plaintiffs, On the other hand; Mr.· Lutema, BANK had no account with SKY OIL So SKY OIL could not have submitted that from the evidence, It Is obvious that It was MGS drawn a cheque on EXIM. With greatest respect therefore, _I think INTERNATIONAL (T) LIMITED, who received the proceeds of the the answer to the third Issue must be In the affirmative. cheque. The fourth tssue ls whether the Defendant endorsed the I entirely agree with Mr. Lutema learned

Counsel that the cheau~ aavable to the Commissioner" for Customs _and recipient of the. proceeds or cheque No. 815213 Is MGS ~ M r . ·Lutema, Counsel for the Plaintiffs began by first INTERNATIONAL (T) LTO. This Is because, ·first, I have·already_ suggesting that the Issue .be amended to read"whether the found In the first Issue that this cheque was cira;.,, by the 1st Plaintiff Defendant namomt for deiflilDCI! the dleove oavable ta the on the 2nd Plaintiff In favour of the Commissioner for aistoms & Camm/ulonec for CuBPOll and Exdte· because in his view, the Excise for the sum of Tshs.175,809,784/=. This was the same duty of the bank Is not to endorse but to see that a cheque. Is cheque which was processed by the Defendant bank for clearance PIOPOrl\'. endorsed by the i:ustomer. It was then his view that the (Exh.P2) and It was the same cheque which was deposited with the stamping of the genuine cheque must have been done by or Defendant bank on 13/5/2005 per Exh.DS In favour of MGS facilitated by officials from the Defendant bank, notwithstanding the INTERNATIONAL (T) Ltd. And according to DW3 and DW4, this 22 " denial of the stamps appearlng In Exh.Pl by DW3 and OW4, as they amount was aedited In the ac:coun~ of. their customer, MGS · did not witness the process of stamping. Therefore, to him the INTERNATIONAL (T) LTD. Secondly, Mr. Duncan has tried to point answer to this

Issue should be In the affirmative. out several lnconslstendes, but In my view, they'are not materlal. It Is my considered opinion that the most audal piece or evidence· Is Mr. Duncan, on the other hand, submitted that the cheque that Of DW2, SAIDI MWAMT\JYA, who testified that the receipt collected by, tlie Defendant for MGS International (T) Ltd was the one (Exh.D3) brought back by PW4 Is not genuine. I' believe DW2 as a. drawn by SKY OIL INVESTMENT LTD and not the cheque drawn by witness or truth. The setlal number In the said receipt was that of the 1st Plalntlff In favour or the Commissioner for Customs. The rate Exh.04 Issued on 27/6/2005 for shs.14,000/=. DW2 further of the cheque (Exh.Pl) Is unknown. According to the learned established that that cheque never reached ·the Customs office: Counsel; witnesses from the Defendant disowned the endorsements at the back of Exh.PI, and It also materially differs from the Taking the totality of all tile evidence on record, I am positive lnlormatlon contained In Exh.DS. ·s1m11ar1y the stamps for outward that the proceeds of that cheque were received by MGS International dearance and that of "for and OIi behatr appeartng In Exh.PI, (T) Ltd. The second Issue Is tlius answered. denoted different Instructions, and that was another anomaty, as the ·two stamps cannot be aJ)plied simultaneously. Besides, the stamps . The third issue 1s

whether the account of MGS appeartng on the cheque are different from those of the Defendant lnt:emattonat Tanzania Limited wac ctedlted with the . bank In terms of size. Therefore, according to the learned Counsel proceeds of the cheque? Mr. o~ncan, learned counsel for. the _for the Defe,;,j,,nt_ cheque No. 815213 draw~ by the fst Plaintiff lri Oefendan~ submitted that the customer's account was credited With · favout or the Commissioner for Customs and Excise (Exh.PI) was not the proceeds or the cheque drawn by SKY OIL INVESTMENTS endorsed by the Defendant The answer to those Issues should LIMITED. He relied on the evidence of DW3, DW4 and DWS together therefore be In the negative. With Exh.D4, D6. Mr. Duncan also referred to the artlcies mar1<ed for Identification as part or his submission. With respect. I think the I agree with Mr. Lutema, learned Counsel that the fou11h Issue documents mar1<ed for ldentlficatl9n had no evldentlal value .and I w1n as presently worded Is misleading. As Is clear from the submissions not be swayed by them. Mr. Lutema, learned Couf'!sel for the PlalnUff of both Counsei,'_at stake here, Is whether the Defendant stamped submitted that In view of the slmllarlty of the _cheque number, the. 27 In the event and for the fon,golng reasons, I WIii answer the the cheque In questlon for dearance. As both Counsel haVl! . fourth Issue In the affinnallve.

substantively argued the Issue, In Its amended form, I v.111 also endorse the amendment to the fourth Issue, to .read: whether the The · ~ Issue ls whC!ther the chcaue by SKY OIL Pefendaot stamoed for dearance the cheauc oavable to the INYEstMENT UMUED, exists? Mr. Duncan, learned Counsel, Commissioner for Custom, and Exdse? _;,.; suggested that the ls_sue be also.mended to read, "whether the .· dfflauo dawn brS'(YOIL INVESTHENTUl LTD OW' exlsttd. I must admit that this was a rather compl.;_ Issue and has @t6ei: thart whethtt It t!Xlftl". He then went on to submit that exertlsed my mind considerably. Eventually however l have to the particular cheque existed on the strength of the evidence of dedde the question on the basis of onus. DWJ, DW4 and exhibits DS and D6, .and that after clearance With the Bank of Tanzania, the cheque was forwarded to the 2nd Plaintlff. It Is the Plalntlffs' contention that the Defendant received and Therefore It Is the 2nd Plalntlff who MOWS where that cheque Is, processed the payment in Exh.Pl. The Defendant contends what It . because It Is the paying bank which remains In possession af cleared received Is not Exh.Pl, blJt another one altogether. To prove this cheques. _Mr. Luterna learned Counsel for the Plalnttffs submitted they produced and sought to rely on Exh.DS. However Exh.DS that since the 2nd Plalntfff did not have a customer by that name,

reveals that the cheque deposited is· No. s1si13, for the ~mount of and has never issued a cheque to It, and since the partk:lllar cheque shs.175,809,754. Exh.P2 shows that this ·cheque bear>_ the same was not dlptured by the Defendant either by photocopying, bank code and the account number of the rustomer. Aocordlng to . microfilming or other process, which was a prudent banking practice, the ·cheque deposit (Exh.DSJ the Defendant bank stamped on the. and since the burden of proof lled on the Defendant to prove that the face of the cheque (Exh.Pl) with a teller's stamp (Teller 83R) on. 13 said cheque existed and has failed to prove so, the answer to this May, 2005, whereas Exh.DS carries the stamp of Teller NO. 83K. · Issue must be Iha~ the said cheque never existed. In my view the fact that a different cheque, with the same In my view, whether the cheque drawn by SKY OIL "exists" or number was deposited With the Defendant bank Is pecullarly within "existed" Is of little consequena, to the resolution of the present Its knoWledge. Therefore In terms of s. 11s of the Evidence Act Issue, because I\ Is Just amatter of tautology. The amendment_ Is not 1967, the burden of proof.shifted to It to prove that fact. In this 28 26 therefore necessary for determining the matter In controversy case, the Defendant did not produce a oopy of the cheque· deposited _l)e\ween the parties. The

real Issue Is whether SKY OIL by SKY OIL INTERNATIONAL (T) LTD. The Defendant does not INTERNATIONAL (T) LTD did really Issue the cheque In controversy? dispute that the 1st Plaintiff drew the cheque (Exh.Pl) which In my view was processed by normal clearance per Exh.P2 by the Mr. Duncan, learned Counsel for the Defendant has again Defendant. Yet, the Defendant has not satlsfactorily explained away strenuously argued that on the strength of the evldenoe of OW3 and the coincidence In the slmllar1ty In the numner of cheques In Exh.Pl, DW4, and Exh.DS and D6, the cheque did exist. P2 and DS, notwithstanding some dlScrepandes In the stamps that DWJ and DW4 had b'ied to explain, I agree With Mr. Lutema that the I think, the present ISSUi,, IS sImnar in conterit with the other evidence of those witnesses on those aspects was not prtmary Issues above. I don, think therefore It can attract a different ev1dence. The testln:ionles of the <?ea'rance Man8ger a~ the tellers answer. would have gone a long way. On the basis of onus, I think the Plaintiffs have discharged their burden of proof and shown that most !I is not disputed that SKY OIL Is not one of the customers of probably the 0efendant must have dealt With the same cheque; while . exiM BAN_K. II oould noi therefore have obtained a ·cheque book th~ Defendant has failed to prove th~t there .;,as any -oth~r _cheque . frorn the 2nd

Plaintiff. II Is also not controvelted that cheque No. · other than Exh.Pl, which was deposited through Exh.DS and_ which 815213 Is a leaf from· EXIM'S cheque bank Issued to NATIONAL OIL they deared In favour of their customer, MGS lntematlonal (T) Ltd. (T) LTD. Theie Is also no dispute that this cheque With the same And since they were the last to handle the cheque deposited by SKY number was deposited by SKY OIL with the Defendant bank and OIL, they were In a better posl«on to know where It Is, but have deared _at the Cearance House (Exh.P2). In my answer to the other failed to produce even a copy of the cheque. I would not agree with Issues above, 1 have held that SKY OIL deposited the same cheque DWJ and DW4 that It was not necessary for them to keep copies of . through Exh.DS. With respect therefore, none of the exhibits referred their documentary transactions, but I endorse the opinion of PW2 to by _Mr._.OUncan shows the existence of a separate cheque. that It was matter of banking practice and prudence to do so. The Defendant's failure to keep a ~PY. of the cheque de~slted by SKY OIL or to produce It lf they have, It works adversely against them. )I 29 The burden of proof of the existence 61 .that other cheque Is 6n · On the .other ,hand, Mr. t.utema, learn!'(l . counsel for the the Defendant. I have already held. above that the Defenda~t ha~ Plaintiffs submitted

that.ihe answer to that Issue must be In .ttie• failed to discharge that burden. affirmaUve: The learned Counsel 0rSt discussed at length on the theory of the existence of the fraud of "chequesubstJWtfon•between There Is no doubt tha- , the 2nd Plalntiff ought to have the true and the forged cheque. I think the theory Is attractive, but remained with the paying cheque, but I think It Is dear from the with respect. In the absence of the alleged "forged cheque" on the testimony of f'WZ, that as far as the 2nd Plalntlff was concerned they basket of evidence which Is before me, I cannot make any further paid through Exh.Pl and kept It. They could not be expected to be comment on this aspect. I would consign this theory to where It In possession of a cheque drawn on It by SKY OIL, because It was not belongs, speculation and conjecture. What Is before me Is cheque their customer. It Is not therefore fair on. the part of Mr. Duncan Exh.Pl, a cheque deposlf Exh.D5, and Exh.P2, the cheque lls- to learned counsel for the Defenda"- to submit that the 2nd Plalntlff · which I Intend to confine my analysis. ought to know the fate of the cheque. It was Mr. Lutema's submission that the llefendant facilitated The· bottom line ls that lt Is the Defendant who· alleges the . . ihe conversion of Exh.Pl In the clearance process. He said that existence of the ·cheque drawn by. SKY OIL, which by a ·

shere · dearanc:e would not have been possible If the Defendant had passed coincidence Is of the same amount .and same number. It Is the cheque through the MICR process, espedally so, as the therefore their duty to prove Us existence. I have found that the movement between the bank and the dearanc:e house was too Defendant has failed to discharge that burden. Therefore, It must be sea,re. The learned counsel further submitted that the cheque was conduded that the cheque drawn by SKY OIL did not and does not paid fraudulently with the collusion of the Defendant bank staff and exist. MGS International (T) Ltd, who, as a corporate cusiomer. never endo!Sed at the back of the cheque, but which however, was The stxth Issue Is whether the DefeDdant wronafullv nevertheless paid. Mr. ~utema wondered why an official of SKY OIL converted the proceeds of the cbeaue drawn In fsivour of the would take the trouble to take the cheque for deposit and then take Commissioner for Customs and Exdse?. Mr. Duncan, teamed the pay In slip to MGS. He said this was nothing but a collusion counsel, submitted that by collecting the cheque drawn on behalf of 30 " betWeen the Defendant bank, SKY OIL and MGS, to wrongfully Its corporate customer, MGS International, the Defenda"- did not . convert the funds, as demonstrated by other similar Instances of deal with the cheque In a manner Inconsistent with the

right of fraudulent conversion lnvoMng MGS. And the Defendant bank persons entitled to them. A«ordlng to the Defendan- the perS<m knows of this collusion, that Is why It has never taken any step entitled to the cheque Is MGS International (T) Ltd and no other.. -against MGS, nor taken sei1ous trouble to establish whether MGS was Besides, none of the Plalntlffs had any actual or Immediate rlght of a bona fide payee of the cheque. In support of this, Mr. Lutema also possession of the cheque, so as to entitie them to brlng the present referred to ~ral documents marked for ldentl0cation, which I have action. Mr. Duncan relied on the pnr\ciple at common law enunciated already ruled that they had little evidential value. Mr. Lutema further In COMMERCIAL BANKING COMPANY OF SVDNEY LTD VS said that the existence o.f another case (Commercial. Case No .. MAfi.N [1960) All ER. 482, which he said had a very persuasive . 120/2005) In which MGS are also l"'(Qlved, Is dear evidence that MGS . authorlty over this Court. on. the other hand If Exh.Pl had reached · had a role to play In the said fraud, and that most likely SKY OIL was the CommlsSloner for Customs & Excise, It would ellelltually be Its aeatlon, but by using the same Defendant bank, It Is obvious that banked with the TRA acoount kept by the Bank of Tanzania, and It they are partners In the business of wrongful conversion.of funds.

It would never have come Into possession of the Defendant. In any was therefore his view that'the Defendant wrongfully converted the case, Mr. Duncan, proceeded, the ownership of that cheque, would proceeds of the cheque drawn In favour of the CommisslOner for lie In the Commissioner for CUstoms and Excise the payee therein, customs and Exdse. So the answer to the 6th Issue should be ln the and not any of the Plalntlffs therein. For this position of the law, Mr. affirmative. Duncan referred the Court to PENMOUNI ESTATES LTD vs. NAJJONAL . PRQYINQAL ~B'ANK, STANLEY MOSS, AND In paragraph 15 of their plain- the Plaintiffs oontend that the PITCHER (JHIRD PABIY} [THE LAW TIMES. yol, 173. of 24 Defendant wrongfully converted the proceeds of the cheque, aossed November, 1945) as quoted In INTERCOM SER)IICES LTD AND and payable to the Commissioner for CUstoms and Excise, thereby OTHERS VS. STANDARD CHARTERED BANK LTD [2002] 2 EA. depriving the Plalnttffs the amount of shs.175,809, 754/= causing loss 391 (HCK) .. On the other prlnclple, the learned Counsel submitted and damage to the said Plaintiffs. In Its defence, In response to this that the Defendant had no duty In la~ towards the P1a11lurrs. With parOlJraph, the Defendant denleS to have converted those proceeds those, Mr, Duncan, submitted that the Defendant did not wrongfully /or three reasons. ArSt the cheque collected by them

was not the or otherwise oonvert the proceeds of the cheque .. )S 33 anti the customer has no title, or has a defective property of the 1st Plalntlff ~r ·•nv party to the suit. Secondly title, to the Instruments, the banker shd/1 not Incur although the Defendant admits having collected cheque no. 815213 any lla/Jlllly_ to. ti>'; true owner of the Instrument /Jy the cheque was drawn by SKY OIL INVESTMENTS and payable to reasvn of having received payment thereof. MGS INTERNATIONAL (T) LTD. Third the Defendant took and processed the cheque No. 815213 In good faith and· for value; ..in INTERCOM SERVICES LTD AND OTHERS VS without notlce of any defect pr tltle, and without. negligence. STANDARD CHARTERED BANK LTD (Supra) a case cited by Mr. Duncan learned counsel for the Defendant, It was observed per The tort of conversion has been defined to mean an act of 1ncuriam that: - willful interference without lawful Justification with any chattel In a ' manner inconslstcrit with the ·r1ght or another, whereby that other Is . "The true owner of acheque Is the person who would be kept dep~ of Its use and· possession. In order to obtain damage,,° the out of his money were the proreeds ID be paid ID the wrong plaintlff must allege and prove that at the time of the Defendant's person. IM1ere the .cheque Is not a to,ge,y, the true owner Is .act, he had: - the Intended payee or lndorsee of the

cheque or the bearer of It. If the cheque Is forged, the true owner Is the drawer (a) ownership and possession or the goods, or, thereof.• (b) possession of them, or (c) an Immediate right to possess them, Again, C8AttSil!li (Supra) also defines what Is "good faith• and "negligence• at p. 286:- but without either ownership or actual ·possession (KJ. AIYAR - lUDIQAL DICUONARY 13th ed. p. 259). "Good faith ...• means honesty In fact, whether or not negligent...... Negllgenre means falling /Jek>w the standarrl of BLACK'$ LAW DICUONAB'< 8th' ed. pp. 356 - 57, lists down reosona/Jle canr expected of a /Jank.• several types of conve.:ston (1) c o n ~ conve;.lon, (11) cohverslon by detention, (111) conversion by estoppel, (Iv) conversion by taking, (v) conversion by wrongful delivery, (vi)' conversion by wrongful ,. 34 Although all the above quoted deflnltlons and case law (exceptlng the destruction, (v0) conversion by wrongful dlsposltlon, (viii) direct BIiis of Exchange Act) are only of persuasive value, I find them highly conversion, (Ix) fraudulent conversion and (x) Involuntary conversion. relevant In the present case. According to ROSS CRANSTON In his book PRiNCIPLES OF Applying the above principles o.n the facts In the present case, I, BANKING LAW IOXford, 1967) at common law, conve;.lon of the will first premise from my findings on the first five Issues. As seen cheque under

which money Is collected and the value of the money above except for the fifth Issue my answers to an the other Issues received under It as a strict liablllty. To mitigate that liability s. 4 of were In the afflrmatlve. · Which means that I satisfied that although the English Oleques Act 19S7, was enacted to give banks some form the Defendant claims to have processed a cheque deposited by or protection against the true owner of the cheques when they collect SKYOIL INVESTMENTS LTD the number or the cheque, the amount . for customers who have no or defective title. Under that ·1aw, the· and the bank on which It Is drawn Is so similar to the one drawn by banks must show that they acted In good faith and without the 1st Plaintiff, that In the absence or a copy or the cheque said to negllgence. have been deposited by SKYOJL and In the light of my finding on tiie flfth Issue above, It Is lrreslstlble, In my view, that It must be found Locally, s, 85 (1) of the BIils of Exchange Act (Ciip 215 - RE that the Defendant did In fact. process the same cheque. If the 2002) provides: - Defendant received It with different names of the drawer and the payee, ·those alterations must ·.have been made on .the same cheque. "8S (J) Where a /Janker. In good faith and without . Thls.ln•.my view; constitutes fraudulent conversion of the cheque and negllgenre proceeds thereof. (a) receives. payment for

a customer of an Instrument to which this .section applies; or Mr. Duncan,. has strenuously argued that since none of the PlalnUffs owned the cheque In questlon, they could not maintain an (b) having credited a a,stomer's account with the act1on In conversion. Admittedly the definition of "owner• of the amount of.an Instrument ID which this section ~ue In a:mverslon dalms has been pro~ematic. ~owever, I am applies, receives payment thereof for himself. · ~rsuaded by the definitions assigned to. that tenn by VISRAM i In 39 l7 and _DW4) and the disappearance or wtthholding of a copy of the INTERCOM SEBYJCES LTD AND OTHERS (Supra) that where a · : cheque Itself the existence of bad faith is Implied, and as agents of cheque Is forged, the drawer remains the owner, but .where It Is not the Defendant, the absence of good faith on the part of their staff Is forged, the payee becomes the awrier. In the.present case, there Is · Imputed on !lie Defendant. no dispute that the 1st Plaintiff drew cheque No. 815213 on the 2nd Plaintiff° In favour of the commissioner (or eustoms and Excise. · Then there is the question of. negligence, which Is defined to . Unfortunately, on the Tacts, that cheque never. rea~ the payee. mea~ Yafllno bf:low the mndsrd .of rcaSVHiftls . @rv Instead, asfound above, It was fraudulently Intercepted and dlvetted exoettet[of• banfC The standard of care expected of a

bank, is through the Defendant to pay a different person. ·n cannot be said explained In minute detan by DW4 GODFREY SIGAIA He gave 15 to have belonged to the COmmlssloner for CUStoms & Excise. On the steps which the bank would take In clearing cheques. The check list contrary, I think the cheque and its proceeds still belonged to the appears to be very Impressive and acxx>rdlng to the witness, Plaintiffs, as persons Immediately entitled to the reverslonary foolproof. But or all these checks and balances, the processing of the possession thereof. I am thus satisfied that the Plaintiffs were the cheque In the MICR system Is common to both the 2nd Plaintiff and .. owners of the cheque and are eritlt1ed to maintain an action In the Defendant ·as can be gathered from the testimony of PW2. conversion. It Is also common· ground that at that stage the MICR process_ The next question Is whether the Defendant Is entitled to the captures all the magnetic Ink details of the account number of the protection afforded under s. 85 or the Bms of ·Exchange Aci? · drawer, the cheque number and the amount, ·from which an - • (Supra), As demonstrated alxr;e, to qualify for _the statuto.i\' · joumal Is extracted for cheques drawn on each. bank for dearance protectlon, the Defendant must show that they acted In good faith purposes. It IS alter this sllig<i ihat the Oearance Manager and and without

negligence. Officer -would aoss check, and the Manager Initials the deposit slip to confirm the a<XUracy or the detans contained In the Instrument. Interpreting s. 4 of the English Cheques Act 1957, which Is In Another requirement Is for the teller to prepare a list or an deposit parl material with s. BS of the 8111s of Exchange Act of Tanzania, It slips of SO cheques (Instruments) which he then hands them over to was held In DfACKWEU ys BARCLAYS BANK p I c [1986] I All E.R. 676, that the onus of proof under that section Is on the the 5ervlce Delivery Manager who on receipt, sends off the summary collecting bank to establish that It had .received payment of the sheet to the Cearan~ Manager who signs In the summary sheet. cheque In good faith and without neglJgence. The standard by which negligence on the part of the bank was to be determined · was In the present case, a_lthough Exh.DS was not only lnltlaled by whether the bank had taken reasonable care to satisfy ltseW that Its persons who were not called to testify but also the summary sheet of· customer's title to the cheque was not defective. the SO cheques received along with Exh.DS, was not produced In court nor Its absence explained. The production or this sheet would "Good faith· Is a question of fact and would depend on the have satisfied the court whether the cheque deposited via Exh.05, circumstances of each case. I

have_·already held above that from. had the same details as ihose shown ·In Exh.P2 or not. If the the evidence on record, a cheque has 3 Identifying numt?ers, the • · summary sheet was prepared and the cheques passed through the cheque number, the paying ·bank code number, and .the customer's MICR system, and wreally the Defendant received a cflfferent cheque account number. All those numbers are dearly p~nted In the rrom SKYDll, the fraud would not have gone undetected. Here, the electronic joUmal (Exh.P2). The Defendant does not deny, that this testimony of the Manager _who supervised the MICR process was was the prevailing_ bank pracllce, and did mil. produce any _oiher · audal. In the absence of such evidence the COurt can only Infer that exhibit to contradict the co_ntents-or Exh.P2. Exh.P2 identlfies·the the "dleque"II at all there was any deposited by SKYDIL did not pass cheque, Exh.Pl as the one drawn by the 1st ·PlalnUff (by Its account through the MICR system. That constitutes negligence on the part of number) on the 2nd Plalntlff (by Its bank code), and then the cheque the Defendant This Is because none of DW3 or DW4 who testified number. Now Ir the Defendant had acted In good faith, It ought, In for the defence were themselves physlcaily Involved In the MICR my opinion, to have not only produced a copy of the cheque drawn process of this particular Instrument. by

SKY Oil, but also produced another electronic Journal to contradict Exh.P2. Exh.DS, which In /act refers to the sa~ cheque -Then, one has to examiiie dosety how the cheque was number, did not disclose the other deialis ~clent to disclose the · presented to the Defendant From the evidence on record, and from Identity of the c;heque deposited by SKYDIL. · If anything, It only_ adds· Exh.05 the cheque was deposited by, not a staff of the MGS to the suspicion that It must have been the same cheque. In. the lnternatlonal (TJ Ltd, but according to DWS by that or SKY OIL absence of the witnesses from among the Defendant's staff who 'There was no evidence that this cheque was first received by MGS . directly dealt_ with that particular cheque_ (which did not lndude DW3 ·. " negligence. U they kept a copy and later destroyed It, or made It _ lntematlonal (T) ltd which wo~ld have been Indicated by Its disappear "this was evidence of want of good faltt1. endorsement at the back of the diequc, Which aa:ordlng ·10 the evidence was not so endorsed; and which DW4 admitted was not In the even, I would answer the 6th Issue In the affirmative. normal for corporate customerS. But without much ado the Defendant "ptrxessed' the .cheque. Although the absence of the The seventh Issue is whether Jbe 1st Plalotttt b•odJed lb• endorsement would not In Itself constlMe negligence under s. 85 (3) ·drawn

and sfan~ cheaue No, 815213 neollacntlv? of the Bills of Exchange Act, these circumstances In which the cheque had been presented for collectkm were In my view so unusual ah act The plea of negligence on the part of the Ptalnttffs IS averred by of the ordinary cou,se of business that the Defendant bank ought to the -_Defendant --,n paragraph 15 of the plaint, complete with the have been put on Inquiry and so ought to ~ave made further Inquiries partlculars, whtch In essence, ts that the 1st Plalntlff or their of the customer and the Plaln"ff, Its failure to do so amounted to employees or agents failed to deliver the cheque through the negligence. CITIBANK, an agent of the Commlssloner_for Customs & Excise at the Long Room. -On the other_ hand, on the. evidence on reco,;,, the Court IS- forced to believe that what passed through the process was Exh.Pl, the Despite the phraseology Of the pleading by the Defendan, the cheque drawn by the 1st Plaintiff because Its details appear In Issue as framed and the submissions of the Counsel, the question Exh.P2, the electronic journal no doubt. produced by the Defendant. was recfUCEd to whether the 1st PlalntJff bandied Its cheque If the Defendant processed a different cheque, much as It may not oeiJIJqently? Besides, suggestive, as the pleading might appear, have been necessary, as OW3 and OW4 claimed, I am of the firm there was no prayer

from the Defendant for a finding of contributory view and In the light of the testimony of FW2 that II was prudent for negligence, -or what the -plea was Intended to achlew, but I will the Defendant to have kept a copy- of the cheque for future . assume ihat this was the Intention of the Defendant as Is dear at the reference, If not physically, then electronically by microfilming. Even ·conclusion of his submission. If the Defendant did not feel the need to keep a copy or the particular (SKYOIL) cheque, It would at least, have led evidence that It was forwarded to the paying bank as she dalms. There Is no evidence. . " Be that as It may, Mr. Duncan submitted In amplification of the On the contrary, what was forwarded to the paying bank In this plea Iha, there was gross negligence on the part of the 1st Plaintiff particular transaction was an Instrument No. 815213 per Exh.P2. (through PW4) In handling their cheque. Apart from dellverlng the This as found above In my Judgment was a cheque (Exh.PI) drawn cheque without followlng the laid down procedures It was the by the 1st PlalnUff, and no\ by SKYOIL .evidence :of PWl, that PW4 had been charged .;;,th the offences of forgery and uttettng false receipt No. 228568 (Exh.03) which SO, failure to produce, a copy· cir ·any-record of the cheque evidence was supported by that of PW2. The learned Counsel further deposited by SKYOIL, or

the ·schedule of cheques apprwed _by the submitted by borrowing the thesis from OW4 as to how the fraud Oearance Manager o~e~ than Exh.P2, and th.e non production of_any .- could have been committed. So, It was the 1st PlalnUff (and Its staff) official of the oerendant Involved _In th_e. MIO\ __ pr0!>!SSlng · of the_ : who were to blame for facllltatlng the fraud. Furthermore It took the alleged cheque In question as .witnesses and. the c1rcu·ms1ances In 'Plaintiff almost three months_ to dlscover the fraud, which would not which the cheque was received and processed, very strongly have been so, had It exercised reasonable sklll and care. For thlS, suggests that, If there was any such cheque the Defendant dealt with Mr. Duncan concluded, the Plaintiffs are not entiUed to dalm because It negligently, and lost It or deliberately withheld Its production. In they ought not to be allowed to enjoy the fruits of their own my view, It Is Important for banks to keep copies of such negligence and wrongdoing. transactions. That thlS IS prudent for all the banlis to observe, Is 1mpned In the policy (as testified upon by OW3 and DW4) _ror On the oiher hand, Mr. Lutema, learned_ Counsel for the collecting banks to w_alt for 4 days so as to clear any doubts from the Plalnttff submitted that the 1st PlalnUff did not handle the cheque paying banks, because In the absence of Its owri records, It

would be negngentty, but with ordinary care and In the ordinary course of Impractical for the collecting banks to meaningfully deal with matterS .-business. It was the_breac:11 of trust by some officerS of the Tanzania that could arlse from the cheques they presented. Now, OW3 and Revenue Authority that led to the diversion of the cheque Into other OW4 have testified ·that_ they waited ror the 4 days before crediting _ hands. But In the altematlve, If there was any negligence, no loss · their customer's aa:nunt. _Ane, but they tlld not tell us, what they did would have been ocxaslo!K!d If the Defendant bank had acted with a copy of the cheque, (If they _ever kept one). My ~ew· I~ that If diligently, honestly and prudently. He then recaplWlated his they did not keep a copy of the SKY OIL cheque, It was sheer arguments as to why he thought they did not do .so diligently. And · " the Defendant was on the loo!< Olli, honest and prudent. In any so, condudcd the learned Counsel, the negligence or lndlsaeUOn on case, It was held In ourNN ys LEATHERM (1901] AC. 497, (1900 - the part of the Plalntlff was not the root cause of the loss.

3) All ER. 1 at p. 17, that at common law contributory negligence of a PlalnUff Is no defence In the case of an Intentional tort. From my On my part, I know that PW4 Is now facing a atmlnal charge at findings above, the present case was no less than an lntenttonal tort Klsutu Resident Magistrates' Court. It may therefore be ~ - by the Defendant, to comment on the credibility of this witness at this stage. But given that the cheque In quesUon (ExhPI) was written cin 18/4/2005, and For the above reasons, I would answer the 7th Issue In the taken to TRA by PW4, the s!mllarttles and differences between the negative. two receipts. (Exh.D3 and 04) the testimony of DW2, together with . . . Exhibits P3, DI, and DZ, one cannot rule out 'the possibility of a The 1ast tssue ts to what cclief1 ace the partlu entlHed? conspiracy between the 1st PlatnUff's staff, TRA officials and some third parties, to defraud. However, as said above since there Is a The PlalnUffs' dalm against the Defendant Is for the sum of pending almlnal case on this matter and Since not all the matertal shs.175,809,754/• being an amount In cheque No. 815213 drawn on evidence Is before me, I cannot say more than this. After all, neither 18/4/2005 In favour of the commissioner for CUstoms and Excise In PW4 SKYOIL officials or TRA officials are on trial here. discharge of some tax obllgaUOns, and which cheque and

proceeds were tolivefted wrongfully by the Defendant. 'However, I agree with the_maxlm of law_quoted by Mr. Duncan that ·t:ammet1/um « lafurfc non orltor su nan hib.,w dtbt" Having carefully considered all the evidence on record, I have ·which mean$ that no man can take advantage of his ~n wrong: fO\Jnd and hereb·i hold that the PlalnUffs have proved their case to But this maxim Is sometimes quallfted by another equally Important the requisite standard. Without much ado, I hereby enter Judgment maxim ""Ouod sb /nltlo non vale~ la trac:to ternoorlt non for the PlalnUff and decree as follows: • ~ w h i c h means that which was originally void, does not by lapse of time become valid. So fraud renders any transaCUon (a) The Defendant Is to refund the said Tshs.175,809,754/• voidable at the etecuon of the party defrauded. Likewise the maxim to the PlalnUffs. does not apply where the right of a third party Is to be affected . . (See BROOM'S LEGAL MAXIMS 10th ed. at pp. 113, 191, and 199). · (b) The PlalnUffs are awarded Tshs. 10,000,000/• as general In the present case, I have already found that fraud was/must have damages for conversion. been committed In relaUon to the 1st PlalnUff's cheque. So the maxim advocated by Mr. Duncan W01Jld not In my view, apply. (c) The sum of shs.175,809,754/= Is to attract Interest of 21% per annum from 16th .May 2005 to. the date of Furthermore, as

Mr. Lutema, has submitted even If there was Judgment. negligence or conspiracy to defend between the PlalnUff's staff and other persons It Is not the proximate cause of the loss which Is the (d) The ·decretal sum Is to attract Interest at the Court rate of subject matter of the present suit. As was held In JHACKWELL'S 7% from the date of judgment to that of payment In full. case (supra) where a defence of Illegality of the Plaintiff's act Is reUcd on, the Court has to look at the quality of the Illegality and the (e) The PlainUffs shall have their costs. proximity of the Illegal conduct to the dalm maintained by the PlalnUff and determine whether there had been an Illegality-of which Order accordingly. the Court should take nouce of and whether by offeMng the PlalnUff SGD the relief sought It WO\Jld not be contrary to pub!IC poliCy. In my 5,A, MASSATI view, In the present context, If there was any Illegality on the part or

JUDGE the PlalnUff, It was not proximate to the claim for the reasons set out 30/10/2007 above. Besides,. I am of the further view, that In the drrumstances, It WO\Jld not be contrary to publlC policy to afford the reliefs sought by the Plalntiffs. As my analysis above has· attempted to show the Immediate cause of the loss of shs.175,809,754/• through cheque No. 815213, was the want of good faith, and negligence that led to the fraudulent conversion of the proceeds of the cticque by the Defendant. I .find and hold that none of the commissions or omissions done by the 1st PlalnUff could have led to _this situation, If.