NCBA v Boleyn and 3 Others default judgment 1

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION) AT DAR ES SALAAM COMMERCIAL CASE NO.1474 OF 2024 NCBA BANK TANZANIA LIMITED.…………………………. PLAINTIFF VERSUS BOLEYN INTERNATIONAL (T) LIMITED…………….1ST DEFENDANT LIU JUNHON……………………………………………….2ND DEFENDANT LIU WEIJUN………………………………….…………….3RD DEFENDANT LIU JUNHONg………………………………………………4TH DEFENDANT LIU CUIHONG………………………………….…………..5TH DEFENDANT DEFAULT JUDGMENT Date of last order: 22/10/2024 Date of judgment: 06/12/2024 AGATHO, J.: The plaintiff and the 1st defendant are companies registered under the Tanzanian Laws. The 2nd, 3rd, 4th and 5th defendants are guarantors to the credit facility extended to 1st defendant by the plaintiff being a successor of the NIC Bank Tanzania Ltd. The Plaintiff filed the suit in this court claiming for the following: 1 (a) A declaration that the 1st defendant defaulted to honour the obligation to pay loan, interest and penalties which loan now stands at TZS 5,532,468,993/=. (b) That the 1st and 2nd defendants being guarantors are now to pay the outstanding liability of in the said sum of TZS 5,532,468,993/=. (c) Interest at the applicable court rate of 12% p.a. from the date of decree to the date of full payment. (d) General damages to be assessed by the Court. (e) Costs of the suit. (f) Any other relief(s) that the Court may deem fit to issue. It is on record that despite the service of summons effected via publication through substituted means that is publication in the newspapers (Daily News and Mwananchi Newspapers dated 7th May 2024 and 17th May 2024 respectively) the defendants failed to file any Written Statement of Defence. That failure to heed the summons and default in filing of defence, prompted the plaintiff to apply for default judgment. The plaintiff was represented by learned advocate Aziza Msangi. The latter filed an application form for default judgment. The plaintiff also filed an affidavit of proof of claim to which I shall revert shortly. Therefore, the main issue before this court is whether the plaintiff has proved her case on the balance of probability? This being a suit, the defendants’ failure to file WSD does not automatically mean that the claim is proved. Therefore, proof on the balance of probability standard apply to this case. That is mandatory otherwise the suit may be dismissed. Truly, he who alleges must prove as prescribed under Section 110 of the Evidence Act [Cap 6 R.E. 2019]. It is also trite law that proof 2 or evidence in civil proceedings may be given either orally or by way of affidavits. In the case at hand the plaintiff in attempting to prove her case filed in court an affidavit which was deponed by John Njau, herein referred as a witness. The latter is a principal officer of the plaintiff herein, which was, formerly, known as NIC Bank Tanzania Ltd as a Recovery Manager hence well acquainted with the case. Mr Njau referred in paragraph 1 of his affidavit to "A certified copy of the certificate for change of name from NIC Bank Tanzania Ltd to NCBA Bank Tanzania Limited is attached for the Court to take judicial notice of change of name. The witness also averred in paragraph 2 of his affidavit that he is a custodian of various documents relating to banking transactions as well as credit and recovery facilities between the plaintiff and its customers including the defendants herein. In paragraph 3 of the affidavit in support of default judgment it is clear that the plaintiffs claim in the suit is for a declaration that the first defendant, being a principal borrower has defaulted and the rest of the defendants being guarantors in respect of financing facilities issued to the Is' defendant are indebted in the sum of TZS 5,532,468.993, being outstanding amount recoverable from the defendants and payable to the plaintiff. The witness avers on paragraph 4 of his affidavit that on diverse dates ranging from 2014 to 2019 the plaintiff was engaged in a financing business with the 1st defendant with diverse renewals and restructuring of the same at various at intervals and moments. Where are the annextures to prove this? 3 Paragraph 5 of the affidavit avers that the credit facilities were syndicatively issued conjunctively by the plaintiff, on one hand, and NIC Bank, on the other hand, on terms and conditions as per respective offer letters. To that end Copies of offer letters were attached and collectively marked annexlure NCBA (T) 2 the originals of which are in possession of the defendants who are out of reach as per section 68 (f) and (g) of the Evidence Act CAP 6 R:E 2019 hence production of copies as secondary evidence ” The plaintiff’s witness further averred on paragraph 6 of the affidavit that the financing facilities were secured by Mortgage of the 1st defendant’s mortgaged property described as Plot No. 72, C.T. No. 87882 Kibaha Township and guaranteed by the 2nd, 3rd, 4th and 5,h defendants, who signed guarantee and indemnity agreements. The Mortgage Deed, guarantee and indemnity agreements duly registered and for which stamp duty is paid in their original forms attached to affidavit and marked annexture NCBA (T)3. Further to that and according to paragraph 7 of the affidavit on Ist April, 2019 the plaintiff, on one hand and NIC Bank Kenya PLC on the other hand, consented to the Is' defendant’s request for migration of a portion of credit facilities from the latter Bank to the plaintiff, on terms and conditions contained in a letter dated 1st April, 2019, pursuant to which migration the plaintiff is mandated to sue on the total liability now outstanding, to wit, liability outstanding for both the facilities issued by the plaintiff herself, and for the facility migrated to her from the said NIC Bank Kenya Pic, to the said plaintiff. The letter containing terms and conditions for migration of a credit facility, the original of which is in possession of the 1st defendant, who is out of reach hence production of a secondary evidence under section 68 (f) and 4 (g) of the Evidence Act, CAP 6 R:E 2019 together with a Board Resolution attached to the affidavit collectively as NCBA (T) 4. Further in paragraph 8 it is averred that the credit facility migrated from NIC Bank Kenya Limited to NCBA Tanzania Limited (1stplaintiff) continued to be secured by landed security stated in paragraph 10 of the affidavit and by the joint and several guarantee and indemnity agreement of the directors as aforesaid. Paragraph 9 of the affidavit states that it was an express term of the Deed(s) of guarantee and indemnity that in any event of default by the first defendant (the borrower) the guarantors shall become responsible to indemnify and to pay any amount due and outstanding, together with interest and penalty at the pp able rate as per terms contained in respective offer letters. As grasped from paragraph 10 of the affidavit, the plaintiff’s witness avers that in the course of servicing of the terms of the financing facilities aforesaid a default occurred where the 1st defendant became indebted to the plaintiff in the sum of TZS 6,496,806,670.77, on account of which the plaintiff exercised her rights under a mortgage Deed by auctioning the landed property described as Plot No. 72, Kibaha Township, which was a security for the facilities, the proceeds of which, however, did not ably settle the outstanding liability of the principal sum, penalties and interest. In paragraph 11 of the affidavit the witness avers that the auction of the mortgaged property only fetched TZS 1,800,000,000 (VA T inclusive ) whereby 60% reduced exposure for NCBA Bank Tanzania Limited and 40% 5 reduced exposure for NCBA Bank Kenya PLC hence did not satisfy the outstanding debt leaving the balance outstanding is TZS 5,532,468,993/=. "Copies of the Bank Statements, and break down of apportionment of the sale proceeds for which there has been sworn an affidavit of authenticity of Bankers Book are filed alongside the Affidavit of proof of claim as annexture NCBA(T) 5. That on account of the foregoing as per paragraph 12 of the affidavit, by virtue of the covenants and by reason of Deeds of guarantee, indemnity, and by reason of migration of outstanding loan due and payable to NIC Bank Kenya Plc to the plaintiff, the latter has, by this suit proceeded against the 2nd to 5th defendants as guarantors to recover the loss, that is to say, the sum of TZS 5,532,468.993/= interest and penalty inclusive. Paragraph 13 of the affidavit for proof of claim, that the plaintiff, therefore, claims for the above said sum of TZS 5,532,468,993/= from the 2nd to 5th defendant, jointly and severally as guarantors. In reference to paragraph 14 of the affidavit, the demand (s) for the defendants to honour their obligations as per covenanted Deeds were made but the 2nd, 3rd, 4th and 5th defendants have either absconded or hidden themselves and hence have not been accessible. Following that state of affairs the plaintiff obtained a Board Resolution to sue. The Copies of demands to the defendants have been attached to the affidavit and marked annexture NCBA (T) 6. Paragraph 15 of the affidavit avers that upon failure on the part of the defendant to make suitable arrangement for payment of the debt, the 6 plaintiff initiated these legal proceedings against the defendant in this Court claiming for payment of TZS 5,532,468,993/= from the defendant being an outstanding loan. The plaintiff in paragraph 16 of the affidavit avers that, the efforts to serve the defendant with the said Plaint could not bear fruit as sworn affidavit of process server and the defendant was later served by way of p through widely circulating newspapers to wit Daily News and Mwananchi of which no Statement of Defence was filed within prescribed period therein. It is explicit as per averments in paragraph 17 of the affidavit that the defendants did not file their Written Statement of Defence. Thus, the plaintiff prayed for the default judgment to be issued as per the law, pleadings and this affidavit of proof. Now back to the issue whether the plaintiff has proved her case on the balance of probability. The first issue is whether there was a credit facility extended to the 1st defendant? Second is whether the 1st defendant defaulted in servicing the loan extended to her. And lastly whether the plaintiff deserve to be awarded the reliefs sought in the plaintiff. Regarding the first issue and looking at paragraph 5 of the affidavit for proof claim there are copies of offer letters attached and collectively marked annexture NCBA (T) 2. Although they are copies, they are admitted under Section 68 (f) and (g) of the Evidence Act CAP 6 R:E 2019. These copies as secondary evidence produced because the originals are in possession of the defendants who are out of reach. Therefore, the first issue is answered in the affirmative. 7 The next issue is whether the 1st defendant defaulted in servicing the loan extended to her. Looking at paragraph 10 of the affidavit, the plaintiff avers that the 1st defendant defaulted in servicing the loan. She thus became indebted to the plaintiff a sum of TZS 6,496,806,670.77, whereof the plaintiff as mortgagee exercised her rights under a mortgage Deed by auctioning the landed property, Plot No. 72, Kibaha Township, which was a security for the facilities. But the proceeds of auction of mortgaged property did not settle the outstanding liability of the principal sum, penalties and interest as it only fetched TZS 1,800,000,000 (VA T inclusive ) as visible in paragraph 11 of the affidavit. Therefore the outstanding debt was not satisfied. It left an outstanding balance of TZS 5,532,468,993/=. To buttress this were the"Copies of the Bank Statements, and break down of apportionment of the sale proceeds for which there has been sworn an affidavit of authenticity of Bankers Book are filed alongside the Affidavit of proof of claim as annexture NCBA(T) 5. From the above evidence it can be concluded that the defendants breached the terms of the credit facility agreement. The have advanced nothing as an excuse for failure to perform their obligation under the contract. The law of contract under Section 37 of the Law of Contract Act [Cap 345 R.E. 2019] is clear that the law does not excuse of parties to perform their obligation under the contract to which they freely entered into. Along with that the case of Simon Kichele Chacha v Aveline M. Kilawe, Civil Appeal No. 160 of 2018 CAT where the court held that: 8 "Parties are bound by the agreement they have freely entered into, and this is a cardinal principle of the law of contract that there should be a sanctity of the contract.” A final issue is whether the plaintiff deserve to be awarded the reliefs sought in the plaintiff. Having concluded that the defendants breached the terms of the credit facility agreement, they are hence liable to pay the outstanding balance, that is principal sum, interest and penalties which stood at TZS 5,532,468,993/=. Considering the evidence adduced as presented hereinabove I am of the settled view that the plaintiff has proved her claim on the balance of probability. Regarding the claim for general damages, while I find that the plaintiffs to have proved their claim. It is the dictates of the law under section 73 (1) and (4) of the Law Contract Act, the law makes it clear that: 73 (1) “ When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.” However, the defendants in the case at hand have been in constant default in servicing the loan. That has also been cemented by the fact that the security was sold but still there is significant outstanding balance. This court is of the view that to slap them with liability of paying general damages will 9 be tantamount to piling misery on their already capsized ship. Consequently, the prayer for general damages is declined. In the end the Court declares and orders: 1. That the defendants have breached the terms of the credit facility agreement. 2. That the defendants are jointly and severally liable to pay the at TZS 5,532,468,993/= constituting the principal sum, interest and penalties. 3. The defendants shall pay interest of 7% on the amount in (2) above from the date of this judgment to the date of payment in full. 4. Costs of this suit shall be borne by the defendants. In terms of Rule 22 (2) (a) of the High Court (Commercial Division) Procedure Rules as amended by G.N. 107 of 2019, it id further ordered that the decree in this suit shall not be executed unless the decree holder has, within a period of ten (10) days from the date of this judgement, publicize the decree in Daily Newspaper and Mwananchi Newspaper one copy each and a period of twenty one days (21) from the date of expiry of the said ten (10) days has elapsed. Order Accordingly. DATED at DAR ES SALAAM this 6th Day of December, 2024. U. J. AGATHO 10 JUDGE 06/12/2024 Court: Judgment delivered today, this 6th December 2024 by Hon. Joyce Minde, Deputy Registrar in the presence of the parties. U. J. AGATHO JUDGE 06/12/2024 11