nyumba ya sanaa culture ltd 2 others vs alipo atunkolepo 2 others 2009 tzhccomd 19 2 november 2009

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM COMMERCIAL CASE NO. 50 OF 2009 NYUMBA YA SANAA & CULTURE LTD ..... 1s t PLAINTIFF BARNABAS PANTALEO LYIMO................ 2n d PLAINTIFF SALVATORY NTOMOLA........................... 3r d PLAINTIFF VERSUS ALIPO ATUNKOLEPO............................................... 1s t DEFENDANT MAFURU M. MAFURU.............................................. 2n d DEFENDANT BOSCO MHAGAMA................................................. 3r d DEFENDANT R U L IN G Hon. Mruma, J. The Plaintiffs, Nyumba ya Sanaa & Culture Limited and two others have instituted a suit against three defendants namely Alipo Atunkolepo, Mafuru M.Mafuru and Bosco Mhagama for the following orders: a) That this honourable court be pleased to order the defendant to return the Title deed and seal to the registered office of the company. b) That this honourable curt may be pleased to declare that the 1st Defendant is no longer a fit person to be director of the company and order that he should be removed as a director of the company. 1 c) That this honourable court be pleased to order that the defendant should refund the sum of the money which has been unlawfully channelled through the company's account so that the company is able to repay it to the rightful owner. d) This honourable court be pleased to declare that the forged Board resolution made by the defendants as mentioned in paragraph 20 above is null and void. e) General damages. f) Punitive and exemplary damages against the 1st and 2nd Defendants for their arbitrary and illegal actions. g) Costs of the suit; h) Any other relief this court deems fit and just. In their written statement of Defence the defendants have vehemently opposed the plaintiff's prayers and together with their defence they have raised five preliminary objections on the points of law. The preliminary points are coached in the following manner; a) That this honourable court lacks jurisdiction to entertain this suit. 2 b) That the plaint does not disclose cause o f action against the defendants. c) That the suit is abuse of the court process. d) That the suit is frivolous, vexatious, embarrassing and scandalous. e) That the plaint has combined different actions talking under separate courts with exclusive jurisdiction. By consent counsel agreed to pray for leave f this court to dispose of the preliminary objection by way of written submissions. Leave was duly granted and a schedule of events was set for the counsel to file their respective submissions. I am greatful to the both counsel for their able submissions which were timely filed. Regarding the 1st preliminary point, it is argued by the defendants counsel that this court has no jurisdiction to entertain the suit on the ground that the plaint as filed do not specifically state the value of the subject matter in order to enable this court to take cognizant of the suit in place of the courts below it to wit, the district court with civil jurisdiction. The counsel further contended that section 3 of the Civil Procedure Code [cap 33 RE 2002] makes it mandatory for the 3 suit to be first commenced in the court of the lowest grade which in this case is the District Court with Civil Jurisdiction. The learned counsel also referred this court to the provisions of order VII Rule 1 of the same code and submitted that failure by the plaintiff to expressly particularize the value of the subject matter offends the provision of rule 1 of order VII of the CPC, he accordingly prayed for the matter to be dismissed with costs. I have looked at the provisions of section 3 of the CPC [cap 33 RE 2002] quoted by the learned counsel for the defendant, and I am unable to see the relationship between his argument regarding the place of suing and the provisions of section 3 he referred to. Section 3 of the CPC [cap 33 RE 2002] relates to interpretation of the code, and the opening word reads: "In this code, unless the context requires otherwise - ......' This is followed by definition of several terms which are found in the code. It has nothing whatsoever to do with place of suing. Probably by citing section 3 of the CPC, the learned counsel had in mind the provisions of section 13 of the same code which provides that: "Every suit shall be instituted in the lowest grade competent to try it and for the purposes of this section, a court of a 4 resident magistrate and district court shall be deemed to be courts of the same grade." If that is what the learned counsel had in mind, I must say, with due respect that he did not have sufficient time to go through the entire plaint and the relevant provisions of the law before hand. A thorough glance of the plaint reveals that the plaintiffs are seeking mainly for declaratory orders. My understanding of Rule 1 of Order VII of the CPC is that statement of the value of the subject matter of the suit is mandatory as far as the case permits. The law provides: "1. The plaint shall contain the following particulars: (a) The name of the court in which the suit is brought; (b) The name, description and place of residence of the plaintiff (c) The name, description and place of residence of the defendant, so far as they can be ascertained. (d) [not relevant] (e) [not relevant] (f) [not relevant] (g) [not relevant] 5 (h) ......[not relevant] (I) a statement of the value of the subject matter of the suit for the purposes o f jurisdiction and court fees so far as the case admits. " The defendant's counsel has contended that it is apparent that the plaintiff's counsel has deliberately avoided to state the value of the subject matter of the suit in plaint contrary to the provisions of order VII rule 1 (i) of the CPC. The counsel contends that such avoidance as deliberately done, makes impossible for the court to establish if it has jurisdiction in the light of section 40 of the Magistrates Courts Act (as amended by Act No.4 of 2004) under which only suits whose subject matter is in the excess of Tshs 30,000,000 and 50,000,000.00 for movable and immovable properties respectively lies to the High Court. Much as I agree with the learned counsel for the defendant that the value of subject matter of the suit must be stated for purposes of determining the jurisdiction of the court and court fees, where the case admits, the jurisdiction of the Commercial Division of the High Court and the court fees, chargeable by the court are however governed not solely by the Magistrates Courts Act, but that law together with the High Court Registries (Amendment) Rules, 1999 GN No.141 of 1999 and the Commercial Court (Fees) Rules 1999. 6 Rule 2(a) of the High Court Registries Rules defines what is a Commercial case. Rule 2(a)(ii) defines a commercial case as a civil case involving a matter considered to be of commercial significance including.......... "the governance of a business or commercial organizations." In the instance case the plaintiff's complaint are based on the governance of a business organization namely Nyumba ya Sanaa & Culture Ltd. There is no doubt about that, therefore the dispute in this suit falls in the avenue of commercial court. As started earlier, the purpose of stating the value of the subject matter under the provisions of rule l(i) of order VII of the CPC is to enable the court to determine whether it has pecuniary jurisdiction to determine the matter or not. Under the provisions of section 40 of the Magistrates Courts Act (as amended by Act No.4 of 2004), only suits whose subject matter exceeds Tshs 30 million for movable properties and Tshs 50 million for immovable properties lies with the High Court. My understanding of the provisions of S. 40 of the Magistrates Courts Act (as amended by Act No.4 of 2004) is that it is applicable only where the value of the subject matter of the suit can be estimated in monetary value. That is why, in my view there is in place paragraph 1(b) and (c) of the schedule to the Commercial court (Fees) Rules 1999, fees for filing plaint: 7 (b) where claims is for damages but no specific amount is claimed, the amount of fees payable is Tshs 100,000/=. (c) where the claim is for injunction or declaration (other than declaration of title to property or other order which cannot be valued in terms of money the fees chargeable is Tshs 100,000.00. As submitted by the learned counsel for the plaintiff and rightly conceded by the defendant's counsel, the suit is founded on the management and affairs of a company. A glance on the plaint would reveal that apart from the company itself, other parties involved in this dispute are directors and officers of the company. The plaintiffs are not claiming for monetary decree only, but mainly for declaratory orders (see paragraphs a, b, & d, of the plaint), general and punitive damages. It is my considered view therefore that the mandatory requirement of rule l(i) of order VII of the civil procedure code. [Cap 33 RE 2002] can only come into play in two scenarios: (ijwhere the value of the subject matter can be estimated or ascertained in monetary value and hence the term "as far as the case admits" used in the rule. (ii) where the schedule to the commercial court (fees) Rules 1999 do not apply. 8 In this regard it is very important to note that while the civil procedure code regulates the functioning of civil courts (including Commercial Division of the High Court), there are in place High Court Registries Rules under GN No.141 of 1999 and the Commercial Court (fees) Rules, 1999 which lay down jurisdiction fees and parameters within which the commercial court should function. The learned counsel for the defendant cited to me the decision of this court in the case of Hertz International Ltd & Another vrs Leisure Tours & 3 others Commercial Case No. 74 of 2008 Makaramba J (unreported) where it was observed that the plaintiff could be availed the reliefs they were seeking in this court in the lower court. On my side, I am of the view that each case must be decided on its own facts. In the case at hand the reliefs the plaintiffs are seeking in this court cannot by any standard be categorized as small claims which should go to the lower court. In general the plaintiffs are complaining about management and affairs of the company - Nyumba ya Sanaa & Culture Ltd. Here, the aggregate of operative facts giving rise to present action, involves a collassal amount of money (see paragraphs 19 and 20 of the plaint), and the whole of the dispute is about the company. Section 481(1) of the Companies Act, No.12 of 2002 caters for powers of the court to grant relief in certain cases and it says: 9 If in any proceedings for negligence, default, breach of duty or breach of trust, against an officer of a company or a person retained by a company as auditor it appears to the court hearing the case that officers or person is or may be liable in respect of the negligence, default, breach of duty or breach of trust.......... the court may relieve him, either wholly or partly from his liability on such terms as the court may think fit" The term court when used in relation to a company is defined under section 2 of the Companies Act, 2002 to mean the court having jurisdiction to wind up the company. Under the provisions of S.275 of the same Act, jurisdiction to wind up a company registered in Tanzania is the preserve of the High Court. Thus reading the provisions of Rule 2(a)(ii) of the High Court(Registries) Rules GN No.141 of 1999, together with the provisions of section 2, sections 275 and 279(2) of the Companies Act 2002 in conjunction with rules 15 -16 and rules 24 -44 of the Companies (Winding-Up) Rules 1919. It is crystal clear that this court has jurisdiction to entertain the matter. On the second objection, I would begin by adopting the definition of the term "cause of action" from the Court of Appeal's decision in the case of JOHN M.BYOMBALIRWA VS AGENCY MARITIME INTERNATIONALE (T) LTD [19831TLR 1 where the term cause of action was defined as: io "essential facts which it is necessary for the Plaintiff to prove before he can succeed in the suit." [See also Legal and Human Rights Centre fLHRCl and Others V. Attorney General (2) Misc. Civil Case No.77 of 2006 High Court DSM Registry (unreported)l. In the present case, the plaintiffs have pleaded that there misappropriation of the company' title deed and common seal by the defendants among others. Under the provisions of sections 480 -482 of the Companies Act, Company, its, director or share holder may institute legal proceedings if he feels that his rights have been infringed and/or abridged. So, in my view, any allegation that one's rights have been infringed and/or are about to be infringed or that the company's properties have been misappropriated is sufficient to constitute a cause of action. Besides, the pleadings (in the plaint) raises a serious and important point of law to be determined regarding approval of company requisite for payment in connection with transfer of its property. For that I would borrow a dictum in the Ugandan case of Katikiro of Ugandan VS Attorney General of Uganda f 1958] EA 765 that a plaint should not be rejected where a serious and important point of law is to be determined. So for the above reasons I would dismiss the second preliminary point of objection. n The third objection should not detain me much. Nothing has been argued to bring the pleadings in the plaint within the ambit of being frivolous, vexatious, embarrassing and scandalous. A suit is said to be frivolous if it has no legal basis and it is scandalous if it is both defamatory and irrelevant to the action. It can only be embarrassing if t is capable of causing the defendant to look stupid and dishonest for no apparent reason, and can only be classified as vexatious if they are drafted in such a way that they annoy or make the defendant feel upset. Going through the entire pleadings and annextures therein, I am unable to find any combination of facts which makes the present suit, frivolous, vexatious, embarrassing, scandalous and therefore an abuse of the court process. In the circumstances, the 3rd preliminary objection also goes. On combination of causes of action suffice to say that the matter relates to the management and affairs of the plaintiff's company. Governance of a business organization or a company including appointment and/or removal of its directors are matters which fall within the ambit of Commercial Division of the High Court in terms of rule 2(a)(ii) of the High court Registries Rules 1999 GN No.141 of 1991. In upshot therefore the preliminary points of objection raised are rejected and therefore dismissed with costs. 12 O rd e r a cco rd in g ly. A .R .M R U M A JU D G E 2 .1 1 .2 0 0 9 2 .1 1 .2 0 0 9 C o ra m : Hon. A .R .M ru m a , Judge. For th e 1st P la in tiff For the 2 nd P la in tiff ►Mr. S ik ira for the Plaintiffs. For th e 3 rd P la in tiff , For th e 1st D e fe n d a n t - Mr. A lip o p re se n t in person. For th e 2 nd D e fe n d a n t - Mr. S ik ira fo r Mr. M ussa Rom a for all D efendants. For the 3 rd D e fe n d a n t - P resen t in person. CC: R.M tey. C O U R T : Ruling d e live re d . A .R .M R U M A JU D G E 2 .1 1 .2 0 0 9 2,950 - words I Certify that this is a tr ie and correct of the orighytl/asd^i Judgment Rulling Registrar, Commercial Court. DSM. ....................... 13