oasis energy co llc vs amran mohamed talib another 2012 tzhccomd 21 28 march 2012

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION)

AT DAR ES SALAAM COMMERCIAL CASE NO 114 OF 2009 OASIS ENERGY CO. LLC..................................................... PLAINTIFF

VERSUS AMRAN MOHAMMED TALIB.....................................1s t DEFENDANT MPS OIL (T) LIMITED.............................................. 2n d DEFENDANT

JUDGEMENT BUKUKU, J. The plaintiff became acquainted with the 1st defendant who is the director of the 2nd defendant, in the process of business ventures. The facts of the case as gathered from the plaint are such that, sometimes in July, 2009, the plaintiff and the defendants entered into an oral partnership agreement through which, the plaintiff would supply the defendants with Gas oil products. That the said partnership agreement continued smoothly until mid of October, 2009, when the misunderstanding ensued between the parties thus making the plaintiff and defendants to bilaterally terminate their partnership. It is alleged that, before the said partnership was terminated, the plaintiff had already supplied the defendants with gas oil as follows; a gas oil cargo delivered through M.T Bebera 1 worth US$ i 1,752,950 out of which the balance of US$ 476,135 remains unpaid to date, and 6019 metric tones of gas oil delivered through M.T Fousenat worth US $ 3,887,755 whose payment was guaranteed by five postdated cheques issued by the defendants each worth US$ 777,551. According to the termination of partnership and separation agreement, the plaintiff and the defendants had bilaterally agreed to settle the above outstanding as follows ; (a) the defendant had agreed to issue on the signing date, an irrevocable post dated cheque in favour of the plaintiff to guarantee the

outstanding payment of US$ 476 135 for the 10th of November 2009; (b) the defendant had also agreed to release the effective risk and effective ownership of the 6019 metric tons of oil which was in their control and ownership and give it back to the plaintiff; and , (c) in return, the plaintiff had agreed to release and return to the defendants the said cheques as clearance of any indebtedness. The defendants vehemently dispute the claims and aver that the plaintiff is not entitled to any compensation from the defendants. The plaintiff is now in court claiming against the Defendants for the following orders; (a) Payment of US$ 476 135 being the outstanding payment for gas oil supplied. (b) Interest on the amount claimed at the rate of 31% p .a from 10th November, 2009 till the date of judgment. 2 (c) Interest on the decretal amount at the court's rate from the date of judgment till the date of full satisfaction of the decree (d) Any other orders or reliefs as this Honorable Court may deem fit and proper to grant. In this suit the plaintiff is being represented by Mr. Laizer, Advocate, and had called one witness, while the defendants jointly are represented by Mr. Mwalongo, Advocate and had called two witnesses. At the close of the defense hearing, both counsels prayed to file closing submissions, which prayer was granted and they duly complied. I recognize the efforts made by both learned counsels in composing their submissions. On the first day of hearing of the matter the following issues were framed and recorded for the determination of this suit, namely; 1. Whether the defendants owes the plaintiff the sum of USD 476,135.00.

2. To what relief (s) are the parties entitled to. Testifying as PW1, Mr. Kevin Barry Dood, stated that he works in Muscat Oman as an acting General Manager of Oasis Energy since 5th October 2007, that he knows the defendant company through an introduction done in a meeting in Oman Muscat between Oasis Energy Company LLC and MPS Oil (T) Limited. In that meeting he was introduced to Mr Akrim Talib the son of Mr Amran Mohamed Talib who was representing defendants. PW1 testified further that, the aim of the meeting 3 was to follow upon an introduction made in Tanzania whereby both parties agreed to enter into a partnership for purposes of selling oil cargoes. The business took off and that two cargoes of marine gas oil were successfully sold, the first shipment with 2525 metric tones was delivered early October 2009 by MT Berbera 1 and sold by defendants in the local market of Tanzania. The value of the consignment was 1,752.950 USD. He testified that, a sum of 1.0 million USD was paid by defendants in form of interim payment by swift transfer. PW1 referred to seven swift messages credited to Oasis amounting 95,943.89 USD, thus making the total amount paid by the defendants to be USD. 1,264,943.89. He tendered the list of swift messages copies which were admitted collectively by court as Exhibit P l PW1 also testified that, the amount of USD. 1,264,943.89. paid to the plaintiff

was not sufficient to liquidate the total cost of USD 1,752.950 which was the agreed value for the 2525 metric tons of gas oil and that the balance of USD 476,135, remained outstanding. He further said that, there was an agreement in writing reached on 28th October 2009, as part of the separation agreement whereas, the defendants agreed to pay the outstanding sum to the plaintiff by means of a postdated cheque on 10th November 2009. PW1 tendered the termination agreement in court which was admitted as Exhibit P2 and he also tendered the postdated cheque which were admitted as Exhibit P3. Testifying further, PW1 informed the court that, he was also required to relinquish all responsibilities for the 6,091 Metric Tons of gas oil and he did that by writing a letter to Mr. Amran on 28th October, 2009 and Mr. Amran wrote to the Managing 4 Director of World Oil Limited giving instruction to relinquish all the cargo and assist Oasis on the ongoing sale of oil. PW1 tendered a letter for release of defendants which was admitted as Exhibit P4. Furthermore PW1 stated that the cheque was to be cleared by 20tn November but it was stopped by defendants and that he was not paid not paid. Upon asking Mr. Amran as to why the cheque was returned, he was told that, that the five postdated cheque to Oasis of 777,000USD towards the overall payment of 3.0 Million USD should be returned and

that defendant was trying to raise funds through their assets. Concluding PW1 stated that they have not been paid yet and thus they decided to come to court so that they can be paid sum of USD 476,135, interest on that payment 31% per annum dated from 10tn November 2009 to date of hearing, the incidental payments of costs of this suit and any payments this court requests. Upon being cross examined by Mr. Mwalongo, PW1 testified that he did not sign the partnership agreement, he does not know when and where it was signed but he knows the broad terms of the partnership agreement and the termination of the partnership agreement. PW1 also told this court that he did not participate in the reconciliation exercise but it was agreed that the balance to be paid to Oasis was 476,135 USD and it was to be paid by postdated cheques and that he doesn't know why they stopped payment after reconciliation. Asked about the delivery notes, PW1 testified that he does not have the delivery notes and he has not seen them but that, for the 1st cargo the total paid was 1.264 million USD and 5 the difference is USD. 476,135. PW1 went further and testified that, he had attended two meetings on the matter and that he was not aware that Oasis refused to return the cheques and a case was filed in the Commercial Division of High Court as C.C. No. 106/2009 between defendants and the plaintiff. He also

surmised that, they did not receive any letter of invitation for reconciliation or any verbal invitation, further PW1 stated that the issue of delivery was not disputed. PW1 concluded his testimony by asking the court to grant the plaintiff the prayers set out in their plaint against the defendants. Mr. Amran Mohamed Talib testifying as DW1 stated that, he is the Director and owner MPS Oil (T) Limited, and that he met the management of OASIS in Muscat Oman and agreed that OASIS imports oil and defendants sells that oil and pays back the dues and taxes. DW1 told this court further that the agreement was entered just orally and it was in 2008. He said that, that plaintiff imported oil in the name of MPS Oil (T) limited 2525 tons of diesel and they received and sold it and paid the plaintiff 1.0 million USD, 169,000 USD and then 95,000 USD and they also paid levies of the oil as agreed and thus they paid 100% for this consignment. DW1 further testified that, they received another 6,000 tons of gas oil which due to price increase they refused to accept it. They had a disagreement on the price because they were to get a loss of 700,000 USD DW1 informed this court that after realizing they were to get a loss, he called the Director of OASIS Khamer Alshanfari who came and claimed that 6 there was USD 476,135 USD payment missing in his account for the first consignment. It was then

agreed that, should return back to the plaintiff the 6000 tons of oil and defendants should issue a postdated cheque for the USD 476,135 and then make a reconciliation so that if the money was paid the cheques should be returned. After making reconciliation they found that there is no outstanding claim and therefore they ordered the bank to stop payment, and that they called Oasis to do some reconciliation but they did not show up even their representative in Tanzania, one Mr. Omar Njama, did not show up. Furthermore DW1 testified that normally the company is supposed to send delivery notes and invoices but they were not submitted. When shown Exh. P2, DW1 testified that he knows the document which relates to termination of partnership agreement and that it was written so that they could give Oasis their consignment of the 6000 tons of oil, and that it is in that agreement where the issue of postdated cheques was explained. DW1 went further to state that apart from the termination of partnership agreement there is no other document which shows that OASIS owes them. He maintained that, there must be invoices and delivery notes of the oil, and the amount received. DW1 concluded his testimony by saying that Oasis (Plaintiff) is not supposed to be paid anything, because their claims are baseless. When cross examined DW1 testified that, they did not have a reconciliation with the

plaintiff. They just did their own reconciliation and discovered that plaintiff owes them nothing. That, after the reconciliation 7 he called the plaintiff but they did not respond. He admitted that he was the one who signed the termination of partnership agreement which was done in Dar Es Salam. On being re-examined, DW1 told this court that the original agreement was oral and that on reconciliation they just phoned the plaintiff who did not come. DW1 stated further that the five cheques are the ones referred to in the termination agreement and that they were retained by the plaintiff until when they instituted a suit in court. The second and last witness on the part of the defendants is Mr. Akraham Amrani who testified as DW2. He told this court that he works at defendants company, and that he is aware there is claim from the plaintiff for sum of476, 135 USD from sale of oil, that they issued postdated cheques to the plaintiff for the claimed amount subject to reconciliation of account of which they were not sure of. DW2 when showed Exhibit P2, he stated that he is the one who signed the cheques and after reconciliation he discovered that the plaintiff do not owe them and thus they stopped the bank from payment. When asked if he knows PW1, DW2 answered in the affirmative. He said he met PW1 once in Muscat Oman he was with the Director of Oasis but that PW1 was not involved in

this transaction. When cross examined, DW2 testified that they paid for the consignment and that the postdated cheques were issued subject to reconciliation of accounts to see if there is any amount outstanding before paying, and it was after discovering no amount was due in favor of the plaintiff they stopped the bank from making payment. He admitted that the partnership agreement was verbal and that they did not have oil import 8 permit from EWURA. Taxes were paid through World oil, and since the partnership agreement was a joint venture, payment of taxes was to be done by both parties. During re-examination, DW2 stated that they usually transacted verbally with the plaintiff, and that they did not have EWURA license to import oil but they had a business license. He further said that, the plaintiff has not shown any documents to show his correctness of the claim. Now, let me turn to the analysis of the evidence, issues and the applicable law. There is undisputed evidence that, sometimes in July, 2009, the parties entered into an oral partnership agreement through which the plaintiff would supply the defendants with gasoline products. This partnership agreement however, went on smoothly until mid October, 2009 when misunderstanding between the parties ensued thus forcing the parties to terminate the agreement, upon terms and conditions spelt out in the termination of

partnership agreement. Among the agreed terms of this termination agreement, was that, the defendant shall issue on the date of signing of the said agreement an irrevocable post dated cheque in favour of the plaintiff to guarantee payment of USD. 476,135.00 on 10th November, 2009. The defendant also agreed to release the effective risk and effective ownership of the 6019 metric tonnes of oil which was in their control and give back to the plaintiff. It is also not in dispute that, the plaintiff on the other hand agreed to release and to return to the defendants the five cheques as clearance of any indebtedness. 9 As it transpired, the defendants released control and ownership of the said cargo as agreed and also issued the postdated cheque No. 933684 for the sum of USD. 476,135.00 in favour of the plaintiff. On 13th November, 2009 the plaintiff deposited the cheque in the bank for the payment of the USD. 476,135.00. Unfortunately, the said cheque was dishonoured by the bank on the grounds that, the defendants have instructed their banker to stop payment. That is when the trouble started. In his final submission, learned counsel for the defendant took most of his time in attacking the credibility of PW1 rather than addressing the issues. He submitted in summary that, the scant evidence, oral and written, tendered by the plaintiff does not mention the first defendant anywhere as

a part to the contracts or transaction. Further, Mr. Mwalongo submitted that, the plaintiff has failed to prove its case as to the required standard as the only evidence which was given by their witness is hearsay which is not admissible under section 62 (1) (a), (b) (c) and (d) of the Evidence Act. With regard to the issue why they stopped payment, it is the testimony of DW1 that, he issue the postdated cheque so that he may get more time to reconcile his accounts and after the said reconciliation, there was nothing due and payable to the plaintiff because there were tax liabilities which were paid by the importer who was not the plaintiff but DW2 through World Oil amounting to USD. 490.00 He also admitted that he could not produce the tax receipts because they were not in their name. Learned counsel for the plaintiff on the other hand submitted that, the defendants have and still do not have justifiable and tenable grounds io to stop payment as they did. His reasons being that, the issue of payment of taxes to the tune of USD. 490,000 as reasons for their decision not to pay the outstanding amount is an afterthought and completely a new matter which was not pleaded in the defendants written statement of defense. He further submitted that, the defendants were setting up a new defense and have failed to discharge their burden of proof to properly move this court to believe

them. He summarized that, parties are bound by their pleadings and citing the case of Makori Wassaga V. Joshua Mwaikambo & Another (1987) TLR 88. Essentially, I would agree with the submission by the advocate for the plaintiff that, the defendants have failed to defend their case. I say so because, one would expect that, a case like this which involves a substantial claim, It is expected the defendants to put up a strong defense to be supported by documentary evidence to show justification for their decision to stop payment of the cheque. Unfortunately, their defense did not have a single documentary evidence to support what they had to say. The same happened at the hearing stage, no evidence was tendered to substantiate their side of the story. To make matter worse, the testimonies of DW1 and DW2 differs substantially from what is pleaded in their defense. In paragraph 5 of their written statement of defense, the defendants averred the following: "5. ........................... the defendants came to realize that the sum o f USD. 476,135.00 was not correct and the same had been arrived at wrongly, that is without taking into account some li payments which the defendants had paid to the plaintiff in respect o f the same transaction, "(emphasis mine). This paragraph is silent on the payment of taxes. The defendants allege to have paid the plaintiff in respect of same

transaction. I am one with the counsel for the plaintiff. The issue of tax was never pleaded at all. If at all the defendants had genuinely paid tax, why were the tax receipts not tendered as evidence. That is the only critical evidence that could have been relied by the defendants and it was not there. This definitely goes to show that, something is wrong somewhere. I say so because, in his testimony, DW2 admitted that DW2 did not have a permit to import oil. During cross examination, DW1 also told this court that, because they did not have a permit to import oil, they paid taxes through World Oil, and that he did not recall exactly when the taxes were paid. While DW1 said that he does not recall when the taxes were paid, DW2 on his side testified that, since the partnership agreement was a joint venture, it was therefore proper for both parties to pay tax. Now one wonders, if the arrangement was in a form of a joint venture, why did the defendants decide to shoulder the whole burden of paying taxes. This again is a puzzle which has no answers. The other issue which I find doubtful on the part of the defendant is the reconciliation exercise. It is the testimony of DW2 that, after they had issued the postdated cheque, they sat down with their accountants and reworked the accounts just to find out that the said payment of USD. 476,135.00. was not payable to the plaintiff and

therefore they instructed 12 their banker not to honor the cheque. He further told this court that, they called the plaintiff to come for the reconciliation but did not come. I find this not to be true because, DW2 testified that, taxes are normally paid within 45 days from the date of discharging the cargo. Exh. P l clearly shows that, the defendants started paying the plaintiff from the sale of the said cargo from 8th October, 2009, which means such taxes and costs (if any) would have already been paid long before the parties met on 28th October, 2009 to terminate the partnership agreement. In other words, it is not true that they discovered the issue of payment of taxes after verification. Even if they did, any reasonable person could have expected the defendants to come in this court armed with the tax receipts and the reconciliation report that shows how the amount claimed was expended. It was the defendants themselves who conducted that reconciliation and therefore, why was it difficult for the defendants to tender report, if any. They failed to produce these vital pieces of evidence maybe because they would have incriminated them. In his testimony, DW2 contradicted himself by testifying that, they were forced to sign the termination agreement, while DW1 agreed to have signed the same. However upon being cross examined, DW2 admitted that they were not forced to do so. All

this goes to show how the testimonies of the defense witnesses contradicted each other. It means that they signed the agreement on their own free will and knew what they were signing. 13 Now, coming to the issues. The first issue is whether the defendants owes the plaintiff the sum of USD 476,135.00. Mr. Laizer, learned counsel for the plaintiff submitted that, there is no better evidence to prove or disprove the above issue other than the original cheque No.933684 (Exhibit P-3) and the terms of the termination agreement (Exhibit P-2). I am in full agreement with the learned counsel. The terms and conditions contained in the termination agreement are very clear. The agreement clearly indicates that, after the deduction of all costs, there was an outstanding balance of USD. 476,135 which was bilaterally agreed as payable to the plaintiff and which payment was guaranteed by an irrevocable post dated cheque issued by the defendants. The allegations that there was a mistake in the computation and that they had to pay tax is a non starter. It was never pleaded and therefore it was an afterthought, which this court will not entertain. The defendants therefore had no justifiable reasons to stop the payment as they did. They have to prove this allegation of tax payment by the production of a receipt. Lack of production of the same renders the defense unfounded. It is trite law that, he

who alleges must prove, and this is enshrined in our law under section 110(1) of the Evidence Act. It states: "Whoever desires any tribunal to give judgm ent as to any legal right or liability dependant on the existence o f facts which he asserts must prove that those facts exists, (emphasis m ine)." 14 Of course, the burden shifts depending on what is established by the party against the other Sarkar on Evidence, 16th Edition 2008 at page 1593 aptly paints the shifting nature of the burden of proof 9on provision of the law similar to ours): " A s the case proceeds the onus must shift from time to time . But the judge should not be blind about the facts established before him. In m ost cases the burden o f p roof is divided accordingly as each party has one or more o f the issues cast on him. The party on whom the burden lies in the first instance, may shift it to the other by providing facts giving rise to a presumption in his favour." My understanding is that section 101 is inflexible and applies to all cases. Section 102 makes it clear that the initial onus is always on the plaintiff and if he discharges that onus and makes out a case which entitles him to relief, the onus shifts on to the defendant to prove those circumstances, if any, which would disentitle the plaintiff the same. In this case at hand, the plaintiff has tendered in court as evidence, the separation of

partnership agreement, which shows that, the there is an outstanding balance of USD. 476,135, which was bilaterally agreed as payable to the plaintiff. This document has not been disputed by the defendants. They however allege that, this amount was used for payment of taxes and other charges. Under such circumstances therefore, I find that the burden of proof now shifts on to the defendants, to offer evidence in rebuttal, and also on the preponderance of the document. (See: the case 15 of JACKSON M USSETI V BLUE STAR SERVICE STATIO N (1 9 9 7 ) TLR, 1 2 3 . It is equally important to note here that, evidence to prove an alleged fact should be heavier and need not be many. What is of great essential is the quality of evidence tendered. In the case of HEMEDI SAIDI v MOHAMEDI MBILU (1984) TLR, 113 (HC), Hon. Sisya, J (as he then was) had this to say:- "(i) According to law both parties to a suit cannot tie, but the person whose evidence is heavier than that o f the other is the one who m ust win; i) in measuring the weight o f evidence it is not the number o f witnesses that counts most but the quality o f the evidence, ii) where, for undisclosed reasons, a party fails to call a material witness on his side, the court is entitled to draw an inference that if the witnesses were called they would have given evidence contrary to the party's interests. Considering that, all the

documents tendered in court by the plaintiff have not been challenged by the defendants, it goes to prove that, the evidence as adduced by the plaintiff is solid. There is no way in which the defendants can claim to have paid taxes and other duties without proof. It is from this therefore, issue No. 1 is answered in the affirmative. 16 Having answered issue No. 1 in the affirmative, I now move on to the second issue which is to what relief (s) are the parties entitled to. The first prayer is for payment of USD. 476, 135 being the principle sum. Since the plaintiff has proved his case, this amount is payable to the plaintiff. The second prayer is for interest on the amount claimed at the rate of 31% from the date of cause of action to date of judgment. The case of Said Kibwana & General Tyre E.A V. Rose Jumbe (1993) TLR speaks about division of interest. In this case it has been held that there are two divisions of interests. One covers the period when the debt fell due to the time of the delivering of judgment and the other covers the time form delivery of judgment till full satisfaction. As for the former the interest rate fall within the discretion of the court while the latter, the interest hinges between 7 and 12%. I will be guided by this principle in determining interest payable. And also, I have considered the long period the claimed amount has been outstanding, and

delayed unreasonably and without justification, and therefore, it is the interest of justice that the principle sum be paid with some interest. In the upshot and for the foregoing reasons, what I can regrettably state in conclusion is that, the defendants close their case without tilting the balance erected by the plaintiff as regards the payment of USD 476, 135. for which I enter judgment in favour of the plaintiff against the defendants. Interest rate of 31% p.a prayed for in item (b) of the prayers paragraph is not supported. I hereby award interest on the principal sum at the rate of 21% from 10th November, 2009 till the date of judgment. A 17 further interest of 12% shall be charged from the date of judgment till full satisfaction of the decree. The defendants are condemned in costs. It is accordingly ordered.

JUDGE 28 MARCH 2012 Judgment delivered this 28th day of March, 2012, in the presence of Mr. T. Laizer Learned Counsel for the Plaintiff and Mr. Modestus, Learned Counsel for the Defendants. A.E BUKUKU

JUDGE 28 MARCH 2012 Word count:4,607 18