ok plast ltd vs barclays bank t ltd 2012 tzhccomd 22 30 november 2012

IN THE HIGH COURT OF TANZANIA COMMERCIAL DIVISION AT DAR ES SALAAM COMMERCIAL CASE NO.64 OF 2009 OK PLAST LIMITED......................................................... PLAINTIFF VERSUS BARCLAYS BANK TANZANIA LTD.................................. DEFENDANT Date of Hearing: 2$h March, 2011, 21st & 2$h November, 2011, and 2March, 2012 Date of last Order: 01/06/2012 Date ofJudgment: 30/11/2012 JUDGMENT MAKARAMBAr J.: OK PLAST LIMITED, the Plaintiff has accepted a Banking Facility with BARCLAYS BANK TANZANIA LTD, the Defendant, which operated under the Bank Account No.8001543 with BARCLAYS BANK TANZANIA LTD since April 2005. It had been an established practice from inception that where a transaction to remit or payout is of larger amount, that BARCLAYS BANK TANZANIA LTD, after verification of the genuineness of the signature of the Authorized Signatory and submitted supporting documents, would also additionally call OK PLAST LIMITED to cross­ verify and confirm the genuineness of the transaction. On the 14th June, 2007, BARCLAYS BANK TANZANIA LTD debited the account of OK PLAST LIMITED with the sum of USD 54,000 purportedly remitted Page 1 of 14 abroad on instructions of OK PLAST LIMITED to one Foshan Shunde Kingsin Imp & Exp Trading Co. Ltd of China. BARCLAYS BANK TANZANIA LTD also debited the said account with the sum of USD 135 purportedly its charges for carrying out this transaction. On the 13th July, 2007, OK PLAST LIMITED protested to BARCLAYS BANK TANZANIA LTD that it (the Plaintiff) never gave any such instructions to remit any funds to any person and demanded the said amount to be credited back to its account together with the commission wrongly charged and debited. BARCLAYS BANK TANZANIA LTD did not respond to OK PLAST LIMITED correspondence. OK PLAST LIMITED then instructed its lawyers to write to BARCLAYS BANK TANZANIA LTD. After several reminders, BARCLAYS BANK TANZANIA LTD replied on February 26, 2009 declining any responsibility. On 22nd October 2008, the OK PLAST LIMITED engaged the services of Risai Security Solution, a hand­ writing expert, to examine the specimen signatures of persons who are authorized signatories to BARCLAYS BANK TANZANIA LTD and the signatures that appear in the documents provided by BARCLAYS BANK TANZANIA LTD purporting to have been signed by OK PLAST LIMITED. On the 13th November, 2008, Risai Security Solution reported that the two signatures bear "different characteristic of letter formations between the specimen signatures." OK PLAST LIMITED provided copy of the report to BARCLAYS BANK TANZANIA LTD but BARCLAYS BANK TANZANIA LTD still refused to credit back the proceeds wrongly, unjustifiably and without authority debited to its account. On the 10th day of August, 2009, OK PLAST LIMITED brought this suit against the Page 2 of 14 BARCLAYS BANK TANZANIA LTD. BARCLAYS BANK TANZANIA LTD. vehemently disputes the claims by OK PLAST LIMITED and contends that the transaction was signed by authorized signatories of OK PLAST LIMITED. In this suit, OK PLAST LIMITED is seeking for the following reliefs: 1. Judgment in favour of OK PLAST LIMITED against BARCLAYS BANK TANZANIA LTD in the sum of USD 54,135. 2. Interest at commercial rate from 14/06/2007 to the date of filing the suit. 3. Genera! damages for inconvenience and loss of opportunity in utilizing the funds. 4. Interest on the decretal amount at the rate of 12% post-judgment 5. Such further orders or reliefs as this Hon. Court deems just equitable and convenient; and 6. Cost of this suit. In arguing the case, Mr. Chandoo, learned Counsel represented OK PLAST LIMITED and Mr. Mbwambo, learned Counsel represented BARCLAYS BANK TANZANIA LTD. In support of its case OK PLAST LIMITED called four witnesses to testify, FADL GHADDAR, the General Manager of Ok Plast Ltd. as PW1; GREGORY VICENT, the Chief Accountant of OK Plast Ltd. as PW2; RICHARD SAMA LUANDA, a retired Police Officer at the Forensic Identification Bureau and the founder of Risal Security Solution as PW3; and JOEL KALEMBO, who once worked as Messenger at OK Plast Ltd. as PW4. On its part, BARCLAYS BANK TANZANIA LTD called a total of three witnesses to testify, Page 3 of 14 FRANCIS KILAS, the Corporate Manager at Barclays Bank Tanzania Ltd as DW1; ELIZABETH MASSAWE, who once served as Corporate Bank Agent at Barclays Bank Tanzania Ltd as DW2' and WILLY MHEMEZI, a Police Officer as DW3. At the close of the trial, this Court granted the prayer by learned Counsel to file their closing written submissions. In this suit, the parties framed six issues which this Court recorded for the determination of this suit, which I propose to traverse in the course of my judgment. The first issue is whether the instruction to remit USD 54,000.00 to Foshan Shunde Kinsin Import & Export trading Co. Ltd in China were given to the Defendant by the authorized signatory in the Plaintiff's account. In his closing submissions Mr. Chandoo for OK PLAST LIMITED submitted that the purported signature of Mr. Fadi Ghaddar under the instructions was fraudulently forged. Therefore basically BARCLAYS BANK TANZANIA LTD was not instructed. PW1 being the General Manager of OK PLAST LIMITED told this Court that, BARCLAYS BANK TANZANIA LTD was not instructed by OK PLAST LIMITED to transfer money to Foshan Shunde Kinsin Import & Export trading Co. Ltd in China. The signature acted upon by BARCLAYS BANK TANZANIA LTD purported to be of OK PLAST LIMITED was forged. PW1 told this Court further that, even looking with the naked eyes there is a slight difference between the forged signature and that of OK PLAST LIMITED. PW1 told this Court further that, it was a normal practice for the bank to confirm to any transaction made between OK PLAST LIMITED and BARCLAYS BANK TANZANIA LTD. Page 4 of 14 PW2, the Chief Accountant of OK PLAST LIMITED stated that, he did not prepare the Request for swift customer transfer (Form E17) dated 13th June 2007 and the letter dated 14th June, 2007, which were admitted in this Court as Exhibit P2 collectively. PW2 told this Court further that, there is no any copy of the acknowledgment from BARCLAYS BANK TANZANIA LTD. for the presentation of the documents marked as Exhibit P2. PW3, the handwriting expert told this Court that, the signature as it appears in Exhibit P2 is different from that of Fadi Ghaddar. Even the rubber stamp purported to be of OK PLAST LIMITED as stamped in Exhibit P2 is not similar to that of OK PLAST LIMITED. PW4, the messenger at OK PLAST LIMITED told this Court that, he did not remember if he has presented to BARCLAYS BANK TANZANIA LTD. the documents with instruction to transfer USD 54,000 to Foshan Shunde Kinsin Import & Export trading Co. Ltd in China. In his closing submissions Mr. Mbwambo for BARCLAYS BANK TANZANIA LTD submitted that, once a banker receives instructions from an authorized agent she/he compares the signatures with those in the Mandate Form. Upon comparing and finding that they are alike then the banker is comfortable that the instruction is genuine. Therefore everything was in order and it comes out clearly that OK PLAST LIMITED was giving instructions to transfer money to BARCLAYS BANK TANZANIA LTD through agents, Joel Kalembo and Ramadhani. DW1, the Co-operate Manager of BARCLAYS BANK TANZANIA LTD stated that, the letter dated 6th April 2005 and marked as Exhibit D2 Page 5 of 14 introduced Mr. Joel Kalembo for the purposes of collecting various bank documents including D/A, cheque books, T/T swifts & bankers cheques related to the account of OK PLAST LIMITED with BARCLAYS BANK TANZANIA LTD. DW2 told this Court further that, in June 2007 a transfer of USD 54,000 from the account of OK PLAST LIMITED was made to Foshan Shunde Kinsin Import & Export trading Co. Ltd in China under the instructions of OK PLAST LIMITED. Upon comparing the signatures from the instructions of OK PLAST LIMITED and that from the Mandate Form, BARCLAYS BANK TANZANIA LTD. found to be of the same person, Mr. Fadi Ghaddar. DW1 told this Court further that, BARCLAYS BANK TANZANIA LTD. normally confirms on instructions where there is doubt on the genuineness of the particular instruction. DW2, the Co-operate Bank Agent at BARCLAYS BANK TANZANIA LTD. told this Court that she was directly dealing with Mr. Joel Kalembo who acted as an agent of OK PLAST LIMITED. Mr. Kalembo has been authorized under Exhibit D2 to perform any banking transaction on the behalf of OK PLAST LIMITED including making instruction to bank for the transfer of money. While cross examined by Mr. Chandoo, DW2 told this Court that, there is no specific format of writing introductory letter to the bank, the letter under Exhibit D2 suffice for Mr. Kalembo to perform any transactions in the bank and the bank has been normally including transferring of money. DW2 told this Court further that, Mr. Joel Kalembo an agent of OK PLAST LIMITED presented to BARCLAYS BANK TANZANIA LTD. instructions for the transferring of USD 54,000 from the account of OK PLAST LIMITED to Foshan Shunde Kinsin Import & Export Page 6 of 14 trading Co. Ltd in China and availed him with a copy of the presented documents. DW2 told this Court further that, Mr. Kalembo was a merely an agent and not a signatory of the account of OK PLAST LIMITED. It is not disputed, as the Court record would reveal, that under Exhibit D3 instruction to arrange a Telegraphic Transfer (T/T) of USD 54,000 in favour of Foshan Shunde Kinsin Import & Export trading Co. Ltd in China was presented to BARCLAYS BANK TANZANIA LTD. As per the testimony of DW2, I am satisfied that it is Mr. Joel Kalembo, who was acting as agent of OK PLAST LIMITED who presented the instructions to BARCLAYS BANK TANZANIA LTD. However, upon making a comparison with my own naked eyes between the signature by Fadi Ghaddar as signed in the Plaint and the purported signature by Mr. Fadi Ghaddar in Exhibit D3 are not similar. The findings of this Court on the two signatures are supported by the testimony of PW3, who is a handwriting expert that, indeed the two signatures compared were not similar and that the signature under Exhibit D3 was not that of Fadi Mr. Ghaddar. As Mr. Chandoo rightly submitted, the instruction to remit USD 54,000.00 to Foshan Shunde Kinsin Import & Export trading Co. Ltd in China was not given to BARCLAYS BANK TANZANIA LTD by the authorized signatory in the account of OK PLAST LIMITED. It is for the above reasons, that the first issue whether the instruction to remit USD 54,000.00 to Foshan Shunde Kinsin Import & Export trading Co. Ltd in China were given to the Defendant by the authorized signatory in the Plaintiff's accounts to be answered in the negative. Page 7 of 14 The second issue is whether the Defendant had debited the Plaintiff's bank account Number 8001543 with the sum of54,135.00. PW1 told this Court that, on receiving the Bank Statement they discovered that, a total of USD 54,000 was wrongly debited by BARCLAYS BANK TANZANIA LTD from the account of OK PLAST LIMITED. DW2 confirmed that, the amount of USD 54,000 was debited form the account of OK PLAST LIMITED under the instructions of OK PLAST LIMITED and that Foshan Shunde Kinsin Import & Export trading Co. Ltd in China confirmed to have received the same. On the testimonies of PW1 and DW2, and Mr. Chandoo rightly submitted in his closing arguments, BARCLAYS BANK TANZANIA LTD had debited the bank account No. 8001543 of OK PLAST LIMITED with the sum of 54,135.00. It is for the above reason that the second issue whether the Defendant had debited the Plaintiff's bank account Number 8001543 with the sum of54,135.00 is to be answered in the affirmative. The third issue is whether the Defendant was negligent and reckless in debiting the Plaintiff account with the sum of USD 54,135.00. In his closing submissions Mr. Chandoo argued that, on receiving the alleged instructions, BARCLAYS BANK TANZANIA LTD did not bother even to verify with OK PLAST LIMITED whether OK PLAST LIMITED had issued such instructions. Mr. Chandoo submitted further that, DW2 told this Court that, she wanted to call PW1 to verify the instruction but was talked to sort it out by PW4. She also called the next day but could not speak with PW1. She was talking with someone who she did not even Page 8 of 14 know whom she spoke to, Mr. Chandoo further submitted. BARCLAYS BANK TANZANIA LTD. therefore acted on the instructions to remit because it was brought by an employee who was introduced to BARCLAYS BANK TANZANIA LTD. BARCLAYS BANK TANZANIA LTD ought to have done further verification before acting on the instructions, Mr. Chandoo surmised. On his part Mr. Mbwambo for BARCLAYS BANK TANZANIA LTD submitted that, upon BARCLAYS BANK TANZANIA LTD comparing and finding that the signatures are alike then BARCLAYS BANK TANZANIA LTD as a banker was comfortable that the instructions are genuine. And since Joel Kalembo was well known to DW2, there was no need to doubt the genuiness of the instructions. Therefore DW1 upon comparing the signatures in Exhibit Pl with the Mandate Form, BARCLAYS BANK TANZANIA LTD was satisfied that the instructions were genuine. DW2 stated that Mr. Joel Kalembo, an agent of OK PLAST LIMITED instructed her that, the matter was of urgency and therefore she may proceed without confirming with the accountants. Considering that the matter was of urgency, DW2 proceed to process the transfer of USD 54,000 before confirming it with the accountants of OK PLAST LIMITED as this comes out clearly in the last paragraph of page 14 of the Court proceedings dated 25/11/2011. At page 44 of the Court proceedings dated 25/11/2011, DW2 told this Court that, she made a call to OK PLAST LIMITED to confirm the transaction from the authorized person but she only spoke to a receptionist of OK PLAST LIMITED whose name she did not know and she was told that all the authorized persons were out of the Page 9 of 14 country. However, Mr. Joel Kalembo aggressively complained that she was delaying the transfer of the money as the matter was of utmost urgency. From the testimony of DW2 at the trial it seems very clearly that DW2 was acting on the instructions presented to the bank by Mr. Joel Kalembo. DW2 as the court record would show wanted to confirm on the instruction but she did not get any signatory. DW2 was aware that, Mr. Joel Kalembo was not among the signatories of OK PLAST LIMITED and that she did not manage to verify with any signatory. However, while being cross-examined by Mr. Chandoo at the trial DW2 stated that, she had nothing to doubt since there was an introductory letter authorizing Mr. Joel Kalembo to perform banking transactions on behalf of OK PLAST LIMITED and that, her seniors did advise her to proceed with the transaction. The introductory letter DW2 alluded to as authorizing Mr. Joel Kalembo to perform banking transactions on behalf of OK PLAST LIMITED was tendered and admitted in this Court as Exhibit D2. I have carefully looked at Exhibit D2. In my considered opinion the said letter, Exhibit D2 restricted Mr. Joel Kalembo only to collect various banking documents including, D/A, cheque books, T/T swifts & bankers cheques relating with the account of OK PLAST LIMITED. The said letter Exhibit D2 did not authorize Mr. Joel Kalembo to make or facilitate any instructions for transferring money. In my view, BARCLAYS BANK TANZANIA LTD did not exercise reasonable care when dealing with the instruction by OK PLAST LIMITED as contained in Exhibit D2. As Mr. Chandoo rightly submitted and as per the decision of this Court in Commercial Case No. Page 10 of 14 8 of 2007 between BIN FIJAA INDUSTRIES LTD VERSUS TANZANIA ELECTRIC SUPPLY COMPANY LTD (unreported), BARCLAYS BANK TANZANIA LTD was in a better position to prevent forgeries by exercising reasonable care in examining the documents presented to it and also confirming it with the authorized persons. On account of the evidence on record, this Court finds and holds that BARCLAYS BANK TANZANIA LTD debited the account of OK PLAST LIMITED with the sum of USD 54,135.00 negligently and recklessly. It is for the above reasons that the third issue whether the Defendant was negligent and reckless in debiting the Plaintiff account with the sum of USD 54,135.00 is to be answered in the affirmative. The fourth issue is whether the Defendant has committed a breach of contract in wrongly debiting the Plaintiff's account in the sum of USD 54, 135.00. In his closing arguments Mr. Chandoo submitted that, it is trite principle of law that the relationship between a bank and its client is contractual. The bank must not dispense with client's money except on express and verifiable instructions. In the instant case, without proper authority BARCLAYS BANK TANZANIA LTD dispensed funds from its client's account to a third party and refused to reimburse when asked to do so. This is breach of contractual relationship between the bank and its customers. In his closing submissions Mr. Mbwambo argued that, BARCLAYS BANK TANZANIA LTD was acting in good faith and in ordinary course of business expected in the business community. Mr. Mbwambo cited tio this Page 11 of 14 Court sections 60 and 90 of the Bills of Exchange Act, to cement his argument that BARCLAYS BANK TANZANIA LTD was acting honestly, even if the court could find it was negligent, the same should be taken as acting in good faith. The evidence on record lead to no other reasonable explanation than that BARCLAYS BANK TANZANIA LTD by transferring the funds of its client, OK PLAST LIMITED, without any proper authority, clearly BARCLAYS BANK TANZANIA LTD breached its contractual relationship with its client, OK PLAST LIMITED. The act of transferring the funds was done negligently and recklessly by BARCLAYS BANK TANZANIA LTD and with its knowledge because DW2 had even asked her superiors about the event and she was bold to make a call to OK PLAST LIMITED but never deployed further efforts to verify the same. This cannot by any stretch of imagination be equated with acting in good faith or honestly. It is for the above reasons that the fourth issue whether the Defendant has committed a breach of contract in wrongly debiting the Plaintiff's account in the sum of USD 54, 135.00 is to be answered in the affirmative. The fifth issue is whether or not the handwriting expert report is valid. I have carefully gone through the closing submissions of learned Counsel for the parties. Neither of them bothered to make any submissions on the issue of the validity of the report of the handwriting expert. It seems to me that the Counsel for the parties were not interested in answering this particular issue. At the trial PW3 explained in greater details Page 12 of 14 how the report was prepared and how he analyzed the specimen supplied to him. In my considered opinion since neither of the parties has contested the validity of the report of the handwriting expert report it is taken to be valid unless proved otherwise. However, much as the report could be valid, the question of its relevancy is a different matter altogether. The case of the Plaintiff succeeds. Judgment and decree is hereby entered in favour of OK PLAST LIMITED against BARCLAYS BANK TANZANIA LTD for the following reliefs: 1. BARCLAYS BANK TANZANIA LTD shall pay OK PLAST LIMITED USD 54,135 (Say United States Dollars Fifty Four Thousand One Hundred Thirty Five Only). 2. BARCLAYS BANK TANZANIA LTD shall pay interest on the decretal sum at (1) above, at the commercial rate of 7% from 14/06/2007 to the date of the filing of the suit. 3. BARCLAYS BANK TANZANIA LTD shall pay interest on the decretal amount at the rate of 12% from the date of judgment until full satisfaction. 4. BARCLAYS BANK TANZANIA LTD shall pay the costs of this suit. It is accordingly so ordered. JUDGE 30/11/2012 Page 13 of 14 Judgment delivered this 30th day of November, 2012 in the presence of Mr Chandoo, Advocate for the Plaintiff and Mr. Chandoo for R. Mbwambo, Advocate for the Defendant. JUDGE 30/11/2012 Page 14 of 14