20191127 TZHC Dar es Salaam

IN THE HIGH COURT OF THE UNITED REPUBLIC TANZANIA (DAR ES SALAAM DISTRICT REGISTRY) AT DAR ES SALAAM CIVIL CASE NO. 163 OF 2016 POWER ROADS TANZANIA LIMITED .............................. PLAINTIFF VERSUS BANK OF AFRICA TANZANIA LIMITED ......................... DEFENDANT JUDGMENT Date of last order 30/10/2019 Date of Judgment 21/11/2019 NGWALA, J. The plaintiff Power Roads Tanzania Limited is a legal entity suing Bank of Africa Tanzania Limited a corporate legal entity, the defendant. The plaintiffs' suit against the defendant is for a claim of a sum of United State Dollars Eight Hundred Nineteen Five Hundred Sixty Eight (US $ 819,568) being loss of income due to termination of contract between the plaintiff and Kalago Enterprises Limited. The plaintiff is also claiming payment of US$ 636,860 equivalent to Tanzania Shillings One Hundred Nineteen Million Ninety Two Thousand Eight Hundred and Twenty Shillings 1 Only (Tshs. 119,092,820/=) being loss of income due to difference in exchange rate. It is stated in the plaint that, the plaintiff and Tanzania Revenue Authority (TRA) had tax dispute at the Tax Revenue Appeals Board, where the judgment was delivered on 24th July, 2014 in favour of the plaintiff. Following that decision, TRA requested to be availed with plaintiff's bank details, for the purpose of effecting the decretal sum in favour of the plaintiff. On 16th December, 2014 TRA credited the decretal sum of USD 636,860 in favour of plaintiff vide bank a/c no. 03019680004 named Power Roads Tanzania Ltd possessed by the Defendant. Due to that, the plaintiff committed to buy various construction Equipments from Caterpillar Tanzania Limited. On 27 th December, 2014 the plaintiff concluded another equipment lease Agreement with Kalago Enterprisess Co. Ltd. In follow up of the said credited decretal sum, the plaintiff was surprised to learn that, the defendant remitted back to TRA the whole of the decretal sum without notifying the plaintiff. The plaintiff sought an intervention of the Tax Revenue Appeal Board which issued a clarification letter on the validity of the transaction. After the clarification, TRA re-transferred the decretal 2 sum to the defendant but it was not reflected into the plaintiff's account without any legal justification. For that reason, the plaintiff failed to execute the contract with Kalago Enterprises Co. Limited due to financial challenges caused by the defendant act of withholding the plaintiffs money that resulted into termination of the same. As a result of termination of the contract with Kalago Enterprises Limited, the paintiff has suffered loss of anticipated income as aforementioned. The plaintiff therefore prays for payments of the loss occassioned, interest of the decretal amount at the court rate of 12% from the date of filing the suit until full payments, costs of the suit and any other relief(s) this court deems fit and just to grant. Through the Written Statement of Defence, the defendant vehemently controverts the claim. The Defendant states that, the circumstances surrounding the deposit into the account were so suspicious, that the defendant was justified to return the monies to TRA. There were investgations carried out by various government organs, followed by court order to the defendant, restraining to deal with the plaintiff's deposit till finalisation of investigation. The reasons of withholding the money were known to the plaintiff. 3 The defence further states that, there was no ill motive on the part of the defendant, but the defendant was acting under the ambit of the law, in compliance with court order and directiyes ,, from investigative authorities. At the commencement of the trial the following issues were framed and recorded by the court for determination. The issues are:- 1. Whether the transactions conducted into the plaintiff account were suspicious. 2. Whether the defendant's act of withholding the plaintiff's amount of money was unlawfully. 3. If the answer in the 2nd issue is in the affirmative, then, whether the plaintiff suffered any loss and to what extent. 4. What relief(s), if any are the parties entitled to? The plaintiff company testified through its sole and single witness, one Aba Patrick .Robert Mwakitwange (PWl), the Director and signatory of the plaintiff. PWl told the court that, in 2014 they won a case against TRA at the Tax Appeal Tribunal, which awarded them USD 636,860. The judgment of the Tax Tribunal was admitted in evidence and marked as Exh.Pl. That sum of money was paid through the defendant. When they went to the Bank they were told there was no money. They followed up; back ,,. 4 to Tax Appeals Tribunal, where they were given a clarification letter addressed to TRA, copied to the defendant. TRA was ordered to repay the money. Prior to that, the plaintiff had communicated and entered into an agreement with MantracK Company for purchase of four equipments namely; the excavator, truck (Tipper), the bulldoser VS and Back hoe. The corespondence between the plaintiff and Mantrack Company were admitted and marked as Exh. P2. It is in evidence of PW1 that, they also started communication with Kalago Enterprises to hire them equipments. They entered into Agreement with the defendant from January -June, 2015 for USO 819. The Agreement between Power Roads (T) Limited and Kalago Enterprises Limited, two letters from Kalago Enterprises dated 17/11/2014 together with two letters from Power Roads (T) Limited, dated 25/11/2014 were all admitted and collectively marked as Exh. P3. On 12th January, 2015 the plaintiffs received a letter from Kalago Enterprise Limited, terminating the contract. A photocopy of the letter with Ref. No.Kumb. KEL/DMC/2914/70 of 10th January, 2015 with title "notisi ya kusitisha mkataba'' was admitted as Exh. P4. 5 PWl testified further that, the company suffered loss of four construction equipments from caterpiller. Another loss was due to changes of exchange rate. On 23 rd December, 2014 when the payments were made, the value of exchange rate was Tshs. 1718 per dollar. The defendant stayed with the money for five months where the rate had changed to Tshs. 1905 per dollar. With that difference, the plaintiff got a loss of Tshs.119, 092,820/=. The applicable exchange rate document for 2nd April, 2016 as per CRDB was admitted and marked "Exh. PS". Consequently a demand letter to the Managing Director of the defendant (Exh.P6) was issued. DWl concluded that, the defendant did not tell the plaintiff the reason why the plaintiff could not be paid money after it was paid by TRA. The plaintiff's prayed for the judgment in their favour. In defence, one Ninaeli Geofrey Mndeme {DW1), an employee of the defendant, stated that the plaintiff company became their customers on 6th March, 2012. They opened a corporate current account. It was an account of Tanzania shillings. The account remained dormant until 8/9/2014 when it was activated by Tshs. 100,000/=. On 16/12/2014 they received a swift message with an order of crediting Power Road Tanzania Limited Tshs. 1,097,000,000/=. They found those money 6 came from TRA. As the customer had not transacted to that tune; failure of customer to inform the Bank that he was going to be paid such amount of money and lack of supporting documents made the money become suspicious. DWl reported the matter to the Risk and Compliance Department. When they were so doing, the money was in Suspense Account of the Central Bank. The Bank could not debit that account and credit the customer account. When the customer came on the following day, they informed him that the account was not credited for lack of supporting documents. On being cross examined, by the learned counsel for the plaintiff Mr. Bonda PWl stated that the law require that, when they notice any suspicious transaction in an account, they have to report to the Risk Department of their Bank. Then the Risk Department will report to the Financial Intelligence Unit of the Central Bank. On her turn Julieth Mwanga DW2 testified that, she is the Compliance Manager working in the Department of Risk and compliance with the Bank - Defendant. She came to know the plaintiff in 2014, when they received a "Suspicious Transaction Report" from Bank of Africa Mtoni Branch. They conducted a Preliminary Analysis and search at business Registrations and Licensing Agency (BRELA). They noted, there were two 7 companies, one known as Power Road Tanzania Limited and another Power Road (T) Ltd. Their account was of the latter. The swift message had the name of Power Road Tanzania Limited. For that reason of difference ·in names the money was returned to TRA. The matter was reported to Financial Intelligence Unit - FIU on 19/12/2014. The directed the Defendant to suspend all transactions related with the said amount vide a letter from FIU dated 24/12/2014 which was admitted and marked as Exhibit D1. The Defendant complied with the order and told PWl that the matter was under investigation. The letter that was received to that effect was admitted in evidence and marked as Exhibit D2. This witness stated further that, on that same day, the Bank received another letter from the Director of Criminal Investigation (DCI) requesting documents for the account. They issued the documents. Thereafter, they got a letter from the DCI which required them to freeze the account. Those two letters were collectively admitted and marked as exhibit D3. They complied with the order. When they asked on the progress of investigation, they received a letter from DCI which was attached with court order of freezing the plaintiffs account. Both were collectively admitted and marked as exhibit D4. While the communication 8 was going on with the relevant institutions, members of the plaintiff were following up the monies at the head office of the Bank. Where upon the letter from the Tax Appeal Board, requiring the Managing Director of the Defendant to explain why they had not credited the customer account was issued. Following that request, the Acting Company Secretary and the Manager of compliance went to the Tax Appeal board to respond to the complaint lodged by the plaintiff on the status of the decretal amount paid to the complainant through the Bank of Africa (BOA). The proceedings were admitted and marked exhibit D5. Regarding the suit, DW2 stated that, the freezing was legal because there was a suspicious transaction. When the money was returned back to TRA and later returned back on 24th December, 2014 and deposited in the plaintiffs account, a suspension order followed by freezing and ultimately a court order which lasted for sixty days. No loss was occasioned as the plaintiff was aware of what was going on. With regard to the question of exchange rate it was stated by DW2 that the plaintiff had been paid in Tanzania Shillings from Bank of Tanzania, whence in such a situation where a person has an account in Tanzania shillings, it is mandatory that the said 9 currency be changed by buying the required currency. For those reason, DW2 implored the court to dismiss the suit with costs. At the conclusion of the trial, the counsel for the parties filed their respective final written submissions to support their case for and against the claims. In his submissions, the Counsel for the Plaintiff urged this Court to find that in view of the evidence adduced the defendant had breached its legal duty based on banker-customer relationship, to pay a customer on demand. Following that breach the plaintiff suffered both special and general damages. Regarding the second issue, the counsel for the plaintiff submitted that, the law requires the reporting agent on suspicious transaction to report to Financial Intelligence Unit within 24 hours. The provision of Section 17(1) of the Anti Money Laundering Act [Cap. 423 R. E. 2002] was cited. It provides that:- 11 Where a reporting person suspects or has grounds that funds or properties are proceeds of crime or are related or linked to are to be for commission of predicate offences or has knowledge of a fact or an 10 activity thay may be an indicating of money laundering or predicate offence, he shall within twenty four hours after forming that suspicion and wherever possible, before any transaction is carried out; (a) Take reasonable measure to ascertain the purpose of the transaction or proposed transaction, the origin and ultimate destination of the funds or property involved,and the identity and address of any ultimate beneficiary and (b)Prepare a report of a transaction or proposed transaction in accordance with subsection 2 and communicate the information to the FIU by any secured means as may be specified by FIU'~ The learned counsel Mr. Bondo argued that the defendant reverted back the fund to the sender in default of the requirement of the law. There was no evidence tendered to prove that assertion. For that reason it was submitted that withholding the plaintiff's fund and dealing with it in any other manner was unlawfully. Furthermore, the counsel argued on the third issue that, following termination of contract with Kalago enterprises, the plaintiff 11 suffered loss. The plaintiff therefore is entitled to the ensued reliefs both specific and general based on contract and general damages. In response, the counsel for the defendant insisited that, there were reasonable grounds to believe the transaction was suspicious. The grounds among them were mentioned as; the nature of the account that'was almost dormant, the difference of names of the beneficiary account, absence of prior notice and lack of supporting documents in respect of the transaction. Those reasons made the defendant doubt its legitimacy. Mr. Tarimo the counsel for the defendant implored the court to answer the first issue in affirmative. Submitting on the second issue it was stated that, when the money was returned to the defendant and successfully deposited in the plaintiff account on the 24th December, 2014, the plaintiff could not transact because there was a suspension order from Financial Intelligence Unit. The Bank was prohibited from dealing with that money. Other orders were followed from the Director of Criminal Investigation and the court. 12 The counsel for the Defendant submitted that, the money was withheld in absence of evil intension on their part. There is no evidence either to prove such motive. Furthermore, the counsel claimed exemption under Section 22(1) of the Anti-Money Laundering Act, 2006 [Cap. 423 R.E. 2002] that provides thus; "notwithstanding any other written law, no action, suit or other proceeding shall lie against any reporting person or any director, officer, employee or representative of the reporting person on grounds of breach of banking or professional secrecy or by reason of any loss resulting from an investigation, prosecution or other legal action taken against any person, following a report or information transmitted in good faith under this part whether or not the suspicion proves to be well founded. The counsel for the defendant submitted further in support of the third and fourth issues which I find no need to discuss and be detained on them, for the purposes of determining this suit. 13 The first issue for determination is whether the transactions conducted into the plaintiff's account were suspicious. The plaintiff's contention is that, there was no suspicion and the whole exercise was a sham in an attempt to rescue the defendant from the unlawful act of withholding the plaintiff's fund. It is the defendant's case that, the transaction was suspicious in all circumstances based the evidence as adduced by DW1 and DW2. Both two witnesses of the defendant are emphatic that, the transaction was suspicious that called upon to take their legal duty as required by the law to report the matter to Financial Intelligence Unit. As submitted variance of names, the nature of the account that was almost dormant and lack of supporting document are sufficient factors to a reasonable person to entertain a doubt which must be cleared in accordance with the law. In this case, the Anti- Money Laundering Act, 2006. [Cap. 423 R.E. 2002] I am therefore satisfied that, in the circumstances, the defendant acted properly on suspecting the legitimany and the validity of the transaction to the right beneficiary of the account. The first issue is therefore, answered in the positive. 14 . . - Regarding the second issue on whether the defendant's act of withholding the plaintiff's amount of money was unlawfully. The plaintiff contend that the act was unlawful! and there was no justification or evidence to prove those money were returned back to the sender. It is the position of the plaintiff that, the defendant unlawfully withheld money to their detriment that led them to suffer loss as they failed to comply with the contract they had entered with Kalago Enterprises Limited. On the other hand, the defendant is resisting those allegations by relying on the legal obligation under the law to report to Financial Intelligence Unit once they suspect any transaction. It is the evidence DWl and DW2 that, the money was once returned back to the sender due to discrepancy of names. When that had been cleared, TRA returned back to the defendant, they deposited that money in the plaintiff's account. Here, there were orders from the investigative machinery and ultimately Court orders to freeze and suspend the account. That court order lasted for six months. The defendant's defence is on compliance with the law, notwithstanding the proctection of the reporter under section 22(1) of the "Anti money money Laundering Act, 2006 quoted above. 15 In my considered view, once the reporting person becomes suspicious is obliged to comply with the mandatory requirement of the law. That report in fact, puts in motion the Financial intelligence and investigative machinery to ascertain the legitimacy or otherwise of the reported transaction. For that matter the reporting person cannot be held liable for complying with the law unless malicious act is established and proved in evidence. In the case at hand, nothing of that nature has been proved. More so it is also in the proceedings of the Tax Revenue Authority (Exhibit PS) which shows clarification on the validity of the action taken by the defendants. That said, I find this issue in the negative. Having so found, I find no reason to deliberate on the last two issues because the answer to the 2nd issue as shown above is not in the affirmative. In the upshot, the plaintiff's case is devoid of merit. Accordingly the plaintiffs claim which were pegged on the answers to the 1st and 2nd issue cannot be granted. The suit is dismissed with costs. ~' A. F. Ngwala JUDGE 27/11/2019 16