SALEH AHMED ALAMARY VS SALEH SALIM ALAMRY COMM CASE NO

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION)

AT ARUSHA COMMERCIAL CASE NO. 05 OF 2023 SALEH AHMED ALAMARY.............................................................. PLAINTIFF

VERSUS SALEH SALIM ALAM RY.............................................................. 1st DEFENDANT DR. HAMIS SAID KIBOLA......................................................... 2nd DEFENDANT HSK SAFARIS LIMITED............................................................ 3rd DEFENDANT

JUDGMENT Date of Last Order: 04/06/2024 Date of Judgment: 23/08/2024 GONZI, J. By way of a Plaint, the Plaintiff sued the Defendants herein praying for Judgment and Decree against them jointly and severally for orders that: a) Payment of USD 47,250 equivalent to TZS 113,400,000/= being outstanding loan amount; b) Payment of 15°/o interest per month on the advanced loan amount (USD 68,250) for 58 months period between 02/07/2018 and July 2023 when the Plaintiff filed this suit; c) Payment of 12°/o interest per annum on the decretal sum or at such other rate as the Court may deem appropriate to grant in the i circumstances, computed from the date ofdefault on 03/09/2018 to the date ofJudgment; d) Payment of interest on the decretal sum at the rate of 12% per annum or at such other rate as the Court may deem appropriate to grant in the circumstances, computed from the date of Judgment until full satisfaction of the entire decretal amount; e) Payment of general damages to be assessed by the Court; f) Payment of costs of the suit; and g) For any other reiieffs) this Court may deem fit to grant. After completion of pleadings, the first pretrial conference was held and the case proceeded to Court-annexed mediation which failed. On 29th November 2023, Final Pretrial Conference was held before Hon. Agatho,!, who was then presiding over this matter. Parties, through their Counsel, were involved in framing issues of the case. The court eventually framed the following three issues for determination: 1. Whether there was a loan agreement?

2. If the answer to issue 1 is in the affirmative, then whether there was a breach of the loan agreement?

3. To what reliefs are the parties entitled? 2 The Plaintiff filed his witness statement and testified as PW 1. He stated that on 2nd July 2018 the Plaintiff and the 1st Defendant who was representing the 2nd and 3rd Defendants, signed a soft loan agreement in Arusha before a Lawyer called Frida Magesa for the Plaintiff to lend the 3rd Defendant USD 68,250 on the condition that the 3rd Defendant would repay the sum within two months. The loan amount was to be used in running the activities of the 3rd Defendant. It was agreed that the loan would attract a 15% default interest for each month of default as from 02/09/2018. It was testified that after being given the loan amount, the 3rd Defendant failed to repay any amount under the loan agreement despite several reminders by the Plaintiff. It was testified further that upon further reminders, the 3rd Defendant repaid USD 10,000 on 10/10/2018, and USD 11,000 on 29/01/2019 through the Plaintiff's Bank Account held with Exim Bank Tanzania Limited Account No.0111017580. The Plaintiff stated that by the time of filing the suit, the interest on default had accumulated to USD 375,637.5 and the outstanding balance on the principal sum was USD 47,250 for the period between February 2019 and July 2023. The Plaintiff alleged that the non-repayment of his loan has caused him great losses for not being able to reinvest and utilize

the outstanding amount commercially. He also complained of psychological and emotional sufferings as a result thereof. ASP Adam L. Ntamuti, a Police Officer from the Forensic Bureau, Arusha, testified as the second witness for the Plaintiff. He testified through his witness statement and attended the court for cross examination. He stated that he is a Gazetted Handwriting Expert in the Police Force. He 3 testified that on 03rd September 2019 he was at his then duty station in Simanjiro District, Manyara Region. While on duty he was assigned to conduct a forensic examination of disputed handwriting, signatures and rubber stamp appearing in a document known as prospective ownership of HSK Safaris Limited dated 3rd June 2016 allegedly signed by the 1st Defendant and the 2nd Defendant and Gilder Fanuel Kibola. He found that the signatures and handwriting of Dr. Hamis Said Kibola in prospective ownership of HSK Safaris Limited dated 3rd June 2016 were valid and the rubber stamp was genuine. The third witness for the Plaintiff was Frida Magesa who filed a witness statement and attended the court for cross examination whereby she testified as PW 3. She testified that on 2nd July 2018 while at her Office in Arusha, the Plaintiff and the 1st Defendant engaged her to prepare a loan agreement. She testified that the 1st defendant on behalf of the 3rd Defendant borrowed USD 68,250 from the

Plaintiff upon an authorization by the 2nd defendant to do so. She testified that the loan agreement was signed by all parties before her and that she saw the Plaintiff giving the 1st Defendant USD 68,250 whereby the 1st Defendant counted the money before her so as to ascertain if it was indeed USD 68,250. She testified that the Plaintiff and the 1st Defendant had agreed that the loan amount would be repaid within 2 months and that an interest rate of 15% monthly would be chargeable after the first two months of the loan agreement. It was agreed that during the initial 2-months period, the loan was interest-free. She testified that by the time of institution of this suit, the defendant was in breach for USD 47,250 as the principal sum. 4 The Plaintiff's witnesses tendered the following exhibits. Exhibit Pl is the Loan Agreement dated 02/07/2018 between Salehe Ahmed Alamary as the Lender and Saleh Salim Alamry as the Borrower. The Agreement shows that the borrower borrowed from the lender USD 68,250 as per the agreement between Saleh Saalim Alamry and Dr. Hamis Saidi Kibola, the Founder and managing Director of HSK Safaris Ltd. The loan is shown as interest-free for the duration of two months if it could be repaid timely within the two months period. A 15% interest rate per month is imposed on the outstanding loan balance in case of delay by the 3rd Defendant to repay the sum

after 2nd September 2018. Exhibit P2 is a bank statement of the Plaintiff for his USD Account No.0111017580, held at Exim Bank Arusha. The statement period is from 12th October 2017 to 14th July 2023. It shows that on 10th October 2018 the Plaintiff's account was credited with USD 10,000 by HSK Safaris through the 1st Defendant (Saleh Salim Al-Amry). A similar transaction is indicated for January 29th of 2019 where USD 11,000 was credited in a similar style. The evidence of the 1st Defendant was given by DW1 himself Mr. Saleh Salim Al-Amry who filed a Witness Statement and appeared for cross examination. He testified that between December 2015 and February 2019 he was a Principal Officer of the 3rd defendant Company. He testified that among his roles was execution of agreements as directed by the 2nd Defendant who is the Managing Director of the 3rd Respondent Company. He testified that on 3rd June 2016, he entered into an agreement for 50% ownership of the 3rd Defendant Company by being allotted shares by the Directors and Members of the 3rd defendant Company. He testified that in 5 July 2018, he and the 2nd Defendant visited the Plaintiff and negotiated for a loan of USD 68,250 for running the affairs of the 3rd defendant company by paying for hunting blocks fees, penalties, trophy fees and other expenses owed to the Government. He testified that soon after signing the

loan agreement, he received cash USD 68,250 from the Plaintiff in the presence of Advocate Frida Magesa as a witness. He said that he handed over the money to the 2nd Defendant so as to pay the 3rd Defendant Company's expenses on the undertaking that the 3rd Defendant would repay the loan without interest within two months that is by 2nd September 2018. DW1 testified that contrary to their prospective shareholding agreement in the 3rd Defendant Company involving the 1st Defendant, the 2nd Defendant and Gilder Fanuel Kibola, the 2nd and 3rd defendants did not affect any transfer of shares to make him a 50% shareholder. Instead, he was removed from his position as Principal officer of the 3rd defendant Company and was replaced by other persons. He testified that he sued the 2nd Defendant and the 3rd defendant in the High Court in Civil Case No.47/2019 wherein the 2nd and 3rd defendants filed their Written Statement of Defence acknowledging validity of the loan of the Plaintiff and that they had started to repay the same. He testified that despite the 2nd and 3rd defendants disputing the signatures in the agreement of prospective ownership of the 3rd Defendant Company, Police Handwriting expert report showed that the signatures were genuine. He stated that the loan in dispute was issued by the Plaintiff with the full knowledge of the 2nd and 3rd Defendants and that the management

of the 3rd Defendant had started to repay the loan into the Plaintiff's bank account. He, therefore, testified that 6 there is no reason for ndt repaying the loan balance to the Plaintiff on the part of the 3rd defendant. DW 2 was Dr. Hamisi Saidi Kibola who filed his witness statement and attended for cross examination. He testified for the 2nd and the 3rd defendants. He testified that he is the Managing Director of the 3rd defendant Company hence responsible for making all major decisions and executing all contracts for the 3rd defendant company. He said that he was not aware of any loan taken by the 1st Defendant on behalf of the 3rd Defendant from the Plaintiff until when he saw a Plaint in Civil case No.47/2019 filed in the High Court at Dar es Salaam where the 1st Defendant was suing him and the company demanding 50% ownership of the 3rd Defendant Company. He testified that the purported loan is unlawful due to lack of authorization on the part of the 1st Defendant to transact the loan and the exorbitant interest rates of 15% per month. He testified that he had negotiated for a soft loan with the Plaintiff in favour of the 3rd defendant Company and not a loan with interest. DW 2 admitted that the 3rd defendant company had indeed repaid the Plaintiff USD 21,000 as part of repayment of the loan but that the said amount was paid at the behest of the 1st defendant who is a

relative of the Plaintiff and that the said repayment was done before Civil Case No.47/2019 being filed in Court and before seeing the loan agreement. He stated that he had not acted as guarantor for the loan and was wondering why he had been personally sued on it. He testified that the 3rd Defendant Company never received the amount from the 1st Defendant after he had taken the same from the Plaintiff. 7 The Defendant tendered Exhibit DI which is an agreement on prospective ownership of HSK Safaris Limited dated 3rd June 2016 between Hamisi S. Kibola, director and owner of the 3rd Defendant and the 1st Defendant herein who is described as "a representative and Member of the Company by virtue of execution of necessary papers on 3rd December 2015." By this agreement (Exhibit DI) it was agreed that "50% of the company was thereby being transferred to the 1st Defendant including assets, profits and liabilities" The agreement makes reference to the responsibilities and tasks of the 1st Defendant Company as analyzed in the letter of 3rd December 2015. The parties to the agreement agreed on future transfer of shares of the 3rd Defendant Company to the 1st Defendant. Exhibit D2 is a letter dated 4th February 2020 from Tanzania Police Force to Raja I Attorneys of Dar es Salaam responding to the request for original Document Examination Report in File No.RK/IR/378/2019. The letter was

signed by Inspector of Police Adam L. Ntamuti, Head of Forensic Bureau Arusha. The report concluded that the disputed signatures of Hamis S. Kibola, Gilder F. Kibola, Saleh Salim Al-amry, Anthony Goodluck Shuma and Hadija Hassan Tati, in the Agreement on Prospective Ownership of HSK Safaris Limited dated 3rd June 2016, are genuine and were written by the respective persons as shown in the Agreement. Exhibit D3 is a Plaint in Civil Case No.47/2019 filed in the High Court at Dar es Salaam District Registry between Saleh Salim Al-Amry (1st Defendant herein) as the Plaintiff against Dr. Hamis S. Kibola, Gilder F. Kibola and HK Safaris Company Limited, as the 1st 2nd and 3rd defendants respectively. The 1st defendant was claiming for specific performance 8 I compelling the defendants to effect shares transfer to him as per the contract entered between them. He was also demanding for transparence in the running of business of the company. He was demanding implementation of the agreement on joint ownership and running of the company and for distribution of unpaid dividends to shareholders. Exhibit D4 is a Joint Written Statement of Defence in Civil Case No.47/2019 filed by Dr. Hamis S. Kibola, Gilder Fanuel Kibola and HSK Safaris Co.Ltd. The Defendants alleged that the agreement the Company had with the 1st Defendant herein was an oral agreement to cooperate in hunting activities and

to share the profits out of business. They denied to have sent the 1st Defendant to Arusha to take the loan from the Plaintiff or to enter into the contract with the Plaintiff because contracts are entered jointly. They stated that prior to their verbal agreement with the 1st defendant, he had made a big promise of getting hunting clients from the UAE but the promise had turned into hot air and the company was making losses. They admitted that the loan agreement annexed as annexture SSA-3 to the Plaint in that case was being repaid by the Company. Exhibit D5 is a counter affidavit filed by Anthony Goodluck Shuma in the Advocates Committee in Application Complaint No.03/2019. The said Anthony Goodluck Shuma stated that Hamis S.Kibola and Salehe Salim Al Amry had signed the agreement for prospective ownership of HSK Safaris in his presence after being introduced to him by Miss Hadija Hassan Tati and that the said agreement had only two parties namely the 1st and 2nd Defendants herein and that Gilder F. Kibola was not a party to: that 9 agreement when it was being signed although her name and signature appeared to have been inserted therein later. Exhibit D6 is a counter affidavit of Hadija Tati filed in the Advocates Committee Application Complaint No.04/2019. She stated that she was aware of a transaction involving her brother in law Saleh Salim Al Amry and one Hamisi S.Kibola

who was introduced to her by the 1st Defendant herein. The counter affidavit disclosed that the two had visited the Advocates' office on 3rd June 2016 at a time when she was not yet an Advocate and therefore, she had taken them to Anthony Goodluck Shuma, Advocate who duly attested their signatures to the Agreement for prospective ownership of the 3rd Defendant Company. She stated that the purported Gilder F. Kibola, whose name and signature was later added to the agreement, was not a party to that agreement when it was being attested as it involved only 2 persons. Exhibit D7 is a copy of an affidavit of Yussuf Mzee Bayumi a relative of Hamis Saidi Kibola. He stated that on 23rd January 2019 he accompanied Hamisi saidi Kibola to the offices of Kings Law Chambers at Haidery Plaza in Dar es Salaam to meet Advocate Anthony Goodluck Shuma. Upon reaching there, Advocate Shuma denied to have ever met Dr. Hamisi Saidi Kibola before that date. Also, that he had denied to have ever attested the signature of Hamis S. Kibola. The affidavit of Yussuf Mzee bayumi disclosed further that Hadija Tati also denied to have seen Hamis Saidi Kibola before that date but that the agreement had been brought to their office by Saleh Said Al Amry while it had already been signed by both parties and that Mr.Shuma, Advocate, just proceeded to sign and stamp it. io Exhibit D8 is a certified resolution of

the 3rd Defendant Company dated 17th July 2023, authorizing the 3rd Defendant Company directors to defend this suit. At the end of examination of witnesses, both sided, with leave of the court, filed their Final written submissions. Mr. Mnyiwala Mapembe, learned Advocate, represented the Plaintiff. The 2nd and 3rd Defendants were represented by Mr. Edmund Rweyemamu Ngemela, learned Advocate. The First Defendant did not file final submissions. I thank the learned Counsel for their submissions. Mr. Mnyiwala Mapembe essentially submitted that Exhibit Pl is enough evidence that indeed the 1st Defendant on behalf of the 3rd defendant signed a loan agreement for the sum of USD 68,250. He argued that as exhibit P2 shows that the loan was repayable by 2nd September 2018, and that up to institution of the suit the 3rd Defendant had only repaid USD 21,000, then the Defendants have breached the contract for non-payment of USD 47,250. He submitted that to this sum, the agreed contractual interest of 15% per month has accrued since 2nd September 2018. He argued that the court, in terms of section 101 of Evidence Act, should not interfere into and vary the terms of the written agreement of the parties. He argued that applying the monthly interest rate of 15% to the outstanding loan as from 2nd September 2018 to July 2023 when the suit was filed, the total amount payable by July 2023 was USD

411,075 as the loan balance was fetching the USD 7087.5 monthly as interest. He insisted that interest is the recompense for money which is the determinant of value in the society. He prayed for Judgment and decree with costs. ii For the 2nd and 3[d Defendants, essentially, Dr. Edmund Ngemela, learned advocate, submitted that the Plaintiff has no cause of action at all against the 2nd defendant as the 2nd Defendant did not sign the loan agreement, he was not the one being represented by the 1st defendant in signing the loan agreement and he is not the one to whom the loan amount was given. Mr. Ngemela, learned Advocate, argued that there exists no valid agreement due to lack of mandate on the part of the 1st defendant to sign the contract for and on behalf of the 3rd Defendant Company in absence of power of attorney. He submitted that the Agreement on prospective ownership of the 3rd Defendant Company (Exhibit DI) should not be relied upon as giving mandate upon the 1st Defendant to act on behalf of the 3rd Defendant since it is tainted with forgery as it purports to have also been signed by Gilder F. Kibola while the affidavits of the Attesting Officer Mr. Shuma and the one who had allegedly introduced her to him (Hadija Tati) deny such a fact. He submitted that the counter affidavits of Mr. Shuma and Ms. Tati show that the said Gilder F. Kibola was not a party to the

Agreement on prospective ownership of the 3rd Defendant Company (Exhibit DI). Mr. Ngemela, learned Advocate, also submitted on failure by 1st Defendant to prove depositing the money in the bank account of the 3rd Defendant Company. He complained of the exorbitant interest rates attached to the loan agreement also. Mr. Edmund Ngemela, learned advocate, argued that all the evidence available in this case point to the 1st defendant as the only one who is liable to repay the loan to the Plaintiff as he negotiated for it without mandate, received the money and never handed it over to the 3rd 12 Defendant company. Mr.Ngemela, learned Advocate, argued also that although the 2nd Defendant admitted to have entered into negotiation to borrow money from the Plaintiff for and on behalf of the 3rd Defendant, the negotiation was in respect of a soft loan, that is, without interest. He argued that the negotiation did not culminate into a contract, and, if it did, then the parties were not at consensus ad idem that is why the Plaintiff issued a loan with interest while the 2nd Defendant had wanted a soft loan. He prayed for dismissal of the suit with costs or alternatively, for the court to enter Judgment and Decree as against the 1st defendant only. I will start with the first issue. The issue is whether or not there was a loan agreement between the Plaintiff and the Defendants. The

Plaintiff's testimonies and submissions insist that such an agreement existed and that it is evidenced by Exhibit Pl. The Defendant has argued that the said Agreement (Exhibit Pl) does not at all refer to the 2nd Defendant. He argued that even where it refers to the 3rd Defendant, the 1st defendant had no power of Attorney or any mandate to represent the 3rd Defendant in signing the loan agreement as well. To narrow down the issue, I will start by accepting the first argument by Mr. Edmund Ngemela, learned advocate, who argued that the 2nd Defendant is a total stranger to that agreement. In his testimony, the 2nd Defendant insisted that he did not even act as a guarantor in it. I have read the entire Exhibit Pl, there is no participation of the 2nd Defendant in his personal capacity, directly or indirectly through agent at all. It purports to be an agreement between the 1st Defendant on behalf of the 3rd Defendant Company at one hand, as the borrower and the Plaintiff on the other side as 13 the lender. The 2nd Defendant is not even mentioned as the borrower or the beneficiary of the money borrowed. As the 3rd Defendant is a limited liability company distinct from the 2nd Defendant, the 2nd Defendant as a director and shareholder of the 3rd Defendant Company, is not anyhow linked to the loan agreement even if the same had been concluded for and on behalf of the 3rd Defendant

Company. It is an elementary principle in company law that when the company is formed (i.e. incorporated) a new legal person is thereby created. That legal entity has all of the attributes of an individual - a human, except that the company attains maturity on its birth. There is no period of minority - no interval of incapacity. Just like a natural person, the company can own property; buy, sell and own land and any other asset such as shares; just like an individual it can sue and be sued; when legal threats are made, they are made against the company. When legal claims are made, they are made by the company. The company can borrow money: ie incur debts. If the company is wound up, at that point the shareholder who has not paid for his shares must pay the total amount due for the unpaid up shares. That is the amount and extent that the shareholder is liable to pay if it all goes wrong for the company. The concept of separate legal personality is not eroded, even if the shareholders and directors of the company are the same persons. Creditors of the company are not able to recover debts from the personal assets of the shareholders, directors or employees. They must recover them from the assets of the company, and the company alone. Therefore, back to the first issue, so far as the 2nd Defendant is concerned, I find that there is no loan agreement between the Plaintiff and the

2nd Defendant. 14 Still on the first issue framed, I will now consider the involvement of the 1st and 3rd Defendants in the loan agreement of 2nd July 2024 viz a viz the Plaintiff. Exhibit Pl is a Loan Agreement dated 02/07/2018 between Salehe Ahmed Alamary as the Lender and "Saleh Salim Alamry on behalf of the 3rd defendant" as the Borrower. The Agreement shows that the borrower borrowed from the lender a total sum of USD 68,250.00, "as per the agreement between Saleh Salim Alamry and Dr. Kibola the Founder and managing Director of HSK Safaris Ltd". The loan is shown as interest free for the duration of two months when it would become due for repayment. 15% interest per month is imposed in case of delay to repay the sum after 2nd September 2018. The pertinent question there is who was borrowing the money from the Plaintiff? It was the consistent argument by the 1st Defendant that he was borrowing the money for and on behalf of the 3rd Defendant Company. The 2nd and 3rd Defendants have denied to have ever authorized the 1st Defendant to transact business on behalf of the 3rd Defendant. The 1st Defendant has argued that he was made a Principal Officer of the 3rd Defendant Company and entrusted to execute contracts on the basis of the 3rd June 2016 prospective shareholding agreement between the 1st Defendant on one hand and the 2nd Defendant and Gilder Fanuel Kibola on the other

hand, who agreed to transfer to him 50% ownership of the company. The pertinent questions which follow are whether the 1st Defendant was actually made a Principal Officer of the Company after that agreement as Director or Secretary thereof? Were the 50% shares of the 3rd Defendant Company actually transferred to the 1st Defendant by the 2nd Defendant and the said Gilder Kibola pursuant to their alleged agreement for 15 prospective shareholding! of the 3rd Defendant? Throughout the testimony of DW1, there is no proof of his being made a Principal Officer of the 3rd Defendant Company as a Director or Secretary thereof. There is not even evidence of his being made a member or shareholder. Principal Officers of the company include its Directors or Company secretary. Each one must be duly appointed by members and specific forms be filed with the Registrar of Companies. Members make their decisions though resolutions passed at the General meetings pursuant to the Articles of Association of the Company and the provisions of the Companies Act. Throughout the hearing the 1st defendant did not at all give any poof of being appointed into directorship or company secretary of the 3rd Defendant Company. He was not a Principal Officer in law, capable of transacting business for and on behalf of the 3rd Defendant Company, individually. I will reproduce the relevant provisions of the Companies Act, CAP 212 on this aspect: "181. Subject to any modifications, exceptions, or limitations contained in this Act or in the company's articles, the directors of a company have all the powers necessary for managing, and for directing and supervising the management of, the business and affairs of a company.

189. The acts of a director or manager shall be valid notwithstanding any defect that may afterwards be discovered in his appointment or qualification" 16 Also, in terms of section 39 (1) and (2) of the Companies Act, Cap 212, (2) a deed is executed by the company under its common seal and if signed by a director and the secretary of the company, or by two directors of the company. "38. A contract may be made (a) by a company, by writing under its common seal, or (b) on behalf of a company, by any person acting under its authority, express or implied, and any formalities required by law in the case of a contract made by an individual also apply, unless a contrary intention appears, to a contract made by or on behalf of a company. 39. -(I) A document is executed by a company by the affixing of its common seal. A company need not have a common seal, however, and the following subsections apply whether it does or not. (2) A document signed by a director and the secretary of a company, or by two directors of a company, and expressed (in whatever form of words) to be executed by the company has the same effect as if executed under the common seal of the company." i^s the 1st Defendant had no mandate in law to transact business for and on behalf of the 3rd Defendant Company, the loan agreement he signed on behalf of the 3rd Defendant Company without competence, became void. 17 If the

1st Defendant was acting simply as an individual agent, he needed powers of Attorney. That was not tendered in court nor even alleged to have existed, either. The acts of the 1st Defendant therefore did not bind the 3rd Defendant Company for lack of mandate on the part of the 1st defendant, he was not a Principal Officer. He did not hold power of attorney. He was not acting as an agent for and on behalf of the principal. He did not possess any express or implied authority to act for and on behalf of the 3rd Defendant Company. For the purpose of section 38 of the Companies Act above, I should add that express authority is the authority which the principal (the company) has expressly given to the agent (director). On the other hand, implied authority, sometimes described as the usual authority, is the authority of an agent (director) to do acts which are reasonably incidental to and necessary for the effective performance of his duties. The 1st Defendant does not fit in either express or implied authority. Implied authority refers to an agent's power to act on behalf of a principal without an express authorization from that principal. Implied authority arises where a person firstly possess some actual authority. It cannot arise where one does not even possess the initial express or actual authority to represent the Principal. If the 1st defendant herein possessed actual authority

as a director of the company and hence was capable of transacting something on behalf of the Company, then he could in law be deemed to possess implied authority also to do something more than what was actually authorized by the principle. The 1st defendant was never made a director nor granted power of attorney so as to be able to act for and on behalf of the 3rd Defendant Company. As he lacked any 18 mandate whatsoever, he could not derive any implied further authority to bind the 3rd Defendant Company. In the case of Hely-Hutchinson v Brayhead Ltd, [1968] 1 QB 549 Lord Denning MR held that: "Z need not consider at length the law on the authority of an agent, actual, apparent, or ostensible... It is there shown that actual authority may be express or implied. It is express when it is given by express words, such as when a board of directors pass a resolution which authorises two of their number to sign cheques. It is implied when it is inferred from the conduct of the parties and the circumstances of the case, such as when the board of directors appoint one of their number to be managing director. They thereby impliedly authorise him to do all such things as fall within the usual scope of that office. Actual authority, express or implied, is binding as between the company and the agent, and also as between the company and others, whether they are within the company or outside

it." I am settled that a company is a legal person who is living only in the eyes of law. It is a formulation of law which lacks both body and mind. It cannot act on its own. It can act only through some human agency. Directors are those persons through whom a company acts and does business. A 19 company is an artificial person and it functions through human agents i.e. the directors. When the principal (the company) grants an agent (Director) express authority to complete a task, they also grant that agent authority to take any steps reasonably necessary for the completion of that task. For one to have a valid implied authority he must firstly have actual authority. If the 1st Defendant had actual authority as a director, to sign the loan agreement, he would be deemed to also have possessed the implied authority to negotiate the terms of the loan agreement including the interest amount. The lack of mandate on the part of the 1st Defendant to transact on behalf of the 3rd Defendant Company rendered the purported loan agreement he signed with the Plaintiff on behalf of the company, void. That is what sections 10 and 11 of the Law of Contract Act, CAP 345 provides under secion 10 thereof. "10. AH agreements are contracts if they are made by the free consent ofparties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared

to be void: 11. (2) An agreement by a person who is not hereby declared to be competent to contract is void." In this case before conclusively ruling as to the voidability of the contract, I asked myself as to whether the 3rd Defendant Company had ratified the transaction which the 1st Defendant did with the Plaintiff as to validate the otherwise void agreement? My answer is in the negative. The only attempt 20 by the Plaintiff and the 1st Defendant to establish ratification is by the 3rd Defendant having repaid USD 21,000.00 through the bank account of the Plaintiff. The 3rd Defendant has admitted to have made that repayment but arguing that the same was done at the behest of the 1st Defendant without the knowledge of the 2nd Defendant who was the managing Director. The implied ratification refers to the contents of Exhibit P2 which is a bank statement of the Plaintiff for his USD Account No.0111017580, held at Exim Bank, Arusha. It shows that on 10th October 2018 the Plaintiff's account was credited with USD 10,000 by HSK Safaris through the 1st Defendant (Saleh Salim Al-Amry). A similar transaction is indicated for January 29th of 2019 where USD 11,000 was credited in a similar style. Can this conduct be taken to have constituted an implied ratification of the loan agreement by the 3rd defendant Company? My answer is in the negative. First, as Exhibit P2 shows the money was

deposited in the account of the Plaintiff by Saleh Salim Al- Amry, the 1st Defendant herein. He was running the affairs of the 3rd Defendant Company without being a director nor a company secretary therein. I have already held hereinbefore that he had no mandate to act for and on behalf of the 3rd Defendant Company. If he had no mandate to borrow the money from the Plaintiff for and on behalf of the 3rd Defendant Company, then for the same reasons, he had no mandate to repay the loan for and on behalf of the 3rd Defendant Company. Second, ratification by a company of a conduct done for and on its behalf would need a resolution of members of the company duly passed in which the act done without mandate of the company could be endorsed as being binding upon the company. Such evidence of ratification by the 3rd Defendant Company, of 21 the loan agreement entered by the 1st defendant with the Plaintiff without mandate, was not brought forward in this case. I thus find the alleged loan agreement entered between the Plaintiff and the 1st Defendant for and on behalf of the 3rd Defendant Company was void as the 1st Defendant had no authority to act for and on behalf of the Company and the Company never thereafter ratified that conduct by way of a resolution. The first issue is therefore answered in the negative. I find that no valid loan agreement existed between the Plaintiff and the

3rd Defendant. I considered whether, as it was argued by Mr.Ngemera, learned Advocate in his final submissions, there exists a loan agreement between the Plaintiff and the 1st Defendant? Simply, that was not the case. All the evidence by the Plaintiff and the 1st Defendant points to the fact that at the time of signing the loan agreement, they both understood it that the borrower was the 3rd Defendant and not the 1st defendant. The Plaintiff understood the 1st defendant as an agent transacting for and on behalf of the 3rd Defendant. The same view was shared by the 1st Defendant. Never at any point in time did the minds of the Plaintiff and the 1st Defendant meet that actually the Plaintiff was the borrower and the 1st Defendant himself was the borrower. A valid contract cannot arise in the circumstances where there was no consensus ad idem. There was no valid loan agreement between the Plaintiff and any one of the three Defendants in this case. The second issue was framed thus: "if the answer to the first issue is in the affirmative, whether there was a breach of the loan agreement?" Now that the first issue has been answered in the negative, the second issue loses any relevancy. There cannot be breach of non-existent contract. 22 The last issue was to what reliefs are the parties entitled? In this case, I find that the evidence is enough on the balance of probabilities to

show that indeed the 3rd Defendant through the 1st Defendant received the USD 68,250.00 from the Plaintiff. The 2nd Defendant admitted to have been involved in negotiations with the Plaintiff for a soft loan. The 3rd Defendant Company even repaid USD 21,000.00 to the Plaintiff, although irregularly through a person who had no mandate. More importantly, in their Joint Written Statement of Defence in Civil Case No.47/2019 filed by Dr. Hamis S. Kibola, Gilder Fanuel Kibola and HSK Safaris Co. Ltd, which was tendered as Exhibit D4 in this case, the 2nd and 3rd Defendant denied to have sent the 1st Defendant to Arusha to take the loan from the Plaintiff or to enter into the contract with the Plaintiff because contracts are entered jointly. However, they admitted that the loan agreement that was annexed as annexture SSA-3 to the Plaint in that case was being repaid by the 3rd Defendant Company. This is an acknowledgment of receipt by the 3rd Defendant, of the loan amounts from the Plaintiff. One of the cardinal principles of civil litigation is that parties are bound by their pleadings. (See The National Insurance Corporation Vs. Sekulu Construction Company (1986), TLR CA 157). Although the admission of receiving the money in this case was made in the pleadings by the 2nd and 3rd Defendants in another case, I am of the view that as the contents of those pleadings were duly verified

of the truthfulness of the statements made therein, the 2nd and 3rd Defendants are debarred and estopped from denying the truth of their statements made therein. 23 The money was received under void agreement but nevertheless it was received by the company. What are the rights of parties to a void agreement under which some benefit has passed from one person to another? The law is clear under section 65 of the Law of Contract Act, CAP 345 that: "When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it" In line with section section 65 of the Law of Contract Act, CAP 345,1 hold that the 3rd Defendant Company is bound to restore the balance of the purported loan amount, to the Plaintiff from whom it received the same. In this case, it has never been disputed that out of the USD 68,250.00 that passed under the void agreement from the Plaintiff to the 3rd Defendant, through the 1st defendant, USD 21,000.00 has already been repaid to the Plaintiff, though irregularly, but it has been repaid nevertheless. The 3rd Defendant is therefore bound to immediately repay the Plaintiff the balance of USD 47,250.00 (United States Dollars Forty Seven Thousand Two Hundred and Fifty only). The claims of

contractual interest and others stemming from the terms of the loan agreement cannot be upheld since the very contract from which they arise, is void. From the date of this Judgment thd USD 47,250.00 (United States Dollars Forty Seven Thousand Two Hundred and Fifty only) shall attract interest at the court rate of 7% per annum from the date of Judgment until the date of full and final payment thereof. 24 In fine, except for the order for the 3rd Defendant to immediately return to the Plaintiff the USD 47,250.00 which shall attract interest at the court rate of 7% per annum from the date of Judgment until the date of full and final payment thereof, the suit is hereby dismissed. Only the 2nd Defendant shall be entitled to costs from the Plaintiff. It is so ordered. Judgment is delivered in court this 23rd day of August 2024 in the presence of Advocate Benson Mhango for the 1st Defendant also holding brief for Mr. Mapembe Mhyiwala, learned Advocate for the Plaintiff. 23/08/2024 25