samwel george mhina vs justine ernest massawe another 2012 tzhccomd 61 12 march 2012

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION)

AT DAR ES SALAAM COMMERCIAL CASE NO 118 OF 2011 SAMWEL GEORGE MHINA................................... APPLICANT

VERSUS JUSTINE ERNEST MASSAWE.................... 1s t RESPONDENT VIOVENA AND COMPANY LIMITED........ 2n d RESPONDENT

RULING BUKUKU, J. In his Chamber Application filed under a certificate of urgency, made under the provisions of Order XXXVII Rule 1(a), Order XLIII Rule 2 and Section 95 of the Civil Procedure Act, Cap33 R.E 2002, the applicant, Mr. Samwel George Mhina, through his learned counsel one Frank Mwalongo, is seeking in this court, for the following Orders:- EX-PARTE (i) That the Honourable Court be pleased to make a finding that sufficient grounds exist to dispense with the notice requirement. (ii) That the Honourable Court be pleased to issue an interim order to restrain the first and second respondents or their agents, servants, Page 1 of 16 assigns or whomever will be acting under their instructions or authority from processing and applying for transfer of Plot No. 135 Block D Sinza Kinondoni Dar Es Salaam from the Applicant to a third party pending hearing and determination of the application for temporary injunction inter parties. (iii) That the Honorable Court be pleased to issue an interim order to restrain the first and second respondent or their agents, servants, assigns or whomever will be acting under their instructions or authority from evicting the Applicant and his family from Plot No. 135 Block D Sinza Kinondoni Dar Es salaam and Plot No.137 Block D, Sinza Kinondoni Dar Es salaam pending hearing and determination of the application for temporary injunction inter parties.

INTER PARTIES (iv) This Honourable Court be pleased to make an order of temporary injunction to restrain the first respondent and second respondents or their agents, servants, assigns or whomever will be acting under their instructions or authority from processing and applying for transfer of plot No.135 Block D Sinza Kinondoni Dar Es salaam and Plot No.137 Block D Sinza Kinondoni Dar Es salaam from the applicant to a third party pending hearing and final determination of the suit. (v) This Honourable Court be pleased to make an order of temporary injunction to restrain the first respondent or their agents, servants, Page 2 of 16 assigns or whomsoever will be acting under their instructions or authority from evicting the applicant and his family from Plot No. 135 Block D Sinza Kinondoni Dar Es salaam and Plot 137 Block D Sinza Kinondoni Dar Es salaam pending hearing and final determination of the suit. (vi) Costs of this application be provided for by the Respondents. (vii) Any other orders as this Honourable Court deems just and fit to grant. On 29th of December 2011, when the parties came for necessary orders before this court, the Applicant was represented by Mr. Mwalongo Advocate, the First respondent was represented by Mr. Ringo Tenga Advocate, whilst the second respondent was absent. The first respondent's counsel brought to the attention of this court that, they were

served with the documents around 6pm in the previous day before the date of mention (meaning on 28th of December 2011) and that, given the nature of the chamber application and the contents of the plaint, the learned Counsel prayed to be given two days to lodge an objection on jurisdiction, since his client was not sure if at all this is a commercial case. Learned Counsel for the applicant did not object the prayer for adjournment as he conceded to have served the 1st respondent belatedly at 6pm after having found their offices closed. However, Mr. Mwalongo informed this court that as the matter stands, the applicant is in the Page 3 of 16 danger of being evicted from the premises any time, and that, there is a danger of processing the transfer of the demised properties. Under such circumstances, Learned counsel for the applicant prayed for an order to have the status quo ante to be maintained pending hearing of the chamber application or any objection that might be raised before the court, so as to ensure that, the matter is not pre empted. This prayer was vehemently opposed by Mr. Tenga, Learned counsel for the first respondent who stated that, the competence of this court is to only hear and determine commercial cases as stipulated under GN. No. 96 of 2005, and that, the definition of a commercial case does not include land cases, and therefore, restraining the first

respondent is not fair. However, he submitted that, his client is ready to maintain the status quo so that the jurisdiction point may be argued within the shortest possible time. In a short but considered note, I granted the prayers of both counsels. First I ordered that the status quo be maintained to preserve the rights of the parties pending the determination of the chamber application, and second, I granted the respondent to present the objection and the counter affidavit and set the hearing of this application to be on o5th January, 2012 When the matter came for hearing on 5th of January 2012, Mr. Tenga, informed this court that they have complied with this court's order, by filing the counter affidavit and a written statement of defence as ordered and that, they have received the reply of the same. In his written Page 4 of 16 statement of defence, the 1st respondent's counsel filed also a notice of a preliminary objection on three points of law which basically touches on the issue of jurisdiction of this court to try this matter. The preliminary objection raised by the first respondent's counsel contained the following points:- (a) That this court has no jurisdiction in this matter as the facts pleaded in the plaint and the reliefs sought seek to annul the disposition by way of sale by the defendants of secured landed properties to a third party not impleaded herein. (b)

That in an interlocutory application lodged in this Court the plaintiff seeks the protection of the court for his continued occupancy and protection from eviction from the said landed properties, matters within the exclusive jurisdiction of the Land Courts. (c) That the plaint is bad in law for not disclosing facts showing that this court has jurisdiction to try the suit. Referring to the facts pleaded in the plaint and the reliefs sought therein, counsel for the 1st respondent submitted that, this court has no jurisdiction to hear this matter as the facts pleaded are in regard to sale of landed properties to a third party who is not impleaded. Secondly, the interlocutory application lodged in this court for seeks protection of the court for the applicant's continued occupancy and protection from eviction from the said landed properties. These are matters of exclusive jurisdiction Page 5 of 16 of the land court. Thirdly, learned counsel for 1st respondent further submitted that, the plaint is bad in law for not showing facts that this court has jurisdiction. According to the learned counsel, it is trite law that parties to a suit are bound by their own pleadings. Issues raised in the plaint usually guide their own pleadings. He referred the court to Para 4 of the plaint which summarizes the cause of action sought by the plaintiff and Para 13 of the said plaint which he says

summarizes three major reliefs, which clearly demonstrates that the plaintiff seeks to protect his landed properties from disposition. Submitting further, Mr. Tenga, said that, the powers of the Commercial Division of the High Court are as outlined in the High Court Registries (Rules) 2005, where the term "commercial case" is defined. It is his averment that, the commercial division has jurisdiction to hear commercial cases of which the jurisdiction is not exclusive, meaning that, the general registries can also he^r commercial cases, which it is not the case with land cases. To support what his submission, he made reference to a Court of Appeal Decision in the case of Bagamoyo District Council V. A/S NOREMCO Construction, CA No. 60/2008, where it was held that, the jurisdiction given to a land court over land matters is exclusive, thus arguing that, land matters averred in the plaint should be handled by the land court. Mr. Tenga also cited the case of Ubungo Spinning Mills V. National Bank of Commerce Ltd, Commercial Case No. 63/2009, where Makaramba, J. held that matters relating to mortgages are a matter squarely falling within the jurisdiction of the land court. In Page 6 of 16 the same vein Mr. Tenga made reference section 3 of Cap 216, The Courts (Land Dispute Settlement) Act which gives exclusive jurisdiction to land courts and also section 18 of the Mortgage Finance

Special Provisions Act, 2008. Mr. Tenga went on to submit that the position as in the Ubungo Spinning case (supra), is similar to this case at hand, and thus this court has no jurisdiction to hear the matter. He surmised further that in the counter affidavit filed and sworn by the first defendant, it is clearly stated that there was a loan advanced to the plaintiff/applicant in June 2009 and that the plaintiff/applicant deposited two title deeds for the property, the applicant pre signed transfer forms to the property and the transfer forms are attached but the plaint is attached with the loan agreement. Further that at clause 6(1) of the agreement the properties are listed, that while the applicant is denying to have authorized selling the properties and that there was no mortgage agreement the first respondent is insisting that it is not true, therefore the first respondent's counsel submitted that since this case involves securing landed property for purposes of securing a debt it is a case for the land court to decide and hence he prayed the application should be struck out with costs for want of jurisdiction. Mr. Mwalongo, Learned counsel for the applicant, started by noting that the counsel for the 1st respondent has not addressed the court on the third point of preliminary objection, and on that base, he prayed to abandon submitting on it. He then went on to submit that

the Commercial Page 7 of 16 Division of the High Court is an optional court for commercial matters without exclusive jurisdiction, and that the term "commercial court" is defined in the High Court Rules 2000 and in the Magistrates Courts Act, 1984 as amended by Act N. 4 of 2000. Submitting further, Mr. Mwalongo, made reference to the submissions by the counsel for the first respondent on a number of decisions putting distinction between land matters and commercial matters. He asserted that the said distinction became important after the establishment of the land division of the High Court but before that, land issues with commercial significance were entertained by this court. He cited the cases of Dhow Mercantile EA Ltd v PSRC, Commercial Case No 7/2003 and Njake Ltd v Tanzania Sewing Machines Co. Ltd, Commercial Case No. 42/2003, where in both cases, land matters were entertained by this court because the land division was yet to be established. The Counsel went on to submit that the distinction between commercial and land matters came when the land division was established, and that all decisions cited by Mr. Tenga were made at the time when the lands division and commercial division were all operative which is not a fact now after coming into force of the Written Laws (Miscellaneous Amendments), Act No. 2 of 2010. This Act amended Section 167 of the Land Act thereby

replacing the lands division with the High Court. Furthermore Mr. Mwalongo, submitted that in the unreported cases cited by the first respondent's counsel, the dis-establishment of the land division was not captured hence the distinction between commercial and Page 8 of 16 land matters becomes irrelevant. He further averred that, both in the chamber application and the plaint there is no mention of a mortgage deed executed but he is at one with counsel for the respondent in that, the main subject matter was a loan agreement between the applicant and the first respondent of T.shs 100, 000,000 which was secured by depositing title deeds and that being the case, Mr. Mwaolongo submitted that since the dispute leading to the auction of two landed properties arises from the loan agreement between a lender and a borrower it makes this matter a commercial matter and thus this court has jurisdiction to determine the same. With regard to the second point of objection, learned counsel for the applicant submitted that, the jurisdiction of the court is determined by looking at the plaint and not the chamber application, that once jurisdiction is established by the plaint, the plaintiff has a right to seek for interlocutory orders so that the subject matter may not be pre-empted. Concluding, the applicant's counsel submitted that, having found that, Act NO. 2/2010 dis­ established the Land

Court Division of the High Court, the chapter on distinction of commercial and land matter is closed hence he prayed that this court should overrule with costs, the three preliminary objections raised. In rejoinder, Mr .Tenga submitted in short that the first respondent's counsel did not address the second point of the preliminary objection on cause of action. He went on to say that in para 4 of the plaint, the Page 9 of 16 applicant should have stated that the matter is a commercial case. He further submitted that, despite the dis-establishment, the lands division is still there. What has been done is extending the hearing of land cases to all judges of ordinary registries of the High Court. Moreover, Mr. Tenga submitted that there is no recent authority cited by the counsel for the applicant showing that a land case can be brought in this court. He then challenged the applicant counsel's submission that, this is a case of debt not land by referring to the earlier cited case of Ubungo Spinning (supra), saying that the same case also involved a debt on landed property. Concluding his rejoinder submissions, counsel for the first respondent submitted that, this court has no jurisdiction and that the case of Ubungo Spinning is binding, and therefore, the preliminary objection should be sustained and the matter be struck out with costs. Having summed up the submissions by both

parties to this application, what I have gathered is that, the preliminary objection raised in this matter is intended to show that this suit is not maintainable for the very reason of lack of jurisdiction. Almost all arguments on this point by counsel for the 1st respondent can be summarized as follows: 1. That, the instance case is not of a commercial significance as provided under R. 2 of the High Court Registries (Amendment) rules, 2005 (GN No. 96/2005) Page 10 of 16 2. The prayers are based on mortgage and therefore the only proper court with jurisdiction is the Lands Division of the High Court.

3. That, the interlocutory application lodged in court seeks to protect the applicant from eviction from the said landed properties, and this is a matter of exclusive jurisdiction of the Lands Court. Now, we turn to the analysis of the arguments. I will therefore start with the issue of jurisdiction, which simply defined, means legal competence. It may be determined or defined based on territorial limits, statutory or monetary limits. As defined in the Black Law Dictionary (9th Edition) at pg. 927, the powers of the court to inquire into facts, apply the law and make decisions/ declare judgment. Section 7 of the CPC deals with jurisdictions of courts. It reads:- S.7(l) " The court shall (subject to the provisions herein contained (have jurisdiction to try all suits o f a civil nature excepting suits o f which their cognizance is either expressly or impliedly barred" S. 7(2)" No suit shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby, and the court may make binding declarations o f right whether or not any con sequential relief is or could be claimed. Page 11 of 16 Under the judicial hierarchy of this country, the High Court (of which the commercial court is part of) is the only court of unlimited jurisdiction. When it comes to matters of a commercial nature, the powers of the commercial division of the High Court are as

outlined in the High Court Registry rules, GN No.96/2005. Section 2 of the rules defines a commercial case as a civil case involving a matter considered to be of commercial significance, which may include but it is not limited to:- (i) Formation of a business or commercial organization; (ii) Governance o f a business or commercial organization; (Hi) Contractual relationship o f a business or commercial organization with other bodies or person outside it; (iv) Liability o f a commercial or business organization or official arising out o f its commercial or business activities; (v) Liabilities o f a commercial or business person arising out o f that person commercial or business activities; (vi) Retracting or payment o f commercial debts by or to business or commercial organization or person; (vii) The enforcement o f commercial arbitration award; (viii) Enforcement o f awards o f a regional court or tribunal o f competent jurisdiction made in accordance with a Treaty or Mutual Assistance arrangement; to which the United Republic is a signatory and which forms part o f the law o f the United Republic; (ix) Admiralty proceedings; and (x) Arbitration proceedings. Page 12 of 16 However, the above categories enlisted under rule 2 defining what a commercial case is are not exhaustive as amply portrayed by the opening paragraph and thus a presiding judge has discretion to determine

whether or not a case is of commercial significance or not. Arguing on the two points of the preliminary objection, the first respondent's counsel argued that, this court has no jurisdiction given the facts pleaded in the plaint, reliefs sought and the nature of the interlocutory orders sought, he went further to submit that Para 4 of the plaint discloses the cause of action and Para 13 discloses three major reliefs sought and to him, it is dear that the plaint seeks to protect the landed properties from disposition hence, this is a land matter which is not within the jurisdiction of the commercial court. He stressed that the land court has exclusive jurisdiction citing the cases of Bagamoyo District Council and Ubungo Spinning (supra). On the other hand the applicant's counsel stressed that the exclusiveness of land's court over land matters has long been taken away by coming into operation of Act No 2 of 2010 and thus the position now is such that, the Lands Division no longer enjoys the exclusive jurisdiction it had. As far as jurisdiction of this court is concerned, I think I need not task myself much. It is not disputed that, under section 167 of the Land Act (Cap 113 RE 2002) and section 3 an 37 of the Land Dispute Courts Act (Cap 216 RE 2002), jurisdiction in land disputes was vested in Land Courts and Tribunals. However, as rightly submitted by counsel for the

applicant, this exclusivity has been taken away by the coming into force of The Written Laws (Miscellaneous Amendments), Act No. 2 of 2010 which Page 13 of 16 amended section 167 of the Land Act thereby replacing the Land Division with the High Court. In other words, the exclusivity once enjoyed by the Land Court on matters pertaining to land has now been transferred to the High Court. Moreover, in terms of section 18(a) of the Mortgages Financing (Special Provisions) Act, 2008, which amends section 140 of the Land Act (Cap 113 RE 2002), the jurisdiction of the Commercial Division of the High Court over commercial mortgages is undoubted. Applied to the instance suit, I am of the considered view that, this dispute fits well in the definition of a commercial case. One can say, this was purely a business contractual relationship between the applicant and the 1st respondent. This is confirmed in para 4 and 5 of the written statement of defence, of the 1st respondent where by he admits that, the 1st respondent and the applicant had entered into two separate loan agreements, with the same terms and conditions and that, the purpose of the loan was to help the applicant complete a building project he was constructing on Ocean Road, Dar Es Salaam, for the Prime Minister's office. Thus, the underlying transaction which gave rise to this suit is a loan agreement which in all purposes and

intent was of commercial significance, and hence falls under item V of section 2 of the High Court Registry rules, GN No.96/2005. The terms and conditions of payment of the loan are irrelevant. What is relevant is the commercial aspect of the transaction which gave rise to the main suit. Under such circumstances, I thus hold that, the dispute before me being commercial in nature it is legally before this court. Page 14 of 16 At this point, I need not task myself into the other issues raised by counsel for the applicant with regard to whether there was a proper mortgage or not, or whether the transfer of the mortgaged property to a third party was proper or not. I leave this part to be contested at the hearing of the main suit. At this juncture, I do not see the importance of determining the second preliminary objection due to the reasoning used to reach the answer for the first preliminary. Since the learned counsel for the first respondent did not specifically submit on the third ground of the preliminary objection, I will also disregard it, after all it will not serve any purpose to having found that this court has jurisdiction. In totality therefore, the preliminary objection dismissed. I find that this court has no jurisdiction to determine the issue since it I find it to be of commercial significance. The preliminary objection is thus struck out with costs. It is accordingly ordered.

JUDGE 12 March, 2012 Page 15 of 16 Ruling delivered this 12th day of March, 2012 in the presence of Mr. Tenga Learned Counsel for the 1st Respondent, also holding brief of Mr. Mwalongo, Learned Counsel for the Applicant

JUDGE 12 March, 2012 Word Count:3,646 fge 16 of 16