sao hill industries ltd vs nipo group ltd 2021 tzhccomd 3255 18 june 2021

IN THE HIGH COURT OF UNITED REPUBLIC

OF THE TANZANIA (COMMERCIAL DIVISION) AT DAR-ES-SALAAM COMMERCIAL CASE N0.80 OF 2020 SAO HILL INDUSTRIES LTD........ .PLAINTIFF VERSUS Z> NIPO GROUP LTD.... .........^....DEFENDANT XF tF DEFAULT aUDGMENT Date of Last Order: 3/05/202 Date of Judgement: 18/06/20211 NANGELA, J.: \ \ )}___y-' F^The>0aintiff herein sued the Defendant claiming (( frorrXthe latter, a total of TZS 940,554,800/- being outstanding purchase amount due and owed to the Plaintiff, inclusive of CESS paid on behalf of the Defendant, on account of the Plaintiff's supply of treated wooden poles to the Defendant. Page 1 of 18 For better clarity, I find it pertinent to reproduce the facts of this case. It is the Plaintiff's averment that, sometime in November 2019, the Plaintiff and the Defendant executed an agreement for supply of treated wooden poles. The Plaintiff was to supply such poles to the Defendant, a registered contractor under the Rural /> Energy Agency (REA) for rural elecW tatio^ppoject managed under the Tanzania. Energy Supply Company (TANESCO). Z \ (i)CTANESCO w asxtojssue acceptance Certificates ^with\a^ Local Purchase Order indicating the quantity o f poles needed and 5% CESS Agreed. (ii)-The Plaintiff would then issue a Pro-forma Invoice for value of poles and CESS payable within 30 days of issuance. (iii) The Plaintiff would then deliver the poles through road way transportation to the

indicated destinations by the Defendant, make payment of CESS on behalf of the Defendant to the local Page 2 of 18 district council which would then be reimbursed by the Defendant to the Plaintiff. (iv) Upon delivery, the Defendant was to initiate payment of the poles and reimbursement of CESS to the Plaintiff. (v) The Defendant had obtained guarantee within payment in form of Letters of Credit with numbers 241TBBL192390001 <^and 241TBBL19211001 issued by the^JM^ional, Microfinance Bank. . It has been averred thaMhe l^ intift performed its November 2019 and March 2-020 by supplying the required poles <ands paying_Jte/ requisite CEES payments to Mafinga'Town Council, which payments amounted to TZS;56;738,o6o/=7 \ W ie n ajl was done, the Plaintiff proceeded to issue the Defendant with invoices for the poles supplied. The invoices issued and their numbers were as follows: • SHI/2019 /November /NIPO/OOl, issued on 26th November 2019. • SHI/2019/December/NIPO/002, issued on 04th December 2019. Page 3 of 18 SHI/2020/March/NIPO/Ol, issued on 27th March 2020; and SHI/2020/FEBRUARY/CESS/001, issued on 12th February 2020. The above issued invoices were for a sum of TZS 1,395,754,800/= (including reimbursement of CESS amount which was paid on behalf of the Defendant.) On 13th January 2020 and 2 8 ^ ^ ^ ^ ^ 0 / t h e Defendant made part-payment of TZS 455;200;000/=. These payments, it is

said? ought to<haye been made since October 13th, 2019” and November 20th, 2019. It is stated that, as <p f4 9 t \Aygust_2020, the balance, which is a sum of T Z S 9 4 0 ,554,800/- remained outstanding. Vk ) /On?'25v';March^2020, the Plaintiff and Defendant executedjii™greement whereupon the latter committed to payXw ithin sixty (60) days, a sum of TZS 472,000,000 in full with 17% interest per annum, being an outstanding amount for treated wooden poles supplied to Mwanza Region on the order of the Defendant. Page 4 of 18 However, the Defendant failed to honour his obligations under the agreement as well. On 26th March 2020, the Defendant sent a letter to the NMB directing the Bank to cancel the Letter of Credit NO.241TBBL 192390001. The Defendant informed the Bankers that, the Defendant<has concluded an agreement with the Plaintiff and^te^e^^xo^that agreement was that, the Defendantxwas^going to pay an outstanding sum of TZS4472,000,000/.- for supply of \.x treated poles - a contract No.AE/008/2016- wooden \\ < / * / 17/HQ/G/10LOl>.6sMwarrare^ion for Rural Electrification Project. Mune^OZO, the Plaintiff wrote a letter to the (( Defendant Ref.SHI/2020/May/REA/02 to the Defendant providing a summary of the outstanding balance as being a total of TZS 940,554,800/. Several e-mail correspondences were initiated to follow-up the claims, but with no meaningful responses. Moreover,

the Plaintiff Page 5 of 18 served on the Defendant several demand letters, as well without success. Seeing that the Defendant has failed, refused or neglected to pay the outstanding balance, the Plaintiff instituted this case praying for judgement and decree as follows: <\ (i) A declaration that the Defendant has breached . \vs> the terms of the Purchase Agreement executed between the two parties. \ \ /> (ii) An order for payment of TZS<940,554;800/- as at 20th Augi2020, being. theXputstanding amount dueland owingxtoJhe/Plaintiff for the ZA \\ purchase, of Poles supplied/by the Plaintiff to the Xpples su p p lie d ^ (iii)^A^order for payment of an interest at j^rpmercial rate of 17% per annum on the *•— -principal amount from the date of default until the date of judgement. (iv) An order that the Defendant pay general damages to be assessed by the Court for breach of contract. (v) An order that the Defendant pay interest on the decretal amount at court rate of 12% per Page 6 of 18 annum from the date of judgement to the date of full satisfaction. (vi) Costs of this suit. (vii)Interest on costs at Court's rate of 12% from the date of judgement until payment in full. (viii) Any other order and relief as this honourable court may deem fit and just to grant. When the suit was called on for mention on 15th October 2020, Ms Sumaey Jaffer, ^ar^^^^dv^date appeared for the Plaintiff.

The,Defendantwvas absent. Ms Jaffer informed this Court/that, when theiDefendant was served with the Plaint,z the Defendant refused to receive the documents(,^manid^|jworn by the process server was filedjmcdurt as well.x since the Defendant was within the \\ \\ V twenty one £21) days in which a written statement of defence was to be filed, a prayer was made and granted to have the matter adjourned. I adjourned the suit and fixed it for mention in chambers on 3rd of December 2020. Page 7 of 18 On the appointed date, i.e., 3 rd D ecem ber 2020, Ms Jaffer appeared in Court. Since th e D efendant w as absent and no w ritten statem ent o f defence w as filed in court, Ms Jaffer prayed to serve th e Plaint to th e D efendant by w ay o f substituted service. She opted to do so d esp ite the fact th a t earlier the process server had fifed an affidavit Z> proving that, w hen th e docu m en t w as l^ a n ^ e d o v ^ to z th e D efendant a t first, the D efendant re fu sed 'to 're ceive it. w as published on D aily New s^ New spaper and Nipashe N ew spaper datea\LO th \D ecem ber 2020. Even^sb^when^the^suit w as called on 24 th February 2021^ tFfe;Defendant'w as absent and no defence w as file (( in Court. T h a t being th e case, M s Ja ffe r prayed to proceed under Rule 22 (1) o f the High C ourt (Com m ercial D ivision) Procedure Rules, GN 250 o f 2012 (as am ended by GN 107 o f

2019). I granted her prayer ordering th a t Form N o .lsh o u id be filed in Court. Page 8 of 18 Basically, if no defence is entered after the Defendant has been duly notified of the case pending in Court and fails to act, Rule 22 (1) of the High Court (Commercial Division) Procedure Rules, 2012 (as amended, 2019) gives a right to the Plaintiff to apply for a default judgement. Rule 22(1) provides as follows: "(1) Where any party required \ o z file written statement ofx defence-fails.tov do so within the specified period or where \ \ \> such ^period^as^beeji/>extended in ^a'ccordahce w ififibferule (2) of rule 20, x \ within^ieperiod^of such extension, the C o urtm ^ /jp o n proof of service and on Application by the plaintiff in Form No.l 'set out in the Schedule to these Rules accompanied by an affidavit in proof of the claim, enter judgment in favour of the plaintiff." On 9th March 2021, the Plaintiff filed Form No.l in accordance with the requirements of Rule 22 (1) High Court (Commercial Division) Procedure Rules, 2012 (as amended, 2019). The Form No. 1 filed in this Court was Page 9 of 18 filed together with an affidavit of one Godlisten Minja in support of the application for default judgement. As I stated earlier herein, there was sufficient proof that the Defendant was served, refused to acknowledge service and failed to appear in Court, even after the summons had

been served on the Defendant by way of a substituted service mode. On 23 rd March 2021, the Court, through a letter signed by Mr Godlisten./.MinjaAwas'-availed with all supporting o rig in a l^ ^ c^ rjie n t^ m e n tio n e d in the supporting a f f id / ^ t h h g ^ jp j je through the Form N o .l, the affida5/<^ ^ ‘d ^Uie^nginal documents availed to the Court^ft^itSlscrutih^ and satisfaction in proof of the (( \\ \> P la in t i^ d ^ jis . As once stated by this Court in the case of N itro E x p losives (T) Ltd v T a n za n ite O ne M ining Ltd, Com m . C a se N o.118 o f 2018 (unreported), the grant of a default judgement is made possible upon proof of the following, that: Page 10 of 18 (a) there is proof of service to the Defendant and that, such Defendant has failed to file written statement of defence and appear in Court; (b) the Plaintiff had made an application to the Court in the prescribed Form N o,l to the 1st Schedule to the Rules; (c) the said Form No.l is accompanied by an affidavit in proof of the claim. <X In the above cited authority, this. Court: emphasized "the affidavit in proof must bev self-"explanatory proving every claim in the plaint ancbthe exhibits must as well be authenticated and, that, the three ingredients must co- exlst<for^the jud^mentjn/favour of the plaintiff to be given^C \ \ I haVeMio'hesitations whatsoever, that, the Plaintiff in this

case\has\satisfied the above requirements. There are, irideefl/ all justifications for that. For instance, looking at the available evidence on record, as per the annexure to the affidavits which accompany Form No.l, which are also annexed to the Plaint, I find what the Plaintiff claims from the Defendant as an outstanding amount is TZS 940,554,800/. Page 11 of 18 As I look at the annexure to the affidavit, the original copies having been availed to me, I find no dispute that the Plaintiff did supply the wooden treated poles to the Defendant. There is also no dispute that the Plaintiff demanded from the Defendant payment?\ofthe said amount and the Defendant has ^aiJfeck refusecr or and e-mails attached to .the. affidavitalso make it clear that such demands Were made\Since the Defendant has V, not filed any defence\the claims remain to be what they arc- /<IrbSziewvof theabove, it is my findings that the Plainbffhasjproved its case to the required standards and, hence, is entitled to a default judgement, as well as some of the prayers sought in Form-No.

1. This is to say that; the Defendant is in breach of the agreement for supply of treated wooden poles which the Defendant executed sometime in November 2019. Page 12 of 18 In the prayers made by the Plaintiff, there is also a prayer for recovery of general damages from the Defendant for the breach of contract the parties executed sometime in November 2019. In our law, once it is established that there was a breach of a contract, the law has stipulated for the consequences that are to follow as3a>result\of/that <\ breach. In particular, section 73 ofxthe Law of Contract Act, Cap 345 RE 2019 d^es^ipulate'that, a party who suffers by such breachz is entitied'to>p'ayment of damages Z> or compensatignkThe.relevant provision provides as follows: / / \ \ 73.-(l) Where a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of Page 13 of 18 (2) The compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. (3) Where an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by

the failure to discharge is entitled to receive the same compensation from the party in d e f a u lt s if such person had contracted to discharge it and had broken his contract. * (4) In estimating the loss, or damage arising from a breach of contract;, the means which \ \ existed of remedying thejnconvenience caused by the non-performance^of tffejCpntract must be takenJnto account." As iVmay^be^noted 'ffom section 73(1) of Cap.345 << )L RE 201-9,.a'party-whozsuffered as a result of a breach of an l^ e e m e j t is y entitled to be compensated. These are such damages which naturally arose in the usual course of things from such breach. Legally speaking, the award of general damages may be made as a result of inconvenience suffered by the Plaintiff in the hands of the Defendant. In particular, for Page 14 of 18 the Plaintiff to be eligible for payment of general damages, the Plaintiff must have suffered loss or inconvenience to justify such an award. It is also worth noting, as a settled legal position as well, that, substantial physical inconvenience, or an inconvenience which is not strictly ^physical and discomfort caused by breach of contract^H^e^itl^the plaintiff to damages. See for instanc^the^ca^eof UCB vs Kigozi [2002] EA 305. Z t V V IU I L liU L I III III I I I \ l 4 v V V \-* V V-U j U l\— V |U V U U V I I /> that follows \s^how\mp^i^sbou/d be paid as genera! d am ag

es^ ^ ^ ^ ^ ^ ^ ^ XEssentialljZi^is'trite that, the quantum of damages to be, paid is) a matter for the discretion of the Court, which discretion, as it was stated in the case of Southern Engineering Company Ltd Vs Mulia [1986-1989] EA 541; has to be exercised judiciously. Looking at the evidence on record and the entire factual circumstances surrounding this suit, there is no Page 15 of 18 doubt that the Plaintiff suffered inconvenience as a result of the Defendant's breach of the agreement earlier executed by the parties. This means, therefore, that, the Plaintiff is entitled to be paid general damages. In my view, and taking into account the evidence on record and the factual circumstances of the case as>.a whole, a Z> payment of TZS 5,000,000/- as general-damagesz wiil be reasonable and, hence, justifiable, f'^wi if proceed to grant such an amount as g.eherabdamages? It follows, therefore, in termsrof Rule 22(1) of the (i) This Court declares that the Defendant has breached the terms of the Purchase Agreement executed between the two parties. (ii) The Defendant is hereby ordered to immediately pay the Plaintiff a total of TZS 940,554,800/-, being the Page 16 of 18 outstanding amount due and owing to the Plaintiff for the purchase of Poles supplied by the Plaintiff to the Defendant and refund of payment of CESS for poles supplied. (iii) That, the Defendant is ordered to

pay the Plaintiff interest at commercial rate of 14% per annum on the principal^1 amount from the date of default-until the date of judgement. (iv) The Defendant is hereby ordered^to pay-: general damages^to a C tu n e -o X T Z S 5,000,000 fonbreach of contract. " XX (v) The Defendant is hereby Ordered to pay /> \\ <2\X interest on the decretal’ amount at court x^ -rate o f s7% per^anfium from the date of x \x> judgement <Jto the date of full ^ X ^ tisfectio n . (yi). Costs of this suit. Furtherorders: (vii)That, in terms of Rule 22 (2) (a) and (b) High Court (Commercial Division) Procedure Rules, 2012 (as amended, 2019), the Court makes further orders that the decree emanating from this suit shall not be executed unless the Page 17 of 18 decree holder has, within a period of ten (10) days from the date of this default judgement, publish a copy of it (the decree) in at least two (2) widely circulated newspapers in the country and after a period of twenty one days (21), from the date of expiry of the said ten (10) days, has elapsed. It is so ordered. DAZED at DAR-ES-SALAAM 18th JUNE, 2021.

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