SARRCHEM INTERNATIONAL T LTD VS GJ LTD COMM CASE NO

1 IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA COMMERCIAL DIVISION AT DAR ES SALAAM COMMERCIAL CASE NO. 139 OF 2023 SARRCHEM INTERNATIONAL TANZANIA LIMITED....................... PLAINTIFF VERSUS GJA LIMITED......................................................................... 1st DEFENDANT BAUTECH COMPANY LIMITED............................................. 2nd DEFENDANT JUDGMENT April 24h, 2024 & June 7th, 2024 Morris, J This one is a default judgment. The plaintiff sued the defendants above claiming several reliefs on allegations that the latter are in breach of three agreements in phases. It is alleged by the plaintiff that each of the defendants concluded a separate sale agreement with him before the trio executing a tripartite contract between them. He claims further that whereas each defendant breached his respective sale agreement, the 1st defendant breached the tripartite agreement. Accordingly, the plaintiff's reliefs are presented in the categorical alternatives. That is, he claims separate damages for either of the two sale agreements or, in alternative, 2 demands compensation on the three-party agreement which combines the first two agreements. To be precise, I will paraphrase the foregoing alternative claims. For the alleged breach of the sale agreements between him and the 1st and 2nd defendants respectively, the plaintiff prays for the Court's declaration that the former are in breach of the terms and condition of the subject agreements. In alternative to such relief, the plaintiff claims for orders against the 1st defendant for payment of USD 12,744.00 (eq. TZS 29,311,200; and the 2nd defendant for USD 26,748.28 (eq. TZS 61,521,044); payment of 2% interest per month against both defendants from the date of cause of action to the date of filing this suit; 25% annual interest against them from the date of filing the suit to the date of judgment; general damages; 12% annual interest from the date of judgment to full settlement of the decree; costs of the suit; and other reliefs at the Court's whims. The other alternate remedies are sought in relation to the breach of the mentioned tripartite agreement. The reliefs under this category are demanded against the 1st defendant alone. Principally, such reliefs combine the claims under the alleged breach of two sale agreements. 3 Hence, in addition to the other reliefs stated in the foregoing category, the plaintiff claims against the former for: a declaration order that the 1st Defendant is in breach of the tripartite agreement; and the order against him for payment of USD 39,492.28 (eq. TZS 90,832,244) which he allegedly undertook to pay in the subject three-party contract. The history of this case is straightforward. I will present it briefly as extractable from the pleadings. Around February 2021 and October 2019, the 1st and 2nd defendant purchased from the plaintiff, Calcium Carbonate MCMCarbl5T and plastic materials worth USD 12,744.00 and USD 33,585.75 respectively. They both signed applicable delivery notes and invoices upon receipt of the goods. However, none of them honoured the sale agreements by making the agreed payments. Consequently, the plaintiff engaged the lawyers to assist in recovery measures through serving the defendants with the demand letters. In response to such intervention, the defendants, who are affiliate/sister companies; acknowledged their respective debt the total sum of which was USD 39,492.28. In a bid to settling such obligation, the affiliate defendants executed a tripartite agreement with the plaintiff. In that agreement, the 1st defendant covenanted to settle the whole debt (his 4 and the 2nd defendant's) in weekly instalments of USD 5000.00 but did not heed accordingly. This suit is, thus, in pursuit of the plaintiff's alleged rights accruing from the accounted breach of contracts. Following his fruitless attempts to serve the defendants with the requisite summons, the plaintiff sought the leave of the Court to employ substituted service thereof. The Court granted him such prayer on December 13th, 2023. Subsequently, he published the summons in the Newspaper twice; on December 28th, 2023 and on February 29th, 2024. Copies of the affidavit of the court process server and newspapers were filed in Court to prove the plaintiff's efforts hereof. Nevertheless, the defendants did not appear or file their written statements of defence. In view of the above defendants' irresponsiveness, the plaintiff through advocate Robert Lawrence Mosi prayed to proceed to the next stage in the absence of the defendants as the statutory time for the defendants to file necessary proceedings had already lapsed. It was on March 21st, 2024. Further, relying on rule 22 of the High Court Commercial Division (Procedure) Rules, 2012; as amended by GN 107 of 2019 {the Ruled) the counsel prayed for leave to file the statutory Form No. 1 and affidavit within 14 days. The Court allowed him 5 accordingly and ordered that such documents were to be filled on or before April 5th, 2024. The plaintiff complied with the filing schedule set by the Court. Thereafter, he prayed for default judgment under the Rules. In line with the above procedure, the present suit was to be proved by the affidavit sworn by Eligius Michael, the plaintiff's principal officer. The same was sworn on April 4th, 2024 and filed before the Court the next day. Apart from reiterating the major averments in the plaint, the deponent hereof summarised the contractual relationships between parties; obligations of each side in the contracts; the circumstances leading to the breach of the contracts and the responsible person; the loss suffered by the plaintiff following such breach; the remedial orders sought from the Court; and the justification for each claim so advanced. Dispassionately, I have taken time to go through the affidavit in question. It is apparent that the Court should determine one primary issue: whether the plaintiff's reliefs sought in this suit are tenable at law. In essence, the deposed affidavit refers to several exhibits. These are, invoices and delivery notes (Pl & P3); plaintiff's bank statement (P2 & 6 P4); demand letter (P5); tripartite agreement (P6); and the plaintiff's board resolution sanctioning pursuit of this case. Before I determine the framed issue above, it is necessary for the Court to consider the legal basis for the mode of proof which has been adopted hereof. Hereof, I cite rule 22 (1) of the Rules to strengthen the reasoning given in this judgment. It provides that: - " Where any party required to file written statement of defence fails to do so within the specified period or where such period has been extended in accordance with sub-rule (2) of rule 20, within the period of such extension, the Court may, upon 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 plaintiff1 (bolding rendered for emphasis). From the above excerpt, the fundamentals of the rule are fivefold. One, the eligible party to file the defence must have failed to file the same in time. Two, service of the summons to such person must be proved. Three, the plaintiff must move the Court. That is, the present modality cannot be adopted or raised suo motu by the Court, for example. Four, the plaintiff's application must be in Form No. 1 of the Rules. Five, the 7 subject Form must be accompanied by the affidavit proving the plaintiff's claims. Indeed, whereas the first four elements are easy to satisfy by the plaintiff, the strengths and merits of his case are determinable on the basis of the affidavital depositions. The foregoing position is also covered at length in various cases. In mind, I have the cases of Alaf Limited v Ummy Hashim Kazungu, Commercial Case No. 120 of 2022; Nitro Explosive (T) Ltd vs Tanzanite One Mining Ltd, Commercial Case No. 118 of 2018; and A- One Products & Bottlers Ltd v Techlong Packaging Machinery Ltd & Another, Commercial case No. 105 of 2017; (all unreported) in this regard. In this case as alluded to earlier in this judgment, the defendants did not file their respective written statements of defence. From the record, the court process server affirmed a set of affidavits on December 7th 2023 to the effect that the defendant's whereabouts were unknown and their phone numbers were not going through which prevented personal service of summonses. Further, the plaintiff published the summonses twice and filed the proof thereof. Hence, as the service was effective in law, the first two elements from the quoted rule have been 8 satisfied. Moreover, the Court was moved by the plaintiff to proceed with the matter on ex-parte basis. The third fundamental is satisfied. The plaintiff also filed Form No. 1 and the affidavit to prove his claims. Thus, all the statutory tenets are covered herein. That said and done, I now look at the affidavit to establish whether or not the claims have been proved by the plaintiff according to the law. It is apparent that the amount claimed by him in this suit are also reflected in the exhibits stated above. Further, the defendants did not file any counter averments to contest any of the plaintiff's assertions. This court finds that the sale agreements between the parties herein were valid and binding. In law, parties to an agreement are cojoined to honour respective promises. This principle is also per section 37 of the Law of Contract Act, Cap 345 R.E. 2019; Simba Motors Ltd v Joh Acheiis & Sohne GMBH and Another, civil appeal No, 72 of 2020 (unreported); and Photo Production Ltd vSecuricor Transport£ft/[1980] 1 All ER 566. The foregoing position notwithstanding, the Court now embarks on determination of the suitable alternate reliefs sought by the plaintiff. As pointed out at the beginning of this judgment, the reliefs are based on the sales agreements and the tripartite contract. While the former 9 category is not problematic to me, the purported tripartite agreement calls for a dense analysis. I will explain. Firstly, a close look at the said agreement reveals two critical latent defects. At page 2, the date of the purported agreement is missing. That is, the first sentence simply indicates that the "tripartite agreement is made this........ day of August 2022". There is no insertion of the date on the space provided for the same. Technically speaking, none of the parties stated therein is certain of the specific date of such agreement in August 2022. Secondly, at page 4 (last page) thereof, the would-be binding agreement acknowledges that the parties executed it "on the date and year first herein above written". But the entire previous text does not bear any date as explained in point number one herein. Thirdly, on the same page (4), one of the parties did not sign and/or seal the so-called agreement. In other words, as opposed to the defendants herein who purportedly signed and sealed the document on August 30th 2022; their counterpart Sarrchem International (T) Ltd did not follow suit. All the blank slots thereon for him to write or endorse bear no content whatsoever. 10 It is not the rocket science for this Court to arrive at the conclusion that the purported document is not a contract in the legal context for want of perfection. In law, an agreement becomes a contract if it is made by competent parties'free consent; for a lawful consideration; with a lawful object; and is not outlawed expressly. That is the gist of section 10 of the Law of Contract Act(supra). Consequently, the document not signed can not be said to exhibit freedom of parties' consent or capacity, at the minimum. The foregoing deduction, thus, further leads the Court to answer if the reliefs sought on the basis of this document are tenable. Obviously, the response is an outright no. That is, in the absence of the valid contract (tripartite or otherwise); parties herein do not hold any rights or obligations in favour or against each other respectively. In consideration of the above findings and analysis, this Court is satisfied that the plaintiff concluded binding contracts of sale with each respective defendant; supplied the goods; and there is no proof that such goods were paid for by the defendants. On such basis, the Court finds that that latter breached the subject agreements by refusing or neglecting 11 to pay for the goods. Consequently, the plaintiff is found to be entitled to the outstanding amount of money due to him from the defendants. However, having concluded that the purported tripartite agreement was invalid, the plaintiff fails to justify the basis of his claim for interest during the pre-suit period. That is, he has not sufficiently demonstrated the efforts employed by him to make the defendants pay the debts. Nonetheless, on record is the demand letter from his lawyers. However, the same does not bear a manifest proof that it was served on any of the defendants. That is, there is no prima-facie evidence that supposed letter was received by the defendants. Accordingly, the plaintiff contributed to his plight herein. The same reasoning caters for the claim of the general damages. Both reliefs are hereby disallowed. This disallowance notwithstanding, the Court awards the plaintiff 7% interest on the decretal sum from the day of this judgment to full settlement of the decree; and costs of this matter. In fine, the issue raised in this judgment is determined in the affirmative subject to the limits specifically stated above. Hence, pursuant to rule 22 (1) of the Rules, this Court hereby enters a Default Judgment and Decree in favour of the Plaintiff as follows: 12 a) The 1st and 2nd defendant are held to be in breach of the respective sale agreement with the plaintiff; b) The 1st Defendant is ordered to pay the plaintiff USD 12,744.00 and the 2nd Defendant shall pay him USD 26,748.28; c) The defendants are hereby ordered to severally pay interest on the decretal sum at the court's rate of 7% from the date of this judgment to the date of full payment; d) Costs of this suit shall be paid by the defendants jointly. It is so ordered. Judge June 7th, 2024 13 Judgment delivered this 7th day of June 2024 in the absence of parties. C.K.K. Morris Judge June 7th, 2024