20151216 TZHC Dar es Salaam

,,. .,J•.:•,, ,.· ,# ,- , - ,. ... IN THE HIGH COURT Of TA.NZANIA (DAR ES SALAAM DISTRICT REGISTRY) AT DAR ES SALAAM CIVIL CASE NO 43 Of 2008 SAVINGS AND FINANCE COMMERCIAL BANK L.IMITED. ■ ■ ■ ■ ■■ ■ ■■■■■■■■■ ii• ■■■■ 11 ■·■ ■■ ■■ ■ ■ ■■ ■• ■ ■ ■ ■ ■ ■ ■■ ■ ■ ■ 11 ■■■■■■■ a ■■■• 11 m - •11 • ■ • r 11iwPLAINTiff . . VERSUS RHINO HOMES LIMITED ................................ ......... 1 5T DEFENDANT JAMES PETER RUGEMBE ....................................... 2No DEFENDANT 17/11&18/12/2015 JUDGMENT MWANDAMBO, J: In this suit the Plaintiff, abank duly licenced to carry on banking business in the country has instituted a suit for recovery of Tshs 560,020,320/06 from the Defendants said to have bee-n paid by rnistake on diverse dates between 14th June and 8 July, 2005. To put the record in its proper perspective, the suit was filed in the name of Savings and Finance Bank Limited but it subsequently changed its name to NIC Bank Tanzania Limited vide certificate of change of name No. 2.5848 issued by the Registrar of Companies on 5 October 2010 and filed in court on 6 August 2012. The facts relevant to this judgement are. fairly straight forward. The 2nd Defendant was at all material times a Managing Director of the 1st Defendant and in that capacity he (the 2nd Defendant) was a signatory to two bank accounts opened on behalf of the 1st Defendant with the Plaintiff 1 .; ... ,. at its branch in Dar es Salaam. It is alleged that on three different , ~ I ~ -' occasions, the 2nd Defendant presented three cheques drawn in the 2nd Defendant's favour by two different drawers. The first cheque is ..said to have been drawn by A&K Holdings. from Standard Chartered Bank; · shoppers Plaza Branch in Dar es Salaam for an amount of Tshs. 289,000,000/=. The other two cheques are shown to have been drawn by-· . Apex Promotion from CRDB Bank, Kijitonyarna Branch,· for Tshs 172,458,000/= and Tshs 98,562,320 respectively. It is to bfinoted that the said cheques are said to have been presented through cheque deposit slips annexed to the plaint. According to the evidence of PWl supported by a bank statement of the 1st Defendant ( exh. Pl) the Plaintiff credited the · -proceeds of thethree cheques to the 1st Defendant1s account and c-in the - process, -the 1st Defendant was allowed to withdrav,r mon_ey from that account. through the 2nd Defendant. The withdrawals were j byway . cash and bankers cheques and by 8th July 2005, the Defendants appear-to have .- . . exhausted the proceeds of the three cheques-·presehted for payment by the 2nd Defendant. Although the pleadings as well as the evidence tendered do not show if the said cheques went through the normal clearing process, it occurred ' - later that the true owners had reported to their respective bankers that the · cheques went missing and thus the said banks stopped payment. As a. result, the drawers' accounts were not debited with the amount shown in the cheques and thus the Plaintiff did -not obtain credit of the cheques - which· she could credit to the 1st Defendant's account. Since the 1st Defendant had already parted with the proceeds of the cheques, the 2 I\, Plafntiff could not reverse the entries in the account and hence the suit for recovery of the said amount together with interest and costs. The Defendants did hot file their written statements of defence within the prescribed time following service and their attempts to file them out of time were put to rest by my brother (Amour, J) in his ruling delivered on 15 December 2014. · That ruling resulted in the Plaintiff being allowed to prove its case ex parte. Perhaps it is not completely out of the way to mention in passing that hearing started with Hassan Rashid Singano (PW1) befo;re Amour ;J who for compelling reasons could not finish the trial and · hence the i-eass1gnn1ent to me. During:hearing,· the Plaintiff produced three witnesses namely; Hamis Rashid:.singano (PWl), Donata Severin {PW2) and Godfrey Nim~od Sigalla (PW3). PWl testified· as an Assistant Credit Manager of the Plaintiff and prodtjced a bank statementjexh. Pl} whereas PW2 and P\N3 testified on .. • ' - L~ behalf of CRDB Bank and Standard Chartered Bank respectively, Each of the two witnesses tendered in evidence letters said to have been written to the Plaintiff 9n 25 and 29 July 2005 respectively informing· the latter of their: decision to stop payment of the cheques following report by ttieirtrue ~ . . . . owne~s. that they went missing. The court admitted the tvvo letters as . exhibits P2 and P3 respectively. · ,In his closing submissions, Mr. Pascal Kamala, learned Advocate for the Plaintiff invited the• court· to enter judgment as prayed because the Plaintiffs had pr_9ved case on the required standard. The learnedAdvocate submitted that the 1st Defendant through the 2nd Defendant obtained credit which did not belong to it and withdrew money·from the account out of 3 ':";,•"' ~ . .. - ;~ ·, ·,· - ~'. .... ... - ,, : . , credit which was fraudulent following report by the true owners of the cheques that the same had been stolen .. Upon examination of the evidence tendered, there is no dispute that the Plaintiff accepted the cheques in question presented by the 2nd Defendant on behalf of the 1st Defendant for collection and once cleared, . the proceeds of the cheques would. be. fredited to thel st: Defendant's· · account for utilization. However, as indicated earlier, there lsno evidence to prove that the Plaintiff caused the said cheques to be cleared in the normal ' clearance process before crediting the 1st Defendant's Account with the proceeds thereof. Needless to say, was the Plaintiff precluded from demanding recovery of the money from its customer upon discovery. that the 1st Defendant had. no_ title: to the -credits~ by way of~ proceeds·from the· fateful cheques? I will answer that ques~ion shortiy_; _-·• _ The question I have posed was consider~d- fH:Kl dealt with by _the · Court of Appeal in 51/ayo· V. CRDB {1996} ltd [2002J IE A 288 and accepted as sound principles of law dey~loped .., ..... ..... . .... .by E:rmlish -- - - courts beginning · .. __ . with the absolutist approach in Kelly V. Solami [1841] 9M and W54 and - subsequent developments in Akeyjna_ :V. Fairbairn l.avvson Et"c Limited [1943] 32 and WestdeustcheLandesba_nl<_ Gizorentrale V.. Islington London Borough Council [1966] 2 All. ER 96L on the right to recover .money paid under mjstake. Discussing - - - the point further, the Court of . ~· Appeal stated: " .. .In practice ,t is perfectly in order to credit a customer's ~ccount with . amounts in un cleared cheques, Just as it happened in the instant case. 4 . ._, . -.~ •··. ... ~ .. Should the cheque be subsequently dishonored, the banker is entitled to reverse the entry and ask the customer to obtain a replacernent cheque; in other word~ the amount entered in the customer's- . account does not irrever_sibly accrue until the completion· of the clearing process: Ellinger andLomnicka Modern Banking_ Law 1994 at --335. It is therefore recognized-that mere crediting · ofa customer's account does not give· value to the cheque, nor does it, without more, indicate that he is permitted to draw against the unclear_ed component of the balance: Al Underwood Lim[ted V . Barclays Bank (1924) .1KB 775. But- _should the banker represent to the custorner, either expressly or by conduct that he might treat the n1oney a_s f?is· own, -or negligently fails to discharge his duty to the customer, as to lead the customer to change his ·position and act to his detriment~ the- banker will . - · not be· permitted to recover 1noney paid under a · mistake.... 1' (atpage 293) It.- is glaringly clear in this_ case that th_e Plaintiff credited the 1st Defendant's A~~ount with the _amounts on LJncleared cheques and - . ·' permitted her to withdraw but that in itself did not preclude the ~laintiff from seeking recovery of the amounts withdrawn following discovery that the cheques_ in question could_ not be paid after the true owners had reported their losses. Of course the Plaintiff is not ~ntirely free from blame 5 in the whole process but as discussed by the courts in Kelly V. Solari {supra} and Akeyjna II.Fairbairn Lawson Etc Limited (supra) negligence or recklessness on the part of the bank does not entitle the Defendant to unjust enrichment. Gladly, there is no defence in this case to the effect that the 1st - Defendant was entitled ·to the proceeds of the · cheques notwithstanding the defect in title thereto. In the circumstances, I am satisfied that the Plaintiff was entitled to recover the money paid to the 1st Defendant by way of a- suit as it has done following failure to reverse the entries into the customer's accou_nt. Acco_rdingly, judgment must be and is hereby entered for the Plaintiff against the 1st Defendant as prayed io -the plc!int.. As for_ tt"!e) nd Defendant, · it is clear that he was the Managing Director cum signatory of the account - but that in itself did not make him_ per~onally lia~~e in_ a, contract between the Plaintiff and the 1 st Defendant. In the absence of any evidence . ····- - - -to link the 2nd Defendant with- that contract _I vvo~ld be h~sitantto find tiim liable. -- In the upshot, the_r~ will- be judgment _agaii::ist~the 1~~t Defe0dant for the amounts indicated in the plaint_witl1 cost~._- L.J.S MWANDAMBO JUDGE_ - - . - ·.: 16/12/2015 Delivered in court in the presence of Ms Esther Njau _Advocate holding for Mr P. Kamala the Plaintiff this 18th day of December 2015. 6 ?~~'.~i~~:,:3;~~~~-'.~~~~r~§~:_:,:\~'-i.;7!~'t;;fr;:;t···='!. ijf~r:,;: ' '"'~"1'·:':;~'5:• "fi.:~~,:~·· ·--;c·'•; ,.~::;-?;:;·,~ ,- {;_· · .;~-~:x,~: 't-. ":!<F~.:. - ,~":!:!"- ., ,. .r .. ...;._;..,.. ~., .I ..... \ L.J.S MWANbAM!130 f _,_ JUDGE -tlj't.\ .,..l ;., ,-, •- .. ,'..,:;;.. • :o> • t ..... p ),,~ ·\,:"\.,, ... .,. ., It .... .- "'· ..... -. ~- :,,~; .' ,, .. ..; ~' I.{~'. ,;1 ,.._- ':,,lq,,..-fft (, ;;l .·t,I .' , . · ... -·- ,,•·..- ... <,·•.:•-:· ..... ·. 7