scaniat ltd vs msae investment ltd 2005 tzhccomd 7 3 june 2005

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT DAR ES SALAAM COMMERCIAL CASE NO. 87 OF 2003 SCANIA TANZANIA LIMITED.................. PLAINTIFF • VERSUS . MSAE INVESTMENT LIMITED................ DEFENDANT Counsel: Mr. Mwakipesile for Plaintiff Mr. Magesa for Defendant . Date of final submissions: 16 May 2005 Date of judgment: 3 June 2005 JUDGMENT Dr. BWANA, J: Facts: 1. Both the plaintiff and Defendant are limited liability companies incorporated in Tanzania under the Companies Ordinance, Cap 212. The Plaintiff deals mainly in Scania vehicles, spare parts and offering of garage services. The defendant on its part deals in passenger transportation business. The parties have been in business relationship for over ten years whereby the plaintiff used to sell SCANIA buses to the defendant as well as selling spare parts and offering workshop services. It is claimed by the plaintiff (but denied by the defendant) that the spare parts and workshop services were provided on credit. The defendant avers that it paid cash. 2. It is also avered by the plaintiff that in order to facilitate smooth business transactions the parties hereto agreed to open an account in the name of the defendant (Account No.4120955) to be maintained by 1 the plaintiff. Therefore all invoices in respect of spare parts and related workshop services provided to the defendant on credit were to be posted into the said account as soon as the same would have been raised. 3. It is, however, claimed that the defendant stopped servicing the account from December 2002 at a time when the account showed a debt balance of Tshs.293,691,072/50. The plaintiff therefore prays for judgment and orders compelling the defendant to pay the said sum plus interest and costs of this suit. 4. It was avered by Carl Henrik Folke Orrling, the only witness for the plaintiff (PW1) that in order to resolve their differences, the parties met and drew up a Memorandum of Understanding - Exh Pl - wherein the defendant did admit the indebtedness to the tune of shs.293,691,073 and promised to pay. However the defendant never honoured its promise and PW1 had to cancel it. The legal ■ consequences of such cancellation are contested. I will have, therefore to rule on what I consider to be the right interpretation. 5. The defendant admits to have had business relationship with the plaintiff since 1994. It also admits to have purchased scania buses, spare parts and enjoyed workshop services from the plaintiff. However all these were paid for, with the exception that some invoices, spares parts and workshop services were given on credit. The defendant denies the sum claimed by the plaintiff. 6. The defendant had filed a counter claim but it was struck out (per Kimaro. J) during the early stages of this suit. Three DWs testified namely Wilbard Mtenga, DW1; Kweyambah Quaker, Dw2 and Ngiana Seth, DW3. 2 Issues 7. The following four issues were framed for the determination of this Court - 7.1. Whether there was an agreement between the plaintiff and defendant for the plaintiff to provide to the defendant vehicles, spares parts and workshop services on credit. 7.2. If yes, whether the plaintiff provided the said spares and services to the defendant to the tune of shs.293,691,072/50; 7.3. If yes, whether the defendant has failed to pay the same. 7.4. To what reliefs are the parties entitled. 8. Before I examine the foregoing issues, there is need to make some observations that came up in the course of-this trial and draw conclusions. I find it necessary to do so because it is clear before me that there was an attempt to ignore the long established rules of procedure. This is particularly notable on the part of the defence case. 8.1. Primary among these observations is the issue of a counter claim. The defendant had raised the same in its Written Statement of Defence but the same was struck out by a ruling of this court ( per Kimaro,J) dated 5 December 2003. However in the course of trial . attempts were made by the defendant to reintroduce in evidence issues that made up the counter claim. Counsel for the plaintiff strenuously objected to that attempt and, rightly so. Once an issue has been struck out, it ceases to be part of the pleadings. As a consequence thereof, an issue which is not part of the pleadings 3 cannot be taken in as part of the evidence for it is ultra petita. Only intra petita issues are relevant. Thus claims of fraud, deceit as well as attempts to set off some of the claims, are all but ultra petita. 8.2. Having struck out the counter claim, the Written Statement of Defence was left with general averments which do admit many of the plaintiffs claims. 9. It should equally be noted that during trial, there were attempts by the defence case to introduce into evidence documents that had not been annexed to the pleadings or discovered in terms of the provisions of Orders XI and XIII of the Civil Procedure Code. Such attempts were resisted by the plaintiff side and rightly so. It is a settled principle that rules of procedure should be respected and complied with at all levels of proceedings. Therefore having failed to annex/attach documents that the defendant considered to be important to its case, it could not do so during the trial stage. 10.1 . Further, it is important to note that the role and place of Closing (or final) submissions in a case is to assist the court in highlighting certain key issues that came up in the course of trial. Such highlights could be on either point, of law or of facts. It became evident however, in the instant case that parties - particularly the defence side - introduced new facts cum evidence in the course of their final submissions. Submissions are not - to be brief - part of the evidence upon which a court has to rely when making its findings. 10.2 . Related to the foregoing is what appears to be a procedure cum steps taken by Mr. Wilbard Mtenga, DW1. He prepared and filed a rejoinder to Mr.Mwakipesile’s Written (final) submissions under the 4 pretext that his counsel - Mr. Magesa - could not do so as he was out of Dar es Salaam! To the best of my knowledge filing of final submissions is in the exclusive domain of Counsel, where a party has one. What Mr. Mtenga did is not only a novel approach but also in the course of so doing, he introduced issues which are ultra petifa, hence un acceptable. Again in the scheduling order for final submissions dated 15 April 2005, the issue of “filing a rejoinder” was not considered and therefore not ordered. For the foregoing observations, the rejoinder filed by Mr. Mtenga, is struck out in its entirety. Determination 11. Now, was there an agreement between the parties for a credit arrangement? Although all the three DWs in essence deny the existence of such an-arrangement, still the following facts indeed do show that a credit facility did exist. First, is the pleading. Paragraph 7 of the Written Statement of Defence does state (in reply to para 7 of the plaint): “ the contents of paragraph 7 of the plaint are admitted only to the extent that there are some invoices for spare parts and services supplied to the defendant...” One has to observe the well rooted principle of law that parties are bound by their own pleadings. Subsequent denials of what is pleaded is not only an after thought but also an attempt to dislodge a truth presented in court as evidence which the adverse party considers not to be in favour of its case. 5 12. Further to the foregoing observation, I do note that all witnesses do admit that Account No.4120955 was opened in order to facilitate the defendant pay the outstanding debt. So services rendered on credit were posted on this account as reflected in the Account Statement, Exh P2. That account had been opened following an agreement between the management of the two companies who are parties to this suit. The said account was kept by the plaintiff, the service provider. I consider that to . ..... . be a proper procedure. The defendant makes sweeping allegations that Exh P2 is a fraud, misleading statement. I am also made to believe (by perusing through the DWs evidence) that the defendant herein has filed a case at the High Court main registry challenging the validity of the contents of Exh P2. This step was taken following the striking out of the.counter claim. Be that as it may, in so far as this case is concerned, it is evident that Exh P2 clearly spell out invoices raised by the plaintiff for services rendered to the defendant. It is therefore a valid document which confirms that the defendant did, indeed, receive services from • ....... - - ■ . . . the plaintiff on credit. Therefore the answer to the first issue is in the affirmative. 13. Were the spares and services rendered to the defendant worth the sum of shs.293,691,072/50 as claimed? It is the defence case that all outstanding debts have been liquidated through the workers transport agreement, Exh DI. The following evidence needs to be considered. 13.1. According to the Memorandum of Understanding signed by PW1 and DW1 on behalf of their respective companies (Exh Pl), the following - ....... - - . . _ contents of paragraph 1 are self explanatory: 6 “ 1. It is acknowledged by Mr. Wilbard Mtenga (Managing Director ofMsae Investments Ltd) that a total debt of Shs.293,691,073 is payable by the company to Scania Tanzania Limitedfor various workshop services and parts purchased on credit from Scania Tanzania Limited”. The above acknowledgement is sufficient proof of the existence of that debt. Other subsequent paragraphs of Exh Pl show how the said debt would be liquidated through an arrangement agreed upon by the parties. 13.2. It is also not in dispute that the said Memorandum of Understanding was eventually terminated. It is PW1 ’s evidence that it was terminated because of the non performance on the part of the defendant. That averment is not controverted. However what the defendant avers is that since that Memorandum of Understanding was terminated (or revoked) by the plaintiff unilaterally, then it should not be relied upon in this case as it is void. With due respect, this is a misrepresentation. There is no evidence on record to show that PW1 decided to terminate the validity of Exh Pl because of irregularities on the face of it or other factors that may make it appear to be void or voidable. There is uncontroverted evidence, as stated above, that Exh Pl was terminated by PW1 because the defendant failed to honour its part of the obligations. That was proper - as is the case in all contracts. The said termination therefore does not render the contents of such a document void. If anything, it tends to support an averment that the defendant failed to honour what it had committed itself to do. Therefore, the defendant’s commitment in para 1 is clear admission that it acknowledges the existence of a debt of shs.293,691,073/-. The 7 contents of both Exh Pl and P2 confirm that the plaintiff did provide spare parts and service worth shs.293,691,073/- to the defendant. 14. Has the defendant failed to pay the same? That is the crux of the issue. It is my view that the defendant has made part payment of the debt. That part payment was made in the form of provision of transport services to the plaintiffs staff. The other part payment may be described as being in the form of buses surrendered to the plaintiff. 14.1. It is not in dispute.that the parties entered into a staff Transport • Agreement (Exh.Dl) whereby the defendant was to transport the plaintiffs staff. The latter was to pay - on monthly basis upon the former being invoiced. Instead of paying directly to the defendant the same was to be credited to the account as Exh DI states: “ ..regarding paragraph 3 of the above letter, we would like to state here that your monthly invoice will be credited to your workshop account...” Therefore the transport agreement was invoice related. The immediate issue for determination then is - did the defendant raise all the invoices for the 55 months that the Agreement is said to have been in force? The defendant says that it did. However that is disputed by the plaintiff. Exh P2 shows invoices for 21 months only. The defendant did not produce proof of other invoices to cover the remaining 34 months. It is correct that the Account was kept and managed by the plaintiff. However, there is no evidence to suggest that the defendant was denied access to the said account. What, therefore, seems to have happened is that since the defendant did not invoice the plaintiff for the 34 months, the latter was not under obligation to pay for services rendered, if any. It is also 8 possible that for the months that invoices were not raised, no transport services were rendered. However for the months invoiced, the total sum raised should be deducted from the shs.293,691,072/50 claimed. That total sum is given as being shs.79,935,664/-. It should be deducted, leaving the sum owing to shs.213,755,408/50. 14.2. Related to the transport agreement, the parties had also agreed that the defendant surrender 10 of its buses to the plaintiff. The latter was to pay the former shs.20m/- per bus. Paragraph 2 of Exh Pl has it all. It states: “ 2. It is hereby agreed betw een Mr. Mtenga on behalf of Msae Investments Ltd on one part and Scania Tanzania Limited on the other that the former shall repay the debt outstanding by selling 10 of his vehicles, as per tax invoice number 0853 dated 15 December 2002 annexed to this memorandum at a price of Shs.20,000,000/- VAT inclusive for each vehicle. The total value of the invoice is shs.200,000,000/- to be credited to the the account of Msae Investments with Scania Tanzania Limited...” It is not in dispute that out of the ten buses, only three were delivered to Scania Tanzania Ltd/Rental arrangements and other related issues, followed. The value of the three buses released is shs.60m/-. Those three buses were not returned to the defendant after the termination of Exh P1. Therefore their value should also be deducted from the money owing, that is shs.213,755,408/50 minus shs.60,000,000 = shs. 153,755,408/50. That sum 9 of shs.153,755,408/50 is, therefore, still outstanding, in favour of the plaintiff. 15. In conclusion, judgment is entered in favour of the plaintiff to the extent shown herein. The defendant is ordered to pay the plaintiff the following:- ... . . 15.1. The sum of shs. 153,755,408/50 being the principal debt still outstanding. 15.2. Interest at 7% per annum from the date of filing of this suit until the date hereof. 15.3. Interest at 7% per annum on the decretal sum from the date hereof until its payment in full. / 15.4. Costs of this suit. / Dr. S. iXanfi JUDGE / 3/6/2002 / 2,498 words 10