20201116 TZHC Dar es Salaam

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (DAR ES SALAAM DISTRICT REGISTRY) AT DAR ES SALAAM CIVIL CASE NO. 70 OF 2016 SETH FUEL (T) LIMITED COMPANY................................ PLAINTIFF VERSUS ALIOS FINANCE (T) LIMITED ....................................... DEFENDANT JUDGEMENT Date of last Order: 03/11/2020 Date of Judgment: 16/11/2020 MLYAMBINA, J. The Plaintiff herein is described as a private Limited liability Company duly incorporated under the laws of the United Republic of Tanzania. The Defendant is also described as a Limited liability · Company duly incorporated under the laws of the United Republic of Tanzania. According to the plaint, the Plaintiff's claim is that, sometimes on the 23 rd October, 2014 the Plaintiff and the Defendant herein entered into written vehicle lease agreement under lease No. TZ 14 CB 1070 and TZ 14 CB 1080 for a lease finance facility of 214,000.80 USD for four Sino truck make Howo and 94,000.00 USD for four 40 FT flatbed semi-trailers respectively which were secured by the leased assets, assets comprehensive insurance-AFZ as beneficiary payee, 35 postdated Cheque of 3,032.43 USD each dated the 15th day of the month 1 for the monthly installment and personal guarantee from the shareholder. It was pleaded that it was one of the crucial conditions of the lease agreement relating to the facility that the lease term and monthly rental shall be valid for 36 months commencing from 23 rd October, 2014 to 23 rd October, 2017, payable at a rate of 84,329.87 USD including VAT as 1st installment and thereafter at monthly installment of 10.035.44 USD for the duration of the lease. · It was further pleaded that in compliance to the lease term the Plaintiff paid the 1st installment at a tune of 84, 329.87 USD · inclusively VAT and thereafter proceeded to remit the monthly installment as agreed and by 06/01/2016 the Plaintiff had remitted the monthly rental at a tune of 34,898.51 USD. The pleading reveals that while the executed vehicle lease agreement was yet to expire, on 05 th January, 2016 the Defendant without any legal justification impounded two of the leased vehicles to wit truck with Reg. T505 DEC, Trailer No. T 602 DEB and truck No. T 514 DEC Trailer No. T. 757 DEB. This act amounted to illegality and the particulars of the illegalities are as follows: 2 a) The Defendant in the first place is in breach of the lease agreement due to the fact that the motor vehicles in question were delivered late for eight months against what was agreed while the Plaintiff had already paid the initial deposit and no explanations were offered to the Plaintiff. b) The impoundment is uncalled for as the Plaintiff up to the time the motor vehicles were impounded by the Defendant he had paid USD 119,227.00 which is 1/3 of the loan sum hardly within five months from the date the motor vehicles in question were handed over to the Plaintiff. c) That, there was no any default notice issued by the Defendant to the Plaintiff prior to the impoundment of the two leased vehicles. d) That, among the impounded two leased vehicles out of four were handed over to the Plaintiff of 30/06/2015 that is Eight months lapsed after the execution of the vehicle lease agreement against the lease term. Copies of the insurance cover note/certificate to that effect are hereto annexed and marked as annexure NCA3. e) That, the Defendant impounded the two leased vehicles in contravention of the rules of law as there existed notice to the Plaintiff as agreed in the lease agreements. 3 f) That, the Defendant impounded the two leased vehicles while the executed agreement has not expired as the same is due to expire by 23/10/2017. It was the Plaintiff case that from 05 th January, 2016, to the date of filing the suit, as a result of the said unlawful impoundment of the two leased vehicles, the Plaintiff company whose among other business deals with carriage of goods and/or transportation services has suffered considerable loss of income in the sum of TZs. 120,000.000/= calculated at the rate of TZs. 40,000,000/= per very month from the date of impoundment (that is 05/01/2016 to the date of filing this suit (08/04/2016). The loss goes on until Judgment is pronounced, as the Plaintiff had on the 10/12/2016 and 16/12/2015 executed contract of carriage as between Transport Services with Luvena Logistics Ltd and Simama TZ Co. Ltd respectively. The Plaintiff pleaded that the above said two contracts have not been fully executed because of the Defendants acts of impounding the vehicles, and still the other remaining two vehicles are head hunted by the Defendant with a view of making forcible impoundment. The relevant copies of the said contract for carriage of goods to that effect are also annexed hereto and marked as annexure NCA4 (a) and (b) to form part of this plaint. 4 WHEREFORE, The Plaintiff prays for Judgment and Decree against the Defendant for the following relief(s): a) An order that the act of the Defendant to impound the leased two vehicles is unlawful and uncalled for and the said two impounded vehicles are to be released. b) An order for payment of TZs. 120.000,000/= being loss of income as prayed for in paragraph 8 of this plaint. c) An order for payment of TZs. 40,000,000/= per every month being continuing loss of income from the date of filing the suit till judgment and thereof till released of them pounded vehicles. d) An order for payment of general damages to be assessed by this Honourable Court. e) Interest on (d) and (e) above at the rate of 25 per month from the date of filing the suit till Judgment. f) Payment of interest on the decretal sum at the Court rate from the date of Judgment until full payment. g) Costs of the suit. In response, the Defendant denied the claims and raised a counter claim against (1) Seth Fuel (T) Ltd, (2) Seth Ngowo, (3) Halima Peter and (4) Peter Rodrick Ngowo. The claim against the 2nd , 3rd and 4th Defendants was based on the personal guarantees 5 'i under which they committed themselves to assume obligations and responsibilities of the 1st Defendant in the said vehicle lease agreement in case of failure. WHEREFORE, the Defendant in the main case prayed for the dismissal of the main case with costs, and the Plaintiff in the counterclaim prays for Judgment and Decree against the Defendants in the counterclaims as hereunder: a) Declaration that the 1st Defendant has branched the terms and conditions of the vehicle lease agreement concluded between her and the Plaintiff to the counterclaim herein; b) Declaration that the 2nd , 3rd and 4th Defendants have· breached the terms and conditions of the guarantee contracts concluded between them and the Plaintiff to the counterclaim herein; c) An order compelling the 1st Defendant in the counterclaim to disclose the location of the leased vehicle (s) and surrender it to the Plaintiff in the counter claim within a specified time frame; d) An order for payment of the outstanding debt of USD 49,708.72 (USD Forty Nine Thousand Seven Hundred Eight and Seventy Two Cents) being specific damages. 6 e) Interest on ( d) above at the commercial rate of 25% from the date when the debt became due to the date of Judgment; f) Interest on decretal sum from the date of Judgment to the date of full settlement of the outstanding debt; g) Payment of general damages; h) Any other relief that this Honorable Court may deem fit and just to grant. At the commencement of hearing the Court framed three issues: 1. Whether the Act of Defendant to impound two vehicles was lawful. 2. Whether the Act of Plaintiff to remove the trackers was lawful. 3. To what relief (s) are the parties entitled. In proving the main suit, and defending the counter claim, the Plaintiff brought only one witness Peter Lodrick Ngowo (PWl). The Defendant and counter claim Plaintiff brought two witnesses namely Yohane Focus Sunguya (DWl) a recovery Manager of Alias Finance (T) Ltd and Irene Lemmy Maganigani (DW2) recovery Officer of Alias Finance (T) Ltd. 7 On oath PWl testified inter alia that he leased vehicles of the Defendant. He leased four vehicles Howo made. It was a 36 months contract running from 23/10/2014 up to 2017. PWl testified further that he made down payment of USD 38129 but if other costs are included the total was USD 119227. The offer letter, vehicle leasing agreement dated 23/10/2014 between Seth Fuel (T) Ltd Company and Alias Finance Tanzania Ltd and a letter of personal guarantee were admitted as ( Pl) collectively. Up to the above point, there was no dispute on whether the Plaintiff and the Defendant entered lease agreement of vehicles. The same is backed up with (s P2) collectively and (P3) collectively which are another offer letter and receipt evidencing payment of USD 38, 129, 87. According to PWl the contract allowed him to start repaying the - loan on December, 2014 after the agreement was signed on October, 2014. It was further testified by PWl that he started business on July, 2015 after he paid for insurance and Sumatra costs. But on January, 2016 the Defendant took back (re-called) their two vehicles. At another point, PWl testified that he was supposed to 8 start repaying the loan from September, 2015. Each month USD 10,000. PWl went further to admit that he never repaid for the month of October, 2015 and November, 2016 even he had no receipt evidencing payment in September, 2015. It was again admitted by PWl that he repaid only USD 4000 for the month of December, 2015 and USD 250 for the month of January, 2016. In the right of the above testimony of PWl there is a clear admission from the Plaintiff that he defaulted to repay the loan for not less than three months. As testified by DWl, and proved by the repayment schedule (D3), it appears correct that the Plaintiff defaulted to repay from the second installment. The Plaintiff was even paying below value especially for the month of December, 2015 leading to the accumulation of the debt at the tune of USD 185,000 for all leased trucks. It is under testimony of DWl that after default, the Defendant repossessed the two pairs of trucks and trailer. Now to answer the first issue, the Plaintiff has alleged that clause 13:7 and 13 ( 4) of the lease agreement required the Defendant to issue notice of which the Defendant did not comply with. On the other hand, the Defendant has argued that clause 13. 1 (i) 13.2 of the lease 9 agreement ( Dl) clearly gives a right to the Defendant to make repossession of assets without notifying the Plaintiff in case of nonperformance of under takings on the part of the lessee. Thus, amongst the basic undertakings of the lease is for the payment as shown in D3. In the final written submissions, the Defendant cited the case of Exim Bank (Tanzania Ltd) v. Dascar Ltd and Another, Civil Appeal No. 92 of 2009 Court of Appeal of Tanzania in which it was held: ... the liabilities of surety to a loan agreement would not be discharged because of the creditor's failure to issue a default notice to the principal debtor promptly unless the contract specifies the time within which the creditor is required to do so. Undoubtedly, the position equally applies to the principle debtor. .. I have had time to go through the lease agreement, in particular clause 13.1 (i), 13.2, 13.4, 13.6 and 13. 7. The said clauses read: 13.1 The lessor will be entitled to terminate the lease in any of the following circumstances. i) If any stipulation or undertaking on the part of the lessee herein contained shall not be performed; or 10 13.2 Then in any of the said cases the term shall forthwith terminate without any notice or other act on the part of the lessor and notwithstanding that the lessor may have waived some previous default or matter of the same or a like nature it shall thereupon be lawful for the lessor to retake possession of the equipment and for that purpose to enter into or upon any premises where the same or any part of the same may be and if such premises be locked the lessee will unlock the same upon any request by any servant or agent of the lessor and if the lessee does not upon such request immediately unlock such premises or is not present then the lessor will be entitled ( any the lessee shall be deemed to have authorized the lessor) to unlock the premises or take any other reasonable steps ( whether forcible or not) to obtain entry but such termination and retaking or possession shall not prejudice or affect the right of the lessor to recover from the lessee the rental or such part of it as shall then remain outstanding and unpaid or to recover from the lessee any other moneys including any arrears of the rental due to the lessor under the provisions of this agreement or damages for the breach of any such provisions. 11 13.3 In addition to the return of the equipment the lessee shall pay to the lessor all costs damages to any other property and expenses whatsoever which the lessor may have incurred or for which it may be liable in exercising its power of retaking the equipment 13.4 Any unexpired portion of any licence duty or insurance premiums in respect of the equipment shall be the absolute property of the lessor without any payment therefor. 13.5 The lessor may also on giving twenty four hours notice in writing to the lessee terminate any other leasing or agreement which may have been entered into between the lessor and the lessee and may exercise the lessor's powers under may other such leasing or agreement as if the lessor had the right to terminate such leasing or agreement by reason or a breach of the terms of this agreement. 13.6 The right to terminate this agreement shall only be exercisable by the lessor and in no case shall this right accrue to the lessee. 13.7 If the lessee defaults on rent due to a term, or working to remover, destroy or alter in any manner whatsoever the geolocation device installed on the leased vehicle, and after a 12 do notice to the lessor notified him by all means with written proof of corrections within 8 days had no effecc the contract can be terminated and the equipment must be returned Upon termination of a lessee who fails to return equipment to the lessor must pay the compensation provided for in paragraph 2 of article 13 of this contract. Though it is not much clear on the question of notice, clause 13.6 specifically points out that the right to terminate the agreement is to be exercisable by the lessor only. The lessee has no such right. It follows therefore that, the Plaintiff having defaulted to repay the loan, the Defendant lawfully impounded the two vehicles. As regards the second issue, PWl denied to had removed the car truck device for lack of such knowledge. The Defendant on the other hand have no knowledge where are the assets. Having gone through clause 13.7 of (Dl) it is evident that the Plaintiff had a duty to notify the Defendant in writing. Contrary to such requirement, the Plaintiff remained silent. I therefore find that the Plaintiff cannot be exempted from liability of illegal removal of the trucks because the vehicles are still in his possession despite the fact that the agreement expired in 2018. 13 It is also in record though DW1 and DW2 that one of the truck leased to the Plaintiff got accident but the Plaintiff did not notify the Defendant contrary to clause 7 of (Dl). It is clear from the evidences that the contract between the parties had four Howo truck and four trailers. Two trucks were sold by the Plaintiff, two truck got accident and one truck got damaged. Therefore, one truck and two trailers are still with the Plaintiff and the loan has accrued up to USD 185,000. In the premises of the foregoing, the Court do hereby find the main suit lacks merits. Accordingly, the following orders · ar.e issued: 1. The main suit is dismissed with costs. 2. The counter claim is granted with costs as here below: i. It is declared that the 1st Defendant breached the terms and conditions of the vehicle lease agreement concluded between him and the Plaintiff in the counter claim. ii. It is declared that the 2nd 3rd and 4th Defendants in the counter claim breached the terms and conditions of the guarantee contracts concluded between them and the Plaintiff to the counter claim. 14 I • iii. The Defendant in the counter claim to surrender the leased remaining vehicle to the Plaintiff in the counter claim within 21 days. 1v. In the alternative to order (iii) above, the 1st Defendant in the counter claim to repay the outstanding debt at the tune of USO 49, 708. 72 (USO) Forty Nine Thousand Seven Hundred Eight Seventy Two Cents being specific damages. v. The first Defendant in the counter claim to pay interest on (iv) above at the commercial rate of 25% from the debt became due to the date of Judgment. vi. The 1st Defendant to pay interest of 12% on decretal sum from the date of this judgment to the date of full settlement. 15 Judgment pronounced and dated 16th November, 2020 in the presence of Counsel Elia Mwingira for the Plaintiff and Yassin Maka for the Defendant. MLYAMBINA JUDGE 16/11/2020 16