st meer investment co ltd vs asthana brothers 92 ltd 2 others 2005 tzhccomd 50 24 march 2005

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM COMMERCIAL CASE NO. 2 OF 2005 ST. MEER & TANZANIA INVESTMENT CO. LTD............. PLAINTIFF VERSUS 1. ASTHANA BROTHERS (92) LTD............................................. 1st DEFENDANT 2. CHINESE - TANZANIA JOINT SHIPPING........................... 2nd DEFENDANT COMPANY (SINOTASHIP) 3. AFRICAN LINER AGENCIES (T) LTD.................................. 3rd DEFENDANT RULING KALEGEYA, J: Mr. Mbwambo, Advocate, for 1st and 3rd Defendants has raised a preliminary objection to the effect that the Plaint is “incompetent and bad in law in as much as this Honourable Court is not seized with jurisdiction to entertain a claim whose monetary relief are in a foreign currency ”. At the sametime, the 1st Defendant raised a counter claim which Mr. Mbwambo urges that it is reflected in paragraphs 6 and 7 of the written statement of Defence running as under: - “6. Paragraph 9 of the Plaint is denied. The 1st Defendant avers that it paid the sum of US $. 7720for the value of the container and demurrage accrued. The First Defendant shall rely on Annexure JCC to the plaint which acknowledges receipt of US $7720 by the Third Defendant from the 1st Defendant, which the 1st Defendant had to pay on behalf of the Plaintiff as 2 guaranteed by the First Defendant as averred in Paragraph 4 of this Defence. 7. That by way of Counter Claim, the 1st Defendant claims for a sum of Tanzania Shillings equivalent to US $.7720, being the sum of money paid to the 3rd Defendant for demurrage arising out offailure to return container No. TRLU- 524193/9 on time, and replacement value for the said container. That this claim arose out of the failure, of the Plaintiff and the 2nd Defendant (who was the Plaintiff’s transporter), to return the container to the Third Defendant. The First Defendant in its capacity as the agent for the Plaintiff (as averred paragraph 4 of this Defence) had guaranteed safe return of the said container. ” The said written statement of Defence has 12 paragraphs excluding the prayers’ paragraph. Paragraph 8 - 12 do not make reference to the counter claim as such. On the counter - claim, apart from para.7, next elements thereof are in the prayers’ paragraph running as under: “WHEREFORE, the 1st Defendant prays for dismissal of the suit with costs, and prays forjudgment and decree against the Plaintiff in terms of the Counter Claim averred in Paragraph 7 hereof. ” Upon being served with the 1st Defendants’ written statement of Defence, Mr. Rutashoborwa, Advocate, in reply thereto, also raised a preliminary objection thus, 3 “...the Counter — claim raised by the 1st Defendant is incompetent and bad in law. The Plaintiff shall thus pray that it be dismissed with costs. ” Arguing on the said preliminary objections, Mr. Mbwambo, making reference to Continental Agencies vs. AC. Berril [1971] EA 205 and Manners vs Pierson & Son [1898] Vol. 1 Ch. 581 or [1898] All ER R 405, insisted that in Tanzania a party can only seek reliefs in Tanzania Currency and not in forex. Mr. Kilindu, Advocate, for the 2nd Defendants was on all fours with Mr. Mbwambo on this. Mr. Rutashoborwa, on the other hand, argued that the said cases did not bar a party from seeking reliefs in forex but that in giving judgment the Court has to pronounce them in Tanzania Currency. He added that even if this is found to be an error the Court can order amendment so that the reliefs be reflected in Tshs. On the preliminary objection he raised regarding the counter - claim, he insisted that a counter - claim being a separate claim it should have distinct paragraphs setting out grounds for the cause of action and not as what was done in 1st Defendants’ written statement of Defence. Citing Unta Exports Ltd vs Customs [1970] EA 648, he insisted further that even if it has properly been drawn up it cannot be considered as no fees were paid thereto. 4 In rejoinder, Mr. Mbwambo reiterated his main submission urging that the two cases referred to relate to filing of the suit and not simply on granting of reliefs. As to fee, he stated unchallengedly that fees were paid vide ERV No. 22360724 dated 28/2/2005 in the sum of shs.283,070. On how the counter - claim should be presented he insisted that O. VIII, Rule 9 does not provide any format. On 2nd preliminary objection, Mr. Rutashoborwa conceded on payment of fees but insisted that O. VIII CPC was violated. Now for the merits. I will start with Mr. Rutashoborwa’s preliminary objection on the format in respect of a counter - claim. With respect to Mr. Mbwambo, the provisions of O. VIII, Rule 9 (2) CPC are not cosmetic. I do appreciate that Rule 9 (2) does not come up with specificity on the format but its wording clearly requires the entitling akin to that of the Plaint. The same states: “(2) Where a counter claim is set - up in a written statement of defence, the counter claim shall be treated as a cross suit and the written statement shall have the same effect as a plaint in a cross suit, and the provisions of Order VII shall apply mutates mutandis to such written statement as if it were a plaint.” (emphasis mine) 5 Thus, being a cross suit it has to display all elements of a claim. I am fortified in this my finding, by the unchallenged observation of a learned author on pleadings, Odgers Principles of Pleading and Practice (21st Edition) at Page 200, wherein, commenting on a provision in pari materia with O. VIII, Rule 9 CPC, has the following: - “”A counterclaim is governed by the same rules of pleading as a statement of claim and the reply to it by the same rules as a defence. All the facts relied on by way of counterclaim must be numbered in paragraphs under the heading “Counterclaim ” so as to distinguish them from facts alleged by way of defence As it stands therefore, the purported counter - claim is not legally one deserving the title. If left as it is, it will not be considered at all by the Court in the process of adjudicating the controversy between the parties. Mr. Rutashoborwa’s preliminary objection on this stands upheld. Turning to the question of reliefs in Tshs and not forex, again, with respect to Mr. Mbwambo, and Mr. Kilindu, I am not convinced by their arguments. The Continental Agencies and Manners cases do not assist the Defendants. Why? Both clearly dealt with the question of reliefs at the stage when the claim’s had already been prosecuted. 6 They were dealing with the question, in which currency should the decree be executed. The ratio decidendi thereof is not that a claim fronted using a forex mode instead of a local currency is unlawful. Secondly, both cases were decided at the time when Forex was highly controlled both in England and in this Country. Under the respective Foreign Exchange legislations no forex could be paid out without the Treasury’s/Central Bank’s approval. Then, forex was very strictly controlled. In that situation, it would have been doing the impossible if Courts pronounced reliefs to be executed in forex as due to shortage of reserves such orders could possibly not be met by the states’ reserves even if permission was given, let alone the obvious that the Courts could not order for issuance of the requisite permission. The above situation however, has now, generally, been blotted the world over (save for few countries, of which Tanzania is not one of them) due to global liberalization. No permission of the Bank of Tanzania is any longer required for one to buy or sell a forex. It is no longer an offence to pocess a forex. Now, can common sense, in this situation accept the idea that all claims should be in local currency? The liberalization of business and transactions knows no boundaries of dealings between both individual persons and corporate bodies. Parties may decide to contract in forex. A party may have received the consideration in forex. Imagine a situation 7 where “A” knows that his neighbour “B” has forex in cash. “A” successfully secures a loan from “B”, in forex. They are agreed that “A” will refund in the very currency he took the money. Would, in this situation, in the event of default, be within the parameters of justice to force “B” to sue “A” for recovery of his money in local currency? Looking at it from the other angle, would courts do justice to “A” if they upheld “B” insistence, when deciding to pay on the agreed date, that he should simply pay in local currency and not the forex they contracted in? I should hurriedly observe that it is interesting that while raising hell and dust on a claim in forex by Plaintiffs, Mr. Mbwambo did the same in the purported counter - claim! In my considered opinion, the actual position should be as follows: - One, in a situation where parties contracted in local currency, the aggrieved party can only claim in local currency. Two, where however, parties contracted in forex, an aggrieved party can file either in local currency equivalent or in forex. If however, he files in forex, under liberalization, I don’t subscribe to the idea that when it comes to execution computation should be made in local currency, unless the decree holder so consent. A defaulting party has to pay in the currency contracted unless he manages to convince the other party otherwise. For reasons stated, Mr. Mbwambo’s preliminary objection stands dismissed while that of Mr. Rutashoborwa on counter - claim is upheld. 8 L.B. KALEGEYA JUDGE Delivered in the presence of Mr. Ogunde for Plaintiff, Mr. Kilindu for 2nd Defendant and Ms. Wamuza for 1st and 3rd Defendant. L. B. KALEGEYA JUDGE 24/3/2004 1,634 words