Stoki Joachim v Servictrade Security for costs

1

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA

COMMERCIAL DIVISION

AT DAR ES SALAAM MISC.COMM. APPLICATION NO. 18457 OF 2024 (Arising From Com m ercial Case No. 6835 of 2023 ) STOKI HAMIS JOACHIM………………………………………………. APPLICANT

VERSUS SERVICTRADE-SERVICES & TRADE LDA…….…………………… RESPONDENT

RULING February 25th, 2025 & April 4th, 2025 Morris, J This ruling is in respect of Mr. Stoki Hamis Joachim’s application for three reliefs against the respondent above. The applicant has moved the court to order the respondent to: furnish in Court USD 200,000.00 (or the sum it deems appropriate) as security for costs incurred and/or likely to be incurred by him in Commercial Case No. 6835 of 2024 to which he is one of the defendants; pay costs of this application; hold the respondent liable for other reliefs at the discretion of the Court. The application was preferred under Orders XXV Rule 1(1) of the Civil P rocedure Code , Cap. 33 R.E. 2019 (CP C ). In its support, Stoki Hamis 2 Joachim - the applicant, deposed and filed an affidavit. Nevertheless, this application was resisted by the respondent. A counter affidavit sworn by Victor Kikwasi, the respondent’s counsel was lodged in Court in opposition hereof. Briefly, as stated above, the applicant is the sixth defendant in Commercial Case No. 6835 of 2024 (the suit). Vide the suit, the respondent - a legal entity registered and headquartered in Portugal under registration number 514513926; sued six defendants (the applicant inclusive) claiming for, among other remedies, reimbursement of USD 2,100,000.00 allegedly paid to the latter as initial payment under the sale and collateral agreements between the parties in the suit

(elsewhere, the contracts). From the applicant’s depositions, apart from being a foreign company with no known offices or physical address locally, the respondent did not possess any property within Tanzania. Henceforth, in the event the suit was futile, the applicant would likely suffer irreparable loss arising from his resistance against the respondent’s claims. He however, did not specify the kind of costs so far incurred and/or likely to be incurred by him in the suit. 3 In opposition to the application at hand, the respondent’s counter affidavit indicated that the respondent was still operating or doing business in Tanzania. Further, that he had sufficient and/or genuine claims against the defendants in the suit such that the money claimed therein would suffice to offset any award of costs to the applicant should that need arise. Further, the respondent deposed that the claimed sum for security was excessive. Parties obtained the Court’s leave to argue for and against the application through filing written submissions. The applicant and respondent were respectively represented by Messrs. Emmanuel J. Mashamba and Victor Kikwasi, both learned advocates. The applicant commenced his submissions in support of the application by praying to adopt his affidavit thereto. He went on to argue that, the order for depositing security for costs despite being discretional is subject to

judicious conditions. The conditions were stated as upon the satisfaction of the Court that the plaintiff resides out of Tanzania and that he possesses not sufficient immovable property within the country other than the property in suit. To justify that the foregoing conditions existed in the present matter, the applicant argued further that it was evident that the respondent resides 4 outside Tanzania and does not possess any immovable property locally pursuant to paragraph 1 of the plaint in the suit. Likewise, the applicant asserted that the objective of requiring deposit of the security under discussion is to protect the defendant who may otherwise fail to recover costs of litigation when he successfully obtains such relief upon failure of the suit. Hereof, reference was made to the cases of Abdul Aziz Lalani v Sadru M agaji, Misc. Comm. Cause No. 8 of 2015; and Osm anli Building Centre Com pany Lim ited Vs Altas Yag Su Ve Tarim Urunleri Gida I nsaat Otom otiv Nakliyat Sanayi Ve Ticaret A.S, Misc. Comm. Appl. No. 81 of 2023 (both unreported). To the applicant, the amount claimed in this matter (USD 200,000.00) was computed basing on item 8 of the Nineth Schedule to the Advocates R em uneration Order , 2015 (the R em uneration Order ) which was well within the statutory 3% range. The claimed security amount, according to the applicant’s counsel, was inclusive of the costs

already incurred and likely to be incurred in defending the suit. To him, the claimed amount of security was reasonable, legal and justifiable. 5 In line with the above stated conditions, the counsel for the applicant argued further that, the respondent did not dispute the fact that she does not reside in Tanzania (paragraph 3 of the counter affidavit). That, it is not disputed that the respondent is incorporated in Portugal with no immovable properties in the United Republic of Tanzania. He thus, prayed for the application to be granted. In defence, the respondent prayed to adopt the depositions in the counter affidavit as part of his submissions. Then he argued that the applicant failed to establish with concrete proof that the respondent did not possess immovable property in the United Republic of Tanzania. Moreover, it was submitted that, in the absence of such proof, the security was not justified hereof. Reference was made to M oham ed I sm ail M urudkker and 2 Others v Fathia Bom ani , Consol. Misc. Land Appl. Nos.273 & 282 of 2022; and the R egistered Trustees of Tanzania P resbyterian Church v Jung Hw an Kim and Another , Misc. Civ. Appl. No.183 of 2022, (both unreported). The applicant also asserted that under section 110 of the Evidence Act , Cap 6, R.E 2022, the applicant was required to prove his allegations that the respondent was eligible for payment security

hereof. 6 The other respondent’s lines of combat were that the plaintiff- respondent had a valid and genuine claim against the defendants in the suit; and that in case the suit failed, the potential amount therein was undisputed by other defendants could be used to satisfy any costs of the applicant herein. Moreover, it was argued by the respondent that even if the security was to be ordered, the amount claimed by the applicant was unjustifiably excessive, exaggerated and disproportionate to the circumstances of the matter. In any case, such amount according to the respondent was not deposed in/proved via the affidavit. Hence, the amount was a mere applicant’s wishful afterthought which was submitted from the bar. Consequently, he prayed for dismissal of the application for lacking merit. The Court has considered the parties’ affidavits and their rival submissions in support and opposition of the application. The issues for determination are: whether the respondent is liable to deposit the security for costs in favour of the Commercial Case; and whether the quantum of USD 200,000.00 as security for costs is justified in the matter at hand. It is a common ground that the respondent is not a resident of Tanzania. Further that, while the applicant argued that the company does 7 not possess any immovable property in Tanzania, the latter contested on the basis that the applicant had

not proved his allegation. From the parties’ pleadings and submissions, it is overt that the centre of the serious controversy between them was on three pillars: the proof that the respondent was not in possession of immovable property locally; the allegedly amount in the suit was not disputed by the rest of the defendants thus it could be used in lieu of the deposit of the security; and the quantum of USD 200,000.00 claimed by the applicant as security for costs in the suit was excessive. As regard to the first pillar above, the respondent argued that it was upon the applicant to prove that the respondent did not possess immovable property in Tanzania. I have taken liberty to read the parties affidavits. Indeed, paragraphs 2, 3 and 6 of the applicant’s affidavit; and paragraphs 3, 4 and 6 of the counter affidavit by the respondent are the most relevant hereof. While the applicant expressly stated that the respondent had no property locally, the latter only noted the fact of being a foreign entity. According to the respondent, “the rest of the contents are disputed”. 8 The affidavit being sworn evidence; the argument by the respondent that there was a need for further proof is, with respect, misplaced. It is common ground that, unless otherwise contested, the depositions are taken to reflect the situation contained therein. To test veracity or authenticity of such averments,

where need be, the opposite party may move the Court to order the deponent thereof to be cross examined. In this matter, the respondent did not exercise such option. Further, paragraph 6 of the counter affidavit is technically suggesting that the respondent admits not having immovable property in the country. In the said paragraph, the deponent is answering the corresponding paragraph 6 of the applicant’s affidavit which asserted that the respondent has no immovable property in Tanzania. Hereof, the respondent partly discloses the ability of the respondent to use the prospective decretal amount in the suit to off-set the costs that may be awarded to the applicant herein. That is, if he had the requisite property that depositions would be reflected in the contention. The second pillar was that since the alleged amount in the suit was not disputed by the defendants would be used to cover costs of the applicant 9 if the suit were to fail. The respondent argument hereof is winding and self- contradictory. On the one hand he argued that the claims against the defendants in the suit were legitimate and tenable; on the other, he proceeded to suggest that in case the suit was unsuccessful in respect of the applicant, the sum not disputed the other defendants would recompense the applicant’s costs. It is not made clear by the respondent how the failed suit can generate money from which

to pay the applicant. The foregoing approach by the respondent is also not easy to affirm. To begin with, the alleged amount in the suit is not only movable but also subject of the dispute. The philosophy behind payment of security for costs is to ease the applicant’s subsequent recovery of costs after they are awarded to him against a foreigner. It is logical to me, that when orders for costs are given by the court, they are meant to be effectual. The beneficiary thereof must be able to recover such costs through taxation. If for the reason of geographical hindrance, the beneficiary applicant is unable to get access to his cost from a foreigner litigant; the court order thereof would achieve a cosmetic objective. 10 Further, the subject matter in dispute is excluded in the equation because at the end of the trial, the winner thereof may turn out to be the very party who applied for the security. As such, he would get his due rights (the property in dispute) but will not recover the attendant costs, should they be awarded to him. Applying such analysis in the present matter therefore, if the cargo were to be used in lieu of the security; and the outcome of the prospective suit is that the applicant is not liable anyhow, his chance to recover the costs (if any) would be nix. In addition to the cases referred to by the parties above, the Court is also guided by the holdings in

the cases of R ajiv Bharat R am ji v P ow er Generation M iddle East Fze , Misc. Civ. Appl. No. 37 of 2023; and P ravindchandra Girdharlal Chavda & 2 Others v Gopalji Vallabhdas & Another , Misc. Comm. Appl. No. 138 of 2023 to the effect that: the respondent must be residing outside Tanzania; and he who does not possess sufficient immovable properties in Tanzania other than the suit property. The above analysis in perspective, the Court finds that the respondent falls squarely in the conditions of eligibility to deposit the security for costs. 11 For clarity of arguments, the respondent is evidently a non-resident to Tanzania; and he does not possess sufficient immovable properties in this country. Even if the purported money in the suit (movable) was to be equated to the envisaged (immovable) property, as resolutely recommended by the respondent; it would fall short of the statutory excellence as it is the property in dispute. On this conclusive note thus, the first issue is answered in the affirmation. I now turn to the contention about the amount claimed by the applicant as adequate security for costs. According to the applicant, the amount claimed in this application was reasonable because it represented 3% of the liquidated sum of USD 2,100,000.00 claimed by the respondent in the suit. Nonetheless, respondent refuted this position by maintaining that, the claimed quantum

of USD 200,000.00 was unreasonably excessive. The above rivalry moves the Court to determine the appropriateness of USD 200,000.00 as security for costs in the matter at hand. Outrightly, the Court holds the firm view that, the suit is not for claim of liquidated sum. Fundamentally, through the suit, the respondent is seeking the Court’s order for breach of contract and sound necessary remedies. 12 As such, basis of the quantum of USD 200,000.00 purportedly being 3% of 2,100,000.00 is wanting. I ably recall that the Court has been invited by both parties to consider the claimed amount on the basis of the fees chargeable under the R em uneration Order . With adequate respect, I desist such invitation. I will state the reasons. Firstly, the present application is not a taxation matter. The ideals of the R em uneration Order are legitimately invocable during taxation proceedings. Secondly, even if the application at hand was due for taxation, I would have no requisite jurisdiction. Undeniably, taxation falls under the realm of the Taxing Officer. Thirdly, if I was to be allured by the parties’ invitation hereof, I would be dragging the Court in the tenets of functus officio in future should any of the parties win costs in the suit and eventually become aggrieved by the decision of the Taxing Officer. In other words, if I presently determine the suitable amount of costs, the Court

would set a precedent to be followed by the Taxing Officer in the taxation, should that stage occur in these proceedings and/or in the Commercial Cause. Thus, the applicability of the 9th Schedule to the R em uneration Order , as claimed by the applicant is irrelevant in this matter. Besides, the 13 submissions in support or negation of the liquidated or unliquidated claims will be rather insignificant at this stage. Consequently, the Court’s discretion hereof is not fettered by the R em uneration Order . Accordingly, the second issue raised above is not answered in the affirmative. The above conclusion notwithstanding; and on the foregoing basis together with the principles laid in authorities above, the Court will now determine the appropriate amount to be deposited as security for costs in the suit. In this respect, I am also in agreement with Target I nternational (T) Ltd v Godrej Consum er P roducts Ltd , Misc. Comm. Cause No. 86 of 2019 (unreported, pages 7 & 8), in which this Court held that; “……once the court is satisfied that security for costs should be given, it would consider various factors in determining the quantum, including the complexity of the case, research workload involved, costs incurred up to the time of the application and after.” As I have alluded to earlier on, the suit involves a contention of breach of contract. The pleadings have it that the

parties are bound to prove and disprove its existence, validity, status and or remedial outcomes. In my considered view, the kernel of the suit is an ordinary litigation. 14 In the upshot, I find merits in the present application and proceed to grant it with the necessary limitation. Accordingly, USD 5000 is hereby granted as security for costs in respect of Commercial Case No. 6835 of 2024. The subject security should be deposited in Court by the respondent within 14 days of this ruling. Other costs shall follow the outcome of the suit. It is so ordered. C.K.K. Morris Judge April 4th, 2025 15 Ruling delivered this 4th day of April 2025 in the presence of Advocate Farida Ibrahim holding the briefs of Messrs. Emmanuel Mashamba and John James, learned Counsel for applicant and respondent respectively. C.K.K. Morris Judge April 4th, 2025