20040220 TZHC Dar es Salaam

r- IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT DAR ES SALAAM COMMERCIAL CASE NO. 257 OF 2002 .' SYCAMORE INVESTSMENTS LIMITED ...... PLAINTIFF VERSUS JUMA MGASSA ................................. DEFENDANT JUDGMENT Kl MA't<O I J. This is a case in which the plaintiff is praying for orders of specific performance against the defendant. The plaintiff, sycamore Investment Limited is a company engaged in real estate .business. ! The pleadings and the evidence tendered during the trial reveal that there was an execution of an Agency agreement between the parties. By the Agency agr~ement which was tendered and admitted in court as exhibit P4, the defendant was engaLed to facilitate the plaintiff towards purchase of property known as MLB which was being sold by the Air Tanzania corporatic;in. Towards performance of his obligation, th_e defendant was assisted to win a tender. for the purchase. of the prop.?.rty by one Mr. Innocent Rimus Michael Mungy (PW1;) who was an Agent of the plaintiff. The witness and the defenoant were working together at the Air Tanzania corporation. The witness was a Puo:ic Relations Manager of the Air Tanzania and the Defendant was Superintendent Cargo Marketing. The two desired the Agency cont1·act to be confidential and the same spells out this desire. r ' ' ', ,'.-' •! 2 What the defendant was to gain from the Agency Agreement ,, was payment of a commission of which PW1 testified of having paid part of it to the defendant for the said purpose. According to the Agency Agreement the commission was T.shs 2.5 million flat rate which was payable upon completion of his ! obligation under the Agency Agreement. Further testimony of PW1 was that he also facilitated the defendant towards performance of his obligation under the agency agreement by provision of the funds for the purchase .of the house which amounted to a total of T.shs 60,000,0001-. (the amount of the tender price given>. After the purchase of the propert\' the defendant was supposed to ensure that he facilitated other processes which would have enabled the plaintiff to acquire the premises. The defendant was a service tenant in the premises . . The defendant admitted that this is the position . . What has brought the parties to this court is that after the defendant had been facilitated to purchase the suit premises, he refus·ed to carry out tI1e other processes which would have enab:led the property to pass title to the plaintiff. Although the agreement shows that the completion of the process would have entitled the defendant to the payment of his commission of 2.5 millicn, the defendant refused to carry out the other processes -· and claimed for an increased commission up to T.shs 1.5,doo,0001 =. ' During the trial the defendant changed his complaJnt about the increase of the commission and he complained about the agency agreement saying that he was no longer willing to abide by it saying as he was not treated fairly. 3 In her final submissions, Mrs Muruke, the Learned Advocate who appeared for the defendant raised matters Which are related to the competency of the suit as well as legality ,and enforceability of the agency agreement. Her arguments regarding the i competency of the suit were that there was no resolution of the Boar.d which allowed the institution of the suit. She supported her argument by the cases of Bugere coffee Crowers Ltd vs sebaduka and Another 1970 EA 147 and Kiwanuka & co vs Walugembe (1969) EA 660. In the case of Bugere Coffee Crowers (supra) the court of Appeal held that: " When companies auth.orize the commencement of legal proceedings, a resolution or resolutions have to be passed either at a company or Board of Directors' Meeting and recorded in the minutes, whereas in the present case I find no company or Board meetings were held on 18th November 1968, apart from the extra ordinary general meeting which certainly did not authorize Messrs. Parekji & co. to start these or any other proceedings on behalf of the COfJ?pany." In the case of Kiwanuka {supra) the suit was dismissed / because the company had not validly authorizeo the institution of the suit. Although the position in this case was rectified by the plaintiff after institution of the suit, by holding an extra ordinary meeting of the Board of Directors and Shareholders in which a resolution was passed allowing commencement of legal actions 4 against agents like the defendant, Mrs Muruke submitted that it was an after thought which was aimed at pre-empting an argument on the matter. The court was referred to the case of Dar- Es-Salaam City council and Others vs C.M. MiJndeba arid · Another Civil Appeal No.39 of 1992 High court msM Registry) (Unreported) where Hon. Judge Mwaikasu as he then Was; held that ratification after institution of the proceedings does not remedy the defect in existenoe at the time of filing of the suit. I l Mrs Muruke also made ireference to section 152 of the contract ordinance arguing that ratification of an unauthorised activity is as good as nothing. Her opinion is that the authorities cited are sufficient to show that the suit· is incompetent and shouid be dismissed. Mr. Ringia, Learned Advocate appearing for the plaintiff submitted that the question of a resolution by the plaintiff for the if!stitution of the suit is a none issue following the ratification whicl1 was made. section 148 of the Law of contract Ordinance was cited by my Ringia to fortfy his argument. Mr. Ringia said after the defect had been ratified, the cases of Bugere and Kiwanuka (supra) cited by Mrs Muruke are distinguishable from this case because no ratification was done in the cases and even then,· the Directors of the plaintiff were aware of what was taking place and none of them complained for the institution of the case. -•"' Mr. Ringia cited the cases of Crover v Matthews (1910) 2 KB 401 reproduced in 51 ROUNDS JUDICIAL DICTIONARY OF WORDS AND. 1 PHASES; sweet & Maxwell 2000 Edition to illustrate what is meant by ratification. I i'.,l~i!r,l YJ.~it•frr{"f,t,t{ . ;,;_; "" ~ t·t".:l'\fr;i,,~• d I ,1rr tH~'H~M3i1J:::'·! •:i ••• , .•' 5 I 11 ~5-~,rt. rtr''.'. · hi:: 1 f1 r ~,' :'; !{ l .J..-\,;i; -''·•'.f r '·I .{:j, 1,.' 'I,•• • t ' i -~ 1" t»:/r t."' 't:: r .;•~ t l·• ,::! :\,i .~' . . i h,, . ,.~rr;,,, ·ti' , · It was held by Lord Watson that ratification , ih o,:diha'i'l • ,:( · : parlance; ratification is ~\ed to express the g/liifi9:6f~1N~f 1 by one without whose consent a transaction ehtered'into bY , others would be inco~plete or invalid; ahd ais6, the ·,· confirmation of a provisi~nal agreement, or of ahy imperfect . ;. obligation, by the same 1Jarties who made the one or were .' i:l not legally bound by the other. l Another illustration is given in the case of Stewart vs Kennedy, I 15 APP cas.99 Lord Macnaghten said that: 11 ·c·. t· ra t1,1ca 10n' s1mp II II ,· · IY(means con,1rma t·,on an d th at ,s 11 · the proper and ordinkrv signification of the word/' I:\ . . . Relying on the case of Almasi ldde Mwiriyi vs NBC Civil ·11 Application No.88 of 1998 (CAT) (Unreported) Mr. Ringia denied that the ratification was mad/\for purposes of pre-empting an argument on the point becausJ·the ratification was done on 15th FebJ"~Jarv, 2003 while the prelim\nary objection was raised by the amended written statement of ~efence filed on 7th April 2003.' My observation here is that it /J true that the argument on ratification cannot be said to h~tk been done for purposes of pre emp~ing the point raised by M1\Muruke because the ratification was ~ade before the point was brught up by Mrs Muruke. What I would say is that tJ _submission made by ivlrs Mufuke on tt1e competency of the suif lls closing submlssions··after'I the trial, is a misconception. It is a ~~tter which ought to have been. argued as a preliminary objectiSn. I say so because of several reasons: I • - ., r•-,, -~,' . , \ • ~ ' lr.. • ,_z:.i.~- 6 Firstly, final submissions are not evidence. They are meant to throw some light on what transpired during the trial for purposes of guiding the court in making a fair and just decision in the case. secondly, the arguments made by Mrs Muruke never featured in the trial much as the same was pleaded in the amended written statement of defence. Thirdly, the mistake which Mrs Muruke did was her failure to plead the same as a preliminary objection. In Mukisa Biscuit Manufacturing co. Ltd ·vs west End DISTRIBUTORS Ltd 1969 EA 696 Law J.A said at page 700 so far as I am aware, a preliminary objection consists of a point of law which has been pleaded, or which arise by clear implication out of pleadings, and which if argued as a preliminary may dispose of the suit. Examples are objection to the jurisdiction of the court, or a plea of limitation, or a submission that parties are bound by the contract giving rise to the suit to refer the dispute to arbitration. Sir Charles New bold, added the following at page 701 A preliminary objection is in the nature of a demurrer. It raises a pure point of Jaw which is argued on the assumption that all the facts pleaded b-y the other side are correct. Lastly, an issue regarding the competency of the suit must always be pursued as a preliminary point because if it succeeds it disposes of the suit. In the circumstance of this case Mrs Muruke ought to have raised the issue as a preliminary objection. After ' . ) the court proceeded to the trial, the issue was overtaken by 7 events. It could not be raised after the trial and by closing submissions. This is unprocedural. As regards the legality and enforceability of the agency agreement executed between the plaintiff and the defendant, Mrs Muruke submitted that there was no resolution of the Board of Directors allowing the plaintiff to enter into the agency agreement, it was not registered, not stamped, not sealed and not properly signed. In her submission to support her arguments she relied on section 11(2) of the contract Ordinance cap 433, sections 8(1) and 9 of the Registration of Documents Ordinance cap117 and the case of Dar-Es-Salaam City council and Others Vs C.M. Mundeba and Another Civil Appeal No. 39 Of 1992 (High court) msM Registry) (Unreported). She also cited section s of The stamp Duty Act 1992 and the case of Josephat L.K.Lugaimukamu v Father Canute J. Mzuwanda [19861 TLR 69, Paragraph 92 of the Articles of Association of the plaintiff company and the case of Judge i/c High court Arusha and Attorney Oeneral V.N.LN.Munuo Ng'uni Civil Appeal No.45 of 1998 (Court of AppeaD (Unreported). She said the agreement is not enforceable because of the above factors. In reply Mr. Ringia submitted that there is no issue framed In respect of the legality and enforceability of the agency agreement. He is wrong. This is one of the issues framed. My comments are that when the agency agreement was tendered in ··•· court and admitted as exhibit P2, Mrs Muruke never raised any objection to the admissibility of the exhibit on the factors raised by her in her final submissions. I would consider Mrs. Muruke's submissions to be a misconception as well on what final submission should be linked to. They should always be linked to the evidence tendered in court. The question of stamp duty, 8 r~gistration and sealing of the agency agreement ought to have been presented to the court before the agency agreement was admitted in court. As started earlier, the issue of stamping, registration and sealing of the agency agreement cannot be raised in the final submissions because they were not addressed during the trial. such a submission ought to have a link with what transpired during the trial. Even assuming that the document should have been stamped if the point was raised before the document was admitted in court, the situation could have been rectified by stamping the same before admissibility in court. · As regards registration of exhibit P2, I would entirely agree with Mr Ringia's submission that an agency agreement is not a document whose registration is compulsory because of the way in which section 8(1) is worded. The section reads: Non-testamentary documents, including DECREE of court and AWARDS, which purport or operate to create, confer, declare, limit, assign, transfer or extinguish and any right, title or interest whether vested or contingent, to, or over land. . The contents of the agency agreement do not suggest that it is a document which can be classified as document of transfer ·•"'' of title or disposition. What the defendant had agreed to do and infact did, was to purchase property belonging to the ATC for the plaintiff. His role was to facilitate tl1e purchase of the. property from ATC to the plaintiff. That is all the defendant was required to do under the agency agreement and it is enforceable under those circumstances. 9 1would also add that unlike what Mrs Muruke has contended, the agency agreement is sealed. The seal can be clearly felt and read on the last page of the agency agreement at page 4. Moreover the defendant admitted that he was given the same copy of the agreement. The only reservation which the defendant had, was that the parties did not sign the document together before the commissioner for oaths and he did not appear before the commissioner for oaths when the attestation was done by the commissioner for oaths who did the attestation. However, considering the evidence which was adduced before this court, I wou!d say it will not be fair for this court to allow the defenda·nt to t:ike advantage of this defect to his benefit. He can not use that defect to justfy his refusal to comply with the agency agreement. This is what comes up cl~arly from in Exhibit P4 where he requested the plaintiff to raise the commission to be T.shs 15,000,000/ =. The defendant is a Form IV Graduate. He was a superintendant cargo Marketing at Air Tanzania corporation when the Agency Agreement was executed. He possessed sufficient intelligence to understand the nature of the agreement which he entered into. He is bound by what he agreed to do. All the circumstances of the case and the evidence considered, I resolve the issues framed as follows: The first issue framed is whether the defendant has performed the l\gency Agreement. The answer is no. In his own testimony the defendant admitted to have not completed the work under the Agency Agreement because he wanted more commission. He also raised excuses that his family members were not involved. 10 . But his own evidence was that the house belonged to ATC and he was only a service tenant in the house. This court wonders how involvement of his family would have altered the position taken by t1·1e ATC to have the house sold, while the defendant admitted that he was not tendering to purchase the house on his own behalf, but on behalf of the plaintiff and the plaintiff paid for everything. Th9- other issue framed is whether the Agency Agreement . . between the plaintiff and the defendant is enforceable under the law. The answer is yes. It was executed by people competent to enter into that agreement and it was voluntary. As mentioned earlier, the points raised by Mrs Muruke regarding the agreement can not prevent it from being enforceable. The defendant admitted that PW1 was an agent of the plaintiff and so he had that authority to enter into the Agency Agreement with the defendant. The Agreement did not require registration and its admL3sibility was not even objected to. It was signed and sealed and PW1 said he initialled on each page. Given the evidence on record, the defendant can still be held liable even without having the document been relied upon by this court. The third and fourth issues are issues of law. The third issue relates to the a resolution by the Board of Directors of the Plaintiff which authorised the filing of the case. I have already commen:J.8d that it was a matter which ought to have been pursued as a preliminary objection because if it wa~ f0und that the plaintiff did not have a Board Resolution authorizing the filing of tr1e case, that would have been the end of the case. The suit would h'\ve been declared incompetent. 1 · .. ... : "::" _._ ,, . .: . 11 The fourth issue is whether there was ratification. The answer is yes. The suit was filed on 9th October 2002. The resolLition Which ratified the filing of the suit is exhibit P6. Paragraph (d) of exhibit P6 allowed commencement of legal action against all or any agents who violated their agreement. Mrs MUruke submitted that because the ratification was made after he filling of the suit it did not remedy the defect. She cited section 152 of the Law of contract Ordinance to augment her submission. section 152 talks of an Act done on behalf of another without the authority of that person. In this case there was no complaint by any of the Directors or Shareholders that the suit was instituted without their authority. Moreover, there was evidence that ratification was done. section 151 of the contract Ordinance allows such ratification. The circumstances which were discussed by Mrs Muruke are quite different from the circumstances of this case. Lastly, is the relief to which the parties are entitled to. The evidence on record is sufficient to establish the plaintiff's case on a balance of probabilities. The defendant is ordered to specifically perform his obligations in accordance with the terms of the agency agreement.The plaintiff is also granted costs. N.P.KIMARO, JUDGE 17/02/2004 ' ' 20/02/2004 Coram: Hon. N.P. Kimaro,J. For the Plaintiff - Mr. Ringia. : I For the Defendant - Mrs Muruk,e. cc: Ngonvani. · ! I Court: Judgment delivered toctk~. C iI I Order: Judgment is entered ~Jr the plaintiff. The defendant is . l1 ordered to specifically perfor~1 his obligation. The plaintiff is also 1 granted costs. !, !I I Ii 1. , I N.P.!<IMARO, iI . JQPGE II 20/02/2004 11 II I I 2,910 - words J ,Certl(u that th~s Is a true and correct ' , 1 d ment l\ulllng 1· Os-~ the orlgi.~~' l~oorrfreerr uu_:ige ------- K' 10ci n ~ - - -· - .. • · ·C . t Osm . -~·-·-- R,en-istrar .· ·, Commarc..tal , our ,. ~~ ~w Oate ...... ~.:---\,1+t-·-"°~--· - q 11 ,-. :itI '\ , I,,II I \ q \ \. \ ', i' : I