20160125 TZCA Dar es Salaam

I IN THE COURT OF APPEAL OF TANZANIA AT DAR EslsALAAM II I {CORAM: MBAROUK, l.A., JUMA, l.A., And MZIRAY, l.A.) I, CONSOLIDATED CIVIL AP~EALS NO. 95 OF 2009 & CIVIL APPEAL Nb. 29 OF 2010 1. SYLVESTER LWEGIRA BANDIO 1 2. HILDA KARABARUNGA BANDIO .................................. APPELLANTS I VERSUS I. I THE NATIONAL BANK OF COMMERCE LTD .................. RESPONDENT 1: I . {Appeals from the ruling, judgment a,nd ldecree of the High Court of Tanzania Commercial Division lat Dar es Salaam) {Kimaro, l.) ,. I Dated the 23 rd day of September, 20,03 and 31 st day of October, 2003 In 1 Commercial Case No. 171 of 2002 ,. I ---------r---- I. JUDGMENT OF ifHE COURT I Date 3 rd Dec 2015 & 29 th Jan 2016 MZIRAY, J.A. These are two consolidated ap~eals. They both arise from the decision of Commercial Case No. 171 of 2002 instituted in the Commercial Division of the High Court on which ithe respondent successfully won a I claim of shs 76,083,979 as a result of the appellants' failure to repay a I, loan of Tshs 16,050,000/= as principal sum and interest which accrued thereto totaling Tshs 66,083,979. 1 ~', I i. i, I The plaint before the trial court ras filed under Order XXXV of the I Civil Procedure Code in a form of a summary suit but upon application by I' the appellants, leave to defend the suitlwas granted. The appellants then ! filed their J·oint written statement of defence and raised a counter claim. A .. I .. . preliminary objection was raised by the irespondent to challenge the validity of the written statement of defence filbd and in the end, a decision was made which upheld the preliminary oJjection and struck out the written statement of defence for being incurabli defective and the counter claim to i have been filed out of the prescribedI time. It is on the basis of this I decision that Civil Appeal No. 29 of 20+0 was filed to challenge the order I reached. Prior to that, Civil Appeal ~o. 95 of 2009 had been filed to challenge the judgment which award$d the respondent a sum of shs I 76,083,979/=. As the two appeals originate in one case, the Court found ! it prudent to consolidate the two appeals. Before we go further, we think that it is important first to have the I background facts which have resulted iln the filing of this appeal. These . . I facts in a nutshell are as follows. By a loan agreement dated 12th March I: 1992, the respondent granted a loar of Tshs 16,050,000/= to the appellants jointly and severally tradinj as Mwanza Textile Enterprises. 2 .. According to the terms of the said agreement, the repayment was to be effected in 20 successive quarterly equil installments of Tshs 877,500/= effective September, 1992 and the last 1uch installment was to be paid by 30th June, 1997. The agreement ~tipulated that the interest was ,, chargeable at the rate of 27.5 % per ahnum and upon default, a further penal interest of 1% per annum was ctargeable. The repayment of the loan amount was guaranteed by a chattels mortgage on which the first appel-lant mortgaged his marine vessel MZA 140. The loan was also secured by the pre-existing mortgage r~gistered on 16th September, 1987 over the first appellant's property compnised I in the Right of occupancy CT i No. 033011/29 on plot No. 166, Block: D, Isamilo area in Mwanza City. Several documents related to this loa~ are annexed in the pleadings. These documents include copies of Lobn Agreement, Chattel Mortgage, II Guarantee Instrument, Mortgage and Title Deed and Statement of Balance I showing that up to and by 30th June, 2002, a total sum of Tshs 76,083,979/= remaining due and payabl~ to the respondent. On hearing the suit ex parte, the respondent obta(ned judgment on this sum. The appellants are aggrieved by this decision] hence this appeal. 3 I • I In the memorandum of appeal in jr-espect of Civil Appeal No. 95 of i 2009, the appellants filed a total of fou;r grounds of appeal, whereas the memorandum of appeal in Civil Appeal ~o. 29 of 2010, three grounds are I filed. When the appeal was called for hearing, Mr. Richard Rweyongeza learned Counsel for the two appel1ants : reposed to argue the first ground ;, i in Civil Appeal No. 95 of 2009 separate!( and then consolidated grounds I Nos. 2,3, and 4. For Civil Appeal No., 29/22010, the learned Counsel pointed I out that he had already filed written s!bmission on which grounds No. 1 and 2 are consolidated. The propositiop for consolidation was agreed by I Mr. Gaspar Nyika, learned Counsel fo~ the respondent and the Court blessed the arrangement. i We shall start discussing the me1orandum of Appeal in respect of Civil Appeal No. 95 of 2009. Submittingjon the first ground of appeal, Mr. I Richard Rweyongeza, learned . Counsel a(rgued I that the learned trial Judge ,I grossly misdirected herself in law in proteeding to hear and determine the I case while the appeHant had filed a not(ice of appeal to challenge the trial Judges decision of striking out the appellants' written statement of 1 I defence and the counter claim. It is the, contention of the learned counsel II that it was not proper for the learnedj trial judge to proceed with the I I 4 hearing of the suit whHe she knew that there was a notice of appeal fil~d in this Court to challenge the order striking out the written statement of defence. The learned Counsel argued that once a notice of appeal is filed everything at the level of the High Court connected with the case comes at a stand still to allow the appeal process to proceed. To support his argument, he referred us to the decision of this Court in Arcado Ntagazwa v Buyagera Bunyambo (1997) TLR 242 at page 248 which held that once a formal notice of intention to appeal was lodged in the Registry the trial judge was obliged to halt the proceedings at once and allow for the appeal process to take effect, or until that Notice was . I withdrawn or was deemed to be withdrawn. Basing on this ground of appeal, the learned Counsel prayed for the appeal be allowed. On the rest of the grounds of appeal in Civil Appeal No. 95 of 2009, Mr. Rweyongeza informed the Court that they are purely based on I evidence. He told the Court that the trial court having struck out the written statement of defence and counter claim, granted leave for the suit to proceed exparte but in the evidence adduced the plaintiff failed to prove the claim. He-submitted that PW1 Venant Lawrent, the only witness who I testified for the plaintiff did not produce any documentary evidence from 5 the Bank or elsewhere to, prove the dai I or show how the amount of shs I . 76,083,979/= was arrived. at. The learned counsel also challenged the I :1 trial court to have failed to analyse proprrly the evidence before it thereby arriving at a wrong decision. He furth~r criticized the trial court to have failed to frame issues for the deter~ination of the case before the commencement of the hearing of the ,s~it as required by the law. In the I' I'I - end he prayed for the appeal be allowed !With costs. I' In Civil Appeal No. 29 of 2010, fr· Rweyongeza, on behalf of the appellants filed a memorandum of Appeal containing three grounds of I appeal. In his written submission, he abandoned I the first ground of appeal having been satisfied that it was proper!( covered in the second ground of appeal. He therefore argued issues whiJh are embodied in the second and third ground of appeal. In the secoJd ground of appeal the learned I I Counsel submitted that having regardl to the contents of the written 11 Ii statement of defence which raised dea/rly issues in controversy between I i the appellants and the respondent, lithe learned trial Judge grossly . misdirected herself in fact and in law in holding that the written statement of defence by the appellants was incuralbly defective. I 6 Submitting in support of the secdnd ground of appeal the learned counsel argued that Order VI Rule 16 of ihe Civil Procedure Code (the CPC) used by the trial Judge to strike out-the!written statement of defence was wrongly invoked because that Order does not empower the court to strike out the whole written statement of defJnce but instead, it empowers the · court to strike out any matter in the Jleadings which is unnecessary or scandalous or unnecessary as envisagJ under Order VI Rule 17 of the . CPC. Having argued to that extent, thl learned Advocate conceded that the written statement of defence filed bJ the appellants had defects which could be cured if the court invoked thl provisions of Order VI Rule 17 instead of Order VI Rule 16 of the CPC thich was inapplicable for purpose I of striking out the whole pleadings. ft is therefore the prayer of the I 1 appeHants through their Advocate that th e appeal be allowed and the Court I steps into the shoes of the High Court Qommercial Division and order that ' the appellants be allowed to amend their written statement of defence so as to bring out all issues in controversy under the provisions they have ' already pointed out. I We now turn to consider the thi~d ground of appeal wherein it is stated that having regard to the terms df the loan, the learned trial. Judge 7 misdirected herself in fact and in law in folding that the counter claim filed by the appellants had been filed out bf the prescribed period without having regard to the -date on which th$ br€ach was· actually committed. Mr. Rweyongeza has pointed out that th! question of limitation particularly as to when did time begun to run wa1 raised by the respondent in its preliminary objection but contradictory ~ersions have been given by the r€spondent as clearly shown in the prbceedings. Mr. Rweyongeza has taken us to page 91 of the record of apbeal where the respondent claims that the cause of action rose in 1994, Jperiod which contradicts the one stipulated in the preliminary objection tol be 1993. Yet in another version, as vividly seen in the pleadings filed by 4he respondent at paragraph 10 of the reply to the written statement of def~nce, it states that there could not I be any disbursement until the appellant had fulfilled all conditions I precedent. The learned counsel maintained that the question as to when time began to run was to be determinJd on facts that would have been I' I adduced and not on contradictory calcul~tions produced by the respondent from the Bar. ! On the counter claim, the learned 1iounsel maintained that it was filed . I within the period prescribed under the aw of Limitation Act, Cap 89, as per the letter of approval of the loan dated 17'1' December, 1990 which II 8 I I appears at page 62 of the record, on wrch the loan period was given as six years from the date of sanction. It i's the view of the learned counsel th. at there is no limit on when disburse~ent. should stop provided that it takes pface within six years of the loan ~eriod. Hence, there could not be any breach by the Bank within the dontract period. He opined that a breach could only occur if a loan had beel cancelled etc. it is therefore the contention of Mr. Rweyongeza that sinci the loan was for a period of six years, there could not be any default bJfore the expiry of the loan period taking into consideration that the cLnter claim was filed on 30th September, 2002 which is a period less than six years a~er the expiry of the loan term. The learned Counsel concluded hi. submission by praying that the appeal be allowed with costs. .I Mr. Gaspar Nyika, learned counse for the respondent Bank gave a concise response. At the outset he con ,'eded to the first ground of appeal made in Civil Appeal No. 95 of 2009 thaJ the trial court committed an error in proceeding to hear and determine the suit while the appellant had filed a not1ce of appeal to challenge the trial court's decision of striking out the 9 I appellants written statement of defenceJ He affirmed the· position laid in ' ' 1 the cited case of Arcado Ntagazwa (supra). Nevertheless, he had a I , different view on the counter claim; According to him it was proper for the .trial court to proceed with the counter cl~im notwithstanding the existence I' of the notice of appeal filed in this Court) Reacting to the consolidated . grou$ds I No. 2,3, and 4 in Civil .Appeal I No. 95 of 2009, Mr. Nyika had a di,erent position from that of Mr. Rweyongeza. The position of Mr. NyikJ was that the evidence of PW1 Ii 'i Venant Lawrent sufficiently proved that !the appellants borrowed the sum claimed and the money is still outstanJing as shown at page 109 of the ! judgment attached in the record. In hi~ view, it is not necessary to have II · documentary evidence from the respon~ent Bank to prove the assertion I I that the appellant defaulted payment. 1 Discussing the appeal in Civil i Appeal No. 95 of 2009 as a whole, the 1darned counsel commented that in event the Court allows the appeal ba1 on the first ground of appeal 11 , raised, then the respondent should not. Je condemned to pay costs as this issue was not raised in the High Cou{. Mr. Nyika suggested that the I· 'I appeal be partly allowed but the effect~ should be to set aside the trial court's judgment. 10 1 Moving to Civil Appeal No. 29 of-:io10, Mr. Nyika adopted his filed , submission. He maintained that a decisiJn of the High Court striking out a ' defence is interlocutory in nature as that decision does not bring the proceOOings to finality. According to hf m, the case has not come to an end, meaning that the plaintiffs right a~ainst defendants have not been determined. The remedy in his view atailable to the defendants lies on section 5(1) (a) of the Appellate Jurisdictibn Act, Cap 141 R.E. 2002. With regards as whether it was corfect for the trial court to strike the written statement of defence, Mr. Nyika· argued that Order VI rule 16 of the I CPC gives discretion either to make an <Drder to strike out or order for an ' 1: amendment. In the 1nstant case the :trial court found out nothing to i 1 amend so it ordered the written stateme t of defence be struck out. Mr. I Nyika cautioned us not to interfere with that discretion. Having argued to I that extent he prayed for the appeal be dismissed with costs. I! I I In rejoinder, Mr. Rweyongeza · ihsisted that as the transaction between the appellants and the responf ent was through the Bank, then ' documentary evidence was essential, wrich apparently was missing, On the question as to whether the counter cfaim could not be affected by the I ! 11 strike order Mr. Rweyongeza firmly stated that the said order affected the counter claim. Responding on the proper construction of Order VI rule 16, the learned counsel pointed out that the spirit of that order is to strike out the offensive part and if it affects ·the whole written statement of defence then the remedy is to order amendment. He then prayed for the appeal be allowed with costs. We have given anxious consideration to the rival submissions of the Advocates for the parties in respect· of these consolidated appeals. We note that both Advocates agree on one vital point that the trial court proceeded with the hearing of the suit and delivered its decision while there was already a notice of appeal filed in this Court. This point is incorporated as ground No. 1 in Civil Appeal No. 95 of 2009. In this ground, both counsels are of unanimous view that it was not proper for the trial court to proceed with the hearing of the suit after the notice of appeal has been lodged in this Court. With such detected anomaly, both Advocates are in consensus that the remedy is to quash and set aside the trial court's decision and order a retriaL The basis of their arguments is grounded in the case ofARCADO NTAGAZWA (supra). 12 1, [i ' - I We note from the record that pu}suant to a preliminary objection - l -_ - raised, the trial court on 26/9/2003 -made I a decision which struck out the i written statement of defence and at thd same time dismissed the counter I ' claim raised by the present appellants in commercial case No. 171 of 2002. The appellant were dissatisfied with that decision and filed an I I appeal to this Court, which was admittedland registered as Civil Appeal No. I 1 98 of 2003. The record further reveal s that while the appeal was still pending, the trial court proceeded with ~he case and gave its judgment on 3/10/2003. In our considered view t~at was not proper. We entirely agree with both learned counsels that it was irregular for the trial court to proceed with the hearing of the suit aft1_: r the notice of appeal has been lodged in this court. · I~ I I In the case of ARCADO NTAGAZfA (supra), this Court faced with similar predicament had this to say, 1 I 1 ''It must be pointed out t/at the learned judge acted improperly here. Onde the formal notice of intention to appeal was lodJed in the Registry the trial Judge was obliged to Aalt the proceedings at Ii once and allow for the appeal process to take effect or until that notice was witAdrawn or was deemed to be withdrawn. - But the bourse adopted by the judge here effectively thwa}ed the appeal. That ·I 13 I, I was wrong/ and had the correct procedure been . ' adopted the present proce~dlngs might not have been necessary. " I W1th the buttress of the above deC!ision, we have no flicker of doubt r 1 that the appeal is meritorious. There wa s a point raised by Mr. Nyika that the order to strike out the written state!ent of defence did not affect the ! I counter claim. With due respect we -don't share his view. We say so because on the same day when the Jritten statement of defence was struJ out, the trial court simultaneouJly made an order dismissing the counferclaim. By all necessary impliJtions therefore the strike order affected also the counter claim. i i As ground one is sufficient to disp, se of this appeal, we think that it 'I ' becomes unnecessary to deal with oth~r remaining grounds in which we hearJ their submissions. We shall enJ here. Exercising the powers of revisi~n conferred on the Court by sectio~ 4(2) of the Appellate Jurisdiction I I Act ctlap 141 R.E. 2002), we quash the' entire proceedings and decisions . I made in Commercial Case No. 171 of 20j2 of the High Court, Commercial Divisilon and we direct that the suit be reard afresh immediately. Since I' I 14 I . 1> the irreguiarity in handling the trial was bccasione~d by the trial court, we make no order for costs. LTED at o/\R ES SAU\AM this 2S'h day of January, 2016 .. M.S.MBAROUK JUSTICE OF l~JPPEAL . I: ·1' I.H. JUMf JUSTICE OFA1PPEAL I . ~ R.E.S; MZIRAY JUSTICE OF AtPPEAL certify that this is ·a true copy. of th~ original. ' II . P.W. . - MPIKYA . i SENIOR DEPUTY . REGISTRAR I COURT OF AIP-PEAL 'i 15