20061026 TZHC Dr es Salaam

.~ :,. _;· IN THE HIGH ·q·$'URT O ANZANIA AT DAR ES SALAAM CIVIL CASE NO. 93 OF 2002 TAI MILLING INDUSTRIES .................................. PLAINTIFF VERSUS BUHLER EAST AFRICA LIMITED .......................... DEFENDANT JUDGMENT I ' Date of last Order 10/10/2006 •1:i; . Date ofJudgment 26/10/2006-f~) ORIYO, J. Through meetings, discussions, exchange of letters and other forms of correspondence, the plaintiff and the defendant reached a mutual understanding that the defendant would supply the plaintiff with a milling machine with capacity to mill a high quality type of flour (known· as " super sembe'') and adjustable to produce a standard quality type of flour. There was no formal contract drawn up and executed by the partie~.'.~- While the plaintiff was a TanzanJr ·(~"'(ff / milling company; the defendanf'was a foreign country with off' Geneva, Switzerland and Nairobi, Kenya. For the purpr,/ suit, the plaintiff had negotiated with and reached an,.,./ the Nairobi Office. Under the agreement, the milling machine was to be supplied on certain terms and conditions. One of such conditions was that the end product would be "super sembe"; as per Exhibit "Pl" item 5. Other terms were spelt out in the Profoma Invoice No MUT 1962/b dated 20/3/98 issued by the defendant to the plaintiff. Those included were:- (i) Capacity of machines to produce 120 tons of flour within 24hours; (ii) Price was Swiss Francs (SFR) 946,082:- ,i- ... . .,'.::;$• . Terms of payment spelt out ·was 10% as down payment with the 1 order and balance of 90% was payable against shipping documents or warehouse receipt or forwarders certificate of receipt. Of significance was that the plaintiff was required to put in place arrangements that 100% of the purchase price would be covered by an irrevocable Letter of Credit issued by a bank in Switzerland, acceptable to the defendant, covering the whole period of manufacture, allowing part shipments; and payable as stipulated above. However, on the part of th.~ defendant, it was to issue, through .\:,ift:; a first class Swiss bank, a Perfor'mance Bond, with the receipt of the functional Letter of Credit. The amount of the Performance Bond 2 .. was 5% of the value of the order and was to expire not later than 31/10/99. d1E • <12 ·1 ,,, The Milling Machine supplied was commissioned in April, 2001 and production commenced May, 2001. On commissioning and initial production; a variety of problems and faults became apparent. These faults and problems were communicated to the defendant immediately by the plaintiffs letter dated 26/4/01 which forms part of Exhibit "P4" (Annexture "P3" to the plaint). One of the major shortcomings was that the end product produced by the mill was "standard flour" instead of the specified "super sembe". Even after the defendant supplied extra si~ves of different sizes the end product J1f . 1 remained the same. The plai,titiff demanded rectification of faults and the remodeling of the machines. In response, the defendant supplied the plaintiff with an Invoice for the costs of the rectification/remodeling works. There was a deadlock because plaintiff was not ready to make additional payment for the rectification and/or remodeling. The defendant was not prepared to undertake the job without additional payment of SFR 348,420 as per Exhibit. "P7'' (Annexture PS") dated 22/10/01. As a result, the plant remained idle and the plaintiff was out of business as a miller; hence the suit. ·1itr· On 12/3/02, the plaintiff filed the suit against the defendant for the following orders:- 3 (a) Payment of shs 857,117,000/= being loss incurred by the plaintiff as a result of the defendant's supply of substandard machinery; (b) Interest; :·ittft;·· (c) Ordered of specific performance to remodel the plant at the defendants cost; ( d) Compensation for losses incurred from month to month by the plaintiff on account of payment of interest on bank loans and the plaintiffs operating expenses until the plant is remodeled. (e) Costs. (f) Other reliefs. The hearing of the suit prqceeded ·::· exparte after the defendant ~ ~ defaulted to file defence. At'.tqe trial, the plaintiff was represented by Dr Lamwai, learned counsel and four issues were framed as follows:- 1. Whether the plaintiff ordered a milling machine for "super sembe" 2. If the answer is yes, whether the machine supplied met the required standards. 3. Whether the plaintiff failed to do business due to the standard of machines supplied and the consequences thereof. i ,.__J ·;· • 4. To what reliefs are parties-i:entitled. fk(····:' TJ: 4 The plaintiff called two witnesses to testify on its behalf. PWl was SALIM HAMDUN SAIDI who was the Managing Director. PW2 was SALIM KASSIM TINDWA, an accountant by profession and a Finance Executive with the Plaintiff. Issues 1 and 2 can be dealt with together. On the testimony of PWl and Exhibit "Pl" (Annexture "Pl" to the plaint) dated 9/6/95 is a record of discussions held by the plaintiff with a representative of the defendant on certain aspects of the contract. Item 5 of the record of discussions provides:- " 5 Extraction Rate The machines can extract between 80% - 85% of grain and get super sembe. It can also be tuned to mill standard sembe, depending on how you want your final products to be". (emphasis supplied). ::-i, .. ·t:1r~ . Therefore it is not dispute that the plaintiff ordered a milling machine for "super sembe" and the defendant agreed to supply a milling machine for that purpose. Issue One is answered in the affirmative. On issue Two, again on the testimony of PWl, the machines failed to perform on commissioning. The end product was "standard flour" and not "super sembe". Defendant advised plaintiff that problem was with sieves and defendant supplied another set of sieves but quality of flour remained the same, standard flour. ·~...t{ 5 .. ! . ··• Plaintiff sent defendant reminders for remedial measures to be taken but defendant was not quick to respond. This is evidenced by Exhibits "P4", "PS" and "P6" comprised of plaintiffs various letters to the defendant on the problem. Therefore issue 2 is answered in the negative that the machine supplied failed to perform. On issue three, the wit8¢sses, (PWl), further testified that finally the defendant's respon~e was in the form of a Proforma Invoice dated 22/10/01 for Remodeling of the Maize Plant at a cost of SFR 348,420; Exhibit "P7". It was testified that efforts to sell the flour produced at the mill within Tanzania failed as customers rejected the product as below standard. Further testimony was Exhibit "P7" that defendant was not prepared to modify the machines unless the plaintiff paid SFR 348,420:- Up to the time of hearing, the Milling Machine remained unrepaired and idle; thus the plaintiff was rendered out of milling business. The third issue is answered in the affirmative. ,}_;.:,... ( The fourth and last issue '\l a crucial one on the reliefs that the parties are entitled to. It is of significance here that the plaintiff has to prove the case on a balance of probabilities. It is immaterial that the case proceeded ex-parte; that burden of proof has to be discharged by the plaintiff. 6 . . The plaintiff prayed under prayer (a) of the plaint for shs 857,117,000/= being total loss incurred on account of business. It is a claim for special damages. In support of the claim, oral evidence of PW2 was tendered that plaintiff suffered loss of business as a consequence of the defective milling machine from May 2001. Further testimony tendered was in the form of Exhibit "P9" which was the plaintiffs computation of losses incurred by the plaintiff since :;Jt; May 2001. But the plaintiff did.,~not state how the figure was arrived at. For example, at page 1 of Exhibit "P9" which was tendered by PW2, it was shown the summary of losses suffered up to November, 2005, to be shs 6, 285,144/=. But the figure of shs 857,117,000/= is not reflected anywhere in the document. Another prayer was under prayer (d) of the plaint for compensation of losses incurred monthly on account of payments of interest on bank loans and operating expenses. This head of claim though not quantified, is also in the nature of special damages. It was a condition precedent of the:,contract to supply a Milling Machine id.n . as contained in Exhibit. "P3" (Invoice) that the plaintiff had to secure an Irrevocable Letter of Credit in favour of the defendant, from a bank, to cover the value of the Milling Machine so, the defendant was aware that the plaintiff had incurred such liabilities for its milling business and the consequences of the milling machine being rendered inoperative. The plaintiff is entitled to special damages. But again, there is no proof of such monthly payments to the East 7 . f\if' <in ·. ·t~ African Development Bank ("EADB") on account of the Letter of Credit ("LC''). Neither was there proof of servicing the loan for its operations secured from the then National Bureau de Change. Also of significance is that Exhibit. "P9" on the losses was prepared by the plaintiff but the accounts were not verified by an auditor or some other qualified independent third party. The issue here is whether the two heads of claims have been proved to the required standard ·as special damages. With the : ,~; t ' exception of Exhibit. "P9" there was no other evidence received of monthly payments to banks to service the loans. It is a trite principle of law that where special damages are claimed, they must be proved in evidence. A number of decided cases and literature by distinguished authors on this legal position are many and varied. These include COOPERMOTORS CORPORATION (T) LTD VS ARUSHA INTERNATIONAL CONFERENCE CENTRE (1991) TLR 165, JUMA MISANYA AND ANOTHER VS LISTA NDURUMAI (1983) TLR 245. Other unreported decisions include THEO MUSH! AND ANOR VS DR WILSON MUTAGABWA; C/A 281/01; TANESCO VS IBRAHIM .rar, FORD; C/A 99/99; both of Higb ;Court, DSM, (unreported). Also, the book SALMOND ON THE LAW d~ TORTS, 7 EDITION at page 143. th However, it is a settled legal principle of law that General Damages are limited to those that the law will presume to be the direct, natural or probable consequences of the act complained of; 8 .,, .,,,}j...{' (See Court of Appeal decisions: i;~- the cases of AFRICAN MARBLE CO. LTD VS TANZANIA SARUJI CORPORATION, Civil Application No. 38 of 1993 and TANESCO VS TIMBER ENTER PRISES LTD; Civil Appeal No. 26 of 2000 both unreported). Secondly general damages are usually not a quantifiable claim in a suit. They should be merely included in the statement of claim and left to the court to do the assessment based on the principles above (See COOPER MOTOR CORPORATION LTD VS MOSHI/ARUSHA OCCUPATIONAL HEALTH SERVICES, (1990) TLR 96). And thirdly is on the interest payable on general damages. Interest is chargeable from the date of judgment and not from the date of suit or from the date the·~cause I . • of action arose. The rationale ,;' i( here is simple in that general damages due are not available until after the same is assessed by the court depending on the circumstances of the case. Therefore, interest is chargeable only from the date the award is made; (See Court of Appeal decision in SAID KIBWANA AND ANOR VS ROSE JUMBE Civil Appeal No. 6/93, Arusha Registry; unreported). In the absence of proof as Special Damages, the claims under (a) and (b) become General Damages. Taking into account the business losses incured by the plaintiff; payments to EADB and the !1 ti·t National Bureau de Change to_, ~ervice the liability together with the accompanying inconveniences, the plaintiff claimed loss/ compensation of shs 4,270,000,000/=. Although the defendant must have foreseen the consequences of its supply of defective milling 9 . . machine and its failure to rectify the defects; I am of the view tha~ the amount of claim is on the higher side. I would instead assess general damages due to the plaintiff at 60% of shs 4, 270, 000,000/= as adequate to cov~r.~i9~neral damages under (a) and (d); ·>·~}f: and it is accordingly granted. \·' Prayer (c) is granted as prayed in that the defendant is ordered to remodel the milling machine to the required specifications to produce "super sembe". Interest at court rate under prayer (b) is also granted from the date of judgment to payment in full. The plaintiff to have the costs of the suit. K.K. Oriya JUDGE 26/10/2006 Word 2,011 -;fJit. ,.