CIVIL APPEAL NO 241 OF 2019 TANZANIA NATIONAL ROAD AGENCYTANROADS VS PRISMO BADR JV THE PARTNERSHIP BETWEEN PRISMO UNI9VERSAL ITALIANA S P A AND BADR EAST AFRICAN ENTE

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM fCORAM: WAMBALI. J.A., MASHAKA. J.A. And MASOUD. J.A.1 CIVIL APPEAL NO. 241 OF 2019 TANZANIA NATIONAL ROAD AGENCY (TANROADS).........................APPELLANT VERSUS PRISMO/BADR JV THE PARTNERSHIP BETWEEN PRISMO UNIVERSAL ITALIAN A S.P.A AND BADR EAST AFRICAN ENTERPRISES LTD......................................RESPONDENT (Appeal from the Judgment and Decree of the High Court of Tanzania at Dar es Salaam) (Muiulizi, U dated the 23rd day of June, 2015 in Civil Case No. 90 of 2008 JUDGMENT OF THE COURT 29th May & 19thJune, 2024 MASOUD. J.A.: The appellant was successfully sued by the respondent in the High Court for a declaratory order that the recommendations issued by the Dispute Review Expert (DRE) on 7thAugust, 2008 were final and binding on the parties and should be implemented; that the respondent's obligation on the performance guarantee was void ab M to and; that a permanent injunction be issued restraining the appellant from pressing for the payment of the sums promised under the performance guarantee. While disputing the respondent's claim, the respondent unsuccessfully counterclaimed against the respondent for a declaratory order that the advance payment made to the respondent is recoverable under the principle of restitution and unjust enrichment. The background giving rise to this appeal had its genesis on 23rd February, 2007 when the respondent entered into a contract with the appellant after being awarded a tender for upgrading to the level of bitumen the roads from Marangu to Rombo Mkuu, and from Mwika to Kitacha, in Kilimanjaro Region. As a condition of that contract, the appellant secured Performance Guarantee and Advance Payment Guarantee from the National Bank of Commerce. At some point in time, the appellant paid the respondent the advance payment for mobilisation of the site pursuant to the contract. Subsequently, the respondent mobilised the site for the purposes of the execution of the contractual works. Following a dispute that arose between the appellant and the respondent on some aspects of execution of contractual works, and the subsequent request by the respondent for the appointment of a DRE under clause 67.1 of the contract, the respondent referred the dispute to the DRE appointed by the International Chamber of Commerce (ICC) in Paris, France to review the dispute and make recommendations pursuant to the said clause of the contract. The recommendations were on 7th August, 2008 eventually given by the DRE to the effect that the contract was void ab initio; that the actions of the appellant and respondent were illegal and the parties were not entitled to restitution; and that, the advance payment was properly utilised for the contract purposes. Although a party who was aggrieved by the recommendations could challenge the recommendations through arbitration within fourteen days of giving such recommendations, none of the parties herein challenged the recommendations through such forum. Going by the pleadings from pages 457 up to 470, pages 1029 up to 1036, and pages 1062 up to 1079 of the record of appeal, it is plain that both the main suit and the counterclaim were hinged on the contract which was declared by the DRE to be void ab initio, the guarantees which were a condition of the contract, the demand by the appellant for recovery of the advance payment pursuant to the guarantees, and the recommendations (exhibit P14) rendered under clause 67.1 of the contract providing for a dispute review procedure as a prerequisite step prior to arbitration. During the final pre-trial and scheduling conference as evident at pages 52 and 53 of the record of appeal, the trial court had framed issues for determination. The said issues were in relation to the respondent's claim in the main suit and the appellant's counterclaim. In relation to the main suit, the issues were: (i) Whether the employer was entitled to state in its demand for payment under performance guarantee that the contractor (the respondent) was in breach of its obligations under the contract between the said contractor and the employer (the appellant) for the construction of the roads as aforesaid; (ii) whether the employer was entitled to state in its demand for payment on the advance payment guarantee that the contractor was in breach of its obligations under the contract because it had utilised the advance payment for purposes other than the cost of mobilisation for the performance of the contract; (iii) what is the effect of the main contract being void ab initio on the performance and advance payment guarantees and; (iv) to what reliefs are parties entitled? In relation to the counterclaim, the issues were: (i) Whether the contract between the contractor and employer for the construction of the roads had special conditions of the contract; (ii) whether the advance payment is recoverable from the contract; (iii) whether the employer is entitled to enforce performance guarantee against the contractor; and to what reliefs are the parties entitled. In a bid to prove their respective cases, the respondent called only one witness, namely, Mr. Dennis Vennier (PW1) who tendered exhibits PI up to P19 and who also testified as DW1 to the counterclaim. On the other hand, the appellant called two witnesses, namely, Mr. Kini Kuyonza (DW1), and Engineer Tumaina Sarakikiya (DW2) who testified for the defence and the counterclaim. After the hearing of the case, the trial judge gave his judgment which consolidated and decided both the main suit and the counterclaim in the favour of the respondent and against the appellant, having found that the contract was, as determined by the DRE, void ab initio, and that the guarantees were equally inoperative and void ab initio. As the contract was void ab initio, the trial judge was also of the finding that the appellant had no locust standi to sue the respondent for recovery of advance payment by virtue of section 3 (6) (c) of the Executive Agencies Act [Cap. 245 R.E. 2002 now R.E 2019] (the EAA). Aggrieved by the decision of the trial court, the appellant challenged the trial judge's judgment on the following grounds: (1) That, the trial Judge erred in law and in fact in holding that the employer (appellant) was not entitled to sue for restitution for monies paid by it under a contract it elected to treat as void. (2) That, the trial Judge erred in law and fact in holding that the Dispute Review Expert's (DRE) recommendations were valid and binding upon parties. (3) That, the trial Judge erred in law and in fact in holding that the contractor and the surety under the respective guarantees were retrospectively discharged upon the contract being declared void ab initio at the instance o f the employer and beneficiaries o f the respective guarantees. (4) That, the trial Judge erred in law and in holding that the guarantees were inoperative and void ab initio. (5) That, the trial Judge erred in law and fact in holding that the employer had no locus standi to recover the advance payment in the suit At the hearing of the appeal, the appellant was represented by Mr. Saddy Rashid, learned Principal State Attorney who was assisted by Mr. Gerald Njoka and Ms. Selina Kapange, both learned Senior State Attorneys. On the other hand, Mr. Peter Kibatala, learned advocate, appeared for the respondent. Although the appellant lodged written submission in support of the appeal, the respondent through its counsel lodged no written submission and made oral submission opposing the appeal. In determining this appeal, we deem it appropriate to start with the fifth ground in the memorandum of appeal relating to the locus standi of the appellant which we have reproduced above. It also relates to the determination against the counterclaim from pages 168 up to 169 of the record of appeal where, among other things, the trial Judge said: "There is another dimension. In terms o fsection 3 (6) (c) o f the EAA 'Notwithstanding any other law, an Executive Agency shall....(c) in all matters relating to contract, not be competent to sue or be sued in its own name; however, any legal proceedings which> but for this paragraph, would have been instituted by or against the executive agency may only be instituted by or against the Governmentin accordance with the Government Proceedings Act/ The effect of this provision; read together with the preceding paragraph (b), is dear and does not call for further interpretation. While the employer can enter into contract, sue or be sued in terms o f that contract, it cannot sue or be sued in case o f derivative rights to recover moneys paid in absence of consideration either by statute, equity or common law consequent to contract becoming void. It has no focus standi by reason o f its finding Act. To that extent, the employer's claim, based on restitution on principles o f common iaw at its own instance, would not be tenable." Incidental to the above finding is the question whether the parties were heard by the trial court on the issue of locus standi before it considered and determined the same against the appellant, which issue we invited the parties to address us on during the hearing of the appeal. In his oral submission in relation to the incidental question, Mr. Rashid faulted the trial Judge for determining against the appellant on the issue of 7 locus standi of the appellant in the matter that he raised suo motu in the course of composing his judgment without inviting the parties to address that question. He insisted that the course taken by the trial Judge was improper because it violated the parties' right to be heard before a judicial decision is taken. Mr. Rashid did not however submit on the way forward should the Court up hold his line of submission. Conversely, Mr. Kibatala's oral submission was equally brief and focused on the issue. He maintained that the decision reached by the trial court on the iocus standi of the appellant was an outcome of his reasoning when determining the third issue, that is, whether the employer is entitled to enforce performance guarantee against the contractor which, according to him, relates to iocus standi of the appellant. He also argued that since reference had been made by the parties to the EAA, it means that it was within the fours of the pleadings and within the parties'full knowledge. As to the way forward, the learned advocate argued that should the Court find contrary to his submission the remedy would be to nullify the relevant trial proceedings and order the matter to be determined afresh after hearing the parties on the issue. We have scrutinised the trial court's proceedings in the record of appeal containing 2659 pages. We did so in the light of the issue whether the parties 8 were heard on the question whether the appellant in terms of section 3 (6) (c) of the EAA had focus standi to claim for recovery of the advance payment. Our scrutiny focused on the pleadings, the issues recorded for the determination of the main suit and the counterclaim, the evidence tendered at the trial, and the final submissions filed before the trial court after the hearing. We could not in the end find anything in the pleadings supporting a finding that the parties were aware of the issue and were expected to address it but in vain. Similarly, we could not find that the issue raised by the trial Judge suo motu was amongst the framed issues for determination by the trial court. We could not likewise find any record to the effect that the parties were heard by the trial court on the issue before the trial court considered and determined it against the appellant. It goes without saying that there was nothing from the parties on the record that supported either the course taken by the trial Judge of raising the issue suo motu or the argument by Mr. Kibatala that the issue was a result of the trial judge's process of reasoning for the decision. It was not surprising that the trial court did not in its resolve consider and make any reference to any argument of any of the parties on the issue for there was none. It is for such reason that even the trial Judge 9 acknowledged that the parties did not address the issue. At page 181 of the record of appeal, the learned trial Judge particularly observed thus: (a) The employer's claim is struck out by reasons o f section 3 (6) (c) o f the EAA. It did not have locus standi to claim under suit for remedies outside the contract consequent to treating the contract as being void ab initio. (b) The issue offocus standi and resjudicata ought to have been raised by the parties. They did not Consequently, each party will bear its own costs in relation to the counterclaim. [Emphasis added]. It is evident from the above excerpt and the reasoning of the trial Judge at pages 168 and 169 of the record of appeal that after he found that the issue was crucial to the determination of the counterclaim, although it was neither raised nor addressed by the parties, he just improperly proceeded to deliberate on it and compose his judgment without affording them the right to be heard on it. We are of the decided view that the trial Judge should have given the parties an opportunity to be heard on the issue before determining it. In view of the foregoing, we agree with Mr. Rashid that the course taken by the trial Judge of raising the issue of locus standi suo motu in the 10 course of composing his judgment and dealing with it without hearing the parties was improper. It is, on our part, a fatal irregularity that occasioned injustice to the parties as it denied them the opportunity to be heard on the issue which hinges fundamental constitutional right guaranteed under Article 13 (6) (a) of the Constitution of the United Republic of Tanzania, Cap. 2. Our view is informed by the settled position of the law applicable in a situation where the court makes a decision on an issue without affording parties an opportunity to be heard on it. In the case of General Medical Council v. Spackman [1943] A. C. 627, Lord Wright said: "If principles o f natural justice are violated in respect o f any decision, it is indeed immaterial whether the same decision would have been arrived at in the absence o f the departure from the essential principles o f justice. The decision must be declared to be no decision." The principle of law emerging from that case was followed and relied upon by this Court in the case of Abbas Sherally and Another v. Abdul Sultan Haji Mohamed Fazalboy (Civil Application IMo. 133 of 2002) [2005] TZCA 105 (17 November 2005, TANZLII) where it was particularly held that: "The right o f a patty to be heard before adverse action is taken against such party has been stated and emphasized by the courts in numerous decisions. That li right is so basic that a decision which is arrived at in violation o f it wiii be nullified, even if the same decision would have been reached had the party been heard, because the violation is considered to be a breach o f naturaljustice.m In relation to the above pronouncement see also, Diamond Trust Bank Tanzania Ltd v. Granitech (T) Ltd and Others (Civil Appeal No. 153 of 2021) [2024] TZCA 102 (23 February 2024, TANZLII), Margwe Erro and Two Others v. Moshi Bahalulu (Civil Appeal No. I l l of 2014) [2015] TZCA 282 (25 February 2015, TANZLII); Danny Shasha v. Samson Masoro and Others (Civil Appeal No. 298 of 2020) [2021] TZCA 653 (5 November 2021, TANZLII); and Mbeya-Rukwa Auto Parts and Transport v. Jestina Mwakyoma [2003] T. L. R. 251, among many. In view of the foregoing deliberations and findings, we find merit in the fifth ground of appeal on the finding of the trial court that the appellant had no locus standi to claim for recovery of the sum paid to the respondent as advance payment without according parties a hearing. As a result, a miscarriage of justice was occasioned. Since allowing this ground of appeal in the manner we have deliberated upon above will have the effect of vitiating the impugned judgment which determined both the main suit and the 12 counterclaim, we find no pressing need to deal with the remaining grounds of appeal. For the reasons stated above, we allow the appeal. Consequently, we nullify, quash the judgment and set aside the decree of the trial court in Civil Case No. 90 of 2008. Accordingly, we order the case file to be remitted to the trial court before another Judge for composing afresh a judgment in accordance with law. Given the circumstances of the appeal, we order that each party shall bear its own costs. DATED at DAR ES SALAAM this 18th day of June, 2024. F. L. K. WAMBALI JUSTICE OF APPEAL L. L. MASHAKA JUSTICE OF APPEAL B. S. MASOUD JUSTICE OF APPEAL The Judgment delivered this 19th day of June, 2024 in the presence of Mr. Malimi Masasila, learned State Attorney assisted by Mr. Stephen Kimaro, learned State Attorney for the appellant and Ms. Gloria Ulomy, learned counsel for the Respondent, is hereby certified as a true copy of the original.