t ports authority vs ms diamond motors ltd another 2011 tzhccomd 2069 18 april 2011

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION)

AT DAR ES SALAAM COMMERCIAL CASE NO.23 OF 2010 TANZANIA PORTS AUTHORITY................................... PLAINTIFF

VERSUS M/S DIAMOND MOTORS LIMITED...............................DEFENDANT M/S DIAMOND SHIPPING SERVICES LIMITED.................................................... 3r d PARTY/DEFENDANT Date of last order: 06/09/2010 Date of final submissions: 11/10/2010 Date of ruling: 18/04/2011

RULING MAKARAMBA, J.: This is a ruling on the three points of preliminary objection raised by the Third Party that first, the Defendant's claim is time barred and not maintainable for being in contravention of the mandatory provisions of the carriage of Goods by Sea Act [Cap. 164 R.E. 2002]; secondly, that the Defendant has issued a Third Party Notice to an agent of a disclosed principal contrary to law and procedure; and lastly, that the Defendnat has no cause of action against the Third Party. Page 1 of 19 The three points of preliminary objection by consent was disposed of by way of written submissions. Mr. P. Kamala from Kesaria & Company, Advocates advocated for the Third Party and The Professional Centre, Advocates for the Defendant. In addressing the preliminary points of objection I have dealt with and determined the first and third grounds but not the second point for reasons explained in this ruling. The Counsel for the Third Party flagged off his submissions in chief by stating that different laws prescribe the periods within which certain actions should be brought before the court or when a party can enforce his/her right. The Counsel for the Third Party submitted further that the law regulating contract between a shipper and a carrier is the Carriage of Goods by Sea Act [Cap. 164 R.E. 2002], which requires all actions/suits under the Act to be brought within a

period of one year. It was the further submission of the Counsel for the Third Party that in terms of Article VII subarticle 6(3) of Schedule of Rules Relating to Bills of Lading: "...f/?e carrier and the ship shall be discharged from all liability in respect o f loss or damage unless suit is brought within one year after delivery o f the goods or the date when the goods should have been delivered." The learned Counsel for the Third Party alluded to the facts that the ship carrying the goods, the motor vehicles the subject of the Bill of Lading at the centre of this suit, arrived at Dar es Salaam Port on 07/09/2007 and the Bill of Lading was issued on 29/08/2007. In the calculations of the learned Counsel for the Third Party, one year started to run from Page 2 of 19 07/09/2007 when the ship arrived at Dar es Salaam Port and expired on 06/09/2008. The suit has been brought three years after expiration of three years since goods delivered at Dar es Salaam Port and therefore the Third Party Notice should be dismissed with costs as per section 3 of LLA for being time barred, surmised and prayed the learned Counsel for the Third Party. In reply, the Defendant's Counsel submitted that the Carriage of Goods by Sea Act [Cap. 164 R.E. 2002] and Rules Relating to Bills of Lading in the Schedule to the Act cited by the Counsel for the Third Party are inapplicable in the case at hand as

that Act and the Rules thereof apply only in respect of carriage of goods by sea in ships plying "from any port in United Republic o f Tanzania to any other port in or outside the United Republic." The Defendant's Counsel submitted further that since in the case at hand the goods were shipped from the port of SHARJAH TERMINAL in the United Arab Emirates to the Dar es Salaam Port in the United Republic of Tanzania, the present case therefore falls within the exclusion in the provisions of section 2 of the Act, which the Defendant's Counsel cited in full in his submissions. Accordingly, the Rules set out in the Schedule to the Carriage of Goods by Sea Act [Cap. 164 R.E. 2002] which apply only in relation to and in connection with the carriage of goods by sea in ships carrying goods from any port in the United Republic to any other port whether in or outside Tanzania are therefore inapplicable to the case at hand and prayed that the preliminary objection should be dismissed with costs. Page 3 of 19 The provisions of section 2 of the Carriage of Goods by Sea Act [Cap. 164 R.E. 2002] which the learned Counsel for the Defendant cited in his reply submissions stipulates as follows: "Subject to the provisions o f this Act, the rules set out in the Schedule hereto shall have effect in relation to and in connection with, the carriage o f goods by sea in ships carrying goods from any port

in the United Republic to any other port whether in or outside the United Republic." (the emphasis is that o f the Defendant's Counsel). The main issue for the determination of this Court with respect to the first point of preliminary objection that the suit has been brought three years after expiration of three years since goods delivered at Dar es Salaam Port is whether the limitation of time set out in the Rules in the Schedule to the Carriage of Goods by Sea Act [Cap. 164 R.E. 2002] apply to the case at hand. In my view, there is no controversy that the dispute at hand arose out of contract of carriage of goods by sea, evidenced by the Bill of Lading, and that the goods were shipped by sea in a ship from the port of SHARJAH TERMINAL which is in the United Arab Emirates to the Dar es Salaam Port in the United Republic of Tanzania. As correctly submitted by the Defendants Counsel, in terms of section 2 of the Carriage of Goods by Sea Act [Cap. 164 R.E. 2002], the rules set out in the Schedule to the Act have effect in relation to and in connection with, the carriage of goods by sea in ships carrying goods from any port in the United Republic to any other port whether in or outside the United Republic. In the present case the goods were shipped by sea in a ship from a port outside Tanzania, SHARJAH TERMINAL, in the United Page 4 of 19 Asrab Emirates, to a port in the United

Republic of Tanzania, Dar es Salaam Port, thus making the provisions of Article III sub-article 6(3) of the Rules in the Schedule to the Carriage of Goods by Sea Act [Cap. 164 R.E. 2002], setting out exemption of a carrier and the ship from liability in respect of loss or damage unless the suit is brought within two years after delivery of the goods or the date when the goods have been delivered inapplicable. In the event and for the foregoing reasons the first point of preliminary objection that the Defendant's claim is time barred and not maintainable for being in contravention of the mandatory provisions of the Carriage of Goods by Sea Act [Cap. 164 R.E. 2002] and the Rules made thereunder is hereby dismissed. In the second point of preliminary objection the Counsel argued that the Defendant has issued a third party notice to an agent of a disclosed principal contrary to law and procedure. The Counsel for the Third Party revisited section 182 Law of Contract Act [Cap.345 R.E. 2002] which states that an agent cannot be bound by or be liable for contracts entered by or on behalf of the principal. It was the submission of the Counsel for the Third Party that the Bill of Lading (Annx. B"" in 3rd Party Notice) indicates that the contract of carriage was entered between M/S Tradex Middle East FZE and EUKOR Car Carriers Inc. Diamond Shipping Services Limited is a mere agent, the

Counsel for the Third Party maintained and made reference to page 1179 Pollock & Mulla Indian Contract and Speific Reliefs Act Eleventh Edition, commenting on section 230 of Indian Act Page 5 of 19 which is pari materia with our section 182, to the effect that if there is no express contract making the agent itself liable or the contract of carriage, the agent's name should be deleted from plaint. The Counsel for the Third Party surmised that unless there is in existence an express contract between the Defendant and the 3rd Party making the latter liable for the contract of carriage as agent of the disclosed principal, the suit against the 3rd Party cannot be maintained. It was the further submission of the Counsel for the Third Party that nowhere in the Defence, the Defendant has pleaded the existence of such an express contract whereby the 3rd Party as agent of the foreign shipping line has agreed to become liable for the contract of carriage of the Defendant's goods. The learned Counsel for the Third Party buttressing further this point referred this Court to the Kenyan case in the Commercial Court at Nairobi FRIENDSHIP CONTAINER MANUFACTURERS LIMITED VS MITCHELL COTTS (K) LIMITED [2001] 2 EA 338 where it was held that a person who acts as agent of a disclosed principal cannot be liable to the Plaintiff in respect of that particular transaction. It was the further submission

of the Third Party Counsel that the point that as long as the principal is known and disclosed and the contracting party with the Plaintiff, then the Defendant as agent cannot be liable was buttressed in the decision of this Court by Makaramba, J. in PRINTO WRAPPINGS LIMITED VS SAFMARINE TANZANIA LIMITED Commercial Case No.35 of 2009 (unreported). Page 6 of 19 The Counsel for the Third Party amplifying further submitted that the principle supported by the doctrine of privity of contract which prevents a third party to enforce a contract, applies with equal logic to forbid the contracting parties to enforce obligations against a stranger. Further, as is the case presently, the Counsel for the Third Party further argued, the contract between the contracting parties, M/S Tradex Middle East FZE and EUKOR Car Carriers Inc. respectively, in which the former was a mere agent of the Defendant, therefore M/S Diamond Motors Limited, a total stranger to the contract of carriage, which cannot impose liability a third party. It was the submission of the Defendant's Counsel in reply that as could be gathered from paragraph 6 of the written statement of defence, the Defendant simply mentioned the name of the ship that carried its consignment of 5 units 2WD Mitsubishi pick-ups whose shipping company/agent is M/S Diamond Shipping Services Ltd. It is the contention of the Defendant's Counsel

that apart from mentioning the name of the ship which carried the consignment of the named goods whose shipping company was not known to the Defendant but the agent/shipping company who is the Third Party, it cannot be said that the principal in the circumstances is a disclosed principal and therefore the Third Pary has been rightly sued. The Defendant's Counsel submitted further that in terms of Order 1 Rule 2 of the Civil Procedure Code, as pleaded in the Third Party Notice, the Third Party being a shipping company/agent becomes a person who Page 7 of 19 can be joined as a Defendant against whom any right to relief arising out o f the transaction is alleged to exist. The Defendant's Counsel relying on the need for the Court to ensure the interests of the parties urged this Court to resort to Order 1 Rule 9 by allowing an amendment of the Plaint so that the Third Party, the agent if it so wishes to be allowed to join the principal. The Defendant's Counsel in his reply submissions stated that looking at paragraph 2 of the Third Party Notice, the Defendant was not certain as to the status of the Third Party. In that paragraph the Defendant pleaded that the Defendant through its agent M/S TRADEX MIDDLE EAST FZE procured the 5 units of 2WD Mitsubishi Pick-ups and ship them to the Plaintiff on board MV MORNING MIDAS whose shipping company/agent is M/S DIAMOND SHIPPING SERVICES LTD.

The Defendant submitted further that the Defendant had been dealing with the Third Party as stipulated in paragraph 6 of the Third Party Written Statement of Defence where the principal is not disclosed since had it been so it would have been sued jointly with the Third Party in terms of Order 1 Rule 7 of the CPC. It is the submission of the Defendant's Counsel that the question as to who is liable and to what extent would be determined by the Court. The Defendant's Counsel submitted further that whether an agent is bound by or becomes liable for contracts entered by or on behalf of the principal as provided for in section 182 of the Law of Contract Act [Cap.345 R.E. 2002] can properly be determined by looking at and reading the contract between an agent and the Defendant or between the Defendant Page 8 of 19 and the principal and an agent to ascertain whether it has a clause making an agent liable for and/or giving an agent powers of enforcing the contract as against the person he is entering into contracts by or on behalf of the principal. It is the further submission of the Defendant that this is a matter involving production of evidence. The Defendant's Counsel surmised that in so far as the second point of preliminary objection is premised on facts to be ascertained in the contracts to be tendered and/or produced in evidence does not qualify to be termed a preliminary

objection in terms of the well- known case of MUKISA BISCUITS MANUFACTURING CO. LTD VS WEST END DISTRIBUTORS LTD [1969] EA 696 and prayed that the preliminary objection be dismissed. The Counsel for the Third Party rejoining submitted that the Defendant's Counsel has failed to distinguish not only the applicability of the authorities the Counsel for the Third Party cited in his submissions in chief but has also the applicability of section 182 of the Law of Contract Act [Cap.345 R.E. 2002] exonerating an agent from liability of the principal. The Counsel for the Third Party in his rejoinder submissions attacked the argument by the Defendant's Counsel that the Defendant did not know that the shipping company was EUKOR Car Carriers Inc., instead they knew the 3rd party, an agent asking what knowledge the Defendant want? It is the further submission of the Counsel for the Third Party that the Bill of lading, which is the contract of carriage, was issued by EUKOR Car Carriers Inc., and it was issued to M/S Tradex East FZE, a purported agent of the Defendant and further that it was also disclosed in the Bill of lading that Page 9 of 19 the 3rd Party was a mere "agent of the vessel" wondering how can an agent be liable in the circumstances. The Counsel for the Third Party argued further that since a 3rd party has no mandate to issue a Bill of lading but only the principal, therefore

the remedy sought by the Defendant against the 3rd party cannot be achieved in any event. The Counsel for the Third party also attacked the argument by the Defendant's Counsel that the applicability of section 182 of the Law of Contract would be determined after reading the contract between the shipper and carrier at the trial by submitting that the contract of carriage which is the Bill of Lading annexed to the Plaint shows that the shipper is Tradex Middle East FZE and the carrier is ERUKOR Car Carriers Inc, which is evidence to prove parties to the contract. The Counsel for the Third Party also attacked resort by the Defendant's Counsel to Order 1 Rule 3 and Order 1 Rule 9 of the CPC as being inapplicable as they would apply if there was no specific law governing the relationship of the parties and in this case the Law of Contract Act, which expressly bar the claims against agents, otherwise this would amount to abuse of court process to join parties who are not concerned with the matter in dispute. This Court has to determine whether the principal was disclosed so as to bring the matter within the ambit of section 182 of the Law of Contract Act, which as the Counsel for the Third party rightly argued, expressly exempt agent from liability for contracts entered by or on behalf of the principal. In my view however, this objection is closely related to the Page 10 of 19 third

ground of preliminary objection that the third party notice does not disclose a cause of action against the third party. On the third ground of preliminary objection that the Defendant has no cause of action against the 3rd Party, the Counsel for the Third Party submitted that whether a pleading discloses a cause of action, meaning facts necessary for the Plaintiff to prove before the Plaintiff can succeed in the suit, as per the decision of the Court of Appeal of Tanzania in Civil Appeal No.15 of 1983 JOHN M. BYQMBALIRWA V. AGENCY MARITIME INTERNATIONALE (TANZANIA) LTD [1983] TLR 1, must be determined upon a perusal of the pleadings alone together with anything attached so as to form part of it, and the assumption that any express or implied allegations of fact in it are true as per Bwana, J. in Commercial Case No.146 of 2002 MIC (T) LIMITED VS TANZANIA TELECOMMUNICATIONS COMPANY LIMITED. As could be gathered from the submissions of the Counsel for the Third party, the facts in respect of the Third Party Notice are as follows: The Third Party is the local agent in Tanzania of the disclosed principal, EUKOR Car Carriers Inc., a shipping line in UAE. The Defendant, M/S Diamond Motors Limited, through its agent M/S TRADEX MIDDLE EAST FZE, the shipper, contracted with EUKOR Car Carriers Inc., the carrier, for carriage of the goods from the United Arabs Emirates to Tanzania.

The Counsel for the Third party submitted that it was with the foreign shipping line with which the Defendants agent, M/S TRADEX MIDDLE EAST FZE, the shipper, entered into a contract for the carriage its goods and not the 3rd Page 11 of 19 party who is only the local agent of the shipping line, EUKOR Car Carriers Inc. It is therefore absurd, the Third Party Counsel further submitted, for the Defendant to hold liable the Third Party for its own mistake and/or negligence as expressly pleaded in paragraph 2 of the Third Party Notice that the original Bill of lading for the Plaintiff's goods got misplaced during transit and/or inter-banking systems making it difficult for the Plaintiff to secure delivery and/or release of the vehicles from the port fort want of original Bill of Lading. As correctly submitted by the Third Party Counsel, given that the Defendant was not even a party to the contract involving the 3rd Party's principal, one would expect at least the Defendant's purported agent M/S Tradex Middle East FZE to come forward to take action. It is paradoxical that a stranger to the contract, the Defendant, is trying to hold another party who is also a stranger to the contract, the 3rd Party, liable for mistakes committed by the Defendant itself or its agent. In his submissions the learned Counsel for the 3rd Party having restated the cardinal principle in the law of carriage

of goods that a person who holds an original Bill of Lading holds a title to the goods, wondered how, given what the Defendant pleaded in the Third Party Notice that the Bill of Lading was misplaced during transit and/or inter-banking systems, the 3rd Party could release goods to a person who has no original Bill of Lading. Further, the Counsel for the Third Party wondered, how can the 3rd Party be responsible for negligence committed by the Defendant or its agent? It is the further case for the 3rd party that the 3rd Party has not Page 12 of 19 refused to release the goods, but as the procedure requires, it can only release the goods to a party who holds an original Bill of Lading. The Counsel for the Third Party submitted further that the foregoing facts pleaded by the Defendant plainly and obviously discloses that there is no any cause of action against the 3rd Party. The learned Counsel for the 3rd Party amplifying further on this point, went to the extent of drawing the analogy of the cargo handling at the Dar es Salaam International Airport by Swissport (formerly DAHACO) and the defunct NASACO in the case of Dar es Salaam Port to show that since these are handling agents for the respective airlines or ships calling at Dar es Salaam International Airport or the Dar es Salaam Port, therefore in the case of cargo being misplaced or lost, it is the airline or the shipping

line which gets to be blamed and not the cargo handling agents at the airport or the port as the case may be. In any case, the Counsel for the Third Party further submitted, if there would be any liability it will be against either the airline or the shipping line as the case may be and not the cargo handling agent. The local handling agent cannot be held responsible for the manner in which the airline or the shipping line as the case may be manifests or carries the cargo from abroad to Tanzania, the Counsel for the Third Party surmised. The Defendant's Counsel in reply submitted that in the Third Party Notice, the Defendant successfully pleaded that there is a contract of carriage of goods by sea entered into by the Defendant though its agent with the 3rd Party and/or 3rd party's principal, in which contract the 3rd party is bound to issue the original bill of lading and/or re-issue the same Page 13 of 19 when it is lost or misplaced, subject however to all necessary precautions. These having been pleaded in the 3rd Party Notice, the Defendant's Counsel further replied, the fact that the Defendant negligently lost the same should come on merit of the case in mitigating damage or justifying the necessary precautions to be taken and hence making the preliminary objection failing to qualify as a preliminary objection in terms of MUKISA BISCUITS MANUFACTURING CO. LTD VS WEST

END DISTRIBUTORS LTD [1969] EA 696 and prayed that the preliminary be dismissed. The Counsel for the Third Party in rejoinder reiterated his arguments in chief on this point that neither the Defendant nor the 3rd Party are parties to the contract of carriage and therefore there is no privity of contract between the Defendant and 3rd Party and further that the contract of carriage was made between TRADEX MIDDLE EAST FZE and EUKOR Car Carriers Inc, who are parties to this suit. The Counsel for the Third Party surmised and prayed that applying the principle of privity of contract this Court dismisses the 3rd party notice because the Defendant has no cause of action against the 3rd Party. The third point of preliminary objection is that the third party notice does not disclose a cause of action. In the eyes of the law, where a third party notice issues, the matter as between the Defendant and the intended third party is thereby treated as suit between them, in that the Third Party is to be treated as plaint and the general principles in civil litigation Page 14 of 19 applicable to a plaint therefore apply mutatis mutandis to the third party notice. The gist of the argument by the Counsel for the Third Party in the third point of preliminary objection is that the Third Party Notice does not disclose a cause of action against the Third Party. The reason for this is that the Defendant

has not pleaded the essential facts which are necessary to prove before the Defendant can succeed in the suit. In resolving the issue whether the third party notice discloses a cause of action, resort is to be had to the principles stated in Order VII Rule 11(a) of the Civil Procedure Code governing a plaint such that in the case of a plaint which does not disclose a cause of action it is liable to be rejected. This principle finds judicial expression in a number of decisions and particularly in Commercial Case No. 146 of 2002 MIC (T) LIMITED V TANZANIA TELECOMMUNICATIONS COMPANY LIMITED and the decision of the Court of Appeal in JOHN M. BYOMBALIRWA V. AGENCY MARITIME INTERNATIONALE (TANZANIA) LTD [1983] TLR 1, wherein it was succinctly stated that in deciding whether or not the plaint discloses a cause of action the plaint and not the reply to the written statement of defence should be looked at. It is therefore settled law now that in deciding whether or not the plaint, and in this case a third party notice, discloses a cause of action the court is to look at the plaint and in this case the Third Party Notice. In the Third Party Notice, the Defendant has stated that the contract of carriage of goods by sea, as evidenced by the Bill of Lading, which is Page 15 of 19 annexed to the Plaint, was entered into by the Defendant through its agent with the 3rd Party and/or 3rd Party's

principal. The Bill of lading was issued by EUKOR CAR CARRIERS INC., to M/S TRADEX MIDDLE EAST FZE, what the Counsel for the Third Party refers to as "the purported agent of the Defendant." The Bill of Lading discloses that the 3rd Party was a mere "agent o f the vessel." At the centre of the dispute in this suit as pleaded by the Defendant in paragraph 2 of the 3rd Party Notice, is a misplaced original bill of lading for the Plaintiff's goods during transit and/or inter­ banking systems thus making it difficult for the Plaintiff to secure delivery and/or release of original Bill of Lading. The argument by the Counsel for the Third Party and rightly so in my view, given that the contracting parties are M/S TADEX MIDDLE EAST FZE, a mere agent of the Defendant, and EUKOR Car Carriers Inc., that contract cannot impose liability upon the 3rd Party. According to paragraph 2 of the 3rd Party Notice, the Defendant though its agent M/S TRADEX MIDDLE EAST FZE contracted with EUKOR Car Carriers Inc. for carriage of the goods (motor vehicles) from the United Arab Emirates to Tanzania. EUKOR Car Carriers Inc. is the principal of the 3rd party. This means that the 3rd party is only the local agent in Tanzania of the disclosed principal being the shipping line in UAE. As rightly submitted by the Counsel for the Third Party, it was with that foreign shipping line and not the Third Party with

whom the Defendant's agent entered into a contract for the carriage of its goods, the said motor vehicles. Page 16 o f 19 Furthermore, as rightly submitted by the Counsel for the 3rd Party, even the Defendant herein is not a contracting party with the Third Party's principal. This therefore, as the Counsel for the Third Party rightly submitted, makes the Defendant a total stranger to the contract of carriage. The Defendant a total stranger to the contract of carriage is now trying to sue another stranger to that contract. In such situation, and with due respect to the learned Counsel to the Defendant, this Court does not have to wait to receive evidence at the trial presumably from two strangers to the contract of carriage which is at the centre of the dispute, to determine that the third party notice dose not disclose a cause of action against the third party. In the premise and for the foregoing reasons, the preliminary objection that the Third Party Notice does not discloses reasonable or any cause of action against the Third Party is hereby sustained. The learned Counsel for the Third Party has prayed before this Court to dismiss the Third Party Notice. However, according to Rule 1(a) of Order VII of the Civil Procedure Code, and on the authority of JOHN M. BYOMBALIRWA V. AGENCY MARITIME INTERNATIONALE (TANZANIA) LTD Civil [1983] TLR 1, where the Plaint fails to disclose

a cause of action, the remedy is to reject it and not dismiss it. Furthermore, the proviso to Rule I (a) of Order VII of the Civil Procedure Code, however stipulates among other things that where a plaint does not disclose a cause of action and the court is satisfied that if the plaintiff is permitted to amend the plaint, it will disclose a cause of action, the court may allow the plaintiff Page 17 of 19 to amend the plaint subject to such conditions as to costs or otherwise as the court may deem fit to impose. The circumstances of this suit however are such that they do not afford this Court the opportunity to exercise its discretion under the proviso to Rule 1(a) of Order VII of the Civil Procedure Code and allow for amendment of the third party notice so as to disclose a cause of action. This Court having determined that the third party notice discloses no cause of action against the third party, it will an academic exercise trying to traverse the arguments by Counsel for the parties on the second point of preliminary objection whether an agent is bound by or becomes liable for contracts entered by or on behalf of the principal as provided for in section 182 of the Law of Contract Act [Cap.345 R.E. 2002]. In the upshot and for the foregoing reasons, the Third Party Notice is hereby rejected. The circumstances of this case are such that this Court having partly sustained and partly dismissed the objections raised by the Third Party, shall make no order as to costs. Each party is to bear own costs. It is accordingly ordered. R.V. MAKARAMBA

JUDGE 18/04/2011 Page 18 of 19 Ruling delivered in Chambers this 18th day of April 2011 in the presence of Mr. Marwa, Advocate for the Defendant, Mr. Rwehumbiza, Advocate for the Third Party and in the absence of the Plaintiff. R.V. MAKARAMBA

JUDGE 18/04/2011. Words count: 4,966 Page 19 of 19