19960920 TZHC Dar es Salaam2

. i .. . :ti" . .' ,• 1. / .•...(:. :. ·., ~/c. 1-s-m .:.,,~~· ' IN THE HIGH CGURT OF· TANZANIA . p \ AT DAR ES SALAAM J ..... CIVIL APPEAL NO. 58/95 ~,..~·.t/ THE DIBECTOR N.B.C. CITY BRANCH . ..... APPELLANT·· "' . , -~ ... - Versus ·-~· ALEX M. MAGJ\l'J'GA._ •-•~ ~ • , ••• ~~--~~·-•-~-•-~• RESPONDENT •a.'• i > ,· ____ _ JU D GM.EN ..,.._...,.. i T ,..:. ;:, KllIL~~R~~• 1 ( The respon~ent Alex Maganga was the successful party in a suit he had filed against the National Bank of Commerce (here- in after to be referred to as the N.B,C) in the Resident Magistrate's Court' of Dar es Salaam. The claim in the lower court was against what was said to be~ the wrongful debiting . ,. . of th~ respondentn private curr~nt acco1:-lllto The factFl that were established at the lower court. showed that in 1986 the.respondent obtained a loan of Shs. 450~000/= from the N.B.C viliich was later raised to Shs. 670~000/=. It was also in evidence that the respondent prior to obtaining the loan was maintaining a pr_ivate current account with the N.B.C City Drive Branch - account Noo 8185 which was later changed to 652001395. The loan which the respondent obtained from the N.B.C was in relation to his Grain Mills Company and he had to operate a business account for purposes of the loan which was account No. 82502 which.was later changed to acco~nt Na,. 6553000532. Now, _whereas the respondent claim t\at. by 27th July he 00 had ·deposited ~ufficient amounts into his uJ ~acc_o:-int clearing the loan leaving him with a credit balancep the appellant ' claim that he still owed them. Apparently, the N.B.C was . .. main~f9ing another account for the bank's o::m records. This !_'.:>-~~ · ;. ·~~{t11.\ was atcqunt No. 1053000012. According to Mr. Madaha who gav~ { eyidepc~ at 1 the trial on behalf. of the appellant/ def end.ant · · ~!,'•. ~ ' j'"=.· • ;I· l when ~ver money was deposited in:the business account during the· \,. subsistence of the loan, the same was transferred into the <'.~~ -~ . ' . loan account and the business account accordingly debited. .-· ••••.. /2 I a - _., c,>1<, ~-,,,. = 2 = ) The respondent was not aware of the third account - i.e Mo. 1053000012. However, Mr. Madaha claimed that the respo- ndent had never discharged his loan liabilities with the N.B.C, and that what the amounts deposited in the business account did waB. only to clear the interest and not the principal amount of the loan. The appellants claim that they were justified to set off the ·amount owed from the respondent's private current account. The issues that were raised at the lower court were, among others, whether the deposit of Shs. 350.,000/= into account No. 6553.000532 on 22.9.92 cleared the respondent's liabilities with the N.B.C. The learned Resident Magistrate who heard the case found as a matter of fact that by 22nd July 1992, the respondentliad~discharged his loan liability. The learned Magistrate also found that the third account claimed to have been kept by the N.B.C was a non-existent one and further that the appellants exercise of ~ight of set-off was unlaw- ful as the loan had been cleared by 22/7/92. The respondent was awarded damages of Shs. 8,000/= per day on the non~use of Shs. 409,864 which the 1.earned trial magistrate had found to have been wrongfully debited from the respondent's private current -account. The appellant has submitted ~n appeal that the trial magistrate erred in fact by failing to recognise the existen·ce of the loan account and the purpose of opening the same along side with the business account. It is further submitted that the trial magistra~e erred in fact by holding that the deposit of Sh.so 350,000/= into the business account had cleared the respondent's liability with the appellant. On the third ground it is claimed that the trial magistrate erred in fact by holding that the appellant's act of debiting the respondent's account with Shs. 234,418/= was unlawful. 18 · The trial magistrate failure to recognize the appellants • right of set off, ·in respect of respondent's accounts is also submitted as haviqiifil½ error' _of law. Lastly it is submi- tted that the learned trial magistrate erred in both law and fact in awarding damages for loss of use of Shs. 409,864/= • . • • . . •/3 -- = 3 = Mr. Mbugha who appeared for the appellant at the hearing maintained of the .appeal contended that a loan account was ·. along side the business account and that this was in line with a principle of accounting known as contra entiries. He further argued that the amounts deposited in the respondent's business account only cleared the interest that had accrued on the loan but not the principal amount which was reflected in the loan account. Regarding the set off Mr. Mbugha claimed that it was done to accomodate overdue loan repayment. The respondent argued the .appeal personally. He very strongly contested the grounds raised. In his submission he argued that there was no need of maintaining a second account sepura~ from the business account to which the amounts of the loan were credi'ted and subsequently debited following re- payments. He ~rgued also that since the so called loan account had not been in existence when the loan was advanced, having surfaced only in 1991, then it was quite possible that the records had not been properly kept. He also argued that he could not be made a party to a loan account which was not known to hi~. Mereover, the respondent clai1ns that deposits in the business account totalled 959, 000/ = clearing the . pr-inci-11.ti.l amount of the loan as well as the interest. He also pointed out that there were no withdrawals from the business account except as these that went towards the repayment of the loan. Lastly he contended.that since he was deprived of the use of his money then the trial magistrate was justified in awarding damages. Now, eprir-t from the submissions which were made in court I have had the opportunity to go trough the court record and in particular through the bank statements that were ~ttache~ to the plaint and the other documents. The record shows that when the respondent was advanced the loan he was supposed to repay in instalments of Shs. 28125/= on a quarterly basis ov~r a period of four years. This amount was raised later to Shs. 41875. the record also shows that respondent mact·e deposits into his business account which was opened for the purpose of disbursements and repayments. The record shows that the amounts of repayments varied. . .... /4. ~~ f = 4 = I can see in the r.~,OQ-,I'd'_ one deposit of Shs. 9,000/= four deposits of 100,000/=:each. The deposit of Shs. 350,000/= of 22/7/92 has not been disputed. This ~c9~~Dt also re£lected a. d · 9 s on 22111~2. ~nougfi 1~ isq~aime credit balance of Shse 6,891.30/./by the appellant that the amounts outstanding in this account were just the interests and not the principal amount I find it difficult to understand this argJment. First of all the appellant .. did not explain if the amounts outstanding in this account were interests only how that amount was arrived at considering that repayments were being made reducing the amount of the loan. Another thing which I have not understood is the fac-J;; of holding the respondent liable for an account that was unknown to him~ As pointed out . appellant• ii by the witness.during trial, the account with No. 1053000012 was kept for the b81nk 1 s ovm records. Statement of this account which is also in the court record does not contain a picture of the actual transactions made between the bank and :the respondent. _What this statement shows is the amount of disbursements as well as the number of instalments that were supposed to be repaid. This loan account does not contain actual fi~res of the amounts paid, while the other account ' which the respondent was aware of had all the necessary entries i. e, amounts de;p·o sited ( including amount of loan) interest, credit as well as debit balances. Like the learned trial magistrate I am unable, with due respect to Mr. Mbugha, to see how the respondent can be held to be liable for an account that was unknown to him and which did not give a reflection of the actual business transacted between him and the N.B.C. From my consideration of the evidence on record I have come to share the views of the learned trial magistrate that the respondent had by 22.7.92 cleared all his loan liabilities with the N.B.C. I have a feeling that the repayments which were made in :l:arger: amounts than the. amounts of the instalmen'ts that were set might have some how confused the N.B.C and instead of cou_nting the loan as paid as on_ 22/7 /92 they went on· charging interest in an amount that had otherwise already been settled. Since the loan had been cleared by 22.7.92, then the learned trial magistrate was justified .to find that it was wrong, on the part of the N.B.t t9 debit the respondent's private current account by way of set off for a loan that was no longer in ex.is~ • • . . . . . •/5 ~ ... .. The set off was .donG without authority or knowledge of the ·· respondent, something which resulted in more complications Eviden~:>e also showed that the respondent's business account re- mained in credit for about six months and it was . in December . 1992 when he found a debit balance of Shs. 234,1+18/= reflected in the account._. This debit balance was not explained. Certainly it was not interest and if it was not, and if we are to go by the appell·a;t, s explanation that' only interests were ~eing reflected on this account, then one may as well asR, why now .trans~ef the remaining principal amount from the "Loan Account" into th'e business account? It appears that following the respo- dent• s complaint concerning wrongful de:Oi ting of his business account, the appell8.nt's response was to set off Shs. 409,864/= from the respondents private account. I agree with the learned trial magistrate that this was wrong and that indeed the res- pondent was deprived of the use of his money. Having found that the respondent could not be held liable for an account that was totally unknown to him, and having found that the respondent had discharged his loan liability with the N.B. C as uf 22. 7. 92., and also having fou...'1d that the appe- : llant 1 s unilateral act of setting off the amount of Shs. 409j 864/= from the respondent's private account was unlawful, the loan having been fully cleared, I will.now turn to the question of damages. Since the set off of Shs. 409,864/= was unlawfully done, then naturally the N.B.C must suffer damages for the non-use of the money by the respondent because the cause was the N.E.G. 1'he trial magistrate awarded Shs. 8000/= per day being about 2% of shs. 409,864/=. In awarding this amount the learned trial magistrate considered the fact that the respondent had not substantiated his claim, but also thought that the motor vehicle, which was to have been re~air~'-7ith the money could have earned the respondent that much. Well, I think that since the respondent was unable to substantiate the claim of damages, the best thing to do in the circumstances would have been to apply the N.B.C' s own terms of interest • . . . • •/6 • 6 t:: Having considered the matter as above I will vary the order of damages awarded and order that the appellant pay to the respondent the amount of Shs. 409,864/= wrongfully deducted from his private business account with interest at fixed deposit rate of the N.B.C with effect from November, 1993. The rates to be applied are to be the rates pertaining for each month from November, 1993. s.ctve- for the variation made in the award of damages, the appeal by the N.B.C:is otherwise dismissed with costs. [ ; '. . ~: . ·-. __\ .......... :, .:..'-..)'-- ... ;._ / -E:A~ KILEO PRINCIP .AL RESIDENT. MAGISTRATE ( EXTENDED JURISDICTION) 20/9/96 fufore Eo Ao Kileo, PRH, Elttemded Juriccliction Tur apPellant - Mr. Mb"!.1.~.a For Reopond.ent - "'n.... r, ...·e,Jent • :i.n person Court: Judgement io <lelh-ored in th . C pre [J0]10G of 1\ff-0 Ml-. ' r•u.· !'JiJU.g'na :for the appellant a th an - -.e P..0GpoL10.ent in peroono PRTIWIPAL RESIDEJ:Pr Il~GI3TR.ATE (EKTEimro JURISDICTION) 20/9/96 // ... .,,..... .,,.... . ...