the registered trustees of agricultural inputs trust fund vs the registered trustees of tunduru district council another 2012 tzhccomd 39 14 december 2012

IN THE HIGH COURT OF TANZANIA

COMMERCIAL DIVISION

AT DAR ES SALAAM COMMERCIAL CASE NO.72 OF 2010

THE REGISTERED TRUSTEES OF AGRICULTURAL INPUTS TRUST FUND............................ PLAINTIFF

VERSUS

THE REGISTERED TRUSTEES OF TUNDURU DISTRICT COUNCIL........................................................ 1s t DEFENDAN THE EXECUTIVE DIRECTOR, TUNDURU DISTRICT COUNCIL........................................................2n d DEFENDAN ABBAS EXPORT LIMITED..................................................................3r d DEFENDAN Date of the last Order: 07/06/2012 Date of Ruling: 14/12/2012

RULING MAKARAMBA. J.: This ruling is on the three points of preliminary objection the 2nd Defendant and the 3rd Defendant raised separately in their Amended Written Statement of Defence. The preliminary objection by the 2nd Defendant was in respect of the following two grounds, namely that: (i) There is no cause o f action against the 2nd Defendant who is an Officer o f the Tunduru District Council; Page 1 of 16 (ii) The suit is incompetent as the Guarantee is unenforceable in law The preliminary objection by the 3rd Defendant was in respect of the following ground, that: "4s no breach o f contract has been alleged, the plaint does not disclose any cause o f action against the 3 d Defendant and thus bad in law". The various heads of preliminary objection were disposed of orally. Mr. George K. Mushumba from Mushumba & Co, Advocates Chambers represented the Plaintiff. Mr. Daimu Halfani from Mpoki & Co. Advocates represented the 2nd Defendant. Adept Chambers represented the 3rd Defendant. The 1st Defendant did not appear and was not represented. Submitting on the first point of preliminary objection by the 2nd Defendant, that there is no cause o f action against the 2Td Defendant, Mr. Daimu, learned Counsel, submitted that the Plaintiff has no right to sue the 2nd Defendant since there is no wrong committed by the 2nd Defendant, and that there is no right accruing from the 2nd

Defendant, which the Plaintiff can enforce through an action or suit. Mr. Daimu argued further that, the Executive Director of Tunduru District Council is an Officer and Employee of the Ministry of Regional Administration and Local Government, who has been posted at the Tunduru District Council as Chief Executive Officer. Mr. Daimu added that, paragraph 3 of the Plaintiff's Plaint describes the 2nd Defendant in the present suit clearly as the District Council of Tunduru, having been sued as Guarantor of the 1st Page 2 of 16 Defendant. According to Mr. Daimu, the Tunduru District Council and the Executive Director of Tunduru District Council are not synonymous though it may be argued that they are organically related. This was also the position taken by the Court of Appeal in the case of USANGU SUGAR

PROCESSING ESTATES LTD VERSUS MBARALI DISTRICT EXECUTIVE DIRECTOR [2005] T.L.R. 71, where the Court observed at page 73 that: "We are o f the opinion that there has been a misconception from the time this matter was in the High Court to the hearing o f this appeal. The Respondent is and the Defendant was at the High Court, the Mbaraii District Executive Director. Throughout the proceedings, however, the subject has been the Mbaraii District Council. Now, these two, that is, the Mbaraii District Executive Director and the Mbaraii District Council are not synonymous though organically connected." In his response Mr. Mushumba, learned Counsel conceded that, the present suit is against the Tunduru District Council as ably stated at paragraph 3 of the Amended Plaint. The Guarantor as per the Deed of guarantee is the Tunduru District Council, and the same Deed of Guarantee was signed by the Executive Director as an Officer of the Tunduru District Council. The name of the Executive Director is merely a title and the suit has been instituted in the name of the Executive Director in light of how the deed of guarantee was executed. Page 3 of 16 Mr. Mshumba submitted in the alternative that, if the Court will find that the words "Executive Director" do not portray the real name of the 2nd Defendant, the anomaly can be cured by amendment by removing those words, taking into consideration

the fact that reading of the Plaint as a whole clearly shows who the 2nd Defendant is. The name of the Executive Director has been bonafide mistakenly pleaded in conformity with the way the Deed of Guarantee is couched Mr. Mushumba suggested and supported his by citing to this Court the provisions of Order 1 Rule 10(2) of the Civil Procedure Code Cap.33 R.E 2002, which provides that: "The court may, a t any stage o f the proceedings, either upon or without the application o f either party and on such terms as m ay appear to the court to be just, order that the name o f any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name o f any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle a ll the questions involved in the suit, be added." According to Mr. Mushumba, by the Court striking out from the Amended Plaint the name "Executive Director", this will serve time and prevent defeating the honest and bonafide claim of the Plaintiff from being non-suited on technical grounds. Mr. Mshumba further cited the provisions Page 4 of 16 of Order 1 Rule 9 of the Civil Procedure Code Cap.33 R.E 2002, which states that: suit shall be defeated by reason o f mis-joinder or non-joinder o f parties and the Court may in every suit deal with the matter in controversy so far as regards the rights and interests o f the parties actually before it. Mr. Mushumba submitted further that, even in the case of USANGU

SUGAR PROCESSING ESTATES LTD VERSUS MBARALI DISTRICT EXECUTIVE DIRECTOR [2005] T.L.R. 71, the Court of Appeal did not dismiss the suit on this ground alone, but observed that the Mbarali District Executive Director and Mbarali District Council are "organically connected", which means that they are connected with the organs of the body or are all connected to each other or cannot be separated. In rejoinder Mr. Daimu argued that, in the present suit there is no issue of mis-joinder or whether the 2nd Defendant was "improperly joined." The suit is intended to recover money from the 2nd Defendant as Guarantor, and as such the 2nd Defendant is the central figure in this suit. Since the 2nd Defendant is being sued by the Plaintiff, the Plaint in that regard must show a cause of action against the 2nd Defendant, namely the Executive Director, Tunduru District Council. As Mr. Daimu correctly submitted, the Plaint must show a cause of action against the Defendant(s) since it is trite law under Order VII Rule 1(e) of the Civil Procedure Code R.E. 2002 for a plaint to contain facts Page 5 of 16 constituting the cause of action and when it arose. The existence of a cause of action in a suit however, depends on how the Court will construe the provisions of Order VII Rule 1(e) of the Civil Procedure Code. In Civil Case No. 106 of 2009 between MPS OIL TANZANIA LTD AND OASIS ENERGY CO. LLC

(unreported) Makaramba, J. observed that: "...for a cause o f action to exist that which ought to have been done or that which ought not to have been has been done." The decision of court on whether there is a cause of action is premised on the contents of the plaint itself together with its annextures as it was stated in the case of JOHN M. BYQMBALIRWA vs, AGENCY MARITIME INTERNATIONALE (TANZANIA) LTD F19831 T.L.R. 1 (CA) where the Court decided that: "For purposes o f deciding whether or not the plaint discloses cause o f action, the plaint together with its annextures should be looked at." The same legal position was restated by Bwana J. in the case of NBC

HOLDING CORPORATION VERSUS SHIRIKA LA UCHUMI NA KILIMO LTD (SUKITA) AND 63 OTHERS, Commercial Case No. 24 of 2001 that: Page 6 of 16 "In deciding whether a plaint discloses a cause o f action or not the Court needs to examine the issue within the four perimeters o f the plaint and its annextures, i f any, with any assumption in the process, that allegations made therein, be they factual or not, express or implied, are true. The issue therefore is whether the Plaintiff's Plaint discloses any cause of action against the 2nd Defendant. Paragraph 3 of the Plaint states clearly that: "3. The Second Defendant is a District Council o f Tunduru sued a guarantor o f the 1st Defendant. Its address o f service for the purposes o f this suit is in the care o f is: Executive Director, Tunduru District Council, P.O.Box 275 Tunduru." On the basis of the Plaint, the 2nd Defendant is therefore described as the District Council of Tunduru. This is a legal person capable of suing and being sued. The DEED OF GUARANTEE (Annexture "L") in paragraph 12 of the Amended Plaint also clearly discloses the name of the Guarantor of the 1st Defendant, as the Tunduru District Council. The Deed of Guarantee also shows that the Executive Director of the Tunduru District Council had signed the Deed of Guarantee as the Principal Officer of the Tunduru District Council. Page 7 of 16 On the foregoing observation, I

am at one with the submission by Mr. Daimu that the Tunduru District Council and the Executive Director Tunduru District Council though organically related are not synonymous as it was stated in the case of USANGU SUGAR PROCESSING ESTATES LTD VERSUS MBARALI DISTRICT EXECUTIVE DIRECTOR [2005] TLR 71. Mr. Mushumba has conceded that in paragraph 3 of the Plaint, the 2nd Defendant is the Tunduru District Council. This may lead to the conclusion that the Plaint does not disclose any cause of action against the Executive Director of Tunduru District Council. I am alive however, to the decision in the case of J.B. SHIRIMA & OTHERS HUMPHREY MEENA T/A COMFORT BUS SERVICE [1992] T.L.R. 290 (HC) which held that "(ii) Where the plaint does not disclose a cause o f action the Court has two alternatives: (a) to order amendment o f the plaint, or (b) to strike out the plaint." According to that decision, where a plaint does not disclose a cause of action a court has the option of either making an order for the amendment of the plaint or for striking it out. In the present matter, however, as Mr. Mushumba rightly submitted the name of the Executive Director was mistakenly added to the name of the 2nd Defendant in the Plaint. Mr. Mushumba however, prays that the name of Executive Director be struck out from the Plaint under Order 1 Rule 10(2) of the Civil Procedure Code Cap.33 R.E 2002. I have

had a look at Order 1 Rule 10(2) Page 8 of 16 of the Civil Procedure Code Cap.33 R.E 2002. That provision vest discretionary powers on the court either suo motu or upon application to order that the name o f any party improperly joined, whether as plaintiff or defendant, be struck out be struck out and the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the court may be necessary to be added in order to enable the court effectually and completely to adjudicate upon and settle all the questions involved in the suit. Essentially, the present suit, as Mr. Daimu rightly argued there is no issue of misjoinder or whether the 2nd Defendant was "improperly joined." However, I am inclined more to the submission by Mr. Mushumba that the name "Executive Director" was mistakenly added to the title "Tunduru District Court" as the 2nd Defendant. This is so since in my considered view, even if the name "Executive Director" is ordered to be struck out from the Plaint, this will not affect the substance of the suit since they will be still be a cause of action against the 2nd Defendant in the sense that this Court will still be able to determine whether '‘'that which ought to have been done or that which ought not to have been has been done." It is for the foregoing reasons that this Court exercising its inherent powers under section

95 of the Civil Procedure Code and taking a cue from Order 1 Rule 10(2) of the Civil Procedure Code, shall order immediate amendment of the Plaint by striking out form the Plaint the word "The Executive Director" leaving intact the word "Tunduru District Council" as the 2nd Defendant. Since this suit has already consumed a good amount of time in its preliminary stages, it will not serve any interest of justice to Page 9 of 16 grant time to the Plaintiff to amend the Plaint. In order to expedite the case, this Court can simply strike out from the Plaint the name of "The Executive Director" which appears adjacent to the name of the 2nd Defendant so that the Plaintiff can proceed against the Tunduru District Council as the 2nd Defendant. On the second point of preliminary objection that this suit is incompetent as the guarantee is unenforceable, Mr. Daimu argued that the suit against the 2nd Defendant is based on the right created in favour of the Plaintiff by the Deed of Guarantee, Annexture "L" to the Amended Plaint. Mr. Daimu argued further that a deed of guarantee is a document, the registration of which is compulsory in terms of section 8(1) of the Registration of Document Act, Cap 117 R.E. 2002, which provides that: "The registration o f the following documents i f executed made after the commencement o f this Act, is compulsory: (a) Non-testamentary documents which

acknowledge the receipt or payment o f any consideration on account o f the creation, declaration, assignment, limitation, or extinction o f any such right, title or interest." Mr. Daimu argued further that since the registration of the Deed of Guarantee in this case is compulsory, it is therefore a legal requirement that it must be registered. Mr. Mushumba totally disagreed with Mr. Daimu by arguing that, the Deed of Guarantee does not acknowledge the receipt or payment of Page 10 of 16 consideration. Mr. Mushumba referred to this Court a number of definitions among which the one by Bullen & Leake's Precedents of Pleadings, 11th Edition at page 216 is more instructive, wherein a "guarantee" is defined as: "...collateralpromise to answer for the debt, default or miscarriage o f another who is or is about to become liable for the same debt to the person guaranteed." In rejoinder, Mr. Daimu argued that, the matter in question can be answered by looking at the document the way it was drafted and its contents as to what it provides, which view I entirely agree with. In my considered view, it is proper to look at the nature and purpose of the particular document itself rather than speculating as to its content. According to Black's Law Dictionary 8th Edition, the term " Guarantee means: "(1) to assume a suretyship obligation, to agree to answer for the debt or default (2) To promise

that a contract or legal act will be duly carried out (3) To give security to." Emanating from the foregoing definitions, it is in my considered view that a Deed of Guarantee works as security for a loan rather than as an acknowledgment for receipt or payment of consideration, as Mr. Daimu seems to suggest. That being the case therefore, a deed of guarantee is Page 11 of 16 not a document whose registration is compulsory in terms of section 8(1) of the Registration of Document Act, Cap 117 R.E. 2002 since it does not fall within the class of "non-testamentary documents which acknowledge the receipt or payment o f any consideration." Mr. Daimu argued further that, the Deed of Guarantee was not executed by Tunduru District Council on the reason that there was no resolution duly authorizing an officer of the Tunduru District Council to sign the Deed. The Deed in question was neither signed by the Chairman or Vice Chairman of the Tunduru District Council as per the mandatory requirement of Section 200(3) of the Local Government (District Authorities) Act, Cap.287 R.E 2002, Mr. Daimu further argued. The Tunduru District Executive Director is one of the Officers of the Council but in order to sign the Deed, there must be a resolution to such effect, Mr. Daimu further added. In his response Mr. Mushumba argued that the 2nd Defendant has deliberately omitted from his submissions to

elaborate on the import of section 200(1) of the Local Government (District Authorities) Act, Cap.287 R.E 2002 which clearly states that: "Subject to the provisions o f this Act, every by-law, order, notice or other document requiring authentication by a district authority shall be deemed to be sufficiently authenticated without the sea! of the authority if signed by two members o f the authority or by the chief executive officer of the authority or by any officer o f the authority duly Page 12 of 16 authorised in that behalf by any resolution o f the authority; save that the authority shall cause at least one copy o f every by-law made by it to be authenticated by the official sea! o f the authority and deposited in the offices o f the authority." (the emphasis is o f this Court). Mr. Mushumba submitted further that, the Deed of Guarantee was signed by the Executive Director under the seal of the authority and the stamp of the Executive Director. According to Mr. Mushumba, section 22(3) of the Local Government Service Act, No. 10 of 1982 provides that, the District Executive Director is the Chief Executive Officer of the Council answerable to the Council for the Discharge and exercise of his functions and powers. Mr. Mushumba submitted further that, section 125(4) of the Local Government (District Authority) Act, 1982 Cap.287 R.E 2002 provides as follows: "A person entering

into a contract with an authority shall not be bound to enquire whether the entering by the council into the intended contract complies with the standing orders o f the council or with the directives o f the authorities and all contracts so entered into by a district council shall i f otherwise valid be valid, notwithstanding the standing orders or directions o f the Minister not having been complied with." Page 13 of 16 Mr. Mushumba added that, the issues of whether the deed of guarantee was signed and accompanied by a resolution or not, whether it has a seal or not, and how the seal was affixed are not purely point of law but a matter of evidence. In his rejoinder Mr. Daimu argued that, the issue, whether or not a seal of the Council and signatures of Chairman and authorized officer have been affixed to the document are not matters which requires calling of witness and adducing evidence so to prove. They are supposed to be part of the contents of a document (contract) that can be easily seen. I have considered the provisions of section 200(1) of the Local Government (District Authority) Act, cited by Mr. Mushumba in his submissions. On the strength of that provision I am satisfied that, the District Executive Officer has authority to sign the Deed of Guarantee as the Principal Officer the District Council. However, with due respect to Mr. Daimu, the issue whether the District

Executive Director was authorized by a resolution to sign the Deed of Guarantee is a matter which requires adduction of evidence and cannot therefore be disposed of as a point of preliminary objection since it is a matter of fact and note pure point of law. In this respect all of the submissions by Mr. Daimu in this regard fail to meet the test of pure point of law as established in the now famous case on preliminary objection, that of MUKISA BISCUITS MANUFACTURING CO. LTD V. WEST END DISTRIBUTORS LTD (1969) EA 696. For the foregoing reason the whole argument by Mr. Daimu with regard to the second point of preliminary objection is misconceived and devoid of any merits. Page 14 of 16 As Mr. Mushumba correctly noted, the 3rd Defendant seems to have abandoned to pursue his preliminary objection as he did not submit any submissions in support of his preliminary objection as ordered by this Court either on the 20th April, 2012 or on the 7th June, 2012. Since non submission amounts to failure to appear and defend a matter, accordingly the preliminary point of objection raised by the 3rd Defendant is hereby dismissed with costs. In the whole, the points of preliminary objection raised by the 2nd Defendant succeed to the extent indicated herein above. The name of "The Executive Director" which appears adjacent to the name of the 2nd Defendant is hereby struck out henceforth expunged from the Plaint. The Plaintiff shall now proceed against the Tunduru District Council as the 2nd Defendant. Costs shall be in the cause. Order accordingly. R.V. MAKARAMBA

JUDGE 14/12/2012 Page 15 of 16 Ruling delivered this 14th day of December, 2012 in the presence of Mr. Daimu, Advocate for Mr. Mushumbusi, Advocate the Plaintiff, for the 1st Defendant Absent and Mr. Daimu, Advocate for the 3rd Defendant. R.V. M A KA RAM BA

JU D G E 14/12/2012 Page 16 of 16