TOTAL T LTD VS INDEPENT POWER T LTD COMM CASE NO

IN THE HIGH COUR OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM. COMMERCIAL CASE NO 152 OF 2016 TOTAL TANZANIA LIMITED..............................................PLAINTIFF VERSUS INDEPENDENT POWER TANZANIA LIMITED................DEFENDANT RULING B.K.PHILLIP, J. This ruling is in respect of points of preliminary objections raised by the defendant's Advocate to wit; (i) That, the pending suit is time barred hence is hopelessly filed out of time; (ii) That, the Plaint is incurably defective for lacking proper verification; (iii) That, the suit preferred in the non-existing court in Tanzania that is to say; High Court of United Republic of Tanzania (Commercial Division). The facts of this matter as stated in the plaint are as follows; The plaintiff claims against the defendant for a declaration that failure by the defendant to pay the whole of the price of fuel supplied to the defendant in December , 2006 and January, 2007 amounts to breach of the fuel supply agreement and an order for immediate payment of the sum of USD 118,253/- and i T.shs 1,760,740,983/-, being the total of the outstanding price of the petroleum products supplied to the defendants, interests, general damages and costs. The plaintiff and the defendant entered into a fuel supply agreement in which the plaintiff would supply petroleum products to the defendant. On diverse dates in December 2006 and January 2007, the plaintiff supplied heavy fuel oil 180cst to the defendant. As on 5th September 2008, the outstanding amount was USD 118,253/- and T.shs 1,760,740,983/=. On 24th October 2008, the defendant wrote a letter to the Tanzania Electric Supply Company Limited( TANESCO), copied the same to the plaintiff acknowledging the debt and instructed TANESCO who was the defendant's debtor to pay the plaintiff the sum of USD 118,253/- and T.shs 1,760,740,983/- being outstanding amount for fuel supplied to the defendant by the plaintiff. However, TANESCO did not heed to the Plaintiff's request. While the plaintiff was still making a follow up with the view to recover the debt, on 15th July 2011, the High Court of Tanzania issued an order for winding up of the defendant and appointed the Administrator General as official Receiver and Liquidator of the defendant. The plaintiff alleges that since defendant was put under liquidation he was prevented by operation of the law from filing any suit in courts of law against the defendant. On 24th October 2011, the official receiver wrote a letter to the defendant's creditors including the plaintiff herein proposing for an out of court settlement of the defendant's disputes. The liquidator went as far offering 2 some terms of settlement and the plaintiff did propose some terms of settlement too. While negotiations were going on, on 5th September 2013, the High Court of Tanzania (Hon. Utamwa, J) issued an order to terminate the liquidator and ordered all affairs of the defendant to be handled by PAP whom the court said that committed himself to pay all the legitimate creditors of the defendant. Despite all what transpired as narrated herein above, the plaintiff alleges that the defendant has not exhibited any seriousness, commitment to pay the outstanding amount amicably. The plaintiff alleges that, since there was acknowledgment of the debt on 24th October 2008 and interference to pursue court proceedings from 15th July, 2011 when the liquidator was appointed who started negotiations to settle the debt to 5th September, 2013 when the liquidator was terminated, this suit falls under the exceptional provisions of the Law of Limitation Act, Cap 89. Upon being served with the plaint, the defendant through the legal services of the learned Advocate Alex M. Balomi of Legal Clinic Advocates, filed a written statement of defence together with a notice of preliminary objection aforesaid. Submitting on the preliminary Objections the defendant's Advocate told this court that he decided to abandon the 2nd and 3rd points of preliminary objection, hence submitted on the 1st point only. The learned Advocate 3 submitted that the point of preliminary objection is a pure point of law based on the Law of Limitation Act, Cap 89, which requires to be settled at the earliest possible time before the hearing of the case. He referred this court to Section 3 and part I column 2 of the Law of Limitation Act, Cap 89 (henceforth 'Cap 89') which provides for limitation of suits arising out of contract to be six years. He submitted that this case was filed in this court in 2016, eight years from the date the cause of action arose that is 2008. He submitted further that sections 14 to 30 of Cap 89 provides for acceptable conditions for exemptions during computation of the limitation period. He said such conditions are legal disability or absence from the country of the party to the suit. The learned Advocate contended that all the conditions for exemptions are not applicable in the instant case. He invited this court to dismiss this case with costs. The plaintiff's advocate Mr. Onesmo Michael adopted his skeleton arguments that he filed in court pursuant to Rule 64 of the High Court (Commercial Division) Procedure Rules, 2012 and submitted that the point of preliminary objection raised by the defendant's Advocate is not a pure point of law as it involves matters of fact contrary to the principles laid down in the case of Mukisa Biscuits in Manufacturing Company Ltd Versus Westend Distributors Ltd (1969) EA 696. The learned advocate contended that in paragraph 21 of the plaint exemption to the computation of time is pleaded in compliance with order VII Rule 6 of the Civil Procedure Code, Cap 33, R.E 2002 (herein after 'CPC") and in response thereto the defendant in paragraph 19 of the 4 written statement of defence disputes what is alleged in paragraph 21 of the plaint. The learned Advocate was of the view that with the above scenario, the issue of limitation should be framed as one of the issues at the hearing of the case. The learned advocate submitted further that, there is no dispute that time started to run against the plaintiff on 24th October 2008, but on the 15th of July 2011, the court appointed a liquidator to handle the affairs of the defendant, hence, under the provisions of section 288 of the Company's Act , Cap 212, the plaintiff was prevented from taking any legal action against the defendant. The liquidator was terminated on 5th September 2013, and according to section 22 of Cap 89, the period between appointment of a Liquidator to his termination should be excluded from computation of the time limit to sue the defendant. The learned Advocate submitted further that, after excluding the period exempted by the law, it obvious that this suit is filed within the period of six years provided by the law for filing suits arising out of contract. In his rejoinder the defendant's Advocate, reiterated his submission in chief and submitted that, counting of the period for institution of the suit starts from the date the cause of action arose. The reasons pleaded in the plaint are not covered in the Law of Limitation Act, Cap 89 as conditions to warrant exemption in computation of time, but they could be good reasons if the plaintiff decides to invoke the provisions of section 44 of Cap 89. The defendant's advocate was of the view that the plaintiff made a mistake to rush into the court to file this case instead of first applying for extension of 5 time to institute the case. He insisted that this case is filed out of time and deserves to be dismissed with costs. In this case both counsels do not dispute that the limitation period for suits arising out of contract is six years. The issue in controversy is the period that the plaintiff's advocate contends that it should not be included in the computation of time for the filing this suit. That period is between 15th July 2011 when the High Court of Tanzania appointed a liquidator for the defendant and 5th September 2013, when the liquidator was terminated. The plaintiff's advocate is of the view that this point of preliminary objection involves matters of facts which need evidence, hence it is not a pure point of law. With due respect to the plaintiff's advocate, this preliminary objection is a pure point of law and can be determined just by applying the facts pleaded in the pleadings to the Law of Limitation Act, Cap 89, in particular the sections that provide for the conditions for exemptions in computation of Limitation periods for institution of cases or applications in courts of law. In paragraph 21 of the plaint the plaintiff alleges that the cause of action arose 24th October 2008 when the defendant acknowledged the existence of the amount claimed. However, I have noticed that in paragraph 5 of the plaint it is stated that on diverse dates in December,2006 and January, 2007, the plaintiff supplied heavy fuel oil 180cst to the defendant, and in paragraph 6 of the plaint, the plaintiff states that in accordance with the 6 terms and conditions of the supply, the defendant was required to pay for the products on a weekly basis and excise duties upon receipt of TTZ debit note. Going by what is pleaded as shown herein above, one can safely say that the cause of action arose in the year 2007, since payments were supposed to be done weekly, so the amount due was supposed to be paid within the year 2007, but it was not paid as agreed. In Paragraph 7 of the, plaint it is stated that on &h September 2008, the plaintiff wrote a demand notice to the defendant and copy of the same is attached to the plaint as TT2. From the foregoing, it is evident that the cause of action did not arise on 24th October 2008 when the defendant acknowledged the existence of the debt but it arose in 2007 when the defendant defaulted to pay the amount due on weekly bases as agreed since fuel was supplied in December 2006 and January 2007. The defendant's advocate does not dispute the fact that there was an order of this court appointing a liquidator and in fact, he has attached to the written statement of defence the order of this court issued by Utamwa ,J. What follows now is the provisions of the Law of Limitation Act Cap 89, which provides for the exemptions. The defendant's advocate submitted that the reasons that can be entertained as good reason to warrant exemption in computation of the limitation period is legal disability, which is not a case in the instant matter. On the other hand the plaintiff's advocate is of the view that in the circumstances of this case the relevant 7 provision of the law is section 22 of the Law of Limitation Act, Cap 89, which provides as follows; Section 22 "...... In computing the period of limitation prescribed for a proceeding the institution, continuance or conclusion of which has been stayed by injunction or order, the time during which the injunction or order remains in force, shall be excluded." According to the facts that are not in dispute in this case as aforesaid, in particular the appointment of a liquidator for the defendant, I am inclined to agree with the plaintiff's advocate that the correct section applicable here is section 22 of Cap 89, because as I have said earlier, it is not in dispute that on 15th July 2011 The High Court of Tanzania, (Kalegeya, J.) appointed a provisional liquidator for the defendant, hence no proceedings could have been instituted by the plaintiff against the defendant even if they wished to do, they were stopped by the court order. The appointment of the liquidator was terminated by the High Court on 5th September, 2013. Therefore the period of 20 months that is from 15th July 2011 to 5th September 2013 has to be excluded in the computation of six year within which the plaintiff was supposed to file his case against the defendant. According to the finding of this court herein above, that the cause of action in this case arose in the year 2007, it follows, therefore that the plaintiff was supposed to file his case against the defendant in the year 2013. 8 However, applying section 22 of Cap 89, 20 months have to be excluded from the computation of the limitation period for filing this case. After excluding the aforesaid 20 months then, the plaintiff was supposed to file the case against the defendant in the year 2015. For the sake of exhausting the arguments raised in this matter, going by what is alleged by the plaintiff's advocate and assuming it is correct that the cause of action arose on 24th October 2008, the plaintiff was supposed to file his case by 24th October 2014, however, applying section 22 of Cap 89, 20 months have to be excluded from the computation of the limitation period for filing this case. After excluding the said 20 months then, the plaintiff was supposed to file this case by 24th June 2016. From the foregoing, since this case was filed on 2nd December, 2016 it is my settled view that this case has been filed out of time, hence, cannot escape the legal consequences of the provisions of section 3 of the Law of Limitation Act, Cap 89 as prayed by the defendant's advocate, consequently, this suit is dismissed with costs. Dated at Dar es ,Salaa.ni this 22nd day of November, 2018 9