vodacom public ltd vs sonia tanil somaiya amal subir somaiya 2023 tzhccomd 78 10 march 2023

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION)

AT DAR ES SALAAM COMMERCIAL CASE N0-.71 OF 2021 VODACOM PUBLIC LIMITED....... .............................. ...PLAINTIFF

VERSUS SONIA TANIL SOM AIYA & AMAL'SUBIR SOMAIYA (As Administrators of the Estate of the iate Tami Somaiyaj................... * DEFENDANTS RULING' Date oflast order: 26/01/2022 Date ofruling: 10/03/2023 AGATHOp.r This ruling was triggered by Preliminary Objectiohs (POs) raised by the Defendants. The said POs were: (1) The suit is time barred. (2) The suit is; bad in law for non-joinder of a necessary party, (3) The suit is ressub-judice. It was by consehsus that the POs be dispdsed by' way of wfitten submissions. The Court drew the subrnissions schedule and the parties complied with' it. The’ Piaihtiff was under legal representation of Mr Gaspar Nyika of IMMMA Advo'cates, and the Defendants enjoyed the services pf Michael N'galo, learned counsel. i Since the first issue of period of limitation can dispose the suit if found to. have merit, I wiH concentrate on.that.But before proceeding with the examination of the PO, it is pertinent to uncover some .facts as drawn from the pleadings. Foremost, there were: a Super Dealer Agreement (herein referred as SDA) entered on 15/11/2004 between Vodacom and Shivacom, the guarantee agreement between Vodacom and Tanil Somaiya concluded on 05/12/2004 and the credit facility agreement of 01/08/2006 between Vodacom and Shivacom. The latter agreement as per clause 9.1 of the SDA was subject to review. It was reviewed in 2.010 which increased

credit facility limit to TZS 18.3 Billion. On 29/06/2011 the Plaintiff informed Shivacom (not a party to the present case): that credit facility is. reduced to TZs 17 Billion to take effect from 01/07/2Qll. Asper paragraph 12 bf the plaint, the Plaintiff issued the demand. hotice on 02/04/2013 to Shivacom that it has exceeded the credit facility lifnit of TZS 17 Billibn. Hence. she reauired her to make additional payhnents to be within the apprbved credit limit. Para 13 of the plaint is plain that on 17/04/2013 the Plaintiff withdrew the credit facility ahd demafided Shivacom tb pay' for ’ ali products 9 purchased which by then was at the tune of TZS 23,275,196, 323/= within 14 days from 17/04/2013. According to paragraph 14 of the plaint, the demand letter informed Shivacom that it shouid pay the outstanding amount or provideappropriate payment plan within 14 days. Failure to do so the Plaintiff will ehforcethe securities pledged. See annexture Voda-5 to the plaint. . As per paragraph 15 of the plaint, Shivacom is alleged to have breached the terms of SDA by failing to make the payment to the Plaintiff. That is as per annexture Voda - 6 to the plaint, a deniand notice dated 17/04/2013 titled "Repayment of the 'credit facility." The ietter from Vodacom to Shivacom. Paragraph 16 of the plaint states that on 21/09/2016 the Plaintiff made demand to the Defendant (GuarantOr) uhder

the guarantee agreement for tlie sum of TZS 37,157,076,683.58 an outstanding amount uiider the SDA as of 30/06/2016 composed of TZS 23,243,525,701.58 as principal sum and TZS 13,913,550,982.00 as accrued interest. The Defendant was, reguired to pay the saidrampunt within 10 days from the :date. of receipt of the said letter annexed to the plaint as annexture- Voda-6. : 3 It is stated in the plaint under paragraph 18 that the Arbitration commenced in 2018. But a question is, does arbitration renew period of limitation? In my considered view, certainly no. Therefore, that point should not detain us. Since the suit is found on contract, that is a breach of guarantee agreement executed on 05/12/2004 and the breach occurred in March or April 2014 as per paragraph 12 of the plaint, and further restated on paragraph 13 of the plaint, as a result of the breach of the said agreement the Plaintiff by the letter dated 17/04/2013 she withdrew the credit facilit\z extended to Shivacom and demanded it to pay fcr all products purchased there und.er, From paragraphs 12 and 13 of the Plaint the breach occurred in March or April 2013 and the letter addressed Shivacbm dated 02/64/2013 makes this clear, and this suit was fiied in the Court on 17/06/2021. As per item 7 of the schedule to the Law of LimitatiOh Act [Cap 89 R.E. 2019} the period of limitatidh for a suit'fcund on contract is six

years. Now, counting from March or April 2013 to June 2021: the six years lapsed in March or ApriL 2019. It is conspicuous that no exten$ioirv: of time has been sought. from the Minister of Justice and Constitutional Affairs. 4 As per Section 5 of the Law of Limitation Act [Cap 89 R.E. 2019]. "Subject to the provisions of this Act the right of action in respect ofany proceedings shaii acCrue on the date on which the cause ofaction arises." In my view paragraphs 16, 22, 25, 30, and 35 of the plaint, do not plead the cause of action. They rather talk about dernand letters sent to the Defendant issued in September 2016, April and May 2021 which the Plaintiff is inviting the Court to assume pr rather 'think to be the period when causes of action arose. With due respect I disagree because those demand notices do not establish caus.es of action. The cause of action in the present suit is based on the. breach of Super Deaier Agreement (SDA) agreement. Moreover, the guarantee agreement is part ahd parcel of the SDA as per clause. 10 of the sa.id SDA. Even the credit facility. is also linked to the SDA. It is not disputed that the guarantdr has been sued due to liability arising from the SDA which embedded the guarantee agreemeht Both are read as one. There ’ls riothing iirthe guaranteeagreemdrit' whfch states that it is a coritinuing bne or indicating that it was meant for more than

one trbnsaction whfch would attracted the application of Section 92 of the Law of.Contract Act [Cap R.E. 2019]. The breach of.contract 5 alleged is equally not a continuing one to attract application of Section 7 of the Law of Limitation Act [Cap 89 R.E. 2019] which provides: "Where there is a continuous breach or continuing wrong independent of a contract a fresh period of Hmitation shaii begin to run at every moment of the time during which the breach br fhe Wrbng, as the case may be, continues" The analysis and distinction of a breach of contract and a continuous breach of contract have been well elucidated in the cases of .Margareth Roland Purucker v Lothar Roland Purucker, and Another, Misc. Commercial Application No.20 of 2022 HCCD; Lindi Express Ltd v Infinite Estate Ltd, Commercial Case No 17 of 2021 HCCD at pages 8 -12. And the case of Josephat Muniko s/o Mwita Mkindya & Another v North Mara Golld Mine Ltdf Commer<qial Case,;Nb. 9 of 201£ HCCD. Thrit said rarri bf settied vi&w that the guarante'e agreemerit ’on Which the Deferidaht is sued is rieither a 'continuing ’orie not was it 'for rnore thah a single transaction. Worse still, rione of these have been' pleaded iri the piairit. • 6 It is elementary that in credit facility secured by guarantee the principal debtor and the guarantor are co-obligors. Hence a default by one is legally assumed to be the default by both

and a demand should have been made concurrently to each of them. That is to say Shivacom and the Defendant for the principal's borrower's failure to make payment within 14 days as per the letter dated 27/04/2021 annexture Voda-5 to the plaint. The lapse of statutory period of limitation alone disposes the suit at hand. I Shall thus not proceed to examine bther POs. That said and done this suit is time barred. For emphasis the breach of contract occurred on or before 02/04/2013. The breach by Shivacom under the SDA gave rise to the Defendant's liabiiity as guarantor under the guarantee agreement which is part bf the SDA. It will be wrOng to 'assurhe' that the breach of contract (cause of action) giving rise to the Defendant's liability for repayment Of outstanding surn. Of money under the SDA arose on 26/09/2016 when a first demand: letter was’ sent. to the Defendant (the guarantor). Ijhave already ^tated^tliat/theudemand, letters <do: not .establish pWe df actiom The latter is established Trom a wrcng done. Thus the time is looked from when the ciyil wrohg occurred andThat is theTime when the cause 7 of action accrues. Hence the date of the demand notice is not necessarily the date when the cause of action accrued. The Defendant was served upori with the demand letter on 26/09/2016, the second one was on 27/04/2021 and the third and last was dated 19/05/2021. The second letter

emanated from arbitration award. There were two awards, partial and final. And the plaintiff erroneously submitted that these demand letters linked with arbitration issues constituted separate causes of action. With due respect the counsel for the Plaintiffseems to be misleading the Court. All that given rise to arbitration proceedings was the breach of contract (SDA agreement embedded with the guarantee. agreement). Thus, a plain cause of action is the breach.of cpntract, It is unconvinCihg that the Plaintiff thihks the cause of action arbse on 05/05/2021 (sbe paragraph13 page 3 of the plaintiff's written submissioh on the POs). In the same paragraph the Plaintiff admits that the suit is based ofr thebreach of SDA by Sliiva.com arid the befendant fiaiibd fe pay the amount ih breach of the contract of guarantee. The life of the latter contract is derived from. the SDA. Thus, the breach of SDA is what led tosthe cause oTaction against the principal debtor and the guarantor (the Defendant). It is obseryed that the principal debtor (Shivacom) is 8 I not a party to this suit. Nevertheless, the breach occurred in March or April 2013 and not on 05/05/2021 as contended by the Plaintiff. It is unconvincing that the Plaintiff is using demand notices and arbitration proceedings as basis for computing time when the cause of action arose. That is a misconception. The demand notices are

not contracts and hdnce cannot establish cause of action. The present case is based on the SDA and the guarantee agreement and credit facility agreement. These are read as one. Default in repayment pf the loan by Shivacom constituted a breach of SDA that gave rise to the Defendant's liabiiity as the guarantdr. That is the gist of the cause of action. In my view this suit is hopelessiy time barred. The failure df the Piaihtiff to issue demand notice to tfae Defendant timely does ndt have the effect of renewihg the period of limitation thjat would have otherwise beeh expired. The breach or default occurred ih March or Aprii 2013 and that is when the cause of actidn accrued. By the way it wa£ an anOmaly not to inform the Defendant when the breach occurred in MarclTO!' April 2013. Be it as jt may the defauit by the principai .debtor (Shiyacom) that . amounts to the default of the Defendant (the; guarantor). That is becauseJn as far asThe SPA, is .concerned.•••• their iiability is< co-extensive. Thus, the Jiability <of '■ the 9 Defendant and that’ of the principal debtor (Shivacom) is co-extensive. See the holding of Nangela, 1 in East Africa Development Bank v Clothilda Mona Pundugu, Commercial Case No. 35 of 2022 HCCD at page 31. In my view, in the context of this case the default by the principal is the default of the guarantor. It is unclear why the Defendant (the guarantor) was

not informed about the breach by Shiyacom on 02/04/2013. That in anyway though does not change the fact that the suit is. time barred. The remedy is to dismiss in .terms of Section 3(1) of the Law of Limitation [Cap 89 R.E. 2019] and as rightly held in Ngom-Matengo Co-operatiye Marketing Unipn Limited v Ali Mohamed psman [1959] EA 577. For the foregoing reasons the first Prelimihary' Objbctibn iS sustained the suit is indeed tlnie barred. Section 3(1) bf the Law of Limitation Act [Cap 89 R.E. 2019] as wellas the Ngbni Materigo'scase(supfa) are loud that where a suit is time barred it shall be djsmissed. This suit is con§bquently dismissdd With cbsts/ It is so ordered. SALAAM this lOth Day.bf March,- 2023. j' W. J. AGATHO W1Q/O3/2O23 Date: 10/03/2023 Coram: Hon. U. J. Agatho, 1 For PJaintiff: Miriam Bachuba, Advocate For Defendant: Miriam Bachuba holding brief of Michael Ngalo, Advocate. JLA: Opportuna C/Clerk: Beatrice Court.: Rulingdeliveredtoday, this 10th March, 2023 in the presence pf Miriam^Bachuba, learned counseLfor the Plaintiff also holding brief Qf,^liphaeJ?Ngalo,.learned counsel for the.:Defendant. U.'J. AGATHO

JUDGE .10/03/^023., ii