CIVIL APPEAL NO

IN THE COURT OF APPEAL OF TANZANIA AT PODOMA (CORAM: LEVIRA, J.A.. GALEBA. J.A. And ISMAIL. J.A.^ CIVIL APPEAL NO. 78 OF 2022 VODACOM TANZANIA PUBLIC LIMITED COMPANY.................... APPELLANT VERSUS THE JUBILEE INSUARANCE COMPANY OF TANZANIA LIMITED............................................................. RESPONDENT (Appeal from the Ruling and Order of the High Court of Tanzania, Commercial Division at Dar es Salaam (Magoiqa, J.) Dated 15th day of October, 2021 in Commercial Case No. 62 of 2021 JUDGMENT OF THE COURT 12th & 20th February, 2025 LEVIRA, J.A.: The present appeal is against the ruling and drawn order of the High Court of Tanzania (Commercial Division) at Dar es Salaam (the High Court), in Commercial Case No. 62 of 2021, which dismissed the appellant's suit with costs against the respondent for being time barred. The facts of the suit as depicted from the record of appeal are to the effect that: On 15th November 2004, the appellant entered into a Super Dealer Agreement (the SDA) with Shivacom Tanzania Limited (Shivacom) in terms of which, Shivacom would purchase the appellant's products including pre-paid airtime, postpaid airtime and starter packs (the products) and resell them in Tanzania. Shivacom was entitled to renumeration in the form of commission to be computed on the basis of the terms and conditions of the SDA. It was also allowed to request for credit facilities from the appellant to facilitate purchase of the products. On 1st August 2006, the appellant and Shivacom entered into a Credit Facility Agreement pursuant to which Shivacom was granted a revolving credit facility of TZS 4.6 billion. The performance of Shivacom's obligation under the agreement was to be secured by a bank guarantee or a performance bond. Therefore, on 9th July, 2012, the respondent issued a performance bond in favour of the appellant to secure performance of Shivacom's obligation under the SDA up to the sum of United States Dollars (USD) 2,500,000.00 (the performance bond). It was further agreed that, in case of any default in the performance of the SDA by Shivacom, the respondent would satisfy and discharge it to the committed extent above. Shivacom defaulted in performance of its obligations under the SDA, such that, on 17th April, 2013, the appellant withdrew the credit facility and demanded payment within 14 days for all the products purchased under credit agreement. Subsequently, on 17th May, 2013, the appellant notified the respondent regarding Shivacom's default and called upon realization of the performance bond. On 12th June, 2013, the respondent responded to the appellant's demand, denying the liability and its obligations under the performance bond on the basis that, Shivacom had not breached the SDA. Following the said demands, on 26th July, 2018, Shivacom initiated arbitration proceedings against the appellant challenging the termination of the SDA. In the meantime, the appellant also raised a counter claim imputing breach of the SDA and the credit facility by Shivacom. While the arbitration proceedings were ongoing and since the respondent was not a party to the arbitration agreement, on 16th May, 2019, the appellant filed Commercial case No. 48 of 2019 against the respondent, seeking for payment of USD 2,500,000.00 under the terms of the performance bond. However, the respondent challenged the competence of the suit by raising preliminary objections. On 8th October, 2019 the High Court delivered its ruling on the objection holding that the suit had been instituted prematurely because Shivacom's liability to the appellant was yet to be established through a due process. Later, on 18th November, 2019, the arbitral tribunal issued the awards wherein Shivacom's claims against the appellant were dismissed, and it was found that Shivacom had breached the SDA. Following the establishment of Shivacom's liability, the appellant notified the respondent about the same and demanded payment of USD 2.500.000.00 being the amount guaranteed under the performance bond within seven days. The respondent did not heed to the demand. As a result, on 20th May, 2021, the appellant filed Commercial Case No. 62 of 2021, in the High Court, seeking to enforce payment of USD 2.500.000.00. Again, the respondent challenged the competence of the suit by way of preliminary objections, one of such points being that, the suit was time barred. The High Court sustained the preliminary objection and proceeded to dismiss the suit with costs. The appellant was aggrieved by that decision, hence the present appeal. The main complaint in this appeal is that: The learned tria l Judge erred in law and fact in finding that the appellant's su it was tim e barred. At the hearing of the appeal, the appellant was represented by Mr. Gasper Nyika, learned advocate, whereas the respondent had the services of Mr. Audax Kahedanguza Vedasto, also learned advocate. Mr. Nyika adopted the appellant's written submissions in support of the appeal filed in Court on 13th May, 2022, to form part of his oral account before the Court. He faulted the decision of the High Court arguing that, the appellant's suit was not time barred such that the learned Judge dismissed it erroneously. He submitted further that, for one to determine whether the suit is time barred or otherwise, he has to consider when the cause of action arose. His elaboration in respect of the present matter was to the effect that, before filing Commercial Case No. 62 of 2021, the appellant had filed Commercial Case No. 48 of 2019. Nonetheless, the same was challenged by the respondent through preliminary points of objection on account that, the suit was time barred, it disclosed no cause of action against the respondent and that the suit was improperly before the court. The High Court sustained two points of objection as it was satisfied that, there was no cause of action and the case was filed prematurely. Mr. Nyika went on to submit that, according to that decision, the cause of action would arise after establishing the liability of the respondent after the arbitral awards. The decision of the High Court was never appealed against, instead the appellant obtained the award and filed Commercial case No. 62 of 2021. Mr. Nyika argued that, according to the decision of the High Court in Commercial Case No. 48 of 2019, the cause of action arose when the award against Shivacom was issued, hence, Commercial Case No. 62 of 2021 which was filed two months after the award i.e. on 18th November, 2019, was within time. He thus, faulted the High Court Judge in the impugned decision claiming that, by deciding that the case was time barred, he reversed the decision of his fellow Judge in Commercial Case No. 48 of 2019. In support of his argument, he cited the case of Mohamed Enterprises (T) Limited v. Masoud Mohamed Nassor, Civil Application No. 33 of 2012 (unreported). Finally, Mr. Nyika urged us to allow the appeal and set aside the impugned decision. In reply, Mr. Vedasto, having adopted the respondent's written submissions to form part of his oral submission before the Court, stated that the appellant's case was premised on the claim that the delay to file the suit is because she was in court. However, he stated that time started to run in 2013 when the cause of action arose. Therefore, counting from that year to 20th May, 2021, there is a period of 8 years which is more than 6 years prescribed by the law. He referred us to page 73 of the record of appeal with a view to showing that, actually the preliminary points of objection raised in Commercial Case No. 48 of 2019 were three as indicated above. He went on submitting that, the third point of objection was determined from page 82-83 of the record of appeal where the learned Judge discussed the issue of referring the dispute to arbitration. As regards the objection that the suit was time barred, Mr. Vedasto submitted that the learned Judge upheld this objection although she did not give reasons. Mr. Vedasto argued vehemently that the appellant's first suit was dismissed by the High Court and thus she had an award which she ought to have executed instead of instituting a fresh suit over the same subject matter. He faulted the appellant for failure to frame the suit as required under Order II rules 1 and 2 of the Civil Procedure Code, Cap 33 (the CPC) so as to prevent multiple suits based on the same cause of action. He argued that the appellant ought to have joined all parties whom she thought might ultimately be held liable. As such, he contended, if Commercial Case No. 62 of 2021 would have been entertained and determined, it means two decrees would have been in existence. He insisted that the appellant was required to sue both the defaulter and the insurer in the same case. Therefore, he said, that the High Court Judge was right to hold that the appellant's suit was time barred because the cause of action arose from the time the default was committed, and time started to run from that particular moment, that is in 2013. In support of his argument, he cited the case of Aman David Mlanga v. Timber Impregnation Limited [1991] TLR 172. Based on his submission, Mr. Vedasto urged us to dismiss the appeal with costs. In his brief rejoinder, Mr. Nyika stated that the High Court Judge did not decide that the suit was time barred. Instead, she said that, the two points of preliminary objection were sufficient to dispose of the matter. He added that the suit was dismissed because the cause of action was not yet been ascertained. Therefore, the appellant did not appeal against that decision because in context, the learned Judge said the case was premature. As such, he said, the suit was not time barred and the learned Judge sustained the second and third points of preliminary objection. Mr. Nyika reiterated his prayer in chief that the appeal be allowed with costs. Having heard counsel for the parties, considered the ground of appeal and gone through the record of appeal, the issue calling for our determination is whether the suit (Commercial Case No. 62 of 2021) was time barred. Determination of this issue requires us, among other things, to ascertain as to when the cause of action arose. Before we get any further, it is imperative to state the guiding principles. In terms of item 7 of part 1 to the schedule to the Law of Limitation Act, Cap 89, the time limit for suit founded on contract (as was in the present matter) is six years which starts to run from the date of breach or default. Another principle which shall guide us is that, the liability of the surety or guarantor does not arise until the principal debtor has committed a default, as the liabilities of those two are co-extensive as per section 80 of the Law of Contract Act, Cap. 345. The counsel for the appellant argued that his client took action upon receiving a notice of default by instituting Commercial Case No. 48 of 2019 against the respondent seeking payment of USD 2,500,000.00 under the terms of the performance bond which was eventually, dismissed for being premature. He further argued that the liability of the respondent could not be established until after establishment of the liability by arbitral awards. Adding that, the same was issued on 18th November, 2019 and 9th March, 2021 and being notified to the parties on 17th March, 2021. According to Mr. Nyika, the cause of auction arose from that date of notification otherwise the appellant could not sue the respondent. The arguments by Mr. Nyika were opposed by Mr. Vedasto who insisted that the cause of action could not base on the date of delivery of the arbitral award but from when a wrong was committed. In the case at hand, the appellant instituted Commercial Case No. 62 of 2021 subject of this appeal, on 20th May, 2021. However, according to the record of appeal, Shivacom who was insured by the respondent was informed by the appellant that she had defaulted compliance with the terms of the SDA on 2nd April, 2013. Thus, she was required to make additional payments within the approved credit limit. However, she did not respond to the plaintiff's request or pay the amount due to the appellant pursuant to the said agreement. In the circumstances and as per the established principle, the cause of action arose on the date when Shivacom was informed of the breach, that is 2nd April, 2013. Counting from that date to 20th May, 2021, the date of filing the suit, eight years had already lapsed. Meaning that, the suit was filed out of prescribed time of six years. In his submission, Mr. Nyika referred us to paragraph 17 of the plaint presented before the High Court found at page 14 of the record of appeal. His intention was to show us that the respondent was not aware of Shivacom's breach of the SDA until on 17th May, 2013 when she was informed by the appellant. We wish to note that, even if we consider that the cause of action arose against the respondent on the date she received the notice, still the appeal would have been filed out of time. In any event, the date on which a cause of action arises cannot wait to be ascertained by a court decree or an arbitral award, so that a proper action can be taken. Apart from that, with respect, we do not agree with the argument by Mr. Nyika that the time spent by the appellant in court while dealing with Commercial Case No. 48 of 2019 should be considered to establish that the suit was filed within time. In our view, this argument might be valid in some other proceedings seeking other reliefs, but certainly, not in the present appeal. Thus, we find no reason to fault the decision of the High Court Judge. We, as well, make a similar finding that the suit (Commercial Case No. 62 of 2021) was instituted out of the time prescribed by the law as indicated above. Consequently, we dismiss the appeal with costs. DATED at DODOMA this 20th day of February, 2025. M. C. LEVIRA JUSTICE OF APPEAL Z. N. GALEBA JUSTICE OF APPEAL M. K. ISMAIL JUSTICE OF APPEAL The Judgment delivered this 20th day of February, 2025 in the absence of the appellant and in presence of Mr. Joseph Kemikimba Rugambwa learned counsel for the respondent via video link is hereby certified as a true copy of the original.