WERASIMBO EMMANUEL V STANBIC BANK TANZANIA LTD 2 OTHERS

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA IN THE SUB-REGISTRY OF MWANZA AT MWANZA LAND CASE NO. 19 OF 2023 WERASIMBO JOHN EMMANUEL ................................................. 1st PLAINTIFF JACQUILINE WILLY MAUKI........................................................ 2nd PLAINTIFF VERSUS STANBIC BANK TANZANIA LIMITED........................................ 1st DEFENDANT JOSEPH JOHN SHUMA.............................................................. 2nd DEFENDANT STEAM GENERAL RECOVERIES LIMITED................................ 3rd DEFENDANT JUDGMENT 5/8/2024 & 24/9/2024 ROBERT, J: The plaintiffs, Werasimbo John Emmanuel (1st Plaintiff) and Jacquiline Willy Mauki (2nd Plaintiff), both residents of Dar es Salaam, filed a suit against Stanbic Bank Tanzania Limited (1st Defendant), Joseph John Shuma (2nd Defendant), and Steam General Recoveries Limited (3rd Defendant). The plaintiffs' claims are related to the mortgaging of a property located on Plot No. 67, Block 'E' Ilemela Area, Mwanza City, under Certificate of Title No. 41023. i In July 2013, the 1st Plaintiff, as a third-party mortgagor, mortgaged the property to secure a loan facility of TZS 150,000,000 for the 2nd Defendant, who trades as JJS Auto Parts & General Distributors. The 2nd Plaintiff, as the spouse of the 1st Plaintiff, consented to the mortgage. The loan was to be repaid over 36 months at an interest rate of 22%. The plaintiffs allege that the loan was repaid in full by 2016, and they were not informed of any default. However, on 26th October 2022, the 1st Defendant, through the 3rd Defendant, issued a 14-day notice to the plaintiffs demanding payment of TZS 401,365,284.69, failure of which the property would be auctioned. The plaintiffs claim they were not given prior notice of the outstanding debt and argue that the actions of the 1st and 3rd Defendants are illegal and in breach of contract. They seek a permanent injunction to prevent the sale of their property, damages for the psychological and physical hardship caused, and other reliefs. The 1st and 3rd Defendants, in their defence, contend that the 1st Plaintiff executed a Deed of Unlimited Personal Guarantee and was notified 2 of the 2nd Defendant's default. They dispute the plaintiffs1 claim that the loan was repaid in full and assert that they have the right to enforce the mortgage to recover the outstanding debt. Issues raised for the determination of this matter are as follows: 1. Whether the term loan which was advanced by the 1st Defendant to the 2nd Defendant in 2013 was repaid in full. 2. Whether the 1st Plaintiffparticipated in the variation of mortgages and term loan which were effected in 2014 and 2015. 3. If issue No. 2 is answered in affirmative whether the 1st plaintiff was issued with the default notice by the 1st defendant. 4. To what reliefs are the parties entitled. During the hearing of this matter, the Plaintiffs were represented by Mr. Dennis Kahangwa, learned counsel, while the 1st and 3rd Defendants were represented by Dr. George Mwaisondola, learned counsel. The case proceeded ex parte against the 2nd Defendant, who failed to enter appearance despite having been duly served. Starting with the first issue, the primary question is whether the loan advanced by the 1st Defendant to the 2nd Defendant in July 2013 was repaid in full. The plaintiffs' case, as presented in their plaint, claims that the loan was fully repaid. However, the 1st Defendant, in its written statement of 3 defense, denied this contention. The testimony provided by DW1, an employee of Stanbic Bank, indicated that the 2nd Defendant had defaulted on the loan. This testimony was corroborated by the loan records and was not contradicted during cross-examination. In contrast, the plaintiffs' evidence on this matter is largely based on their understanding and hearsay, as they were not privy to the specifics of the repayment status. The principle of privity of contract dictates that only parties to a contract have the standing to enforce its terms or claim rights under it. In this case, the plaintiffs, who are not parties to the loan agreement between the 1st and 2nd Defendants, could not claim knowledge of whether the loan was fully repaid. The separation of rights between a loan agreement and a third- party mortgage was reinforced by the Court of Appeal of Tanzania in Austack Alphonce Musli v. Bank of Tanzania Ltd & Another, Civil Appeal No. 373 of 2020, which held that the mortgagor (in this case, the 1st plaintiff) could not enforce rights arising out of the loan agreement. During the trial, the 1st defendant, through DW1, testified that the 2nd defendant had defaulted on the loan, and this evidence was uncontroverted. Even PW1 and PW2, the plaintiffs' witnesses, did not present any evidence proving full repayment of the loan. Given the unchallenged evidence from 4 the 1st defendant and the lack of documentary evidence from the plaintiffs, the court finds that the loan advanced in 2013 was not repaid in full. The second issue is whether the 1st Plaintiff Participated in the Variation of Mortgage and Term Loan. The 1st Plaintiff contends that he was not involved in the variations of the mortgage that occurred in 2014 and 2015, beyond the initial mortgage agreement signed in 2013. The 1st and 2nd Deeds of Variation (Exhibits DI and D2) were executed and registered, indicating that the mortgage agreement was altered. These documents were signed in the presence of Advocate Silas Nziku, who also witnessed the original mortgage deed. The 1st Plaintiff asserts that he was not involved in these variations. However, the plaintiffs failed to provide any evidence or testimony from Advocate Nziku to challenge the authenticity of these documents. The registration of the mortgage and its variations provides a strong presumption of their validity. The rule of sanctity of the land register as invoked in Omary Yusuph v. Rahma Ahmed Abdulkadir [1987] TLR 169 provides that registered documents are conclusive evidence of the transactions they record. 5 The plaintiffs' failure to produce evidence to contest the registered variations or challenge the credibility of the documents and witnesses means the Court must rely on the registered records, which indicate that the 1st Plaintiff was involved in the variations. The third issue addresses whether the 1st plaintiff, Werasimbo John Emmanuel, was properly served with a default notice by the 1st defendant, Stanbic Bank Tanzania Limited, as required under the law and the terms of the mortgage agreement. Under Section 127 of the Land Act, the mortgagee is required to serve a written notice to the mortgagor in the event of default in payment or breach of mortgage conditions. The 1st plaintiff claims that he was unaware of any default notice being issued and that the first defendant failed to meet its legal obligation to notify him of the default. On the other hand, the 1st defendant argues that a proper default notice was issued and sent to the 1st plaintiffs registered postal address, and the 1st plaintiff cannot claim ignorance of the notice. The 1st defendant, through DW1, presented Exhibit D3, a default notice dated October 4, 2018, along with receipts confirming that the notice was 6 sent to the 1st plaintiff's registered postal address in Dar es Salaam, P.O. Box 80445, which was the address provided in the loan and mortgage agreements. This same address appeared on the personal guarantee (Exhibit D4), and the 1st plaintiff did not deny the authenticity of the documents. Upon review of the evidence presented, the Court finds that the 1st Plaintiffs claim of not receiving the default notice is contradicted by the documentary and testimonial evidence submitted by the 1st Defendant. Exhibit D3, which comprises the default notice and accompanying postal receipts, demonstrates that the notice was sent to the 1st Plaintiff's known postal address, as confirmed by his personal guarantee (Exhibit D4). Furthermore, the 1st Plaintiff did not dispute that the postal address used by the 1st Defendant was correct or that the registered mail was received. The requirements of Section 127 of the Land Act, Cap 113 [R.E. 2019] are clear and mandatory. This provision dictates that a mortgagee, upon default by the mortgagor, must serve a notice in writing, detailing the nature of the default, the actions required to cure the default, and the consequences of failing to remedy the breach within the stipulated time of 60 days. The default notice presented by the 1st Defendant fulfills these statutory requirements. It adequately informed the 1st Plaintiff of the nature and 7 extent of the default, the remedies available to the 1st Defendant, and the legal consequences of failing to remedy the breach, including the potential sale of the mortgaged property. The evidence adduced, particularly the delivery records, indicates that the notice was sent and delivered in accordance with legal standards. This is further supported by the testimony of DW1, who confirmed the issuance and mailing of the default notice. The 1st Plaintiff's failure to substantiate the claim of non-receipt, combined with the undisputed evidence, renders the claim untenable. It is a settled principle that service via registered mail to a party's last known address constitutes valid service. Once a notice is sent via registered mail to the correct address, it is deemed received, even if the party claims not to have physically received it. Therefore, based on the facts and in light of Section 127 of the Land Act, the Court finds that the 1st Plaintiff was properly served with a default notice that complied with all statutory requirements. The 1st Defendant lawfully exercised its right to issue the notice and to pursue remedies available under the mortgage agreement. Consequently, this Court holds 8 that the 1st Defendant acted in accordance with the law, and the service of the default notice was both proper and valid Given the findings on the substantive issues, the plaintiffs' claims are unsupported by sufficient evidence. The defendants have demonstrated through clear and uncontradicted evidence that the loan was not repaid in full, that the 1st Plaintiff was involved in the mortgage variations, and that the default notice was properly issued. In the circumstances, the plaintiffs' case has been found to lack merit on all substantive issues. In light of this, and given the plaintiffs' failure to substantiate their claims, the Court dismisses the plaintiffs' case with costs. It is so ordered. 9