YARA T LTD VS ADA AFRICANS PROUREMENTS LTD COMM CASE NO

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM COMMERCIAL CASE NO. 88 OF 2015 YARA TANZANIA LIMITED....................................................PLAINTIFF VERSUS ADA AFRICANS PROCUREMENTS LIMITED IBRAHIM MUTASA KCB BANK (T) LTD .............. DEFENDANTS 24th May & 16th June, 2016 DEFAULT JUDGMENT MWAMBEGELE, J.: The plaintiff, a limited liability entity incorporated under the laws of Tanzania instituted this suit on the 30.07.2015 against the defendants jointly and severally craving for the following reliefs: (a) A declaration that the defendants defrauded the plaint and thereby obtained fertilizers from the plaintiff unlawfully; (b) A declaration that the defendants are in breach of the very supply contract said to be obtained by fraudulent means; (c) An order to lift the 1st defendant's corporate veil as against the 2nd defendant and hold him responsible for the plaintiff losses; 1 (d) An order for payment of Tshs. 211,200,000/= being the value of the said fraudulently obtained fertilizers; (e) Interest at the commercial rate of 25% from the date when the debt became due to the date of judgment; (f) Interest on the decretal sum from the date of judgment to the date of full settlement of the debt; (g) General damages; (h) Costs of this suit; (i) Any other reliefs that this honorable court shall deem just and equitable to grant. The record has it that despite several attempts to locate the defendants, the plaintiff was unable to secure their address and effect services. As a result, on 14.12.2015 the defendant's prayer for substituted service by way of publication was granted. The record has it further that the said publication was made on 22.01.2016 through the Mwananchi News paper and the Daily News but until the 02.03.2016 when the matter came before this court for necessary orders there was no defense filed by the defendants. On 04.03.2016 the plaintiff through the re-service of Mr. Nuhu Mkumbukwa, learned advocate filed an application for a default judgment in terms of rule 22 (1) of the High Court (Commercial Division) Procedure Rules, 2012 - GN No. 250 of 2012 (hereinafter "the Rules"). For avoidance of doubt let me reproduce the sub-rule: "Where any party required to file written statement of defence fails to do so within the 2 specified period or where such period has been extended in accordance with sub rule (2) of rule 19, within the period of such extension, the Court shall upon proof of service and on application by the plaintiff in Form No.l set out in the Schedule to these Rules enter judgement in favour of the plaintiff." As intimated hereinabove, it is not disputed that the defendants were served through publication and that to the date of composing this default judgment, let alone upon filing an application for it (the default judgment), they had not appeared nor filed their defense. To me the conditions sine qua non for the grant of default judgment, being proof of service to the defendants by the plaintiff and failure to file defence by the defendants has been met and thereby warranting grant of default judgment. However, I hasten to observe at this juncture, that prudence has it that a default judgment must be issued without prejudice to the duty of the court to scrutinize the pleadings as well as the documents attached in ascertaining the veracity of the prayers before granting the same. I will accordingly be guided by this practice of this court founded upon prudence in composing this judgment. Before I venture into the judgment, I find it apposite to recite, albeit briefly, the story leading to this suit as told from the plaint. The 1st defendant is a limited liability body corporate whereas the 2nd defendant is a natural person working for gain in Dar es Salaam as the Director of the first defendant. The 1st defendant trading through the 1st defendant had ordered for fertilizers from the plaintiff worth Tshs. 211,200,000/= whereby the plaintiff required the defendants to obtain a bank guarantee before the supply of the fertilizers 3 could be made. It is stated that basing on the bank guarantee from the National Bank of Commerce which was presented by the defendants and purchase orders, the parties entered into a Fertilizer Supply Agreement and supplied the same worth the amount mentioned above. It is also stated that the plaintiff issued invoices but the defendants failed to honour the same whereby on the 15.03.2012 the 2nd defendant wrote to the plaintiff acknowledging the delay to pay and asked for the restructuring of the mode of payment. Upon lapse of the time for payment, as stated in the plaint, the plaintiff resorted to the said Bank Guarantee only to be told by the said bank that it had never issued such guarantee. Finally that the plaintiff had tried to contact the defendants to no avail and that their fraudulent acts have caused the plaintiff immense loss of Tshs. 211,200,000/= hence the suit. I have gone through the documents attached to the plaint particularly the Local Purchase Orders and the list of trucks and particulars (Annexure Yara 1), Six copies of delivery notes (Annexture Yara 2) as well as a copy of the letter dated 15.03.2012 from the 1st defendant written by the 2nd defendant to the plaintiff (Annexture Yara 4). On the face value, I am certain that indeed the said fertilizers worth the said amount of Tshs. 211,200,000/= were issued and delivered to the defendants. Therefore, the 4th prayer is granted as prayed. However, having looked at the plaint and the documents supplied, I find no basis of fixing the commercial interest at 25%. To me it is rather on the high side. I also do not find any basis for pegging it from the date of accrual. I will therefore award interest on the principal sum at the rate of 19% from the date of filing the suit to the date of this judgment. 4 In the same vein, general damages being discretionary, whether on default judgment or otherwise, there should be basis for judicious exercise of the same by the court. Having seen none through the plaint, I refuse to make any order in this respect. For the declaratory prayers made under items (a), and (c), I find the circumstances as depicted through the plaint to be insufficient to ground such prayers. Thus, as for the fertilizers having been obtained fraudulently by the defendants, there is nothing concrete to support the same, say at least the fraudulently obtained Bank Guarantee or at least the written communique between the plaintiff and the said bank denying to have issued the said Bank Guarantee. For the prayer to lift the corporate veil of the first defendant, the plaint does not disclose either that the 1st defendant is no longer a going concern or that it is unable to discharge its debts by reason of lack of funds or property. Given the fact that the plaintiff has sued the defendants jointly and severally, and given the obvious fact that they are indeed in breach of the Fertilizer Supply Agreement and as such liable jointly and severally, I deem this prayer to be rather premature or rather redundant. I thus decline to grant it. That notwithstanding, the plaintiff must have .its costs for this suit. In fine therefore, and in terms of rule 22 (2) of the Rules, judgment is hereby entered for the plaintiff in the following terms: 1. The defendants are in breach of the Fertilizers Supply Agreement; 2. The defendants shall pay the plaintiff Tshs. 211,200,000/= being the value of the supplied fertilizers; 5 3. The defendants shall pay the plaintiff interest on the principal sum at the rate of 19% from the date of filing the present suit to the date of this judgment; 4. The defendants shall pay further interest on the decretal sum at the court's rate of 7% per annum from the date of this judgment till final and full satisfaction; and 5. The defendants shall pay the plaintiff costs of this suit; In terms of rule 22 (2) (a) and (b) of the Rules, I further direct that the decree in this case shall not be executed unless the decree holder has, within a period of ten (10) days from the date of this default judgment, published a copy of the decree in at least two (2) newspapers of wide circulation in the country and after a period of twenty-one (21) days from the date of expiry of the said period often (10) days has lapsed. Order accordingly. DATED at DAR ES SALAAM this 16th day of June, 2016. J. C. M. MWAMBEGELE JUDGE 6