Exim Bank Tanzania Limited vs Lulu Saleh Massasy (Civil Appeal No. 228 of 2022) [2025] TZCA 1308 (23 December 2025)

IN THE COURT OF APPEAL OF TANZANIA AT DOPOMA fCORAM: MWARI3A. 3.A.. KENTE. 3.A. And ISMAIL. J.A.^ CIVIL APPEAL NO. 228 OF 2022 EXIM BANK TANZANIA LIMITED...................................................APPELLANT VERSUS LULU SALEH MASSASY ............................................................... RESPONDENT (Appeal from the Judgment and Decree of the High Court of Tanzania, Commercial Division at Dar es Salaam) ( M w m & U Dated 4th day of August 2021 in Commercial Case No. 62 of 2Q19 JUDGMENT OF THE COURT 18thJune & 23rd December, 2025 MWARI3A. J.A.: The defunct First National Bank Tanzania Limited (the Bank), whose specific assets and liabilities were transferred to the Exim Bank Tanzania Limited (the appellant herein), was the plaintiff in the High Court of Tanzania, Commercial Division at Dar es Salaam. It instituted a suit, Commercial Case No. 62 of 2019 (the suit) against the respondent, Lulu Saleh Massasy claiming for TZS 400,602,331.98 being an outstanding amount of a credit facility (Home Equity Release Loan) advanced to her by the Bank plus interest and other charges arising from the credit facility agreement entered by the parties on 3/4/2017 whereby the respondent was advanced TZS 320,000,000.00. As a security for the loan, the i respondent mortgaged her right of occupancy over a landed property on Plot No. 894 with certificate of title No. 122542, LO. Number 303984 situated at Lulanzi in Kibaha Township. The loan was granted on several conditions, including the requirement that the same would be repaid within the period of 240 months (20 years) on monthly basis with interest at the bank rate of 22% per annum. According to the Bank, the respondent defaulted to repay the loan as per the agreed schedule and as at 6/5/2019, she owed the Bank TZS 400,602,331.98, being the unpaid instalments plus interest and other charges. As a result, on 20/8/2018, the Bank served the respondent with a statutory notice informing her that, she had defaulted to repay the loan as agreed. It alleged further that, the respondent did not make any payments to service the loan and therefore, decided to file the suit in which it prayed for the following reliefs: (i) An order that the defendant is liable and should im m ediately pay TZS 400,602,331.98 as per paragraph 3 above. (ii) Eviction, delivery o f vacant possession and an order for sale o f landed property registered as Plot No. 894 with Certificate o f m e No. 122542, Lulanzi Area, Kibaha Township in the name o f Lulu Saleh Masasi. (n i)If the p la in tiff w ill not be abte to recover the whole amount from roman number ii above, Court to issue an order fo r recovery o f 2 any balance after the sale o f the m ortgaged property as per roman ii above from any o f the properties o f the defendants. (iv)Interest on (i) above a t the rate o f 22% as per the loan agreem ent from 6/5/2019 to the date to judgm ent (v) Interest on the decretal amount a t the rate o f 7% per annum from the date o f judgm ent till the date o f fu ll and final satisfaction o f the decree. (vi) Costs o f and incidental to the su it (vii)A ny other reliefs that this honourable court may deem ju st and equitable to grant The respondent did not dispute that she obtained the loan. She did not also dispute the claim that, she defaulted to repay it in accordance with the terms of the loan agreement. She contended that, because the period of repayment of the loan was 240 months, her failure to repay the monthly instalments for the period up to 6/5/2019, did not entitle the Bank to call upon the whole amount of the loan plus interest. According to her, that was more so because she had paid 10 instalments between April 2017 and March 2018. She added that, the move taken by the Bank was not proper because she had been communicating to it about the reasons for her failure to service the loan. She contended also that, since she had been renegotiating on the payable rate of interest, it could not 3 be possible for her to effect monthly payments before the negotiations were finalized. Before the hearing of the suit, the following issues were framed for determination: *7. Whether there was loan agreem ent between the p la in tiff and the defendant 2. I f the answer to issue No. 1 above, is in the affirm ative, whether the defendant breached the said loan agreem ent 3. What reliefs are the parties entitled to ." The trial court ordered that the case be heard by filling of witnesses' statements and thereafter, the witnesses be summoned to tender some documents, if any, and to be examined. The statements were filed by Francis Mangula (PW1) who was the appellant's Recovery Manager and Lulu Saleh Massasy (DW1), the defendant. When he appeared at the trial, PW1 tendered his statement and a copy of the loan agreement, which was admitted in evidence as exhibit PI. On cross-examination, he stated that, the respondent was required to repay the loan according to the agreed schedule and a default of repayment of a month would entitle the appellant to exercise its right of 4 recalling the loan. According to the witness, the appellant took the action of suing the respondent after she had defaulted for a period of one year. On her part, having tendered her statement, which was admitted to form part of her evidence, DW1 had the following to say when she was cross-examined by the appellant's counsel: After having obtained the loan, she discharged her obligation of remitting monthly repayments as from April 2017 to March 2018. Thereafter, she encountered a financial hardship due to challenges in her business operations, including the problems leading to the closure of her factory known as Masasi Food Industry. She contended that, she communicated to the appellant about the situation as being the reason for her failure to abide by the ■ repayment schedule. She admitted however, that she did not have tangible evidence that she did so. With regard to the collateral for the loan (the mortgaged property), she stated that, the same was worth 660,000,000.00 and for that reason, the appellant should not have recalled the loan after she had defaulted for only one year because, the same was repayable within 20 years. She added that, the appellant should not have recalled the loan while her complaint that the interest was on a high side had not been resolved. 5 In his judgment, the learned trial Judge (Mruma, J.) found it undisputed that, the parties had entered into the credit facility agreement (exhibit PI) on the terms and conditions stated therein. He found further that, as agreed by the parties, the respondent had repaid 10 months' instalments before she subsequently failed to comply with the monthly repayment schedule. On the question whether there had been a breach of the agreement at the time when the appellant instituted the suit, the learned trial Judge was of the view that, the appellant had failed to establish that claim. He reasoned as follows in his judgment at page 328 of the record of appeal: "Testifying on this issue PW1 gave general statem ent to the effect that the borrower (i.e. the defendant) had failed to pay the agreed instalm ents. He however, didn't specify how many months she did fa il to repay the instalm ent and how much she did fa il on each instalm ent In term s o f the facility agreem ent (exhibit PI), the date on which repaym ent o f the instalm ents were to be made by the defendant was on 3&h o f every month. In his evidence PW1 stated sim ply that at the tim e o f instituting the suit, the outstanding am ount against the defendant was Tsh 400,602,331.98 and when he was asked to clarify how that figure was arrived at, she couldn't. In 6 the circum stances and in view o f the p artie s' pleadings, evidence and submissions, I answer the second issue in the negative. The allegation o f breach o f the term s o f the Agreem ent by the defendant has not been established." The learned trial Judge also considered the effect of COVID-19 outbreak on the economic activities hence the inability of those who obtained bank loans, including the appellant, to service them according to the agreed schedules. He consequently answered the issue in the negative; that the appellant did not breach the credit facility agreement. On the reliefs claimed by the appellant, in particular, the amount of TZS 400,602,331.98 as an outstanding amount as at the date of filing the suit, the learned trial Judge was of the view that, the same was not established because the said witness did not produce a bank statement proving the claimed amount. He added that, the respondent ought to have been provided with a financial statement showing the details of repayment, outstanding amount and the relevant charges on the credit facility with a view to proving the claimed amount. He relied on regulation 26 (1) of the Bank of Tanzania Regulations, 2019 (Financial Consumer Protection) Regulations and the High Court decision in the case of Grofin Africa Fund Ltd v. Furniture and Electronics Ltd and 3 Others, Commercial Case No. 81 of 2017 (unreported). On the basis of the findings stated above, the High Court dismissed the suit with costs, observing that the appellant had failed to prove that the respondent was owing the appellant the claimed amount of TZS 400,602,331.98. The trial court observed however, that the parties' credit facility agreement remained in force. The appellant was aggrieved by the decision of the High Court hence this appeal which is predicated on the following four grounds: "1, That, the tria l court erred both in law and fact by holding that there was no breach o f contract despite adm ission by the defendant 2. That, the tria l court erred both in law and fact by holding that the defendant failed to pay the loan due to COVID-19 hence reached into erroneous decision. 3. That, the tria i court erred both in fact and law by dism issing the su it with costs while the defendant had defaulted and adm itted to have defaulted [to repay the loan] hence reached into erroneous decision. 4. That, the tria l court erred in fact and law by holding that the appellant failed to prove the outstanding amount hence reached into erroneous decision." At the hearing of the appeal, the appellant was represented by Mr. Innocent Felix Mushi, learned counsel. On her part, the respondent, who was duly served, did not enter-appearanee. In the circumstances, we ordered that the hearing should proceed in her absence in terms of rule 112 (1) of the Tanzania Court of Rules, 2009 (the Rules). Before the commencement of hearing, Mr. Mushi informed the Court that, by virtue of the Government Notice No. 616 of 25/2/2022 and by the approval of the Bank of Tanzania vide its letter dated 19/7/2022, the assets and liabilities of the First National Bank were transferred to the Exim Bank Tanzania Limited. He thus prayed that the Exim Bank Tanzania Limited be substituted as the appellant. We granted the prayer hence the citation of the appellant by the new name as appearing above. On 9/8/2022, through its advocate, Mr. Innocent Mushi, the appellant filed its written submissions in support of the appeal in terms of rule 106 (1) of the Rules. However, according to the record, the respondent did not file her written reply submissions in compliance with rule 106 (7) of the Rules. 9 In his submissions, the appellant's counsel made some brief but focused arguments. On the first and the third grounds of appeal, he contended that, the learned trial Judge erred in holding that, the respondent did not default to repay the loan while in her written statement of defence; paragraphs 5, 7 (i), (iv) and (v), she admitted to have defaulted and assigned the reasons for her failure to do so. The learned counsel argued that, the default to repay the loan on monthly instalments amounted to a breach of the loan agreement. He clarified that, the loan amount of TZS 320,000,000.00, which was advanced to the respondent, was repayable on monthly basis for a period of 20 years and therefore, failure to effect payments of even a month, amounted to a breach of the terms and conditions of the loan agreement. For that reason, he submitted that, the trial court erred in dismissing the suit With regard to the second ground, it was Mr. Mushi's argument that, the reliance by the learned trial Judge on the COVID-19 pandemic as the reason for the respondents default in the repayment of the loan, was unfounded because the breach occurred in 2018 before the outbreak of the disease as evidenced by the notice of default appearing at page 53 of the record of appeal. 10 Submitting further on the fourth ground of appeal, Mr. Mushi contended that, the complaint by the respondent based on the bank- customer relationship; that the appellant should have provided the statement of accounts of the outstanding amount of the loan, was not a sound ground for dismissing the suit. He stressed that, like the appellant, the respondent had the duty of knowing the sum which she had repaid and the outstanding amount as at the date on which the suit was instituted. In determining the grounds of appeal, we wish to begin with the first and third grounds. The issue which arises from the submissions of the learned counsel for the appellant on the two grounds of appeal is whether the respondent breached the loan agreement. From the pleadings and the evidence, our answer to the issue is in the affirmative. The respondent agreed that, after having obtained the loan, which was repayable monthly for a period of 240 months by virtue of clause 10 of the offer letter for home loan (the letter), she repaid the monthly instalments for 10 months between April 2017 and March 2018. She did not however, effect any payments thereafter. Under clause 1.23.1 of the General Terms and condition of the loan (the agreement), failure to abide by the schedule of payment would entitle the appellant to terminate the li agreement under clause 1.23.12.2 of the Agreement. That clause states as follows: "1.23.1- Any o f the follow ing events shall constitute as custom er's default o f this agreem ent - 1.23.1 I f the custom er fa ils to p a y an y am ount due in term s o f this Agreem ent or if any instrum ent issued by the custom er is dishonoured due to insufficient funds." [Em phasis added.] It is clear from clause 1.23.1 of the agreement that, the respondent's failure to abide by the condition stipulated under item 10 of the Letter as from March 2018 to 20/8/2018, when the appellant served her with a default notice, she was in breach of the contract. The respondent did not, in essence, dispute that she breached the convenant under item 10 of the Letter. It was her defence that, she was unable to comply with that term of the agreement because she encountered financial difficulties. For the foregoing reasons, we agree with the learned counsel for the appellant that, the learned trial Judge erred in his finding that, the respondent did not breach the agreement, We therefore find merit in the first and third grounds of appeal and allow them. The second ground of appeal need not detain us much. We hasten to express our agreement with the learned counsel for the appellant that, the learned trial Judge erred in finding that, the respondent's financial capability to repay the loan was affected by the outbreak of COVID-19 pandemic. With respect, such a matter was not raised by the respondent both in her pleadings and in her evidence. For that reason, the learned trial Judge erred in acting on the factor which was neither pleaded nor adduced by the respondent. On the respondent's defence that the cause of her failure to repay the loan according to the agreed schedule, was because her business dwindled, is untenable. That factor could only be the basis for negotiations on the options to be agreed upon by the parties. See the case of Unilever Tanzania Ltd v. Benedict Mkasa t/a Bema Enterprises (Civil Appeal No. 41 of 2009) [2009] TZCA 24. In that case, the Court observed that: "Strictly speaking ; under our laws, once the parties have freely agreed on their contractual clauses, it would not be open fo r the courts to change those clauses which parties have agreed 13 between themselves. It was up to the parties concerned to renegotiate and to freely rectify clauses which parties find to be onerous. It is not the role o f the courts to re-draft clauses in agreem ents but to enforce those clauses where parties are in dispute." On those reasons, we find that, this ground is also meritorious and is hereby allowed. With regard to the fourth ground, the finding by the trial court that, the appellant had failed to prove its case because PW1 did not know the outstanding amount of the loan at the time when the suit was filed is, in our view, erroneous. The fact that PW1 did not state in his evidence, the exact amount of the outstanding loan, did not render that evidence uncreditworthy as regards the fact that the respondent was indebted. It was not disputed that the respondent obtained a loan of TZS 320,000,000.00 which was to be repaid on equal monthly instalments for a period of 20 years with interest at the rate of 22% per annum. She paid 10 instalments only, the last instalment being in March 2018 and thereafter, defaulted in the repayments for about 14 months before the appellant decided to institute the suit in May 2019. According to paragraph 8 of the plaint, at the time when the appellant instituted the suit, the outstanding amount of the loan plus interest and other charges 14 was TZS 400,602,331.98. In paragraph 7 (i) of her written statement of defence, although she raised a general denial to paragraph 8 of the plaint, the respondent did not dispute the outstanding amount of the loan. She merely gave explanation on her failure to continue with payment of instalments according to the agreement. She stated as follows: " That the defendant has been in frequent communication with the p la in tiff and has tried several tim es to explain the reason behind her repaym ent challenges and dearly expressed her intentions to honour the said Agreem ent" Furthermore, as shown above, in her evidence at the trial, she attributed her default in the repayment of the loan to the financial hardship she allegedly encountered following a fall of her business. She also based her defence on the rate of interest that, she was negotiating with the appellant to reduce it on account that, it was on the high side. It is obvious therefore, that the learned trial Judge acted on a minor discrepancy in the evidence of PW1 which was insignificant given the presence of undisputed facts concerning the amount of the unpaid loan. For this reason, we equally find merit in this ground of appeal and thus allow it. 15 On the basis of the foregoing reasons, we are satisfied that the appeal has merit. We accordingly allow it and grant the reliefs (i) - (vi) prayed in the plaint. DATED at DODOMA this 25th day of November, 2025. A. G. MWARIJA JUSTICE OF APPEAL P. M. KENTE JUSTICE OF APPEAL M. K. ISMAIL JUSTICE OF APPEAL The Judgment delivered through virtual court this 23rd day of December, 2025 in the presence of Mr. Innocent Felix Mushi, learned counsel for the appellant and in the absence of the respondent and Mr. Soud Omar, Court Clerk; is hereby certified as a true copy of the original. W. A. HAMZA DEPUTY REGISTRAR COURT OF APPEAL