NMB Bank PLC vs Kuringe Real Estate Co. Ltd (Civil Appeal No. 738 of 2024) [2025] TZCA 1293 (11 December 2025)

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM fCORAM: KEREFU. J.A.. KHAMIS, 3.A. And NANGELA. 3.A.) CIVIL APPEAL NO, 738 OF 2024 NMB BANK P LC ........................................................................ APPELLANT VERSUS KURINGE REAL ESTATE CO. LTD ................... ....................... RESPONDENT (Appeal from the Decision of the High Court of Tanzania, Commercial Division, at Dar es Salaam) f Mkeha, J.) dated the 21s t day of June, 2024 in Commercial Case No. 104 of 2023 JUDGMENT OF THE COURT 02n d & 11th December 2025 NANGELA, 3.A.: The background to this appeal may be stated briefly. The respondent, is a company duty registered and incorporated under the Companies Act, Cap. 212 [R.E. 2023]. On 25/08/2023, the respondent instituted a suit before the High Court of Tanzania, Commercial Division (the trial court), against the appellant, a licensed banker operating in accordance with the laws of Tanzania. In that suit, the respondent sought, inter alia, a declaration that the appellant had breached a sale agreement (exhibit P2) executed on 03/04/2018 for the purchase of a house described as Plot No. 696, Block "C", CT No. 96163, Land Office No. 411245, Sinza, Dar es Salaam (the suit property), at a price of TZS 145,000,000.00. The purchase arose from a public auction conducted by the appellant, in which the respondent emerged the successful bidder and was issued with a certificate of sale. Before the transaction was finalized, the respondent conducted an official search (exhibit P3) in the Office of the Registrar of Titles to ascertain the status of the suit property. The search revealed that the property was registered in the name of one Wilson Saimon Ngui, t/a "Meku Spare Parts", and that, it had been mortgaged to the appellant to secure a loan of TZS 536,000,000.00. Upon default by the mortgagor, the appellant auctioned the property in exercise of her statutory power of sale and the respondent purchased it. Upon purchase of the suit property, the respondent initiated a transfer process and paid TZS 8,700,000.00, as stamp duty. As evidenced by exhibit P4 available in the record of appeal, the transfer was completed, and the property was registered in the respondent's name on 21/12/2018. However, on 02/05/2020, the respondent discovered a proclamation of sale issued by the High Court of Tanzania, Commercial Division, in respect of the same property. She attempted to challenge that proclamation but her attempts proved futile because, on 02/8/2023, she received a notice from the Registrar of Titles indicating an intention to deregister her name in favour of one David Godwin Urio. Based on the above facts, the respondent instituted Commercial Case No. 104 of 2023 before the trial court, alleging inter alia, that, the appellant had knowingly withheld material information concerning an encumbrance affecting the suit property, thereby breaching the sale agreement (exhibit P2). She therefore prayed for judgment and decree in that; one, the respondent was in breach of the sale agreement in respect of the suit property, two, that the purchase price of the suit property paid to the appellant on 24/2/2018 in the Sum of TZS 145,000,000.00 be refunded to the respondent, three, the appellant pay the respondent costs of transfer of the suit property amounting to TZS 17,390,000.00; four, payment of interest at a commercial rate of 22% per annum of the sum stated in prayer number two and three; from 2018 when the sums were expended to the date of full repayment; five, payment of interest rate at court's rate of 10% from the date of Judgment to the date of full payment; six, payment of general damages; seven, payment of costs and, eight, any other reliefs that the trial court would deem just to grant. The appellant filed a written statement of defence in which she admitted the existence of the sale agreement (exhibit P2) and the fact 3 that the suit property had been duly transferred to the respondent, who had been handed the Certificate of Title (exhibit P5) and other associated documents. On that account, the appellant, denied all remaining allegations, including the alleged breach of contract. In the course of determining the suit, the trial court framed two issues: (a) whether the appellant breached the sale agreement; and (b) the reliefs to which the parties were entitled. At the hearing of the suit, each party called one witness. For her part, the respondent's case was supported by Mr. Edward Eugen Mushi (PW1). In his testimony, PW1 recounted how the purchase of the suit property took place in 2018, its subsequent transfer into the respondent's name, and the later notice from the Registrar of Titles dated 02/8/2023, indicating an intended deregistration of the respondent's name in favour of Mr. David Godwin Urio. PW1 asserted that the appellant had knowingly sold the property while it remained encumbered and had failed to disclose that material fact to the respondent, thereby breaching the sale agreement. Finally, in support of the respondent's case, PW1 tendered in court exhibits PI to P5. For the defence case, Mr. Erick Aloyce Shinga testified as DW1. In his testimony, he acknowledged the sale agreement (exhibit P2) and confirmed that the property had belonged to Wilson Saimon Ngui t/a Meku Spare Parts. He also testified that the said Wilson Saimon Ngui had mortgaged the suit property to the appellant and whose default had led to the auction. He stated, however, that, after the sale of the property, all necessary documents, i.e., the Certificate of Sale, the sale agreement, and the Certificate of Title, were duly handed to the respondent, and, that, the property was duly and successfully transferred to the name of the respondent. Consequently, DW1 denied any breach by the appellant. Based on the evidence before him, the trial judge found that, DW1 failed to rebut the respondent's averments, especially those set out in paragraphs 10 and 13 of both the plaint and PWl's witness statement. This, the court held, demonstrated that the respondent stood to lose the property and that the appellant had sold it with knowledge of an undisclosed encumbrance. In light of exhibit P4, confirming the transfer on 21/12/ 2018, and DWl's failure to dispute the deregistration notice, the trial court concluded that the appellant had committed a "constructive breach" of the sale agreement. Accordingly, the trial court found in favour of the respondent, declared the appellant in breach of exhibit P2, and ordered: a refund of the purchase price of TZS 145,000,000.00 with 15% compound interest 5 per annum from 24/02/2018 to the date of judgment; interest at the court's rate of 10% per annum thereafter until payment in full; general damages of T7S 25,000,000.00; and costs of the suit. Dissatisfied, the appellant lodged the present appeal. Initially, in her memorandum of appeal, the appellant had raised seven grounds of appeal. However, later, with the leave of the Court, an additional new ground was uploaded to the list, making eight grounds of appeal which may be paraphrased to read as follows: 1. The learned trial Judge erred in faw and fact by holding that the appellant breached the sale agreement for Plot No. 696 Block "C" CT No. 96163, L O. No. 411245, Sinza, Kinondoni Municipality, Dar es Salaam. The Judge failed to note that the suit property was sold in its current condition and location; that the respondent had a duty to verify the appellant's right to sell; that no third-party interest was registered at the time o f sale; that title had already been successfully transferred to the respondent; that the respondent negligently failed to protect his rights by withdrawing, without leave to refile, objection proceedings against third-party claims; that the respondent undertook not to demand vacant possession; and that the appellant had handed over all documents evidencing ownership, culminating in the transfer to the respondents name. 2. The learned trial Judge erred in finding that the appellant (through DW1) failed to challenge the evidence in paragraphs 10 and 13 o f the witness statement and o f the Piaint, and in doing so overlooked DW1 's evidence in paragraphs 5 and 6 o f the written statement o f defence. 3. Alternatively, the learned trial Judge erred in failing to appreciate that the evidence o f PW1 and the allegations did not establish a breach o f contract when the facts set out in ground 1 are taken into account. 4. The learned trial Judge erred in holding that the appellant sold the property while aware o fanother encumbrance , without first determining whether any encumbrance existed beyond the mortgage in favour o f the appellant, its nature, and the date it was registered. 5. The learned trial Judge erred in finding that the alleged encumbrance could not have been discovered at the time o f the sale. 6. The learned trialJudge erred in awarding interest, particularly compound interest, without evidentiary basis. 7. The learned trial Judge erred in awarding interest at the court rate o f 10%, contrary to Order XX Rule 21(1) o f the Civil Procedure Code (CPC), Cap. 33 [R.E 2019]. 8. The learned trial Judge erred in law and fact in awarding generaI damages without there being any assessment thereof " When the appeal was called on for hearing, Ms. Faizal Salah, learned counsel, represented the appellant while the respondent had the legal services of Mr. Francis Makota, learned counsel. Because both learned counsel had filed written submissions, the Court sought only clarifications from them, which clarifications they duly adopted as their oral submissions. At the outset, however, the Court further invited them to address whether, at the time of hearing of the suit in the trial court, Mr. David Urio and the Registrar of Titles ought to have been joined as necessary parties and, if so, whether their omission was fatal. In their responses to the issue raised by the Court, both learned counsel were ad idem that neither Mr. David Urio nor the Registrar of Titles was a necessary party who should have been joined to the suit. They reasoned and submitted that their stance arises from the fact that the dispute before the trial court concerned not on the ownership of the suit property but the alleged breach of a contract of sale which was exclusively between the appellant and the respondent. They, consequently, saw no room for Mr. David Urio or the Registrar of Titles who were not privy to the respondent's and appellant's sale arrangements. We have duly re-examined the record of appeal and considered the submissions made by the learned counsel for the parties on that issue raised by the Court suo motu. We, therefore, respectfully agree with the conclusion they arrived at. As the claims before the trial court related solely to breach of the sale agreement between the respondent and the appellant, the issue of non-joinder does not arise. With that matter settled, we now turn to the merits of the appeal, beginning with the grounds of appeal and the respective submissions, which we shall examine in light of what the record of appeal before us states and in accordance with the applicable law. Apparently, in her approach to the grounds of appeal, the appellant's counsel consolidated grounds one, four, and five, which she addressed jointly. Counsel for the respondent adopted the same approach. We, likewise, shall consider these grounds together, guided by the submissions made by the parties and the evidence on the record of appeal. While it is unnecessary to recount every detail advanced in the 9 written submissions and oral clarifications, we affirm that in the course of our deliberations, we have carefully examined and taken on board all submissions and clarifications made by both learned counsel for the parties. Briefly, the thrust of the appellant's complaint under grounds one, four, and five jointly addressed by the appellant's learned counsel is that, the trial Judge failed to appreciate that the suit property was sold at the time when the appellant could not reasonably have known of any undisclosed encumbrance. In his decision, found on pages 135 to 136 of the record of appeal, the trial Judge held as follows: " Exhibit P4 indicates that, by 21/12/2018, the suit property had been transferred to the Plaintiff. However, given the fact that the Registrar o f Titles had had issued notice indicating his intention to deregister the plaintiff as the owner o f the suit property and that, instead o f the plaintiff one David Godwin Urio had to be registered as the owner, this fact having been not disputed by DW1 in his witness statement, ... leads me into a conclusion that, the defendant sold the property while aware o f the other encumbrance over the suitproperty which could not be discovered by the plaintiff at the time o f sale as it happened. I hold 10 this to be constructive breach o f the sale agreement on the part o f the defendant" Ms. Salah challenged the above finding of the learned trial Judge as being erroneous. First, she contended that, prior to the purchase of the suit property, the respondent conducted a Land Registry search confirming that the property stood in the name of Wilson Saimon Ngui t/a Meku Spare Parts, mortgaged to the appellant to secure TZS 536,000,000. Second, that, by the time the respondent received a deregistration notice that was issued on 02/08/2023, title had already been transferred into the respondent's name. Third, that, because the property was sold in its current condition and location, it was the respondent's duty to investigate the appellant's right of sale and, once title was acquired, to address any ensuing challenges, including securing vacant possession. She buttressed her submissions by referring the Court to the provisions of sections 33 (1) of the Land Registration Act, Cap. 334 [R.E 2023], and 135 (l)(b) and (3) of the Land Act, Cap. 113 [R.E. 2019], (now section 145 (l)(b) and (3) of Cap. 113 [R.E. 2023]) and concluded that, the trial Judge failed to appropriately evaluate the evidence on record, a fact which caused him to arrive at an erroneous conclusion. ii In response, Mr. Makota argued that, although the respondent conducted a search, this did not extinguish the appellant's obligation as a seller to disclose material facts. He further asserted that, the respondent's search was a statutory duty under section 67 (b)(i) of the Land Act and section 34 of the Land Registration Act, Cap. 334 [R.E. 2019]. He contended that, section 135 (2)(c) of the Land Act, Cap. 113, R.E. 2019 (now section 145 of Cap. 113 [R.E. 2023]) does not impose upon a purchaser any obligation to investigate the propriety or regularity of a sale. According to Mr. Makota, the respondent's search confirmed only the mortgage, while subsequent proceedings revealed undisclosed third-party claims attributable to the appellant's nondisclosure. He argued, by reference to exhibit Dl, that, the respondent never obtained physical possession of the property and, that, the notice of the intention for deregistration referred to under paragraph 10 of the respondent's witness statement was a result of the incumbrance referred in exhibit Dl. He contended, therefore, that, the respondent's inability to secure possession aligned with the trial court's finding of a constructive breach. Finally, he urged that clause 2 of exhibit P2 should be construed as falling within the exception under section 33 (1) of the Land 12 Registration Act, and that, the trial court rightly held that the appellant was required to disclose the encumbrance. Having considered the rival submissions/ the record of appeal, and the applicable law, we now address grounds one, four, and five, which were jointly argued by counsel. Before doing so, we reiterate, pursuant to Rule 36(l)(a) of the Court of Appeal Rules, 2009, that in appeals originating from the High Court or a tribunal exercising original jurisdiction, this Court is empowered to re-evaluate the entire evidence on record and to draw its own inferences. This principle was affirmed in Kellu Kamo Lucas v. Dr. Luis B. Shija (Civil Appeal No. 63 of 2022) [2023] TZCA 17924 (12 December 2023- TanzLII) which relied on the previous Court decision in Jamal A. Tamim v. Felix Francis Mkosamali and Another, Civil Appeal 110 of 2012 (unreported). In the present appeal, the record and the parties' submissions make it clear that, prior to executing the sale agreement (exhibit P2), the respondent conducted a land registry search (exhibit P3) confirming that the suit property was registered in the name of Wilson Saimon t/a Meku Spare Parts. It is undisputed fact that the parties thereafter executed exhibit P2 on 03/04/2018, and that all requisite documents, including the 13 title deed, were duly transferred to the respondent, enabling her to process and secure registration of the suit property in her own name. The significance of the above uncontested facts to the present appeal must therefore be determined. In doing so, two things need to be taken on board. One, is the appellant's contention that the respondent's allegation of nondisclosure of an encumbrance was unfounded, and two, is the contention that because the notice of deregistration was issued on 02/04/2023 long after the completion of the transaction and the transfer of title, it was incumbent upon the respondent to protect her registered interest rather than attribute fault to the appellant. We find merit in the above two contentions on account of the following: First, the record does show, through PWl's witness statement, that the respondent successfully transferred the suit property from Wilson Saimon Ngui to Kuringe Real Estate on 21/12/2018, after which the title stood in her name. In essence, once the respondent's interest was duly registered in the Land Register, she obtained an indefeasible title, unless displaced by cogent evidence to the contrary. Put differently, she thereby became the effective owner. Section 2(1) of the Land Registration Act defines the owner of registered land as "the person for the time being in whose name the estate or interest is registered." 14 Second, the fact that the respondent was the person holding an effective title to the suit property at the time did also have an additional legal significance. That legal significance was aptly stated in the reasoning of the Court in Kellu Kamo Lucas v. Dr. Luis B. Shija (supra), particularly with regarding to section 40 of the Land Registration Act. In that decision, the Court, in addressing the legal effect of a certificate of title heid in the name of its holder, examined the import of section40, and observed that "a certificate of title shall be admissible as evidenceof the several matters therein contained". To amplify further about that provision, the Court went ahead and stated as follows: "That is to say, because Kellu Kamo Lucas, is shown as the owner o f the estate in the certificates o f title, according to section 40 o f the LRA above, that is sufficient evidence as to the owner o f the interest in the estate in question. In law, doubt as to the authenticity o f the registered estate, arises only where the same is proved to have been fraudulently acquired in terms o f section 33 (1) o f the LRA, which provides as follows: 33,-(1) The owner ofany estate shall, except in case of fraud, hold the same free from all estates and interests whatsoever, other than- 15 (a) anyincumbrance registered or entered in the land register; (b) the interest ofanyperson in possession ofthe land whose interest is not registrable under the provisions of this Act; (c) any rights subsisting underanyadversepossession or by reason of any iaw ofprescription; (d) anypublic rights of way; (e) any charge on or over land created by the express provisions of any other law, without reference to registration under this Act, to secure any unpaid rates or other moneys; (f) any rights conferred on any person under the provisions of the Mining Act, the Petroleum Act, the Forests Act or the Water Resource Management Act (other than easements created or saved under the provisions of the last-mentionedAct); and (g) any security over crops registered under the provisions of the Chattels TransferAct". Based on the above provision, the Court was of the settled view that: " < ? person whose name is written as the registered owner of the land referred to in the certificate of occupancy, owns that land to the exclusion of all persons except where a thirdparty can prove that the 16 land was acquired fraudulently or that any of the points listed from (a) to (g) is relevant to the land ." In her submissions, Ms. Salah relied on the above-cited provision and, in our view, her submission was a correct restatement of the legal position affirmed in Kellu Kamo (supra). As earlier noted, once the respondent's interest in the suit property was registered in the Land Register, she acquired an indefeasible title — displaceable only upon proof by a third party that the title was procured fraudulently or fell within one of the circumstances enumerated under section 40 (a) to (g). The ensuing question, therefore, is whether such proof existed and, more specifically, for the present appeal, whether there was, to the knowledge of the appellant, any encumbrance registered prior to the execution of exhibit P2 and the subsequent transfer of title on 21/12/2018. Unfortunately, we find no such evidence on the entire record of this appeal. What the record of appeal does confirm is the fact that, at the time exhibit P2 was being executed by the parties, the only registered encumbrance, as exhibit P3 indicates, was the one appearing in the appellant's name. In his earnest efforts, Mr. Makota sought to rely on exhibit Dl to demonstrate that the appellant was aware of an undisclosed encumbrance, thereby committing a constructive breach. With respect, we are unable to accept that argument. As properly submitted by Ms. 17 Salah, exhibit D1 supports the appellant's position that the only known and registered encumbrance, acknowledged by the respondent through exhibit P3, stood in the appellant's name. There was, therefore, no constructive breach, and the trial court erred in holding otherwise. Based on the above finding, and as Ms. Salah correctly submitted, the notice of deregistration, issued long after the sale and transfer were completed, ought to have been challenged by the respondent before the Registrar of Titles. Under section 99 (1) of the Land Registration Act, Cap. 334 [R.E. 2023], the Registrar's decision would then have been subject to appeal to the High Court by any aggrieved party. Accordingly, we are satisfied, that, grounds one, four, and five of the appeal are meritorious, and we hereby uphold them. We now turn to grounds two and three. These two grounds are framed in the alternative, challenging the trial judge's conclusion that the appellant failed to rebut PWl's evidence as contained in paragraphs 10 and 13 of his witness's statement and the plaint, thereby establishing a constructive breach. The appellant maintains, consistent with our findings on grounds one, four and five, that there was no constructive breach of the sale agreement. In essence, having already found that no breach of the sale agreement occurred, it is unnecessary to revisit those issues. It 18 follows, therefore, that, the reasoning and conclusions reached in determining grounds one, four, and five necessarily dispose of ground two and, its alternative ground three. Grounds six and seven are closely related and are best addressed together. They concern whether the trial Judge was justified in awarding compound interest at 15% without evidentiary support, and in imposing court's rate interest at 10% contrary to Order XX, rule 21 (1) of the Civil Procedure Code, Cap. 33 R.E. 2019. Although, Ms. Salah contended that the trial Judge erred because the respondent had not pleaded compound interest, Mr. Makota maintained that the award was proper. The law is clear. First, parties are bound by their pleadings unless leave is granted to depart from them. This principle has been consistently affirmed, including in Barclays Bank (T) Ltd. v. Jacob Muro, Civil Appeal No. 357 of 2019 [2020] TZCA 1875 (26 November, 2020, TANZLII) which reaffirmed earlier authorities such as James Funke Ngwagilo v. Attorney General [2004] TLR 161; Lawrence Surumbu Tara v. The Hon. Attorney General and 2 Others, Civil Appeal No. 56 of 2012; and Charles Richard Kombe t/a Building v. Evarani Mtungi and 3 Others, Civil Appeal No. 38 of 2012 (both unreported). Second, except for interest at the court rate, compound interest is neither presumed nor a default common-law remedy. It must therefore be expressly pleaded, with clarity as to its nature and the commercial rate sought, and it must be proved. This requirement was reiterated in Robert Scheltens v. Sudesh Kumari Varma & Others (Civil Appeal 203 of 2019) [2022] TZCA 508 (16 August 2022, TanzLII), following Zanzibar Telecom Limited v. Petrofuel Tanzania Limited, Civil Appeal No. 69 of 2014 (unreported). In essence, courts routinely decline to award compound interest where the pleadings are silent or ambiguous. Applying these principles, the record reveals that the respondent did not plead compound interest; she pleaded only interest at a commercial rate of 22%. Although, the Court observed in Robert Scheltens v. Sudesh Kumari Varma & Others (supra) that "interest" in commercial practice may generally connote compound interest, we are not persuaded that a bare claim for commercial-rate interest automatically carries that meaning. Moreover, the claim in this case does not fall within those categories in which equity woufd ordinarily warrant compound interest. Crucially, the trial Judge provided no rationale for awarding compound interest. He ought to have justified that award. See the decision in Trade Union Congress of Tanzania (TUKTA) v. Engineering Systems 20 Consultants Ltd & Others (Civil Appeal No. 51 of 2016) [2020] T7CA 251 (26 May 2020, TanzLII). With respect to the court-rate interest, the appellant argued that the award of 10% was erroneous in the absence of an agreement between the parties. Under Order XX rule 21(1) of the CPC, the default court rate is 7% per annum, which may rise to 12% only by agreement. This position, has been affirmed in Robert Scheltens v. Sudesh Kumari Varma & Others (supra), citing Saidi Kibwana and Another v. Rose Jumbe [1993] T.L.R. 174, Njoro Furniture Mart Ltd v. Tanzania Electric Supply Co. Ltd [1995] T.L.R. 2015, Rev. Christopher Mtikila v. Attorney General [2004] T.L.R. 172 and Ashraf Akbar Khan v. Ravji Govind Varsam [2019] T.L.R. 59. It follows, therefore, that, there being no evidence of any agreement on court's rate interest beyond the fixed 7%, the award of 10% was in error. Grounds six and seven therefore have merit. The final issue, ground eight, concerns the complaint that the trial Judge awarded general damages without assessment. In Nicholaus Mwaipyana v. The Registered Trustees of Little Sisters of Jesus Tanzania (Civil Appeal No.276 of 2020) [2023] TZCA 17578 (30 August 2023-TanzLII), the Court had the following to say: 21 " We also subscribe to Mr. Kisigiro that, the award o f genera! damages is within the discretion o f the trial court. The discretion is, however, not absolute. As a matter o f law, it has to be exercised reasonably, judiciously and on sound legal principles. In this case, the trial court awarded the respective relief without there being a finding on the assessment o f the same. There was as well no factual finding o f the casual connection between the wrong and the alleged damages. In the circumstances, therefore, it cannot be said that the discretion was exercised reasonably and judiciously as the law requires. On that account, therefore, we allow the seventh ground o f appeal and set aside the trial court’ s award o f general damages." In the present appeal, it is indeed clear from the record of it, that, the trial Judge did not provide any assessment which would have justified the amount he awarded as general damages. While, the assessment of general damages is, in principle, a discretionary judicial function, such discretion must be exercised judiciously and anchored in transparent and reasoned justification. It follows, therefore, that the eighth ground of appeal is meritorious, and we accordingly affirm it. 22 In the result, and for the foregoing reasons, we allow the appeal with costs. DATED at DODOMA this 11th Day of December, 2025. R. J. KEREFU JUSTICE OF APPEAL A. S. KHAMIS JUSTICE OF APPEAL D. J. NANGELA JUSTICE OF APPEAL The Judgment delivered this 11th day of December, 2025 in the presence of Ms. Faiza Salah, learned counsel for the appellant and Mr. Francis Makota, learned Counsel for the respondent both through Virtual Court and Mr. Shafii Kassim, Court Clerk; is hereby certified as a true copy COURT OF APPEAL of the original. 23