Integrated Property Investment & Others vs Company for Habitat and Housing in Africa (Civil Appeal No. 107 of 2015) [2018] TZCA 349 (20 December 2018)

', •• 1\1 'I'HE COURT OF APPEAL OF TANZANIA AT DAR ES SALAAM (CORAM: MWARIlA, l.A., MUGASHA, l.A. And MZIRAY, l.A.) CIVIL APPEAL NO. 107 OF 2015

1. INTERGRATED PROPERTY INVESTMENT (T) LIMITED
2. OMARI ABDI ALI .... APPELLANTS
3. SULEIMAN ABDI DUALEH VERSUS THE COMPANY FOR HABITAT AND HOUSING IN AFRICA •....• RESPONDENT (:"'pp~a! from the decision of the High Court of Ta;-;=:~r.f<J (Ccrnrnercial Division) at Dar es Salaam) (Mansoor, J.) dated the 6 th day of July, 2015 in Commercial Case No. 53 of 2015 JUDGMENT OF THE COURT 3 rd September & 24th December, 2018 MWARIJA, J.A.: The respondent in this appeal, the Company for Habitat and Housing in Africa (Shelter Afrique), was the plaintiff in the High Court of Tanzania (Commercial Division) at Dar es Salaam in Commercial Case No. 53 of 2015 ("the Suit"). It instituted the Suit against the appellants, Integrated Property Investment (T) Limited, Omar Abdi Ali and Suleiman Abdi Dualeh (the 1 st _3 rd defendants respectively in the trial Court); The Suit was instituted by way of summary procedure under O.XXXV of the 1

Civil -rccedure Code [Cap.33 R.E. 2002]. (the CF-C) The respondent claimes-for the following reliefs:- "(A) against the 1 st Defendant for:- (a) the sum of USD ~326,791.54 (United States Dollars Five Million Three Hundred Twenty Six Thousand Seven Hundred Ninety One and Fitty Fotu: Cents); (b) interest on the sum "ot USD ~326,791.54 from the . date otthe oemond I etter at rates set out in clauses 7.1, 8.1 and 8.2 of the Loan Agreement amounting to USD 431,990.81 (Four Hundred Thirty One Thousand Nine Hundred Ninety and Cents Eight One at the date of this claim and continuing at a daily rate of USD 2390.84 (Two Thousand Three Hundred Ninety and Cents Eighty Four); (c) interest on the decretal amount at the courts rate from the date of judgment until date of full and final payment; (d) an order granting the Plaintiff vacant possession of the Property; and (e) an order appointing Mr. Sadock Datto Magai as Receiver Manager with power to sell, lease, enter into possession or collect the income of the Property; (8) against the r d and fd Defendants:- (a) the sum of USD ~326,791.54 (United States Dollars Five MIYlion Three Hundred Twenty Six Thousand Seven Hundred Ninety One. and Fifty Four Cents); and 2

(b) interest on the sum of USD ~326/791.54 from the date of ,7':'_ Demands at rates set out in clause 6 'Of Life'" Guarantee and clause 8.2 of the Loan Agreement amounting to USD 431/990.81 (Four Hundred Thirty One Thousand Nine Hundred Ninety and Cents Eighty One at the date of this claim and" continuing at a daily rate of USD 2390.84 .. (Two Thousand Three Hundred Ninety and Cents Eighty Four): (C) agilint ;thg;" J,s.t," 7'cJ_ and Sd Defendants , " jointly and severally for:- (c) interest on the decretal amount at the coarts rate from the date of judgement untt'l date of full and final payment/ (d) costs/ and (e) any other reliefs as this honourable court may deem fit" From the contents of the plaint; the dispute arose from a loan agreement entered between the 1 st appellant and the respondent ("the Agreement''). The appellants secured a loan of USD 5,000,000.00 from the respondent upon a legal mortgage over a property situated on plots Nos. 2, 3 and 5 Block 'A', UnuniojKunduchi area in Kinondoni municipality within the Dar es Salaam City, held under Certificate of Title No. 44549 in the name of the 1 st appellant, the 2 nd and 3 rd appellants, ,r ' who were until the material time of the Agreement, the directors of the 3

1 st appellant, guarante-:_;J the loan through execution of persc. ,di' guarantees thereof. ,,!,. , " Following a dispute over repayment of the loan, the respondent instituted the Suit in the trial court. The appellants were subsequently served, with summons in terms of O.XXXV r. 2(1) 'of the CPC informing them that they would, within twenty one days from the date of service ,., - of the summons, apply for leave to appear and defend the Suit. On 5/6/2015, they filed an application to that effect, Misc. Civil Application No. 135 of 2015. The application was brought under O.XXXV r.3 (1) of the (PC. In response, the respondent raised a preliminary objection challenging the competence of the application. On 6/7/2015 when the application was called on for hearing of the preliminary objection, Ms. Madina Chenge appeared for the respondent. The appellants did not enter appearance and as a consequence the learned trial judge made the following order:- "The applicants were aware of todev's date for hearing of the application to appear and defend the suit the Applicants have failed to enter appearance to pursue their application and no reasons for the failure 4

to» appear have been shown consequenttv. [he eppscstion for leave to appear and detene: ,{fie summary suit is dismissed for non-appearance .... H It is on record that on 9/6/2015 when the application was fixed for hearing on 6/7/2015, Ms. Samah Salah who appeared for the appellants, held the brief of Mr. Lutema for the respondent. On that same date after having dismissed the application, the learned judge went on to determine the Suit by entering a "default judgement." She ordered as follows:- "The defendants failed to appear to defend the suit and tl7US they beve failed to obtain leave to defend the summery suit; therefore/ the allegations in the plaint are deemed to be edmltted, and the Plaintiff is entitled to a judgment and decree as prayed in the summary suit. The judgment is entered under 0.35 Rule 2 (2) (a) of the CPC H As a result, a decree, titled "default decree" awarding all the reliefs prayed in the plaint as enumerated above, was issued in favour of the respondent. Although tile judgment was entered under Order XXXV rule 2(2)(a) of the epc for the appellants failure to appear at the hearing of 5

::lneir application for leave to defend the SLliL, tile judgment ought to 'h'8\jl~lbeen followed by a decree issued in acca:~dRnce with the provisions of Order XX rule 6 and 7 of the CPC. The same was to be titled "decree" not "default decree." The defect is however not fatal as held in the case between the same parties to this appeal, Civil Application No. 162 'of 2015 (unreported) in which the appellants in this case applied for stay of , 'execution of the impugned deer ee. The defect had given rise to one of the grounds of the preliminary objection raised by the present respondent in the said application. Overruling that ground, the Court stated as follows: "The terms of the decree are clearly ascertainable. We are therefore convinced that the inclusion of the word default in the decree was unnecessary and uncalled f0 0 but in noxious.// The appellants herein were aggrieved by the decision of the trial Court hence this appeal. In their memorandum of appeal, they had initially preferred seven grounds of their grievance. However, in their .joint .written submission, they abandoned two of the grounds and argued the remaining five as paraphrased below:- 6

"1. That the Honourable I flal Court erred in law and in fact in not hU/i:J!~Jy that Commercial case number 53 of 2015 was not a summary suit. 2. That the Honourable Trial Court erred in law and ;" in fact in not holding that from the statements appearing In the plaint the suit was barred by law '+ -.(" to be desionsted as a summary suit. 3. That the Honourable Trial Court erred in law and in fact in not holding that there was no statement appearing in the plaint constituting the suit that obliged the ;rd and :5 d applicants to be sued summarily. 4. That the Honourable Trial Court erred in law and in fact in entering a summary judgment founded on failure of natural justice and blatant breach of procedures relating to resolutions of issues of law and facts. 5. The decision of the High Court (Land Division) (sic) is otherwise faulty and wronq in law in that it is founded on an order that was pre-maturely 7

issueooy ihe Court without considering that what" was be/Tc),"''E,·the Court was not an application but-s preliminary objection. // At the hearing of the appeal the appellants were represented by Dr. Masumbuko Lamwai, learned counsel while the respondent had the services of Mr. Gasper Nyika, learned counsel. When arguing the appeal " .• ' ,- - : .• _, f ~,,''< ~ in Court, both Dr. Lamwai and Mr. Nyika adopted the written submissions which had earlier on been filed by the appellants and the respondent filed in compliance with sub-rules (1) and (8) of Rule 106 of the Tanzania Court of Rules, 2009 (the Rules), respectively. With regard to the 1 st and 2 nd grounds of appeal, it is the appellants' contention that the learned trial judge should have found that the case against the appellant could not have been proceeded with under a summary procedure on account that the nature of the claim does not fall under any of the categories of suits stipulated under O.XXXV of the CPC. They contended further in the 3 rd ground of appeal, that the 2 nd and 3 rd appellants were wrongly joined in the suit because as guarantors of the loan, the claim against them could not be brought by way of a summary suit. 8

Itwas argued by the appellants' counsel thaL i.iTe respondent's claims co:~,£,ti,tute two causes of action, the claim based en mortgage and that which is based on the contract of guarantee. He submitted therefore that, whereas it is proper to bring the claim based on mortgage by way of a summary procedure, the claim based on the contract of guarantee, which does not fall under any of the categories of tire suns stated under O.XXXV of ' the (PC, VVdS wrongly brought under that Order against the 2 nd and 3 rd appellants. To that argument, Mr. Byamungu added that, as a result of joining the 2 nd and 3 rd appellants in the Suit, the trial Court gave reliefs which were beyond what was claimed by way of a summary suit. On the 4th and s" grounds of appeal, the appel!ants cha!lenged the procedure which was adopted by the trial Court to enter the impugned judgment. It was argued, firstly, that since the appellants were ordered to file defence, the trial court had obviously treated the case as an ordinary Suit and for that reason; it wrongly proceeded with it under summary procedure. Amplifying that argument in his oral submission, Dr. Lamwai argued that, after having made an order requiring the appeiiants to fiie a written statement of defence, the trial court erred when it conversely issued a summons under rule 2( 1) of 9

-.- - O.XXXV of the Cl-C informing the appc::d(,l5 about the requirement of i·, ,r,;+:.:-:,obtaining leave to appear and defend.the-Sv[t. It was submitted further in these grounds that, . since the respondent had raised a preliminary objection against the application for leave to appear and defend, by virtue of the rule of practice, the same ,l' was to be heard first, and for that reason, the trial court erred in _-,:. dismissing the application on the date of hearing of the preliminary objection. This is more so, he argued, because there is no proof that Ms. Samah Salah who held the brief of Mr. Lutema for the appellants on 9/6/2015, informed him on 9/6/2015, of the next date of hearing. The learned counsel argued also that the application was dismissed pre- maturely because, apart from the fact that on that date (6/7/2015) what was fixed for hearing was the preliminary objection, the respondent's counsel had prayed for adjournment due to the absence of the appellants' counsel. Dr. Lamwai stressed that in the circumstances, the appellants were denied the right of hearing hence a breach of one of the principles of natural justice. In his reply, the respondent's counsel opposed the appeal. With regard to the 1 st and z= qrounds, he argued firstly, that from the 10

respondent's claims, the SUi(: WaS properly brought by way of summary, , suit under O.XXXV of the CPO; ,/~cording to the learned counsel, the fsct· t " " that the 2 nd and 3 rd appellants were guarantors, did not bar them from being sued jointly with the 1 st appellant in a summary suit. Relying on O.XXXV r. 1 (c) of the CPC, he contended that, since the suit arose from a loan which was secured by mortgage and because the respondent's ciann was fo(····payment of monies securea . Dy mortqaqe", the 2 nd, and 3 rd appellants were properly sued jointly with the 1 st appellant who is the principal debtor. On the 4th and 5 th grounds, the respondent's counsel submitted that the same raise issues concerning the propriety or otherwise of the trial court's order dismissing the application for leave to appear and defend. He argued however that, since the appellants were served and were as a result, having a notice of the date of hearing of both the application and the Suit, the trial court rightly dismissed the application and entered the impugned judgment. He argued further that under O.XXXV r. 3(1) (a) of the CPC as amended by the Mortgage Finance Act, No. 17 of 2008, the trial Court properly invoked rule 2(2) (a) of the CPC to enter judgment for the respondent 11

Having dUlY considered the submissions of the learner, coimsel for the parties, f\le vVisH·to start by observing that, although upon ii".;i:itution of the suit, the learned trial judge ordered for issuance of summons to file defence but instead, a summons to obtain leave to appear and . defend (summons to appear and defend) was issued, the irregularity is, in OUf" view, not fatal. Since the case was filed as a summary suit, summons' to appear and defend was properly issued under '0. XXXV r. 2(1) of the (PC. Furthermore, the appellants were not prejudiced because they understood the nature of the suit and in response, they filed an application for leave to appear and defend the Suit. Turning now to the substance of the appeal, the 1 st - 3 rd grounds thereof raise the issue whether or not the nature of the claim entitled the respondent to institute a Summary Suit under O. XXXV of the (PC. There is no dispute that the points raised in these grounds of appeal were not decided by the trial court. That court merely entered a summary judgment. In the circumstances therefore, since these grounds do not challenge the points which were argued and decided by the trial court, there is no material upon which this Court can act to make a decision thereon. 12

')' ' '.~- ",[,- So', although a summary judgment is appeara,ble under section 5 (1) '{J}:'of the Appellate Jurisdiction Act [Cap. :;_~E 'R.E. 2002], in the particular circumstances of this case, the three grounds of appeal have been misconceived. This is because, as submitted by Mr. Nyika, Rule 93 (1) of the Rules provides clearly that the grounds of appeal must specify the points which are alleged to have been wrongly decided. The .. , provision states as follows: "93 - (1) A memorandum of appeal shall set forth concisely and under distinct heads, without narrative, the grounds of objection to the decision appealed against specifying the points which are alleged to have been wrongly decided, and the nature of the order which it is proposed to ask the Court to make. 1'1' [Emphasis added]. In this appeal, the appellants have raised the points which go to the merits of the case while the issues arising therefrom were not argued and determined. In fact, as submitted by the respondent's counsel, these grounds of appeal reiterate the "matters which the appellants intended to rely upon in their dismissed application. Dr. 13

Lamwai submitted that the raised issues should be taken to have been constructively decided by the tr,al Lvi.:.r~:. With respect, going by the mandatory provisions of Rule 93 (1) of the Rules, we are unable to agree with that proposition. The grounds of appeal must be based on the points which. have already been decided. As to the 4th and s" grounds, the same are challenging the procedure which was applied to enter the impugned judgment. It is contended, firstly, that the appellants' application for leave to defend was wrongly dismissed and secondly, that the judgment was wrongly entered on the date fixed for hearing of the preliminary objection. The appellants' complaint is that they were not afforded the right of hearing because there is no proof that Ms. Salah who heid the brief of Mr. Lutema, the appellant's counsel on 9/6/2015, notified him of the date of hearing the preliminary objection, the date on which the trial court dismissed the appellants' application and entered the impugned judgment. Given the nature of the points raised in these two grounds of appeal, we agree with Mr. Nyika that the same ought to have been decided in the application for leave to appear and defend. Since that application was not heard and because the appellants are discontented 14

with the dismissal of tile aoplication, it is our considered view that, thp proper move was tG ap!-";r· ~o set aside the decree on the basis of' LI il: grounds complained in these two grounds of appeal so that the same could be heard and decided. It is worth to state here that, a summary suit entered as a result of the defendant's failure to appear is akin to an ex-parte decision. Commenting on O. 37 r. 2 of the Indian Code of Civii Procedure which is in pari materia with O.XXXV r.2 of our CPC, the learned authors of Mulla, The Code of Civil Procedure (Abridged), 14th Ed, state that position in the following words: "J"he language used in O. 37 r. 2 does not postulate the passing of an ex-parte decree as is provided under O. 9 r.6 and procedure to set aside that decree and if necessary, stay or set check out in O. 37 r. 4 leaves no doubt that the provisions contained in O. 9 r. 13 have no application to a decree passed in absentia of the defendant. A decree passed against the defendant for his not entering into appearance in terms of 0. 37 r. 2 (3), it is an ex-parte 15

i"-i decree in the sense that the code has used. dj' the words as iF admitted in sub-r (::>/01- r. 2 are only to make the decree ettective. Such a decree does not cease to be an ex- parte decree in the sense of O. 9 r. 3 has used it. The provisions of 0.9 r. 13 are not applicable because O. 37 is self contained code regarding the summary procedure for the matters covered under it "[Emphasis added] Like an ex-parte judgment therefore, a summary judgment may also be set aside. The applicable provision to that effect is O. XXXV r. 8 of the CPC as amended by GN No. 256 of 2005. The provision states as follows: -'.I; ''After the decree the Court may, in exceptional circumstances set aside that decree and if necessary, stay or set aside execution and may give leave to the defendant to appear to summons and to defend the suit. if it seems reasonable to the Court to do/ and on such terms as the Court thinks fit. N 16

On the basis of the above stated posmon therefore, we are unable "i.Ll:-: agree with the argument that once a SLiIl-,.l,ary judgment has been entered, the same cannot be set aside. Since the appellants are complaining that their application for leave to defend was dismissed without being afforded the. right to be heard, to apply to set aside the decree is, in our view, a proper course which should have been taken by the appellants. It is instructive to state further that, unlike in an ex-parte judgment entered in default of the defendant's appearance, a defendant against whom a summary judgment has been entered has to show firstly, that there were exceptional circumstances which prevented him from appearing in court and secondly, that he has a good defence in the suit. The learned authors of Sarkars, The Code of Civil Procedure, u" Ed., comments as follows at pages 2248 - 9 on rule 4 of 0.37 of the Indian Code of Civil Procedure, which is in pari materia with O. XXXV r. 8 of our (PC. "Under Rule 4 the defendant is obliged to explain the special circumstances which prevented him from appearing in the Court and seek leave to defend the suit within time. In addition he has 17

further to show tl iut tie has good, substantial and/or meritorious dJ:::-~~,:e in the suit." '~" .. , . On the basis of the above stated reasons, it is our considered view that the appellants should have first applied to set aside the decree. As statedafcve, they would have the opportunity of arguing, hot only the polnts which - were raised in the 4th and 5 th grounds, but also those raised in the 1 st - 3 rd grounds of appeal as intimated in their dismissed application. In case of dissatisfaction with the outcome, they could then appeal against that decision. We are guided in that view, by the court's decision in the case of The Government of Vietnam v. Mohamed Enterprises (T) ltd; Civil Appeal No. 122 of 2005 (unreported). In that case, the appellant appeaied against the ex-parte judgment of the High Court raising in the appeal, the grounds which required the Court to step into the shoes of the High Court and make decision on them, purely from the subrnlss.ons of the parties; advocates from the bar. The Court held as follows: "It is our considered opinion that the determination of these questions/ and others Which we have not aired here: need evidence. They are not matters for the determination of an 18

appellilte .Court but for a trial court. The proper .'!i·. . course m~".r&cXion, therefore, was setting aside the' ex-parte judgment and conducting a full trial. The appeal is therefore misconceived ... N i : Given the particular circumstances of this case, we hold the same view as expressed in the above cited case. 'In. the event, we find that this appeal has been misconceived. The same is therefore hereby dismissed with costs. The appellants are at liberty to apply to set aside the decree in accordance with the law. DATED at DAR ES SALAAM this zo" day of December, 2018. A. G. MWARIJA JUSTICE OF APPEAL S.E.A. MUGASHA JUSTICE OF APPEAL EGISTRAR 19