Karim Shamshuddin Suleiman vs Maheshkumar Raojibhai Patel (Civil Appeal No. 470 of 2021) [2024] TZCA 1110 (15 November 2024)

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM ( CORAM: NDIKA, J.A.. MGEYEKWA. J.A.. And ISMAIL. J.A.^ CIVIL APPEAL NO. 470 OF 2021 KARIM SHAMSHUDDIN SULEMAN ......................................... APPELLANT VERSUS MAHESHKUMAR RAOJIBHAI PATEL ...............................RESPONDENT (Appeal from the decision of the High Court of Tanzania (Commercial Division) at Dar es Salaam) (Mruma, J.) dated the 7th day of February, 2018 in Commercial Case No. 80 of 2015 JUDGMENT OF THE COURT 29mOctober & 15th November, 2024 MGEYEKWA. 3.A. This appeal challenges the judgment of the High Court Commercial Division (Mruma, J.) delivered on 7th February, 2018. The dispute between the parties arose from an alleged dissolution of a joint venture agreement dated 11th March, 2014 upon which the respondent sought payment of US$ 3,300,000.00 being excess contribution of his share in the joint venture business.

The facts underlying the dispute under scrutiny are to the effect that: it is alleged that on 28th December, 2013 the parties to this appeal concluded a written agreement of dissolution of their joint venture business in terms of which the appellant was to pay the respondent the amount of US$ 3,300,000.00 which was the excess contribution of the respondent's share in the joint venture business. It is common cause that the sum of US$ 3,300,000.00 that was due by August, 2016 was the basis of the dispute before the High Court. The record bears out that the agreed payment of US$ 3,300,000.00 would be settled by the appellant as follows: a deposit of US$ 250,000.00 would be made on or before 10th February, 2014, and US$ 100,000.00 on every working day of each month starting from March, 2014. In accordance with that agreement, the entire outstanding payment was to be made within a maximum of 18 months. According to the record of appeal, the respondent averred that the on 29th December, 2013, the appellant through email correspondence admitted the liability and requested to be allowed to pay US$ 100,000.00 every month. The appellant defaulted in the repayment of US$ 3,300,000.00.

Following the default, on 13th July, 2015 the respondent commenced proceedings in the High Court, Commercial Division, seeking an order against the appellant for immediate settlement of the entire outstanding sum of US$ 3,300,000.00. He also claimed interest on the outstanding amount at the commercial rate of 21% per annum from February, 2014 to the date of judgment, interest at the court rate of 12% from the date of judgment, and costs of the suit. In opposition thereto, the appellant filed a Written Statement of Defence dated 3rd September, 2007, denying liability. It is averred that he neither agreed nor signed the alleged the joint venture agreement or its dissolution. He also asserted that there is no agreed amount payable which he had not paid as alleged by the respondent. He thus moved for dismissal of the suit. After hearing the case, the learned trial Judge on 7th August, 2018 delivered a judgment on the merits of the suit, adjudging the respondent to be entitled to recover from the appellant the claimed sum of US$ 3,300,000.00 being the excess contribution of his shares in the joint venture business, interest on the decretal amount at the rate of 5% per annum from the date of filing the suit to the date of the Judgment,

interest at the rate of 2% per annum from the date of full payment of the decretal amount and costs of the suit. Resenting the decision, the appellant has preferred this appeal upon a memorandum of appeal containing twelve (12) grounds of appeal. However, as will become clear, determination of this appeal will likely depend on the following three grounds of appeal: 1 . That the High Court erred in law and in fact to assume that it has pecuniaryjurisdiction without having any material before it which the law required it to consider to determine that it hadjurisdiction. 2. That the High Court erred in law and in fact to assume thejurisdiction it did not have to hear and determine a case which by all senses was a case of enforcement of the laws of Mauritius. 3. That the High Court erred in law and in fact to hold liable the appellant on the dissolution ofjoint venture agreement withoutproof not only that the two signed the contract but also proof that the two conducted any business together. At the hearing of the appeal, Mr. Audax Kahendaguza Vedasto and Mr. Yudathade Alexander Paul, both learned counsel, represented the appellant and respondent respectively. Subsequent to the filing of the

appeal, Mr. Vedasto filed written submissions in support of the appeal. Mr. Paul did not lodge any written arguments but chose to submit orally. However, as it will not be practicable to list every fact included in the submissions, we can only refer to those that are conveniently relevant to the resolution of the matter before us. Mr. Vedasto adopted the written submissions and in addition made clarifications in that regard. With respect to the first ground of the appeal, whose gist is that the High Court was not clothed with jurisdiction to determine the matter, Mr. Vedasto faulted the teamed Judge for failure to determine the issue of pecuniary jurisdiction which was brought before him. He contended that the record does not show if the claim before it was within the value stipulated under rule 5 (2) of the High Court (Commercial Division) Rules of 2021, GN. No. 250 of 13/07/2021 (the Rules). He asserted that the pleadings are silent about the value of the claim at the time when the suit was filed, which is necessary to establish the jurisdiction of the High Court Commercial Division. Mr. Vedasto continued to argue that the jurisdictional clause in this case, as outlined in paragraph 10 of the plaint, did not fulfill the legal requirement. He clarified that the plaint lacks a paragraph specifying the

value of the subject matter, which would confer jurisdiction on the High Court Commercial Division to determine the case. He referred us to the case of Assanand and Sons Ltd v. East Africa Records Ltd [1959] EA 360 and submitted that the court's jurisdiction is a matter of significant importance, merely asserting the court has jurisdiction is not sufficient. The learned counsel further argued that the respondent was required to prove whether the alleged amount of US$ 3,300,000 was equivalent to or exceeded TZS 70,000,000.00. He argued that the court cannot simply assume its jurisdiction. Reinforcing his argumentation, he cited the case of Tanga Cement Public Company Ltd v. Fair Competition Commission, Civil Application No. 10/20 of 2018 (un reported). The second ground touches on territorial jurisdiction. On this, the appellant's counsel argued that the agreement presented for enforcement violated the laws of Tanzania and, therefore, was unenforceable under sections 22 and 23 of the Law of Contract Act. He emphasized that the High Court of Tanzania was not the proper court to hear the case, as the laws that grant the High Court with jurisdiction

to apply and enforce jurisdiction are; the Constitution of Tanzania, 1977, written laws, received laws, and customary laws. He valiantly stressed that, apart from those laws, there is no other law that gives jurisdiction to the High Court to enforce and apply the laws of Mauritius. As such, he submitted, the suit ought to have been struck out for want of jurisdiction. With regard to the third ground of appeal, Mr. Vedasto vehemently maintained that the High Court erred in holding that there was adequate evidence to support the respondent's case. The gravamen of Mr. Vedasto's argument was that the learned Judge failed to substantiate his findings with any specific material on record. Expanding on his point, he argued that the learned Judge failed to assess the evidence presented by PW1, which did not substantiate his claim. He also faulted the learned Judge for failure to consider the appellant's evidence and the detailed analysis of the case contained in the submission of the appellant. To support his submission, he referred us to pages 162B and 1162G of the record of appeal. The learned counsel took exception to the High Court Judge's reasoning that the respondent proved his case while the appellant

disputed the claim against him by stating that the parties never engaged in any joint venture business. His contention was that one cannot dissolve a business that does not exist. Counsel relied on the Court's decisions in Hemed v. Mohamed (1984) TLR 113 and Aziz v. Republic [1991] TLR 71 in support of the proposition that in the absence of crucial witnesses to support the respondent's case, it can be inferred that no such business existed. The learned counsel went on to argue that, the disputed assertion that the parties agreed the figure of US$ 3,300,000.00 is not proved. He added that the appellant disputed the fact that he signed the joint venture agreement by stating that it was not his signature, but the respondent did not tender any document that contained the appellant's signatures to prove his allegations. As such, he maintained that the question of a joint venture dissolution agreement is not relevant in this case. On the adversary side, Mr. Paul opposed Mr. Vedasto's submission. While relying on rule 5 (2) of the Rules, he firmly argued that the respondent's suit complied with it. Elaborating, Mr. Paul argued that the rule 5 (2) of the Rules requires the High Court Commercial Division to

adjudicate matters with a value of maximum TZS 70,000,000.00. He firmly believed that the respondent's claim of US$ 3,300,000.00 was within the jurisdiction of the High Court Commercial Divisionn. Therefore, he urged us to dismiss this ground. Mr. Paul also disagreed with Mr. Vedasto's argument on the second ground on territorial jurisdiction. He argued that the breach of contract happened in Tanzania and so is the parties’ place of residence, thus, the respondent was right to institute a case in Tanzania. Mr. Paul concluded by stating that the second ground has no merit. Responding to the appellant's counsel submission on the issue of dissolution of the joint venture agreement, Mr. Paul countered that the respondent had met his responsibility and established his case by introducing exhibit PI. He noted that the trial judge correctly relied on exhibit PI in his findings, as it proved the respondent had contributed US$ 3,300,000.00 in excess of his shares to the business, and it was on that agreed term the appellant agreed to repay the respondent. In his conclusion, he implored us to dismiss the appeal with costs. We have evaluated the grounds in support of and against the appeal. This appeal will stand or fall on two issues. The first issue is a

pertinent jurisdictional precept which is whether the High Court was clothed with jurisdiction. The second issue is whether the dissolution of joint venture agreement is valid and binding on the parties. We shall begin our discussion by first making observations with respect to the first and second grounds of appeal. It is clear to us that the crux of learned counsel grievance is on whether the High Court (Commercial Division) was clothed with jurisdiction to adjudicate the matter. We share the undisputed assertation by learned counsel for the parties that under the High Court Commercial Rules, the provision governing the jurisdiction of the court falls under rule 5 (2) of the Rules. For ease of appreciation, we shall reproduce that provision as hereunder: "5 (2) The court shall have and exercise original jurisdiction in a commercial case in which the value of the claim shall be at least... seventy million shillings in proceedings where the subject matter is capable of being estimated at a money value." The counsel locked horns on whether the amount of US$ 3,300,000 was within the jurisdiction of the High Court Commercial Division. As alluded to above, we are at one with both counsel that the High Court

Commercial Division has original jurisdiction in commercial cases in which the value of the claim is at least TZS. 70,000,000.00. However, we do not share the appellant's counsel grievance that the High Court Commercial Division had no pecuniary jurisdiction to entertain the suit simply because the amount stated in the plaint is in foreign currency without its equivalent sum stated in the Tanzania currency. We think, this a proper case in which the Court can infer existence of a fact. It is trite principle that the Court may infer the existence of any fact that it thinks was likely to have happened in terms of section 122 of the Evidence Act (the EA) and arrive at its conclusion. For ease of reference, we reproduce section 122 of the EA hereunder: "122. The Court may infer the existence of any fact which it thinks iikeiy to have happened, regard being had to the common course of natural events ; human conduct, and public and private business, in their relation to the facts o f the particular case ." The above provision concerns presumptions of fact, meaning the court may infer that judicial and official acts have been regularly performed. See for instance the case of The Board of Trustees of the

National Social Security Fund v. New Kilimanjaro Bazaar Ltd, Civil Appeal No. 16 of 2004. In the case at hand, it is expressly averred that the value of the claim as per the respondent's plaint was US$ 3.000.000.00. Merely by sight, the value of the claim was within the jurisdictional limits of the High Court Commercial Division. In accordance with the foreign exchange rates set by the Bank of Tanzania for the year 2014, one US$ was equivalent to TZS. 1,600.00. So, US$ 3,300,000.00 was at the material time approximately equivalent to TZS 5.280.000.000.00 It cannot be gainsaid that this amount was within the jurisdiction of the High Court Commercial Division as per rule 5 (2) of the Rules. Consequently, this ground has no substance. In relation to the second ground, which pertains to territorial jurisdiction, we do agree with Mr. Paul's submission. We firmly think that any suits as provided under section 18 of the Civil Procedure Code are to be filed where the cause of action arose or where the defendant resides or works for gain. In the appeal at hand, notably, the plaint at paragraphs 1.0 and 2.0, shows that the appellant and the respondent's physical addresses were in Dar es Salaam, Tanzania, and the alleged defaulter resides in Tanzania. As such, the respondent was right to

institute a suit where the appellant resides. Therefore, there is no gainsaying that the trial court was vested with territorial jurisdiction to entertain the suit. This ground is unfounded and we thus dismiss it. On the third ground, the appellant is challenging the trial court's finding that he was liable for the dissolution of the joint venture. The issue which pops up for our determination is whether the dissolution of joint venture agreement is valid and binding on the parties. It transpired that the appellant who testified as DW1 during trial denied having signed the joint venture and the dissolution of the joint venture, and the appellant's counsel in his written submissions contested the legitimacy of the dissolution of the joint venture agreement (exhibit PI). The pleadings before the trial court clearly show that the parties were not on the same page regarding the existence of the joint venture agreement. In paragraph 3 of the plaint, for instance, the respondent herein, who was the plaintiff at the trial court alleged to have executed the joint venture agreement with the appellant herein. In turn, the appellant refuted the said allegation contending not to have signed it. Given the circumstances of this case, determining the appellant's liability for anything arising from the dissolution of the joint venture

hinged on resolving whether the joint venture actually existed. Our view is based on the principle that dissolution can only apply to something that exists. Simply put, a joint venture that does not exist cannot be dissolved. Section 110 (1) of the EA requires a party who alleges to prove. Therefore, it was the respondent's responsibility to prove that the joint venture existed in order to establish its dissolution. The trial court record shows that the joint venture agreement was never submitted as evidence. This, in itself, represents a complete failure by the respondent to prove the dissolution of the joint venture, the existence of which was in question. Beyond the aforementioned shortcomings, we note that exhibit PI, which was a contract signed by two companies, involved natural persons. It became evident from paragraphs A and B of exhibit PI, as well as paragraphs 1 and 2 of the respondent's witness statement, that the respondent operated a transport and logistics company called Pwani Hauliers Limited, while the appellant ran a similar company, Dhando Road Haulage Limited. However, it is perplexing that the parties allegedly signed exhibit PI as natural persons. Furthermore, paragraph D of exhibit PI indicates that a joint venture company, Pwani

International Hauliers Limited, was established in Mauritius. If this was the intended arrangement, both the joint venture agreement and exhibit PI should have involved the respective companies, not natural persons. As such, individual liabilities cannot be attributed to a contract that was entered into by companies. In addition to the unenforceability of the dissolution of the joint venture agreement, there are other deficiencies in the contested judgment that need to be addressed. Examined closely, we noted that, the trial court erroneously disregarded the appellant's defence case. As mentioned earlier, the appellant disassociated himself from the respondent's allegations. To substantiate his defence, he tendered a copy of his passport (exhibit D l) bearing his signature. Unfortunately, the trial court did not assess the authenticity of the signatures, which showed a notable discrepancy between exhibit PI and exhibit Dl. Therefore, it was improper for the trial court to rely on the contested document and decide the matter in favour of the weaker party. Given the above - listed shortfalls of the dissolution of joint venture agreement, we find and hold that the respondent did not meet the burden of proof required to establish the appellant's liability. It is

cardinal law that the one who alleges that certain facts exist must prove the existence of those facts. In the case Paulina Samson Ndawavya v. Theresia Thomasi Madaha, Civil Appeal No. 45 of 2017 (unreported), this Court restated the principle on who alleges must prove in the following terms: "It is trite law and indeed elementary that he who alleges has o f proof as per section 110 of the Evidence Act, Cap. 6 [R.E 2002]. It is equally elementary that since the dispute was in civil case ; the standard o f proof was on a balance of probabilities which simply means that the Court wifi sustain such evidence which is more credible than the other on a particular fact to be proved For the aforesaid reasons, we find and hold that the trial court erroneously accepted the respondent's account as factual and correct, even though there was no strong evidence on record to substantiate his assertions. Had the trial court considered that dissolution can only affect what is in existence, it could have decided otherwise. Thus, the seventh ground of appeal is merited, and we allow it. Since this ground is

dispositive of the appeal, and for reasons earlier stated, we shall not determine the remaining grounds of appeal. Consequently, we allow the appeal with costs and proceed to quash the High Court's judgment and set aside the corresponding decree. DATED at DAR ES SALAAM this 14th day of November, 2024. G. A. M. NDIKA JUSTICE OF APPEAL A. Z. MGEYEKWA JUSTICE OF APPEAL M. K. ISMAIL JUSTICE OF APPEAL The Judgment delivered this 15th day of November, 2024 in the presence of Mr. Joseph Rugambwa, learned counsel for the Appellant and in the absence of Respondent, is hereby certified as a true copy of the original.