Diana Complex Limited & Others vs Diamond Trust Bank Tanzania Limited (Civil Application No. 63/16 of 2022) [2023] TZCA 17760 (18 October 2023)

IN THE COURT OF APPEAL OF TANZANIA AT PAR ES SALAAM (CORAM: MWARIJA. J.A., KENTE. J.A. And MURUKE. J.A.^ CIVIL APPLICATION NO. 63/16 OF 2022 DIANA COMPLEX LIMITED........................................... ........ 1 st APPLICANT KINGSWAY APARTMENT LIMITED.......................................2 nd APPLICANT MEHBOOB KASSAMALI PORTANI ................. . ...................... 3 > « >APPLICANT HUSSEIN GULAMHUSSEIN DAMANI ..................................... 4™ APPLICANT VERSUS DIAMOND TRUST BANK TANZANIA LIMITED.................... RESPONDENT (Application for stay of execution of the decree of the High Court of Tanzania, Commercial Division at Dar es Salaam) fMruma. dated the 25th day of August, 2021 in Commercial Case No. 118 of 2019 RULING OF THE COURT 3&h August & 13th October, 2023 MWARIJA, J.A.: The applicants, Diana Complex Limited, Kingsway Apartments Limited, Mehboob Kasamali Portani and Hussein Gulamhussein Damani brought this application seeking an order staying execution of the decree of the High Court, Commercial Division (Mruma, J.) arising from Commercial Case No. 118 of 2019. In that case, the respondent, Diamond Trust Bank Tanzania Limited successfully sued the applicants 1

for USD 8,453,067.80 being the amount of a credit facility advanced to them by the former. According to the loan agreement between the parties, the term loan facility was to be repaid within the period of 96 month from the date of disbursement and the same was to attract an interest of 8% per annum. As a security for the loan, the applicants mortgaged three properties, two of which are situated at Upanga area within Ilala Municipality held under Certificate of Titles Nos. 186163/54 and 186163/58 both of them having been registered in the name of Diana Complex Limited and Apartments No. 6, 7, 8 and 9 situated within Kinondoni Municipality on Plot No. 117 Mwadu Lane, Kingsway area held under Certificate of Title No. 186030/19. According to the respondent, the applicants defaulted to repay the loan in accordance with the agreement and therefore, filed the suit. The trial court entered judgment against the applicants who were ordered to pay the applicant USD 8,453,067,80, interest and the costs of the suit. The applicants were aggrieved by the decision of the High Court and therefore, on 6/9/2021 they filed a notice of appeal. On the other hand, by a fetter dated 16/2/2022, the respondent notified the applicants of its intention to execute the decree. They in turn filed this

application for stay of execution. The application, which was brought under inter alia rule, 11 (3) and (5) (a) and (b) of the Tanzania Court of Appeal Rules, 2009 (the Rules), is supported by a joint affidavit of Makaki Masatu and Shehzada Walii. From the notice of motion, the application is based on the following grounds: "(i) The application for stay o f execution has been made without unreasonable delay on the basis that, on 17th day o f February 2022, the applicants'counsel on b eh aifofth e applicants were served with 15 days Notice and the prohibitory order. (ii) Substantial financial loss w ill result to the applicants unless the order for stay o f execution is granted. (iii) There exist serious errors and illegalities in the judgm ent and decree o f the High Court o f Tanzania sought to be challenged and to be examined by this Hon. Court in the intended appeal to this Court. (iv) The applicants are w illing to furnish such security as may be ordered by the Court fo r the due performance o f the decree sought to be stayed." On its part, the respondent filed an affidavit in reply sworn by Ives Mlawi, disputing some of the paragraphs of the supporting affidavit. At the hearing of the application, the applicants were represented by Mr. Makaki Masatu assisted by Mr. Martin Mdoe, learned advocates 3

while the respondent was represented by Mr. Zacharia Daudi assisted by Ms. Rashida Jamaldin Hussein, learned advocates. At the outset, Mr. Daudi conceded to the application. He however, urged the Court to order that, security for the due performance of the decree be given by the applicants through a bank guarantee on the sum equal to the decretal amount of USD 9,838,243.64 as stated in paragraph 9 of the supporting affidavit. Mr. Masatu welcomed the concession to the application by the respondent's counsel. As for the security for the due performance of the decree, the respondent's counsel urged the Court to consider the fact that, there is a prohibitory order of the High Court prohibiting the applicants from disposing of the three properties which were mortgaged by them to the respondent. Mr. Masatu prayed that, half of the value of those properties be used as security and in addition, the applicants be allowed to deposit 50% of the decretal value by way of a bank guarantee. On the use of the mortgaged property as a security, the learned counsel cited the case of Africhick Hatcher's Limited v. CRDB Bank PLC, Civil Application No. 98 of 2016 (unreported) to bolster his argument.

In rejoinder, Mr. Daudi reiterated his submission that the order of stay should only be issued on the condition that, the applicants deposit a bank guarantee of the sum equal to the decretal amount, the attached properties notwithstanding. He argued that, the position stated in the Africhick Hatchers (supra) is not applicable in the circumstances of the present case. Following the position that the application for stay of execution of the decree was not opposed and because, after perusal of the notice of motion and the supporting affidavit, we are satisfied that the conditions for grant of stay of execution as stipulated under rule 11 (3) and (5) of the Rules have been met, we are inclined to grant the application. With regard to the security for the due performance of the decree, after having considered the submissions of the learned counsel for the parties, we agree with Mr. Masatu that a property which is not the subject matter of litigation may be used as a security even though it was a subject of the mortgage. What is important is that, its excess value must be commensurate to the amount which was the subject of the mortgage. In the case of Africhick Hatchers Limited (supra) cited by the learned counsel for the respondent, the Court considered a situation similar to the one in the present case where the Court is asked to order 5

part of the mortgaged properties to be used as security for the due performance of the decree. In that case, the Court observed as follows: "...the property which secured the loan and currently in the hands o f the respondent bank, was not the subject o f litigation. It was , and s till is, a collateral from which the respondent may at any requisite time recover, upon sale, his secured loan and the decreed amount It is pertinent to point out that because the undisputed value o f that property is Tzs. 200,000,000/=; and since the decreed amount stands a t Tzs. 1,785,000,000/= (o f course without interest), which means Tzs. 18,000,000,000/= is in excess; we are firm that the respondent w ill not be at risk. As such, justice demands that we accept that property as sufficient security, as we accordingly do, for the due performance o f the decree as prayed on behalf o f the applicant" In the case at hand, the total value of mortgaged properties is TZS 10,554,000,000 which is equivalent to about a half of the decretal sum of USD 8,500,000.00. It means therefore, that it is only half of the decretal sum which, unlike in the case of Africhick Hatchers (supra), is secured by the properties which have been prohibited by the High Court from being disposed of in its prohibitory order dated 10/2/2022. e

In the circumstances therefore, what is required is the security for the remaining half of the amount of the decree. We therefore, order that, apart from the three mortgaged properties, the applicant is ordered to furnish, within the period of forty-five (45) days from the date of delivery of this ruling, additional security by depositing a bank guarantee of USD 5,000,000.00 or an equivalence of that amount in Tanzanian Shillings. Since the issue of costs did not arise, we make no order to that effect. DATED at DAR ES SALAAM this 13th day of October, 2023. A. G. MWARIJA JUSTICE OF APPEAL P. M. KENTE JUSTICE OF APPEAL Z. G. MURUKE JUSTICE OF APPEAL The Ruling delivered this 18th day of October, 2023 in the presence of Mr. Maiik Hamza, learned counsel for the Applicants and Mr. Zakaria Daudi, learned State Attorney for the Respondent, is hereby certified as a true copy of the original. DEPUTY REGISTRAR ' 3 COURT OF APPEAL