Richard Katarama vs Savings and Finance Ltd. (Miscellaneous Civil Application No 17 of 2000) [2000] TZHC 282 (21 November 2000)

IN THE HIGH COURT OF TANZANIA MWANZ4 -

• -.- MISCELlANEOUS CIVIL APPLICATION NO 1 7$ OF 2000 ORIGINATflG FROM (Hc) CIVItJ . iASE NO, 38 OF 2000 RICHARD KATARAM 00 •. ,. APPLICANT Versus SAVINGS AND FINANCE LTD. 00 . : RESPONDENT 0 R U L I N G NCHALIA, J. is an application for a temp.rary injunction toj'estrain the respondent Company, Savings and Finance LTD, fr'ot dispising of the applicants property mehtioned in para (a) of the chamber summons and n para (3) of the applicant's affidavit filed in SUppO't: Of this application. The application has been fild under Order 37 Rule 2(1) CPC, 66 which provides and I quote: • '2(1) In any suit for restraining the defendant from committing a breach of contract or other inquiry of any kind, Wiether compensat ion is -; claimed in the suit or not, the plaintiff may, at 40 any time after the commencement of the suit and either before or after judgmeilt-, apply t .p:. t} court for a temporary injunction to re±-inhe defendant from committiflg the breach, of .coitract or injury of a like kind arising -ott of the same contxac-t or relating.. to the safne oerty or right. Mr, Nasimire, leified-advocate is actng.for the applicant, and he argued this application. On the other 'bahd Mr. Bu-tambala learned advocate is acting for th ispondent oOrnpàny.-and he also argued the application whereby he 'eherentlrreiste the same,

Mr, Nasimire argued the application on the basis of the aff 1- davit deposed to by one Richard Katarama the applicant, which affidavit is in support of this apl{catioi 0 In his submission Mr. Nasimire referred to Civil case No.38/2000 between the partie and from which this application arises and also he relied on CPC, 66 Rule 2(1) of Order 37/quoted above, That suit has in this court by the applicant/Plaintiff against the respondent cb- mpany/defendant In that suit the applicant/plaintiff is praying for the following reliefs/orders from this bourt:- "(a) A; declaratory order that the moratorium aferesaid is a binding contract between the plaintiff and the defendant, An order to the effect that the defendants intention to realise the securities aforesaid is a breach of the terms of the said moratorium. An order compelling the defendant to provide the Plaintiff with the statement of accounts. A declaratory order that the interest rates charged by the defendant on the loan without the plaintiffs consent is unjustified A permanent injunction restraining the defe- ndant: from realising the securities aforesaid The cssts of this suit Any further and other reliefs that this Honourble Court deems just to award." Mr. Nasimire submitted that it is true the applicant/Plaintiff is indebted to the respondent/defendant Company to the tune of Shs. 2 5167 2 , 2575 whih was advanced t D the applicant/Plaintiff by the respondent/defendant. Company in two separate loans,. According to annexture A in the pJaint, the first loan was secured on 15/3/99, while the second loan as per annexture B to the .plaint, was secured on 22/4/99. Each loan was for 10 1 000,000/. According to the loan or facility agreement for each loan, the loans were to be repaid within twelve months from the date of availment as per clause 7

of the loan agreements Under clause 12 of the loan agreements there are listed events which amount to default by the borrower. Under clause 12(b) of the loan agreement it is provided as follows and I quote: '12(b) Any indebtedness of the Borrower becomes due :. and payable prior to its stated maturity by reasons of default of the Borrdwer oi is not paid when due: or if, the s ñi'i for. the"Borrowers obligation. shall .become.nforceab1e (whethr the same shall -. be enforceable or not), . I am of the considered view that the respondent company's action agaipzt the applicant's property which is complained of arises from the default detailed in clause 12(b) of the loan agreement quoted above 0 Mr. Nasimire concedes that the applicant was in default. in repaying his loan to the respondent/defendant company, but Pursuant and consequent to discussions between the applicant and the defendant on the breach or default which had ..risen, a subsequent agreement was reached between the applicant and the respondent company to the effect that, instead of the company realising the loan money from the applicant forthwith in accordance with clause 12 of the loans agreement, a new agreement was reached between the parties. That agreement contained a term which bound the applicant to repay the outstanding loan-money by way of daily instalments of 50,000/= effective from 31/8/2000, The said subseque.rt agreement was maUe orally between the applicant and one Parin Shariff the Branch flanager of the respondent company, and was witnessed by one D.nald Kahema an Assistant Manager Credit Depatment with the respondent Company. Mr, Nasimire argued that this subse quent.oral agreement on the mode of repayment of the outstanding loan-money was binding between the parties, and the same had the effect of waiving the two initial written loan agreements, that is, including clause 12 thereof. It is on the basis of this "I,

argument by Mr. Nasimire that the applicant/plaintiff filed ciril ease No.3812000 against the respondent/defendant Company. Mr N 5 simire has submitted that the repondent/defendant admits in para + of his couter affidavit that; indeed., there was such subseqieht einent or ndatorium which set out different terms of Pepaynent of the balance of the loan-money by the applicant, to the effOot. that instead of payiig the whole sum On balance as per the initiJ agre'ernents under clause 12 thereof the applicant would pay by instalments of 200,000/= daily effective from 31/8/2000, Mr. Nasimire argued that the quantum of the agreed rate of daily instalment payment in the subsequent agreement which is now in dispute, that is, whether it was 50,0007= as the licaht alleges,. or 200 4 000/= as alleged by the respondent, is an issue for deter- thination in the nin suit, the same cannot be detrmined now in thisapplication., In reply Mr. Butambala learned advocate for the respondent company reiterated that, so long as the applicant was in breach of the initial loan agreement, he is bound to the consequences upon :breaclt of that agreement regardless of the subsequent oralagreethent which, Mr 0 Butarnbala argued, had no effect of waiving the initial • loaa-aeement, And even if the subsequent agreement on the mode of repayment waived the initial agreement, the applicant had also breachedthe said subsequent agreement because he hastotally stopped making any payment at all towards the ipaymeñt of the loan. Mr. Butambala referred to applicant's behaviour as a breach upon breach, that is, he has breached two agreements 0 Mr Butambala further submitted by making reference to a letter dated 1 8/9/2000 from a Court broker one Hezrony Laro Luemba addressed to the applicant concerning this loan. In that letter the said courtbroker states that the applicant and the respondent had agreed that by 14/9/ 2 000 the applicant would start repaying the balance of the loan - money by 200,0001= daily instalments, Rr, Butambala submitted

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• 5 - that the applicant never responded to that letter, so, impliedly, he admitted that he had a'eed to make 200,0007= daily instalment payment toward the loan in question. With regard to the applicanta property which the respondent has advertized for sale in repayment of the loan-money due from the applicant, Mr • Butambala submitted that the said property was mortgaged to the respondent. For that reason the mortgagee, that is the respondent, has the right under the mortgage to sell the mortgaged property 4 Mr. Butambala cited the following decisions of this court insupport of his argument. (1) Civil case No.14/1996Co-qperative & Rural Development Bank v • Ms 0 Ng'wanda ConipaxrLTD, Tabora Registry (unreported) (Masnche. J)., (2) N.B,C0v, Shabe MtumwaNassoro H/C Civil Appeal No.68J94 , Dar-es-salaam (urorted) Mapigano, J.) In reply Mr. Nasimire first attacked the validity of the Court broker!.s letter dated 18/9/2000 addressed to the applicant wherein it is alleged that the applicant and the respondent had aeed to 200,000/= daily instalment payment towards the outstanding loan-money by the applicant. Mr 3 Nasimire watered down that letter that the same was a mere threat to the applicant by the Courtbroker. He submitted that the said letter is not part of the subsequent agreement or moratorium referred to,. That the said ?.etter was not even signed by the said Courtbroker nor was the same copied to the respondent company. So, that letter is not evidence of the agreed amount of daily rate payment by the applicant towards the outstanding loan. With regard to the decisions of this court cited by Mr. Butambala, Mr 0 Nasimire, submitted that those decisions are distinguished from the facts of the presentsituation. He argued that those decisions are applicable in a situation where the mortgagee is strictly exercising his rights under the mortgage

ft 6 - terms, and not in a situation as in, this case where the mortgagee has waived his rights under the mortgage by entering into a new contract with the mortgagor, quite different from the terms and coritions of the mortgage. Having carefully considered the submissions of both learned counsel for the parties, and the law applicable to the dispute between the parties, I first find that, indeed, the parties voluntarily entered into a new agreement on the mode of x*payment of the loanmoney by the applicant. The said agreement was an oral agreement which was duly entered into on 31/8/2000. To this extent I am fully satisfied that that is the position. As already stated, the two loan agreements were made on 15/3/99 and on 22/4/99 respectively. This means the applicant was bound under clause 7 of the loan-agreemeiits to have repaid the loan-money by 15/3/2000 and 22/4/2000 respectivela. By these dates the applicant had not repaid the loan-money, so the respondent company was entitled, as of those dates to exercise its rights under the mortgage but it did not do so, and no reason has been accounted for that omission or forbearance in the counter affidavit. It took the respondent more than four (4) months after the applicant had breached the agreents before. he resorted to the exerci$e of his rights under .the loan-mgreement. And even then he did so after he had first entered into a fresh agreement with the respondent on the mode of repaying the loan-money. This is the moratriuzn which the applicant in relying uponj and in fact has sued upon it in u/c Civil Case No. 38/2000 which is still pending. And indeed, a moratorium is a well known concept in the law of lending. The concise law Dictionary by P.G. Esborn difines the term moratorium as "The general postment • payment of debts authorised by statute. And the coucise Oxford Dctionary defines that terms as" legal authorization to debt.rs to 8tpone payment." This Court in deciding the dispute between these parties in bound to first decide whether the moratorium or

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• 7 - eubsequent and fresh agreement that was reached between the parties Oil 31/8/2000, more than four months after the applicant had breached the mortgage or loan—agrrement, had any legal effect? Whether the same was binding between the parties? Already the applicant has filed a suit in this court - HC Civil Case No.3812000 against the respondent company based on the moratorium in question. Sc, the issue en whether the said moratorium is binding or not and what rate ef inatalement was agreed thereini is aubjudice in this same court in HC Civil Cane No. 38/2000. Under Civil Procedure, this &ourt is it legally enpewered at this stage to deoide that issue in this applicaticn, I so find. Also this court will have to consider when decIding the substantive suit the reepondents conduct in forbearing tcexoreiso his rights under the mortgage immediat,ely after the applicant breached the terms ef the mortgage. So, the decisions of this court on the right of a mortgagee to exercise his rights under a mortgage will be considered later at the hearing and in the decision of the main auit. It is premature and it will pre-mpt the decision of this court in HC Civil Case N. 38/2000 if this court at this state decided whether the decisions of this court cited by Mr. Butambala are applicable to the facta and circumstances of this application and the substantive suit. Fui'ther, the questions upon which I have made findings above ameunt triable issus in the substantive pending suit between the parties. Thatbeing the position, this application for a temporary injuetion is merit meritorious, and this court is legally entitled togrant it. On the foregoing discussions and findings I grant this application with costs. I direct and order that the temporary injuctien applied
• for issue in the terms stated in the chamber summons. R.wever, in order to do justice to the respondent Finance Company, Ihave to make an order directing the applicant to strictly ésmply with the subsequent agreement on the mode of payment of the lean. -

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• 8 - money which is still outstanding. He has to ntinue making the instalment payments to the tune of 50 1 0001= daily which he concedes, until the substantive suit is heard and determined. The applicant has also to pay at a go any amount of instalment payments which are in arrears from 31/8/2000, the effective date of the undisputed subsequent agreement on the new mode of payment. At the hearing of this application the arrears amounted to 987,000, 1= on 2/11/2000 9 if the mathematics were correct. The proper and due arrears be well calculated at the 50,000/= daily rate from 31/8/2000 which the applicant concedes, and the applicant is ordered to pay the same, and then should continue paying the daily rate of 50,000/=. In default his property shall be attached and sold to repay the loan-money, however, restricted to the 50, 000 1=' daily rate pending the determination of H/C Civil Case No. 38/2000. It is ordered accordingly. Application granted. Ilk IASI IT. A M.D. NHALLA 3UIGE 23/i1/2000 Coram : M.D. Nohalla, J. For Applicant/Plaintiff - Mr. Nasimire, Advocate - Present For Respondent/Defendant - Mr. Butambala, Advocate - Present C.C. Restituta Court: Ruling delivered in open court in the presence of the parties, at Mwanza, this the21st day of November, 2000, Right of appeal explained, MWANZA M.D. NCHALLA 21/ai/2000 JU1?GE