Gerhard Hockmurth vs Intermarine Limited and Another (Commercial Case No. 2 of 1999) [2000] TZHC 593 (18 September 2000)

IN THE HIGI l COURT OF TANZANIA (COMMI::RCIAL DIVISION) AT DAR ES SALAAM COMMERCIAL CASE NO. 2 OF 1999. GERHARD HOCKi\ t UR.TH .............. .. PLAINTIFF VERSUS INTER1\1ARINE LlMITED .................. lST DEFENDANT NUNZIO D'ESPOSITO ........................ 2ND DEFENDANT I~ UL ING KALEGEY A, .I: Mr. Malimi for Defendants obj,.:,.:ts to Mr. Mchomc (for Plaintiff)'s is prayer to tender a document entitled "Guaranh.:c .111d indemnity (Individual Guarantor)'' on the grounds that it is not properly c':xc(ute,: ;:s required by law; it has not been altested; it as not been stamped and it has not been rq·istcred. I le refers to S. 30 or the Comprnies Ordinance; S. 5 (I) and 46 or The Stamp Duty Act, l 972,; S. 8 and i 0 of the Registration· of Documents Ordinance. Cap 117. In response !Vtr. Mchomc argue:, ,h;:it S. 30 or the Companies Ordinance is not applicable ns the document in questio11 i., not one or those cnvisage<l thcn:under, for it was not a matter trnnsacted by the Cornp.my; lhut the document 1s not one or lhc Compulsorily n:.:i;istrable docu1111.:1lls a:. 1 rovided under S. 13 and 8 ol" Cip 117: lh11 it is not 01K· of the documents which shoul1.1 i1c stamped as it is not one of'thosc scheduled under the lav, 1 • I le insists that this is a ,j, •..:urrn::111 which is govcrnl.'.d by th1.: grncrnl law nr contract _hence no attestation ur rct!istr.:, i>ll is required. Finally he rclcrs tu what is meant hv the 1cnns "lndemnitv .. and "L'.uarant,·. ·· bv rckrrinl.! to Black·s La"· Dictionar" . ., .. '- . - . .. The arguments bcin!:! ccntrcu Ill, cgal pt)ints I shall stick IO the same and be brid". I!•' . t

•· 2 I will start with S. 30 of Cap. ~ 12. With respect to Mr. Malimi, as rightly argued by Mr. Mchome, the said section deals \'ith forms of contracts entered into by a Company and not individuals as vivid!) shown by the opening words thereof, "Contracts vn beJ1c1(/vfu Company my be made asfvl/01's ... .. What is alleged here is a transaction \ hich involved natural personalities (Plaintiff and 2 nd Defendant) in which the latter undertook a guarantee and indemnity of the farmer's loss, if any, in his dealing with a third p:1rty, a Company. The said section therefore is not relevant here. Section IO of the Registration ul Documents Ord. is equally not applicable. Its very wording clearly takes us tea diffcr...:nt angle of the globe. IL reads, "No document of which Ifie.: n:;.:,i.,tration is co1111ml.wry sher/I be ejfectual to pcrss any land or w,_, interest therein or render such land /(able as security fi;r the J'u.1'/1/ent (lmo11ey, or he received as evidence of any dealing o/Ji·c·ting such land 1111/ess and until it has been registered". I krc. \.: .,re not dealing with land. Section 8 of Cap I 17 rm:scrilK·:; -.vhich docunh:nts need to be rcgist(:rcd compulsorily. In order to appn.:ci:ih.: \ It.It is covt:red. S. 8 (I) should be quotL'tL "8( I) 11w reistratio11 o(tlie /oi,1111·in~ doc11111,·11ts i( exec11tecl ur

1. • • • • made <{fler the Commi.:11L·onen, .i(this Onli11u11ce is compul.w;ry (a) No11-testw11cntwy doc11111cn1,. inc/11cling dcaees <~( 011_1 Court ,111cl :/H·ord. 1rhich purport c>r <': •, n,te to creutt'. cO/f<!r. declol'L'. limit. assign. trumi-r or l'./lli,!.t, : any right. title. or interest. 11'11l'!hcr ,·ested or

3 {b) Non-testame111ary document.\ which acknowledge the receipt or Payment of any consideration on account of !he creation, Declaration, assignme 111. I D111ratTo1i:orex1in-ctio11-of any-Sue h_ --~ ~~ Right, title or interesl" While S. 8 (I) (a) clearly ct:ntn:s on land S. 8 (I) (b) concerns documents which acknowledge receipt or payment of any consideration. The document in question docs not refer to land and therefore S. 8 (I) (;1) is totally inapplicable. What about S. 8 (I) (b)? The rn11trolling words in this clause arc "documen/s lvhich acknowled,i..:t' the rc.:ceipl or payment of any consideration on accoum <?/the· aealion ..... In my view, the words "receipt" or "pa) ment" should not be taken in their literal sense. They don't mean literal receipt or pay1111.:11t but also include an undertaking by a party of doing certain obligations in the cvl:nt tk other party also perfects another obligation. Now, looking at our document. the auth1 ,r is undertaking the role of a guarantor, and surctyship in consideration or the Plain ti !l's undertaking to advance to th~ I st Defendant credit facilities to a tune of S.S dollars I 'i0,000. /\s defined in Black's Law Dictionary, 6 111 Edition, "Consideration" is, .. The i11d11ceme111 to u cowrucl. !he cuuse. 11wti1·e. price or impelling, i1?fl11e11ce 11"/1ic/1 inch, ,·.1· u co111rucli11g 1wrty lo en/er i111u Cl crmtrw.:t. 'Ille reason(}/" 11/tll.'1 wl CUI/Se (ru t'0/1/J"(IC/. :,;ome right. i111i.:rcsl prr{tt or hCll('.flt an:ruinp. to 011,· __ .,urty or somt·jin·hearanr.:e dc1ri111elll. loss. or responsibility, gin.'11. si[/]i.-r..:d u1· :111der1uke11 hi" the other ... \ \ \

t l .. 4 Surely, here, there is receipt or payment of consideration, and this contrary to Mr. Mchome's submission, brings it under the clear substance ofS. 8 (I) (b) of The Registration of Documents Ord. Cap. I I 7. It had to be compulsorily registered. As regards the issue of a stamp duty I am surprised that Mr. Mchome having brought the Black's Law Dictionary to his aid regarding the meaning of "Indemnity" and "guarantee" still persists with his argum-:nt that no stamp Duty was rcqLtired to be paid. Item 33 to the schedule of the stamp Du1y Act, Act 20/72 clearly shows "Indemnity Bonds" attract a stamp duty as that paid lor "Security Bonds". The Dictionary referred to abo\ L defines an "Indemnity Bond"' as·· An undertaking given by an obligor to reimburse an obligce for any loss suffered due to the conduct of the obliger or a third person, while the term "Security"' is defined as, "Proleclion; assurcmce: i11clc1111u/icatio11. The term is usually applied to an obligation, pledge, 11wrtiugc, de;)()sil, lieu, e.t.c. given by a deb/or in order lo assure the payment or pe1_-Ji1m1,JJ;ce </his debt ... Tlze name is also sometimes given to one wlto becomes surer or guarantor for anotlzer". In my view, although the docu1n,·nt is interestingly entitled ''Guarantee and Indemnity Individual Guarantor'', the L1111tents arc very clear - the 2'" 1 Ddcndant was providing security to Pia inti IT, guara11l1.:cing that whatever credits advancc<l to I st Dcfcnc.bnt. in the event or not being hu11, 1ured. would be reimbursed by him (2 nd defendant). Frum whatever ;rnglc you !1,11k at this document it ralls squan.:ly under a security bond which attracts a stamp l)u1 >.

II 5 For reasons discussed above th~ objections stand allowed. The document is a compulsorily registrable document and attracts a stamp duty, both of which qualifications it does not have. L.B. KALEGEY A JUDGE Ruling delivered L.l L KALEGEY A JUDGE I 8/9/2000