Kombo Khamis Hassan vs Republic (Civil Appeal 17 of 2008) [2009] TZCA 22 (7 January 2009)

Transaction Type

Key Facts

Issues

• Whether the forceful takeover of the bakery caused damage to the respondent, with the court agreeing that the appellant broke locks by force and the evidence supported this finding.
• Whether the suit was time-barred under the Limitation Decree, given the unpaid loan amounts and part payments, with the court determining that a fresh limitation period began with the last part payment on 31.12.2003.
• Whether the counter-claim for USD 184,550.00 was valid, with the court ruling that the amount represented lawful part payments under the loan agreement and dismissing the counter-claim.
• Whether the sale agreement was unlawful due to the respondent's foreign status and potential contravention of public policy under the Contract Decree and the Restriction Order, with the court affirming the agreement's validity as a foreign loan to a local, not an investment.
• Whether the respondent proved the USD 110,000.00 debt, including evidence of expenditures and unpaid salary, with the court upholding the balance as valid under the agreement and evidence.
• Whether the respondent had the right to repossess bakery machineries under clause 3:0:4 of the agreement, with the court confirming repossession as lawful collateral under the contract and Contract Decree.

Holdings

• The court set aside orders 1-4 from the High Court's judgment, deeming them unnecessary as they exceeded the respondent's prayers and lacked legal basis.
• Ground eleven was dismissed, confirming the appellant took over the bakery by force and caused damage, which was properly considered in the judgment.
• Ground nine was dismissed, rejecting the counter-claim for USD 184,550 as the respondent's deductions were part of the loan repayment agreement.
• The court dismissed ground three of the appeal, ruling that the suit was not time-barred as the limitation period started on 31.12.2003, within the three-year timeframe for the suit filed on 18.03.2004.
• Ground four was dismissed, confirming the sale agreement was lawful and not against public policy as the respondent was a foreign creditor, not an investor, and no laws were contravened.
• Ground ten was dismissed, upholding the respondent's right to repossess bakery machineries under clause 3:0:4 as valid collateral for the unpaid debt.
• Ground eight was dismissed; the USD 110,000 outstanding loan was proven through the agreement and evidence of deductions from bakery proceeds.

Remedies

• The costs of this suit are to be borne by the Defendant (appellant) as determined by the court.
• The respondent is hereby entitled to repossession of the Bakery machineries or repayment of USD 110,000.00 as per the court's final determination.

Monetary Damages

Legal Principles

• The court upheld the validity of the contract between the parties, emphasizing that agreements must be honored unless rendered unlawful. It rejected claims that the contract was void under public policy or foreign investment restrictions, affirming that the respondent's repossession rights were lawful under the contractual terms.
• The court determined that the limitation period for the debt was reset by part payments under section 21(1) of the Limitation Decree, finding the suit filed on 18.03.2004 was within the three-year period starting from the last payment on 31.12.2003.
• The High Court's orders to supervise accounts and repair costs were set aside as they exceeded the pleadings and lacked legal basis. Courts generally cannot grant reliefs not sought in the original prayers.

Key Disputed Contract Clauses

• Clause 3:0:3 outlined the repayment schedule for USD 250,000.00 in three annual installments. The dispute centered on whether the suit was time-barred under the Limitation Decree, with the court determining that part payments until 31.12.2003 reset the limitation period, validating the 2004 suit.
• Clause 2:0 set the value of bakery machinery and related expenditures at USD 250,000.00. The court upheld this amount, noting it included costs beyond the machinery's original price (USD 77,063.00) such as shipment, installation, and unpaid salary, thereby validating the outstanding USD 110,000.00 debt.
• Clause 3:0:4 provided the respondent with the right to repossess the bakery machineries if the appellant defaulted. The court affirmed this clause as reasonable and lawful, emphasizing it served as security for the loan without violating sections 76 or 77 of the Contract Decree.

Precedent Name

• Wolfgang Dourado v. Tito de Costa
• Mistry Amar Singh v. Serwano Wofunira Kulubya

Cited Statute

• Contract Decree, Cap 149, Laws of Zanzibar
• Investment Protection Act, 1986, L.N. No. 28 of 1993
• Limitation Decree, Cap 12, Laws of Zanzibar

Judge Name

• J. H. MsOffe
• S. Mjasiri
• M. C. Othman

Damages / Relief Type

• Costs of the suit to be borne by the Defendant (appellant)
• Repossession of Bakery machineries or repayment of USD 110,000.00

Passage Text

• It was fully established that apart from the bakery machineries whose original price was put at USD 77,063.00 (PW1, DW1) there were other expenditures involved which were also borne by the respondent. They included costs of shipment, customs, installation, repairs and renovations, generator and those of the three technicians from Europe who installed the machineries. Of the total amount PW1 expended, i.e. USD 294,550.00 an amount went towards his un-paid salary at between USD 1,200.00 - 1,500.00 per month (Exhibit P.4) which the appellant admitted he had not been paid for four years.
• With respect, we agree with learned counsel that the High Court was not entitled to mould reliefs 2, 3 and 4 in the manner it did as they had no reference to the respondent's prayer and the pleadings as a whole... In the final analysis, and for the foregoing reasons save for orders 1 to 4, which we hereby set aside, we have no reservations in affirming the judgment and decree of the High Court.
• Clause 3:0:4 of the agreement, in our respectful view, is too plain to admit any ambiguity. Thereunder, that right of repossession of the bakery machineries is subject to what is enough to satisfy the remaining portion of the debt not yet paid. It is not an unlimited right to repossess the entire machineries but only what is enough to satisfy the outstanding portion of the debt.