NJORO FURNITURE MART LTD v TANZANIA ELECTRIC SUPPLY CO LTD 1995 TLR 205 (CA)

NJORO FURNITURE MART LTD v TANZANIA ELECTRIC SUPPLY CO LTD 1995 TLR 205 (CA)

Court Court of Appeal - Arusha

Judge Nyalali CJ, Makame JJA and Kisanga JJA B

Civil Appeal No 39 of 1993

August 3, 1995

(From the decision of the High Court of Tanzania at Arusha, Munuo, J). C

Flynote

Tort - Damages - Whether to include an element to offset the effect of inflation and

devaluation.

Civil Practice and Procedure - Costs - Court awards half of the costs of the suit -

Whether proper. D

Civil Practice and Procedure - Interest - From date of filing suit to date of final

judgment - Interest on judgment debt.

-Headnote

The trial High court awarded a sum of Shs 728, 154/70/ = being part of the special E

damages claimed by the appellants, plus half of the costs of the suit and 10% interest

payable 'from the date of judgment to the date of final settlement'. The appellant

appealed to the Court of Appeal against the quantum of special damages awarded, half

of the costs of the suit without assigning any reasons, and failure of the Trial Judge to

award 'interest at bank rate on the decretal sum calculated from the date of filing the

suit to the date of final judgment'. The Court of Appeal upheld the quantum awarded

by the Trial Judge. On the other points raised: F

Held:

(i) Since in principle the quantum of damages has to be such as to restore

an injured party, as far as possible, to the position prior to the injury, it is correct in

law to include in the award of damages an element calculated to offset the effect of

inflation and devaluation; G

(ii) Costs follow the event; where the court directs that any costs shall not

follow the event the court shall state its reasons in writing.

(iii) It is apparent from the provisions of s 29 of the Civil Procedure Code,

H read together with rule 21 of Order 20 of the same code that interest is payable on

a judgment debt 'from the date of delivery of the judgment until the same shall be

satisfied', at the rate of seven percentum per annum or not exceeding twelve

percentum as agreed by the parties in writing or by consent;

(iv) The trial court was in error in making a direction for '10% interest

from the date of judgment to the date of final settlement' in the absence of agreement

by the parties; I

1995 TLR p206

NYALALI CJ

A (v) The appellant is entitled to interest at bank rate from the date of filing

the suit to date of delivery of judgment.

Case Infomation

Appeal allowed in part.

Case referred to:

B (1) Kioka Ltd v. De Angelis [1969] EA 7

Jonathan for the appellant.

Maro for the respondent.

[zJDz]Judgment

C Nyalali, CJ delivered the following considered judgment of the Court:

This is an appeal by Njoro Furniture Mart Ltd, hereinafter called the appellant,

against part of the judgment and decree of the High Court at Arusha where the

appellant had instituted a suit against Tanzania Electric Supply Co Ltd, hereinafter D

called the respondent. The suit was for payment of special and general damages

arising out of alleged negligent conduct on the part of the respondent, plus costs and

interest. The trial High Court, Munuo, J awarded a sum of Shs E 728,154/70/= being

part of the special damages claimed, plus half of the costs of the suit and 10 per cent

interest payable 'from the date of judgment to the date of final settlement'. The

remainder of appellant's claim was rejected by the High Court. Appellant was

aggrieved, hence this appeal to this court. Mr Jonathan, learned advocate, represents

the appellant in this appeal, whereas Mr Maro, F learned advocate, represents the

respondent. 12 grounds of appeal were submitted and argued in the appeal before us.

G It is common ground that on 17 September 1989 the carpentry workshop of the

appellant at Njoro, otherwise known as Maili Sita, in Moshi municipality was gutted

by fire some time after the respondent's employees had attended to the electricity line

and transformer serving the appellant's carpentry workshop. That fire also damaged

the property of the appellant's neighbours. Subsequently, at a meeting H held

between the respondent's representatives on one side and the appellant and its

neighbours on the other side, the respondent, through its representatives, admitted

liability and agreed to compensate the appellant and the neighbours for the damage

suffered. Prolonged negotiations and communications regarding the quantum of

damages took place between the appellant and the respondent without success. I

1995 TLR p207

NYALALI CJ

It is common ground also that in the course of the negotiations for settlement of A

claims, the respondent asked the appellant to give an estimate of the costs of repairing

the damaged workshop; and an estimate of the loss of profits suffered as a

consequence of the fire. In response to such requests, the appellant supplied to the

respondent various estimates as per Exh P2, P9 and D6. Exh P2 is an B estimate

prepared by a firm known as General Electric Service and signed by DW8 in respect

of costs for 'repair and replacement of damaged motors and electric installation ...'. It

is dated 18 January 1990 and puts the cost at Shs 1,261,808/=. Exh D6 is a similar

estimate by the same firm, that is General C Electric Service, and is dated 25 July

1991. Exh D6 puts the cost for 'electrical repair' of the workshop at Shs 728,154.70/=.

Exh P9 is an accountant's report prepared by one Anael Patrick Kavishe (PW3) of

Masawe & Co Ltd, a firm of accountants and auditors, showing that the appellant had

suffered loss of profits in the region of Shs 17,000,000/=. It is common ground that the

appellant is a usual D client of Masawe & Co Ltd, on retainership basis.

Furthermore, it is undisputed between the parties that in the course of attempting to

negotiate a settlement of the claims, the respondent also undertook its own E

investigations of the damage and loss suffered by the appellant. Towards that end, one

Mtoro Rajab Khalifan (DW6) prepared a report of the accounts of the appellant. That

report, admitted at the trial as Exh D7, showed that the carpentry workshop business

was running at a loss at the time of the fire incident. DW6 is a registered accountant

employed by the respondent. F

It is the appellant's case that it is entitled to be paid not only the sum of Shs

1,261,808/= as per Exh P2, being the cost of restoring the carpentry workshop to

normality, but the sum of Shs 17,105,394/= being the estimated loss of profits G

arising from loss of sales to customers. Furthermore, it is part of the appellant's case

that the appellant is entitled to be paid compensation for the loss likely to be suffered

as a result of action likely to be taken by appellant's customers for failure to supply

goods to the latter as agreed before the workshop was gutted by fire. Appellant

further contends that any compensation paid by the respondent should H include an

element to offset the effect of inflation and devaluation, plus interest at bank rate in

order to put the appellant in the position it would have been had the workshop

continued to operate.

The respondent's case on the other hand is to the effect that both estimates by the

appellant as per Exh P2 and P9 are at best unreli- I

1995 TLR p208

NYALALI CJ

A able. It is respondent's contention that the estimate of the cost of restoring the

workshop as shown in Exh P2 is fraudulent and grossly exaggerated. Furthermore,

respondent contends that the true financial position of the workshop at the time of

the fire incident is that it was a loss-making business as shown in Exh D7.

Furthermore, it was part of the respondent's case at the trial in the High B Court that

the appellant should have mitigated the damage by having the damaged workshop

machines repaired and installed by General Electric Service, the firm which was

apparently ready to repair and install the machines on credit.

C The first issue for consideration and decision in this case concerns the cost of

restoring appellant's workshop to the working conditions it had prior to being gutted

by fire. The only evidence relevant to decision of this issue is Exh P2 and D6. Both are

estimates prepared by the appellant. The learned Trial Judge disregarded Exh D P2

on the ground that the person who signed it, that is DW8, was not sure of its contents

as he claimed not to be conversant with the English language in which it was written.

The learned Trial Judge, however, accepted the contents of Exh D6 as being more

reliable and proceeded to award the sum shown therein that is Shs E 728,154/70/=.

Bearing in mind that Exh D6 is a document prepared and supplied by the appellant in

the course of negotiation to settle appellant's claims against the respondent, we find

no basis for faulting the learned Trial Judge in that regard. We therefore find, as she

did, that the cost of restoring the carpentry workshop to its working condition at the

time Exh D6 was prepared is Shs 728,154/70/=. F

The second issue for consideration and decision is whether the appellant suffered loss

of profits as a result of the fire. The learned Trial Judge does not appear to have

specifically considered this matter when dealing with the 11 issues framed G for

consideration by the trial court. Obviously the matter fell for consideration under

issue No 9, that is, 'Has the plaintiff suffered loss of income and if so, to what extent?'.

It would seem that the matter slipped from the attention of the learned Trial Judge

apparently because she confined herself to only one aspect of the H issue - that is,

appellant's alleged failure to mitigate damages. Obviously the issue of mitigation of

specific damages arises only where loss is proved.

In the present case the only evidence relevant to the issue of loss of profits is to be

found in the testimonies of PW3 and DW6 and the respective reports each prepared,

that is Exh P9 and D7 respectively. The testimonies and reports of these accountants

is diame- I

1995 TLR p209

NYALALI CJ

trically opposed to each other. One supports the contention that appellant's A

venture was profitable before it was closed down. The other supports the contrary

view that appellant's venture was making a loss at the material time. Unfortunately

neither PW3 nor DW6 is an independent witness, because the former is a retained

client who normally audits the appellant's accounts, and the latter is an employee of

the respondent. We think that under these circumstances, where the B burden of

proof is upon the appellant (as plaintiff in the case), the appellant has to show that

PW3 and his report are more reliable than DW6 and his report. It seems to us that

this was not done. It follows therefore that the appellant failed to prove on a balance

of probabilities that he suffered loss of profits. C

The third issue is whether the appellant is entitled to be paid compensation for loss

likely to be suffered as a result of claims likely to be made for failure to deliver goods

to clients as agreed before the workshop was gutted by fire. The learned D Trial

Judge found to the effect that the appellant had received confirmed orders for the

manufacture and supply of sundry goods to clients before the workshop was gutted by

fire. She however did not consider whether the appellant would suffer loss

consequent upon possible claims by those clients. In our considered opinion E it

seems that the appellant, on the evidence adduced at the trial, has a defence against

such possible claims. The obvious defence is that of frustration of contract arising out

of appellant's workshop being gutted by fire. It follows therefore that appellant is not

entitled to compensation for possible claims. F

The fourth issue is whether any amount of money awarded to the appellant as

damages should include an element to offset the effect of inflation and devaluation.

We think that since in principle the quantum of damages has to be such as to restore

an injured party, as far as possible to the position prior to the injury, it is correct in

law to include in the award of damages an element calculated to offset G the effect

of inflation and devaluation. As stated by Kemp and Mc Oustra, learned authors in

their The Quantum of Damages, vol 1, 2nd ed, 'leaving authority aside, both principle

and common sense require that the courts, when they H assess an award of money,

which is to compensate a plaintiff for the damage caused to him by his injuries,

should take into account large and comparatively permanent changes in real value,

i.e. in the purchasing power of money'. Unfortunately in the present case, though

appellant was represented by experienced counsel at the trial, no evidence or material

was adduced at the trial upon which the rate of inflation or I

1995 TLR p210

NYALALI CJ

A devaluation could be determined. We are therefore unable to award any amount

for inflation or devaluation.

The fifth and last issue before us is whether the trial court erred in awarding half of

the costs of the suit instead of granting the full costs, and whether it erred in

awarding interest at 10 per cent from the date of judgment to the date of payment, B

instead of granting interest at bank rate from date of filing the suit to date of payment

as prayed.

With regard to the matter of costs, Mr Maro, learned advocate for the respondent,

argued in the appeal before us that the trial court was correct in exercising its C

discretion by granting less than the full costs in favour of the appellant, on the ground

that the appellant had failed to prove a substantial part or the claim contained in the

plaint. Undoubtedly in our opinion, costs are within the discretion of the court as

stated under s 30 of the Civil Procedure Code, 1966. It has, D however, long been

established by the courts that costs normally follow the event. See case of Kiska Ltd v

De Angelis (1). Moreover, under ss (2) of s 30 of the Civil Procedure Code, it is

expressly stated that, 'Where the court directs that any costs shall not follow the

event, the court shall state its reasons in writing.' E

The gist of appellant's complaint is that the court did not state its reasons in writing

for directing only half of the costs to be paid. The complaint is justified. We have,

however, to ask ourselves what legal effect does this procedural error have? In our

considered opinion, since the reasons for awarding less than the full costs in F favour

of the appellant are so obvious, the error is curable. We thus cure the error by stating

that the appellant, who was the plaintiff in the trial court, is entitled to half the costs

of the suit by reason of failure to prove a substantial part of the claim.

G As to the matter of payment of interest, it is apparent from the provisions of s 29

of the Civil Procedure Code, read together with r 21 of Ord 20 of the same Code that

interest is payable on a judgment debt 'from the date of delivery of the judgment until

the same shall be satisfied.' Under r 21 of Ord 20, 'the rate ... shall H be seven per

cent per annum or such other rate, not exceeding 12 per cent per annum as the parties

may expressly agree in writing before or after the delivery of the judgment or as may

be adjudged by consent'.

It is thus evident that the trial court was in error in making a direction for '10 per

cent interest from the date of the judgment to the date of final settlement', in the

absence of agreement by the I

1995 TLR p211

NYALALI CJ

parties. We are bound to intervene to correct this error. But before we do so, we A

have to consider whether the appellant should be paid any interest for the period

prior to judgment. Under s 29 of the Civil Procedure Code, a court has power '... to

order interest to be paid up to the date of judgment at such rates as it may deem

reasonable ...'. The appellant had claimed in the plaint, 'interest at bank rate on the B

decretal sum calculated from the date of filing the suit to the date of final judgment.'

We think under the circumstances of this case, the claim is fully justified. The

appellant is entitled to interest at bank rate from the date of filing the suit to date of

delivery of judgment. C

In the final analysis therefore, this appeal partly fails and partly succeeds to the extent

that the appeal against the principal sum and costs filed, but the appeal against the

order for payment of interest succeeds to the extend indicated above. Under the

circumstances of this case, we think it is just that appellant be paid one-third of the

costs of this appeal. D

1995 TLR p211

F