SELEMANI SEMBIKO v REPUBLIC 1992 TLR 144 (CA)

 

SELEMANI SEMBIKO v REPUBLIC 1992 TLR 144 (CA)

Court Court of Appeal of Tanzania - Dar Es Salaam

Judge Makame JJA, Kisanga JJA, Omar JJA

17 June 1992

Flynote

Bills of Exchange - Negotiable instruments - Cheque - Payee gives assurance cheque

D has been cleared and consequently delivers the goods bought - Later same payee

informs cheque has not been cleared and seeks restoration of the goods - Whether

goods can be restored - Whether there is failure of consideration.

-Headnote

The appellant wanted to buy a car from M/s Cooper Motors Corporation Ltd. Since E

the seller insisted that payment must be in US dollars the appellant approached a

third party who drew a cheque in favour of the corporation. The appellant undertook

to reimburse the drawer in local currency. Upon the appellant presenting the cheque

to F the corporation it was made clear to him that the motor vehicle would be

realised to him only after the cheque was cleared and the proceeds thereof received

by the Land Rover Factory in England. After about a month the corporation informed

the appellant orally G and later by a letter that the cheque had been cleared. The

appellant reimbursed the drawer of the cheque. The Corporation delivered the motor

car to the appellant.

Later the Corporation claimed that the cheque had not been cleared. Such revelation

was followed by criminal proceedings which ended up with acquittal of the appellant

H and others and an order that the motor vehicle be restored to the Corporation.

This appeal was against the restoration order.

Held: (i) Once the Corporation had repeatedly assured the appellant that all was all I

right and that it had duly received the proceeds of the cheque; it seems plain to us

that the corporation cannot validly

1992 TLR p145

be heard to come back to the appellant and allege that it has not received A

consideration for the motor vehicle, contrary to its own earlier assurances which

were as clear and unambiguous as they could possibly be;

(ii) the restoration order was wrongly made in as much as it purported to

benefit the corporation which was all along to blame. B

Case Information

Appeal allowed.

Mkatte, for the appellant

[zJDz]Judgment

Kisanga, Makame and Omar, JJ.A.: The appellant Selemani Sembiko and two C

others were jointly charged in the District Court with obtaining a motor vehicle by

false pretences from Messrs Cooper Motors Corporation Limited, hereinafter to be

referred to simply as the Corporation. The three of them were also charged jointly on

a related D count of making a false document, and the appellant alone was charged

on yet a further related count of uttering a false document. After a full trial they were

all acquitted on all the counts with an order, however, that the motor vehicle in

question be restored to the Corporation. The appellant's appeal to the High Court

against the said order was E unsuccessful, hence this second appeal.

The background to the case was briefly as follows: The appellant is a managing

director of a firm known as Steadfast Tanzania Limited duly registered and operating

in Tanzania. Some time in 1988 he approached the Corporation for the purchase of a

F new Land Rover for his firm. He was given a quotation of US$ 33,145.00 for it, and

it would appeal that the Corporation insisted on the payment being effected in

foreign currency. Whereupon the appellant approached one Damas Nilah, a business

G associate and co-accused at the trial, for help. This latter in turn approached a

European friend of his called Danied Snadon who was operating a company called

East African Sailing Safari duly registered with the Registrar of Business names with

its place of business at the Yatch Club in Dar es Salaam. Between these three, an

agreement was H reached whereby the owner of the East African Sailing Safari

issued a cheque in foreign currency for the purchase of the motor vehicle and the

appellant undertook to re-imburse him in local currency while Damas Nilah

guaranteed the re-imbursement.

Upon the appellant presenting the cheque to the Corporation, it was made clear to

him I that the motor vehicle would be released

1992 TLR p146

KISANGA JJA, MAKAME JJA, OMAR JJA

to him only after the cheque was cleared and the proceeds thereof received by the A

Land Rover Factory in England. After about one month the appellant was called by

the Corporation to be informed that a telex message was received from the Land

Rover Factory England stating that the money on the cheque was duly received, and

that the Corporation could now proceed to process delivery of the motor vehicle to

the B purchaser. This was yet followed by a letter by the Corporation by which the

appellant was further assured that the cheques had been honoured and payment of it

had been duly effected. In reliance of these assurances the appellant proceeded to reimburse

C the drawer of the cheque to the tune of Tsh. 4,000,000.00 being the

equivalent in foreign currency of the purchase price of the motor vehicle. In the

meantime the Corporation duly processed delivery of the motor vehicle in favour of

the appellant's firm, the Steadfast Tanzania Limited.

Some time after delivering the motor vehicle, however, the Corporation claimed that

D the Land Rover Factory in England sent information that the very cheque which

earlier on was said to have been cleared and the proceeds thereof received in England

had been dishonoured by an Australian bank with which the drawer once operated

an account but had since closed it. Such revelation was followed by criminal

proceedings E which, as stated before, ended up with the acquittal of the accused

persons and the order now under review.

The basis for the concurrent decisions of both courts below to restore the motor F

vehicle to the Corporation was that the Corporation had received no consideration for

the motor vehicle, and that the appellant's remedy, if any, was to sue the East African

Sailing Safari. Mr. Mkatte, learned advocate who represented the appellant both in

this Court and in the High Court, however, submitted in effect that the Corporation

was at G all material times the holder of the cheque in due course for value, and that

as such it was the Corporation, not the appellant, which was to seek relief by suing

the drawer of the cheque.

This matter is not free from difficulty. Admittedly the argument of both courts below

H that the Corporation had received no consideration for the motor vehicle would

have much force if there was nothing more to it. But that argument obviously

overlooked or played down some important consideration, namely, that it was the

Corporation itself which was the author of its own misfortune. The Corporation had

made it clear to the I appellant that the motor vehicle would not be released until

the foreign cheque

1992 TLR p147

KISANGA JJA, MAKAME JJA, OMAR JJA

was cleared and the proceeds thereof were received by the LandRover Factory in A

England. The appellant was agreeable to that and waited patiently for about one

month after which the Corporation gave him repeated assurances that all was well,

that the cheque had been honoured and that payment of it had been effected. It was

on the strength of such repeated assurances that the motor vehicle was released or

delivered B to him. In other words the Corporation had assured him that it had duly

received consideration for its motor vehicle, otherwise it would certainly not have

parted with it.

The appellant for his part, acting on the Corporation's repeated assurances, went

ahead and re-imbursed the drawer of the foreign cheque in local currency in the

amount C equivalent to what the Corporation made him believe that it had duly

received as the price of the motor vehicle. That was clearly consideration for the

motor vehicle on the part of the appellant. Then the question is: In these

circumstances what further was required of the appellant to make his claim over the

motor vehicle a valid one? Surely D once he was assured that the cheque was valid

and had been duly honoured, it would be idle to expect him to turn to the drawer of

the cheque for any questions regarding the cheque.

Once the Corporation had repeatedly assured the appellant that all was all right and

E that it had duly received the proceeds of the cheque, it seems plain to us that the

Corporation cannot validly be heard to come back to the appellant and allege that it

has not received consideration for the motor vehicle, contrary to its own earlier

assurances which were as clear and unambiguous as they could possibly be. Had the

Corporation F not given those assurances, the transaction would not have been

concluded. If as now claimed by the Corporation the drawer of the cheque had closed

his account, the Corporation which was having the cheque ought to have brought this

to the notice of the appellant who would then take up the matter with the drawer of

the cheque in order G to prevent anyone being defrauded. But the Corporation was

negligent. It did not care to establish or ascertain the true status of the cheque, i.e.

whether it was drawn on an account that had since been closed,even though the

Corporation had up to about one month to do this. Not only that. The Corporation

went on to feed the appellant with H wrong information about the status of the

cheque saying that it was valid and had duly been honoured, thereby inducing the

appellant to part with his Tshs. 4,000,000.00 believing that he was reimbursing the

drawer of the cheque for foreign currency in respect of the purchase price for the

motor vehicle. All along it was the Corporation, I not

1992 TLR p148

the appellant, which was to blame; in our view the Corporation must bear the A

consequences that flow from there.

We are firmly of the view that the restoration order was wrongly made in as much as

it purported to benefit the Corporation which was all along to blame. If the

Corporation received no consideration for its motor vehicle from the appellant, this

was because of B the Corporation's own misleading assurances that it had duly

received such consideration. Had it not given such misleading assurances, appropriate

steps would have been taken to ensure that the Corporation duly received

consideration for its motor vehicle. On the other hand the appellant, acting on the

Corporation misleading C assurance or information gave consideration for the motor

vehicle by reimbursing the drawer of the cheque for the foreign currency which the

Corporation made him believe that it had received from the said cheque as being the

price of the motor vehicle. In D our view, the appellant had done all that was

required of him to make his firm's claim over the motor vehicle valid.

In the result the appeal succeeds. We accordingly reverse the order in question, and

direct that the motor vehicle in question shall remain in the name of the registered

owner, The Steadfast Tanzania Limited. E

Appeal allowed.

1992 TLR p148

F