B.P. TANZANIA LIMITED v GRUPPO SOGESCA LANARI ESTERIO s.p.a. 1992 TLR 321 (CA)

 

B.P. TANZANIA LIMITED v GRUPPO SOGESCA LANARI ESTERIO s.p.a. 1992 TLR 321 (CA)

Court Court of Appeal of Tanzania - Mwanza

Judge Omar JJA, Ramadhani JJA, Mnzavas JJA

G

22 October, 1992

Flynote

Contract - Agency - Claim for price of fuel - Attachment of truck as security pending

determination of suit - Whether reasonable cause for attachment. H

Civil Practice and Procedure - Security - Damages for attachment of property as

security - No reasonable cause for filing suit.

-Headnote

The appellant acted as agent of a company based in London, England. There arose a

dispute between the appellant and the respondent, a party to the contract with the I

London based company.

1992 TLR p322

OMAR JJA, RAMADHANI JJA, MNZAVAS JJA

Because of the dispute the appellant applied for attachment of the respondent's A

property to serve as security. Consequently the respondents truck was attached for

538 days. In the High Court the respondent won the case. On the attached truck the

Court awarded the respondents Shs. 35,866,666/= for non user.

On appeal the Court of Appeal considered, inter alia, whether the award for B nonuser

of the truck was justified.

Held: (i) There were, in our view, good reasons calling for the appellant to apply for

attachment of respondents property pending judgment; C

(ii) had the plaintiff/appellant properly and carefully weighed his case

before filing the suit against the respondent the chances are that he would not have

gone to Court and the respondent would have been saved from all the bother of

having his truck attached and having to defend the case; D

(iii) the award of Shs. 35,866,666/= for non user of the truck was not only far

too exorbitant but also missuported by evidence.

Case Information

Order accordingly. E

Rugarabamu and Mkatte, for the appellant.

Rweyemamu, for the respondent

[zJDz]Judgment

Omar, Ramadhani and Mnzavas, JJ.A.: In this case the respondent company, F

Gruppo Sogesca Lanari Esterio s,p,a. (to which we will hereinafter, for the sake of

brevity, be referring to as the respondent) entered into a contract with a company

registered in London by the name of Tecofi Ltd whereby the later company was to

supply the respondent fuel. The terms of the contract are contained in a letter of

intent - exhibit D.2. G

It would appear that Tecofi Ltd was to buy the fuel to be supplied to the respondent

from another company, B.P. Africa, based in London which company was to ship the

fuel to the appellant company at Dar es Salaam for onward transmission to their depot

in Mwanza which was to deliver the fuel to the respondent. H

The arrangement for payment for fuel sold and delivered was that B.P. Africa wuld

invoice Tecofi Limited for fuel supplied to the appellant company and Tecofi Limited

would likewise invoice the respondent who would effect payment directly to Tecofi

Limited. Sometime in October there arose a dispute between the appellant company I

(B.P. Tanzania Limited) and the respondent company

1992 TLR p323

OMAR JJA, RAMADHANI JJA, MNZAVAS JJA

whereby the former company alleged that the latter company had failed to pay for

fuel A sold and delivered to it despite repeated demands. The value of the fuel

delivered was said to be in the tune of Shs.9,562,725/=. Eventually the appellant

company filed a suit in the High Court against the respondent company on 25/10/89

claiming the amount. B

After the respondent company had filed a W.S.D. and later an amended W.S.D. and

the appellant company had filed amended reply to the amended W.S.D. containing a

counter claim the appellant company reduced the claim of Shs.9,562,725/= to one of

Shs.3,758,952/15. C

The following issues were agreed upon:

1. Whether the supply of fuel by the plaintiff/appellant to the

defendant/respondent was governed by any contractual relationship between them or

just motivated by contractual D relationship between Tecofi Ltd and B.P. Africa Ltd

of London.

2. Whether Tecofi Ltd did buy and consign fuel to the defendant through

the plaintiff, and E if so, how/much and in which measurements.

3. Whether the defendant/respondent did exhaust stock as consigned

through the plaintiff/appellant, and if not, what is the balance due to the

defendant/respondent. F

4. Whether the defendant/respondent did overdraw fuel from the

plaintiff/appellant exceeding his stock at the time claimed by the plaintiff/appellant,

and if so, how much.

G 5. Whether the plaintiff/appellant had any justification to seek for the

attachment of the defendant's truck, and if not, what damages is the

defendant/respondent entitled to.

H 6. Relief - (Here it may have meant to what reliefs are the parties entitled

to).

After hearing evidence from both sides the High Court, (Moshi, J.), was satisfied that

the respondent company had neither overdrawn gas oil nor petrol from his stock with

I the appellant company. On the contrary the learned trial judge hold that the

1992 TLR p324

defendant/respondent had still 518,287 litres of gas oil and 54,4411 litres of petrol in

A his stock held by the plaintiff/appellant and ordered that the plaintiff/appellant

delivers this fuel or its money equivalent to the defendant/respondent. The Court also

ordered that the plaintiff/appellant pays coss.

As for the attachement of defendant's/respondent's truck it was the learned judge's B

opinion that there was no sufficient cause to make the plaintiff company

apprehensive that the defendant company was disposing its working tools so as to

leave the jursidiction of the Court to the detriment of plaintiff's interest. For this

reason it was the trial Court's conclusion that there was no need for the plaintiff

company to apply for C attachment of defendant's truck pending hearing of the suit.

The Court therefore concluded that the defendant company was entitled to be

compensated by the plaintiff company for non-user of his truck for the whole period

it remained attached. D

It agreed with the defendant/respondent that the truck used to fetch Shs.100,000/=

per day according to Ministry of Works scale. As the attachment of the truck lasted

for 538 days (From 8/11/89 to 30/4/91 when attachment was raised) the Court found

that the amount due for the defendant for non-user of the truck was Shs.100,000 x

538 days E which came to 53,800,000/=. The trial Court however took into account

that there were Sundays, public holidays, days when the truck went for maintenance

etc. when the truck would not be in use. The Court therefore deducted one third

from the amount of F Shs.53,800,000/= which came to Shs.17,933,333/= and awarded

the defendant/respondent Shs.35,866,666/= for non-user of the truck.

The Court then proceeded and dismissed plaintiff's case with costs.

Dissatisfied with the whole judgment of the lower Court the plaintiff has appealed to

G this Court.

Mr. Rugarabamu and Mr. Mkatte, learned Counsel, appeared for the appellant

company. In his submission Mr. Rugarabamu argued that the learned judge's finding

that supply of oil to the respondent was in metric tons only was erroneous. H

It was the learned Counsel's submission that DW.1 agreed in his evidence that he

received from the appellant 6,321,417 litres of gas oil. In support of his argument the

Court was referred to page 37 of the proceedings. It was also argued that the

respondent conceded in his defence in the High Court that he had received 203389 I

litres of petrol; and that in all the appellant had supplied a

1992 TLR p325

OMAR JJA, RAMADHANI JJA, MNZAVAS JJA

total of 559,589 litres of petrol to the respondent without payment. In support of his

A argument the Court was referred to the evidence of PW.1 at page 31.

The Court was also referred to exhibit P.4 which was said to be a summary of oil the

respondent had withdrawn.

It was the learned Counsel for the appellant's argument that some of the fuel was B

supplied to the respondent in cubic metres and some in metric tons.

As for the award of damages to the respondent for non-user of his truck as a result of

the attachment of the truck pending determination of the suit, the learned Counsel C

submitted that the appellant was entitled to file an application for attachment of the

truck as there was evidence that the respondent was disposing his property; some of

which had left the country. In support of his submission the Court was referred to

page 21A of the proceedings.

It was also argued that later the appellant and the respondent agreed before the judge

D that the respondent offers only two trucks as security. The Court was referred to

the same page - 21A.

At a later date the respondent applied to the Court seeking variation of the terms of

security, the application was granted and only one truck was offered as security. E

As for the argument that the truck earned Shs.100,000/= per day Mr. Rugarabamu

argued that there was no officer from the Ministry of Works who testified that the

truck earned such amount per day. The Court was asked to allow the appeal with

costs.

In rebuttal Mr. Rweyemamu for the respondent argued that exhibit D.1 was a letter of

F intent and not a contract. He argued that 5900 metric tons of gas oil was bought in

eight separate contracts. To fortify his argument the evidence of DW.1 at page 37 of

the proceedings was referred to us. Mr. Rweyemamu submitted that the letter of

intent exhibit D.2 and the invoices in respect of the gas oil supplied showed that the

fuel was G all the time supplied in metric tons.

It was the learned Counsel's argument that B.P. African was not called to testify that

some of the fuel was supplied in cubic metres nor, it was argued, one, Muro. Mr. H

Rweyemamu submitted that the appellant had problems in safe-keeping their

documents and that this occasioned the confusion in their evidence regarding the

manner the fuel was supplied. Mr. Rweyemamu further argued that had the

appellant, communicated with his principal in London the confusion as to whether or

not some of the fuel was I delivered in cubic metres would have been resolved. In

support of his argument

1992 TLR p326

OMAR JJA, RAMADHANI JJA, MNZAVAS JJA

the provisions of section 166 of the Law of Contract Act were quotted: A

Section 166 of the Law of Contract says:

It is the duty of an agent, in cases of difficulty, to use all reasonable diligence

in B communicating with his principal, and in seeking to obtain his instructions.

The Court was also told that the respondent always purchased fuel from the appellant

whenever their stock was exhausted. To fortify his argument the Court was referred

to C the evidence of Mamforo Lema, (PW.3) on page 34.

It was the defence case that the appellant refused to produce bills of lading because if

they did it would have prejudiced their case.

In this case the claim by the plaintiff/appellant stood or fell on the evidence of PW.1,

D PW.2, PW.3 and PW.4.

From the testimony of DW.1 the respondent used to get his supply of fuel from the

appellant as supplied to them by Tecofi Limited through B.P. Africa Limited. The

Letter of Intent v exhibit D.2 between the defendant/respondent and Tecofi Limited

clearly E stipulated that fuel would be supplied to the defendant/respondent in

metric tons.

From the evidence the appellant claimed that between the month of June 1986 and

October 1988 the respondent had drawn 6321417 litres of gas oil and that from July F

1988 to July 1989 had drawn 205,589 litres of petrol. This, according to the appellant

company amounted to an overdraw of 5,509 litres worth a total sum of Shs.

3,758,952.15 the subject matter of the suit filed in the High Court.

The respondent company did not dispute receipt of 6321417 litre of gas oil from the

G appellant company but countered that it was supposed to receive 5,900 metric tons

of gas oil and 200 metric tons of petrol from Tecofi Limited through the appellant

company. Each metric ton was, according to the respondent, equal to 1159 litres. This

H formula was the one agreed between the appellant and Tecofi Limited and,

according to the respondent, it is an international formula. According to DW.1's

evidence the fuel was supplied to the respondent through the appellant in eight

separate contracts as shown in the invoices - exhibit D.1. Apparently even PW.1

conceded in his evidence I that the invoices showed that the fuel was supplied in

metric tons.

1992 TLR p327

OMAR JJA, RAMADHANI JJA, MNZAVAS JJA

It was argued by the respondent that using the agreed conversion formula the 5900 A

metric tons of gas oil came to 6,839,704 litres of gas oil and the 200 metric tons of

petrol came to 231,800 litres. These were the litres of fuel the respondent was to

receive from the appellant company. The defendant/respondent argued that having

received 6,321,417 litres of gas oil from the plaintiff/appellant as per exhibit P.1 there

B remained 518,287 litres of gas oil the respondent had to collect from the appellant.

It was argued that using the same conversion formula the respondent had under

collected 26,944 litres of petrol. This gave rise to the counter-claim by the respondent

in his amended W.S.D. The respondent denied having taken fuel on loan from the

appellant. C According to his defence he used to buy fuel by cash whenever his

supply from Tecofi Limited had exhausted. In support of his argument that he used to

pay cash for fuel the respondent produced cash payment receipt - exhibit D.3. D

Mr. Rugarabamu learned Counsel for the plaintiff/appellant on the other hand argued

that the purchase and consignment of the fuel was supplied in both metric tons and

cubic meters.

Our observation in this case and especially taking into account the Letter of Intent

between Tecofi Limited and the defendant/respondent - exhibit D.2, it is clear that

the E purchase and consignment of fuel to the respondent by Tecofi Limited was to

be in metric tons. That was the agreement. With respect to Mr. Rugarabamu learned

Counsel for the appellant, there was no cogent primary evidence to counter the

argument by Mr. Rweyemamu, learned Counsel for respondent, that the fuel was

supplied in metric F tons as stipulated in the Letter of Intent.

It is also evident from the invoices from Tecofi Limited - Exhibit D.1 that all the

consignments were in metric tons.

Bearing in mind that there was no dispute that the respondent received from the G

appellant 6,321,417 litres of gas oil and 205,589 litres of petrol this amount is to be

deducted from 5900 metric tons of gas oil and 200 metric tons of petrol the appellant

received from Tecofi Limited for the respondent.

Using the conversation formula supplied by Tecofi Limited 5900 metric tons of gas oil

H comes to 6,839,704 litres of gas oil (One metric ton being 1159.27 litres)and the

200 metric tons come to 231800 (approximately) litres of petrol.

If the amount of 6,321,417 litres of gas oil and 205,589 litres of petrol already received

by the respondent is deducted from the amount held by the appellant as shown

above, I it follows, as night

1992 TLR p328

OMAR JJA, RAMADHANI JJA, MNZAVAS JJA

follows day, that the appellant still has 518,287 litres of gas oil and 54,411 litres of A

petrol belonging to the respondent.

As for the argument that the respondent used to take fuel on credit when his stock

had exhausted this is countered by no lesser a person than the appellant company's

own stocks and sales accountant - PW.3. B

He said on page 34 of the proceedings inter alia:

The defendant bought on cash basis and cash sale was raised. They had paid

cheque No. F. 113115 ... they requested us to deduct the 8,000 litres earlier purchased

from us. C We issued them B.P. cheque No. 39317 of 22.2.89 - amount Shs.

420,876.80.

On page 35 on cross-examination by Mr. Rweyemamu he said inter alia: D

As on 10/5/89 there were 76,507 litres of motor gasoline and 813051 litres of

gas oil due to the defendant company. We concede we had defendant's stock of motor

gasoline during the same period when the defendant company was supposed to have

withdrawn E the same ... When the defendant company did not have stock with us

they used to buy products from us by cash.

That being the evidence from plaintiff's accountant and taking into account that we F

have, we hope amply demonstrated above, we are fully satisfied that the

preponderance of probabilities weighed heavily against the plaintiff/appellant.

We see no good reason to differ with the learned judge's finding that the applellant G

still owes the respondent a total of 518,287 litres of gas oil and 54,411 litres of petrol

or their money value.

As for the award of damages for the attachment of respondent's truck we, with

respect to the learned trial judge, do not agree with his reasoning that the appellant

had no reasonable cause to apply for attachment of respondent's property pending H

determination of the suit. If Mr. Rugarabamu's submission before Munyera, J. (as he

then was), is anything to go by the respondent was in the process of disposing his

property. A trailer TZ 1274 with a cement mixer on it and one caterpillar earth mover

had already crossed the border to Kenya. There were in our view good reasons calling

I for the appellant to apply for attachment of respondent's

1992 TLR p329

OMAR JJA, RAMADHANI JJA, MNZAVAS JJA

property pending judgment. May be it is also not irrelevant to mention that later the

A parties recorded a consent agreement that only two of respondent's trucks should

be attached.

Finally the respondent applied for variation of order of attachment and the Court

ordered that only one vehicle should be attached. The second truck was released to

him. B

As for the argument that the truck earned Shs. 100,000/= per day there was only the

bare word of the respondent that this was in accordance with the Ministry of Works

scale. It would have shed more light if an officer from the Ministry of Works was

called as a witness in connection with the claim of Shs. 100,000/= per day which was

not a C small amount.

However we agree that had the plaintiff/appellant properly and carefully weighed his

case before filing the suit against the respondent the chances are that he would not

have gone to Court and the respondent would have been saved from all the bother of

D having his truck attached and having to defend the case.

We have no doubt in our minds that the award of Shs.35,866,666/= for non-user of

the truck was not only far too exorbitant but also unsupported by evidence. The

award of Shs.35,866,666/= is accordingly hereby set aside. E

After a lot of deliberation and reflection we are of the opinion that if the respondent

had decided to pay cash as security, instead of his truck being attached, he would

have been required to pay not less than Shs.3,758,952/15 the amount the appellant

was claiming. The amount of 3,758,952/15 paid as security would fetch an interest of

30% per year F in a fixed deposit. This will mean that the respondent would be

entitled to about Shs. 1,691,527/= interest for the 538 days his money remained in

Court.

We are of the considered opinion that justice will be served if the respondent is paid

Shs.1,691,527/= for non-user of his truck. It is so ordered. G

Order accordingly.

1992 TLR p330

A