Asha Soud Salim v Tanzania Housing Bank 1983 TLR 270 (HC)

ASHA SOUD SALIM v TANZANIA HOUSING BANK 1983 TLR 270 (HC)

Court High Court of Tanzania - Zanzibar

Judge Augustino Ramadhani CJ

April 9, 1984

MISC. CIVIL APPLICATION 7 OF 1978 B

Flynote

Civil Practice and Procedure - Jurisdiction - Declaratory order - Whether the High Court of Zanzibar has power to grant declaratory decrees.

Constitutional Law - Validity of a proclamation of the Zanzibar Revolutionary Council - Whether a Revolutionary Council proclamation has a force of law.

Contract - Void contract - Payment of interest a term of the contract, rendered unlawful being contrary to law - Whether contract enforceable.

Contract - Public policy - Charging of interest prohibited by the government - Whether charging of interest in such circumstances is against public policy.

Contract - Frustration - Failure of a party to perform a contract because of government action.

Statutory Interpretation - Mischief rule.

-Headnote

In 1959 the mother of the applicant borrowed Shs. 45,000/= from the First Permanent Building Society, a predecessor of the respondent (Tanzania Housing Bank), for building a house which she then mortgaged. The loan was repayable in twenty years, and the interest chargeable was 81/2% per annum. The borrower made regular payments of Shs 398/= a month to the lender until and including December, 1963, when she stopped. In January, 1964 the Zanzibar Revolutionary Council issued a proclamation prohibiting charging of interest on moneys borrowed.

In January 1967 the borrower died and the applicant was appointed an administratrix of the estates of her deceased mother. The applicant filed an application in the High Court praying for a declaratory order that she be allowed to redeem the mortgage house after paying the respondent the outstanding amount, i.e. principal sum plus interest thereon (the latter up to 1964 only) summing up to Shs. 41,356/46.

Since 1964 the respondent had been insisting by correspondence that the borrower had to continue paying the monthly instalments which included interest. And, since 1964 the government had put the borrower in such a situation that she could not continue paying the instalments.

The learned High Court judge considered various issues including whether the High Court of Zanzibar has power to give declaratory orders and whether the contract was void being contrary to law or against public policy. He also considered interpretation of the proclamation of the Zanzibar Revolutionary Council with regard to payment of interest.

Held: 

(i) On the basis of ss, 4 and 129 of the Civil Procedure decree and in the absence of express or implied bar the High Court has jurisdiction to grant declaratory orders, it being within the inherent power of the court;

(ii) by virtue of the revolution the Revolutionary Council had acquired inherent power to promulgate law; proclamations by the Council had, therefore, a force of law;

(iii) the proclamation prohibiting payment of interest made payment of interest unlawful and the contract between the parties became void under s. 56 (2) of the Contract Decree (Cap. 149);

(iv) at the time of the revolution it was in the good and in the interest of the Zanzibari society that interest charged on loans should be abolished;

(v) as a matter of public policy the applicant should not be found at fault for not paying interest after the same was prohibited by the government;

(vi) by virtue of Decree No. 5 of 1978, which provided for payment of interest, payment of interest in Zanzibar is no longer unlawful or contrary to public policy; 

(vii) the acquisition of the house by the government operated as a frustration of the contract;

(viii) the proclamation prohibiting lending of money with interest was not intended to prohibit lending of money; it merely prohibited charging of interest on money borrowed.

Case Information

Application granted.

Cases referred to.

1. Ramji Dewji v Ali bin Hassan [1958] E.A. 297 G

2. Egerton v Brownlow [1853] 4 HL Cas 196

3. Re Beard [1908] 1 Ch. 383

4. Re Jacob Morris (deceased) [1943] N.S.W.S.R. 352

5. Metropolitan Water Board v Dick, Kerr & Co. [1918] A.C. 119

S. El Maamry for the applicant.

S. Msuya for the respondent.

[zJDz]Judgment

Ramadhani, C.J.: Though I have heard this application in Kiswahili I have decided to write my judgment in English because I feel there are quite a few quotations in English which I would rather leave in that language. Moreover the application itself was in English. 

The Applicant, Asha, is a daughter of one Zuwena Hemed (deceased) who in this judgment I would refer to as the Borrower. The respondent is the Tanzania Housing Bank (THB) which has taken over the activities, assets and liabilities of the First Permanent Building Society. In this judgment I will refer to the latter as the Society.

Thus I will use the Respondent for THB and the Society for the other, for purposes of clarity in the judgment. In 1959 the Borrower was given by the Society a loan of Shs. 45,000/= for constructing a house. The loan was repayable in twenty years at an interest rate of 81/2 per cent per annum. The Borrower was paying Shs. 398/= per month. She built a house on Plot No. 11 at Migombani, Zanzibar. The loan was secured by mortgaging the house.

The Borrower paid as agreed up to and including the month of December, 1963. She never paid a single cent thereafter. Correspondence ensued between the Society and the Borrower regarding payment. Eventually the Borrower passed away on 18th January, 1967. The applicant was granted by this very court letters of administration in the Probate Cause No. 8 of 1968. The Applicant also exchanged a couple of letters with the Society on the issue of the loan and repayment.

The Applicant prays for a declaratory order that she be allowed to pay the Respondent the outstanding amount i.e. the principal borrowed and interest thereon as up to 1964. This amount has been given as Shs. 41,356/46. The Applicant contends that by the proclamation issued by the Revolutionary Council in January, 1964 charging of interest on moneys borrowed was prohibited. It was ordered for all loans that only the principal amounts be repaid without interest. It is further contended that the proclamation applied to this mortgage No. ZM 32.

For the avoidance of doubt let me state that this court has the power to grant declaratory orders prayed for. This was so decided by Law Ag. C.J. in the case of Ramji Dewji v G Ali bin Hassan [1958] E.A. 297. He based his decision on section 4 and 102 of the Civil Procedure Decree Cap. 4. Now these are ss. 4 and 129 of Cap. 8 respectively. Admittedly the Honourable Judge referred to art. 24, of the Zanzibar Order-in-Council, 1924 too. I am also aware that this Order-in-Council, as the others, has been abrogated by the existing Laws Decree, 1964 (Presidential Decree No. 1 of 1964). However, I am of the most considered opinion that Order-in-Council was not the basis of his decision.

Section 4 of the Civil Procedure Decree gives the courts jurisdiction to try all civil cases except those suits in which their cognizance is either expressly or impliedly barred. The I Honourable Judge observed that the Decree is thus not exhaustive as to what suits may be entertained. He then referred to s. 102 (now s. 129) which saves the inherent power of the court "to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court".

As there was no law either expressly or impliedly barring the courts in Zanzibar to make declaratory judgments and in reading the two sections mentioned above, His Lordship felt that the law as obtained in England was relevant. He thus resorted to the reception clause as provided by art. 24 of the Order-in-Council. Whether using the English received law or not, on the basis of the two sections of the Civil Procedure Decree and in the absence of express or implied bar, this court has jurisdiction to deal with such applications as the present one for it is within the inherent power of the High Court.

Coming back to the suit the respondent objects to the applications. He claims to be repaid the principal and interest thereon up to and including 31st December, 1981 which sum comes up to Shs. 186, 834/50. He contends that heretofore the Applicant, as well as the Borrower, had never used the proclamation as the excuse for nonpayment.

Instead both of them had continuously promised to repay the loan with interest and had advanced other excuses for their failure. That part, the Respondent submitted that the proclamation by the Revolutionary Council and relied upon by the Applicant has not the force of law. 

A number of letters have been produced by the Respondent which had been written by the Borrower, the Society, the Applicant and even the Respondent himself. These letters throw light on the issues involved.

The Borrower had complained to the Agenda of the Society in Zanzibar that the house was occupied by the servants of the Revolutionary Government and that no rents were paid. The agent informed the Society of these complaints by the letters dated 20th March, 1964 and 20th November, 1964. The Society conducted its investigation and found out that the house was occupied by servants of the Ministry of Home Affairs and that a rent of Shs. 500/= was paid monthly to the Borrower by the Ministry of Housing (of Mainland). This fact was disclosed by the Society in its letter to the Borrower of 17th October, 1966. The Borrower replied to it on 6th December, 1967 stating "I don't remember saying or informing you that I have not been receiving rent. Your agent Mr. T.E.T. Karimjee ... wanted me to sign a letter authorising you to take the rent from the H Ministry of Housing on my behalf ... I pointed out to Mr. Karimjee that it would cause me great financial strain ...". The Borrower then went ahead to enumerate her commitments: She had to provide for the maintenance of her son in England, the house needed repairs and redecoration, she had to pay 25% of the rent as taxes to the I Municipal Council and that she had lost her son and husband within a space of six months. She asked to allowed to repay by instalment of shs.250/= per month. 

Let me add that in its letter the Society had threatened that "I have now instructed my advocate to take legal action against you for recovery of the full amount of the company's debt". This letter was signed personally by L.B. Van Der Watt, the Manager for Tanzania.

As I have already narrated the Borrower unfortunately died on the 18th January, 1967. It is not known what response there was to her request. The threat, on the other hand, was never executed. However, the Society wrote to the Applicant on 27th April, 1967, although this letter was not produced in Court by the Respondent.

Anyway, the Applicant responded to that letter on 9th May, 1967. She was pleading for extension of time so that she could sort out her mother's affairs. May be I should let her plea for herself: "So please give us some more time, and I agree to pay from January, 1967".

The Society responded to this letter on the 9th June, 1967 but again the letter was not produced. However, the Applicant wrote on 15th June, 1967 reiterating that "I have already promised you to pay all the arrears, and I confirm again that I shall pay the arrears". She pleaded again for time, "It is therefore impossible for me to resume paying within 14 days ...". No other correspondence was produced after these.

It would appear to me from the foregoing that in the two letters of the Respondent which were not produced in court the threat of legal action was repeated and in the second letter a time limit of 14 days was prescribed to augment the threat.

A number of reasons for nonpayment emerge from these letters. First, the Borrower claimed that she was getting no rents from the occupants of the house who happened to be in the service of the Revolutionary government. She later denied this. Secondly the Borrower pleaded financial difficulties as the impediment and sought the permission of the society to pay Shs. 250/= per month instead. After the death of the Borrower, the Applicant too advanced two excuses. First, she was awaiting letters of administration to manage her mother's estate. Then, secondly, she alleged a time factor and begged for some elbow room before she was to pay.

However, in the course of this application a fifth and a new cause has been submitted: the proclamation by the Revolutionary Council. Now which is the actual reason?

It is evident to me that this house was occupied by government servants even before the Revolution. The letter of one Raymond who was a tenant in this house in October, 1967 says:

"This house from the Colonial times, was graded as a `B' grade quarter and it was allotted to me from the Police Housing Pool ....

It was Government rented quarter and I paid as my precessors had done, a fixed monthly rent A of Shs. 108/35". This Mr. Benedict Raymond occupied this house as from the 28th February, 1964. He wrote the above quoted letter to the Society asking for a reduction of rents. Presumably he was seeking a reduction from the rent of Shs. 500/=. That had been paid for by the Mainland Ministry of Housing. For reasons not disclosed in the letter both the said Ministry of Housing and the Ministry of Home Affairs relinquished the responsibility of paying rent for this house. It became the duty of the occupant himself to pay the rents hence Mr. Raymond's plea for the reduction of rents payable.

Anyway, to stop digressing, it is manifestly clear that a rent of Shs. 108/35 that had been payable is extremely meagre in relation to the monthly payment of Shs. 398/= that the Borrower had been paying to the Society. She was not getting as rents even a third of what she was paying to the Society. Yet the Borrower managed to make her monthly payments promptly and without fail up to and including the month of December, 1963! As I have indicated earlier, the Borrower stopped paying after the Revolution.

It would seem to me then, from the above facts and on balance of probabilities, that the Borrower stopped payment not because she was receiving no rents and neither because of financial difficulties. She stopped for another reason altogether. This other reason would seem to me to be the proclamation by the Revolutionary Council.

Unfortunately the Borrower herself is not available to state why she did not gather up courage and categorically mention the proclamation as her reason. On the part of the Applicant, on the other hand, she did not take any steps towards making any payment despite her promises and the fact that letters of administration were granted to her on the 6th February, 1969.

Even on the part of the Respondent he has been hesitant to take any legal action though it would appear he thrice threatened so to do. Under the mortgage agreement the Respondent has the right to foreclosure. However, he has not exercised that right. Even this application has not been done by him. Mr. Msuya, the Corporation Secretary of the Respondent, told the court that eventually they would have come to Court.

I will deal with the mortgage agreements later on but at this juncture it is not out of place, and I do not think that I am wrong, to take into consideration this conduct of the respondent. After all subsequent conduct of a party is relevant under s. 8 of the Evidence Decree, Cap. 5. From this conduct I come to the deduction that the Respondent also acknowledges the proclamation. I will return to this later. But what actually was this proclamation of the Revolutionary Council?

Mr. Ussi Khamis Haji, the then Deputy Attorney General produced Exhibit "A". This is a specially printed piece of paper. At the top and running right across the paper in capitals and heavy print is the following heading: "BARAZA LA MAPINDUZI - ZANZIBAR". Under the heading and to the right has been printed "Nam ...". The blanks have been filled in by figures "31" in type. Then there is the following sentence: "Kipande cha mazungumzo ya mkutano wa tarehe .....19...". In these blanks the date "19 January, 64" has been typed. All the above except those filled in the blanks have been printed. The excerpt of the deliberations has been typed on the piece of paper as follows:

"Kodi ya Viwanja vya Nyumba. Ukopeshaji wa Riba na Vitu vya Rehani. Kodi ya viwanja vya nyumba ikomeshwe. Pia ukopeshaji wa riba na vitu vyote vya rehani virudishiwe wenyewe bila ya malipo au deni lolote lile".

At the bottom and in the right hand corner of the exhibit has been printed "Mwandishi wa KM (BLM)". On top of these words are dots and somebody has signed on these dots.

After that proclamation all pawn shops were closed down. There was no more charging of interest in money lending. It was at this time that payment of such loans as this came to a standstill. The Society had about 29 loans similar to this one and apparently for all of these no repayment was done. I will deal with this at length elsewhere.

It is abundantly clear to me that the Society acknowledged this proclamation. This is so from a memorandum which has been produced in court by the Respondent himself. Mr. L.B. Van der Watt, the Manager of the Society in Tanzania, wrote a memorandum which I feel I can only do it justice by quoting it fully: "Note for Mortgage File No. G ZM.32 4th November, 1964 "Saw Mr. Maggidi, Principal Secretary, Ministry of Housing and informed him of the agreement with the Government whereby the Government preference shareholding in First Permanent (E.A.) Ltd. would be converted to a deferred loan to be identified with the Zanzibar mortgage asset. He was asked whether he could in these new circumstances arrange for the rent for Mrs. El-Harthia's H house to be paid to us for credit of our mortgage account, as any such payment would reduce the Government loss:

"He said that until the formal agreement between the Government and C.D.C. is signed it would be very difficult for him to arrange this because he would have to inform the Minister of I State for Union Affairs, who in turn would refer to the Zanzibar Government.

I therefore agreed to leave the matter in abeyance until the agreements are signed when a A formal approach will be made to the Ministry of Housing". Apart from the above quoted memo in the course of entertaining this application Mr. Msuya sent a letter to this court reference SAM/mm of 27th October, 1980. The letter was in Kiswahili. However, the relevant part of it and translated into English is as follows:

".. there are 29 mortgages (rehani) whose payment ceased since 1964. Talks have often times been held between the Ministers of Finance for the Mainland and the Islands as well as C bank officials with the view of finding a solution for these loans especially on their repayment with interest and the restarting of issuing loans to the people of Tanzania Islands.

I beg to inform the court that the talks among the above mentioned offices are continuing and a solution will be arrived at. Hence we beseech your court to adjourn the case until a solution is obtained for all the 29 loans".

It is manifestly clear to me that the Respondent not only knew of the proclamation but treated it as legally enforceable hence his determination to seek a political solution rather than judicial despite his threats of going to court. Even when the Respondent was finally dragged into litigation by the Applicant he resisted by way of seeking adjournments in anticipation of a political solution.

Paradoxically the Zanzibar Attorney-General Chambers was well aware that that proclamation has been held to be law. This is evidenced by the letter the A-G wrote to the Principal Secretary of the Revolutionary Council Ref. L.D. 613 of 27th June, 1979. This letter was produced and received as Exhibit "C". It was written in Kiswahili so I G better quote it as such lest I distort it:

"... ingawa iliamuliwa na Baraza la Mapinduzi tarehe 3-2-1964 kukataza riba na uwekaji wa rehani, hakuna sheria iliyotungwa maalum kukataza mambo hayo. Yalibakia ni maamuzi ya H Kiserikali (policy decision) ambayo yamekuwa yakifuatwa kiutekelezaji hadi havi sasa. Matokeo yake ni kuwa kiutekelezaji na kihali halisi imechukulika na kueleweka kuwa Tanzania Visiwani hapana mikopo ya riba na pia kuweka rehani (mortgage) kwa mujibu wa Sheria. Hivyo ndivyo benki ikiwemo na Benki ya Nyumba (THB) wanavyoelewa kama ilivyokwisha elezwa" (emphasis A provided).

The learned A-G went on that as the Government has now decided that loans be administered under the usual conditions, which include charging of interest, the policy stand has been altered and:

"Ilivyokuwa hapakuwa na sheria iliyokataza riba basi ni suala la uamuzi kiserikali ambao umetolewa. Hapana sheria ya kurekebisha au kubadili. Labda tu kwa vile ilieleweka hivyo nje, ili kuwapa taarifa na kuondoa mashaka tunaweza kutoa tangazo katika gazeti la Serikali C Benki ya Nyumba na benki zinginezo zinaruhusiwa kufanya shughuli zao Tanzania Visiwani kwa masharti ya kawaida".

This is how the proclamation by the R.C. was understood and taken to be both within the Isle and without (the Mainland). Thus how it was understood by the Society, the Borrower, the Applicant, the Respondent and the Hon. A-G of Zanzibar. But What actually is the legal status of the proclamation? How does this court view it? 

In this application the Respondent, as represented by Mr. Msuya, contends that the proclamation has no legal effect whatsoever. The court sought the assistance of the A-G on this matter. As already said he was represented by Mr. Ussi Khamisi Haji. With all due respect to him, I hesitate to say that he had assisted the court in clarifying the stand of the A-G Chambers on the issue. He merely quoted Decree No. 5 of 1978 that the Revolutionary Government has allowed loans payable with interest and that the Respondent has been allowed to operate such loans. His biggest contribution has been the production of copies of the letters which I have already referred to above and the excerpt already quoted (Exhibit "A").

This court takes judicial notice of the fact that Zanzibar became independent of the British on 10th December, 1963. On the 12th January, 1964 the peoples of Zanzibar overthrew the yoke of the Sultan. The whole system of law making and the publication of government notices was thrown overboard. So what was the new system?

On 30th January, 1964 "The Legislative Powers Law, 1964" was promulgated. This provided, inter alia, "2. The power to make law for the government of the People's Republic Zanzibar is hereby I vested in the President of the Republic acting by and with the advice and consent of the Revolutionary Council". 

That piece of legislation was then signed by all the thirty members of the Revolutionary Council led by the Late Mzee Karume. Two things stand out clearly from this law. First, the law was promulgated on the 30th January while the revolution was on the 12th January. The question then is where were the legislative powers vested during the nineteen or so days? Second, this law did not constitute the Revolutionary Council. The Council had been there. The law was promulgated by the Council. The preamble of the legislation makes this fact glaringly C obvious:

"IN EXERCISE of its Supreme Authority in the People's Republic of Zanzibar, the Revolutionary Council in conjunction with the Cabinet of Ministers hereby makes the following laws."

It is abundantly clear to me that the Revolutionary Council and the Cabinet begot this law.

Hence the question I had posed earlier, where were the legislative powers vested precedent to this law, I feel it is answered. The legislative powers were vested in the Revolutionary Council. It was because of that that "the Legislative Power Law"

was promulgated. In fact by promulgating this law, the Council formally declared the powers they inherently had by virtue of the revolution. The success of the revolution vested these powers in the Council. A revolution owes its legitimacy to its success.

For the sake of formalizing and casting it in the legal form that law was promulgated and henceforth all were promulgated as decrees and assented to by the President.

As already mentioned this particular proclamation in issue was given on the 19th January that is before the Legislative Powers Law. The question then is what status does it have?

As I have already demonstrated that the Council inherently had legislative powers even before the Legislative Powers Law then I have no doubts at all in my mind that this particular proclamation has the force of law. It is legally not wanting solely because it has not been articulated in the language of a draftsman or that it has not been christened a decree or law. Hence I find that the proclamation of the 19th January, 1964, the excerpt of which has been produced in court as Exhibit A, is law.

Section 56 of the Contract Decree (Cap 149) provides: 

"(1) An agreement to do an act impossible in itself is void. (2) A contract to do an act which, A after the contract is made becomes impossible or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible orunlawful".

In case of the very remote possibility that I might have erred, though I am convinced that I have not, in holding as I do that the proclamation is law, then let me approach the issue from another angle. Decree No. 5 of 1964. 'The Constitutional Government and the Rule of Law Decree' provides that "... the principal judicial power is exercised on behalf of the Revolutionary Council by the Courts, which shall be free to decide issues before them solely in accordance with law and public policy". If I am wrong in finding that the proclamation is law then what is 'public policy'?

I have failed within the scanty collection I have to obtain any authority on the issue of public policy in Zanzibar or elsewhere in East Africa. I have then to resort to assistance from English and Commonwealth cases.

In the case of Egerton v Brownlow (1853) 4 H.L. Cas. at p. 196 public policy has been defined as: 

"that principle of the law which holds that no subject can lawfully do that which has a tendency to be injurious to the public, or against the public good, which may be termed, as it sometimes has been, the policy of the law, or public policy in relation to the administration of the law".

In the other case of Re Beard [1908] 1 Ch. 383 at p. 342 it has been said that:

"The truth of the matter seems to be that public policy is a variable thing. It must fluctuate with the circumstances of the time".

This pronouncement was followed in the Australian case of Re Jacob Morris (deceased) [1943] N.S.W.S.R. 352. It was propounded that:

"The phrase `public policy' appears to mean the ideas which for the time being prevail in a community as to the conditions necessary to ensure its welfare; so that anything is treated as I against public policy if it is generally regarded as injurious to the public interest ...".

Thus I can safely come to the conclusion that 'public policy' is determined by the circumstances of a given society at a particular historic juncture of the development of that society. Thus at the time of the revolution it was in the good and in the interest of the Zanzibari society that interest charged on loans should be abolished.

But there is a second facet to public policy in this case. At the present moment, no body should be found at fault for not doing that which was prohibited, by the powers that were. Therefore, the contention by the Respondent that the Applicant is to pay not only the principal amount and the interest there-on as stipulated in the contract but also for all the period up to the time of this application is contrary to public policy.

The only problem in holding that payment of interest was against public policy is when it ceased being so. When was the payment of interest not against public policy? Or is it still contrary to public policy to this day? I would certainly not answer the second question in the affirmative. It is definitely not contrary to public policy now.

But when D did it stop being so?

Upon a careful inspection of all the decrees passed since the proclamation there is none talking about charging or payment of interest on loan except Decree No. 5 of 1978 which was referred to this Court by Mr. Ussi. This is 'The Government Loans, Stocks, E Grants and Guarantees, Decree, 1978: The decree specifically provides for the payment of interest half-yearly in paragraph (f) of section 5. It is also mentioned in divers other sections. I could safely deduce that on the day this decree came into force payment of interest ceased to be contrary to public policy. No date has been provided F for the coming into force of this decree. However, under section 6 of the Interpretation Decree, Cap. 1 this date is deemed to be the date the decree was promulgated in the 'gazette'. This was 19th August, 1978 as Notice No. 146 of 1978 in the 'Gazette' No. 5151 of 1978.

There is yet a third aspect to this issue. I asked Mr. Msuya about frustration and he said that since the house which is the subject matter of the contract exists, there cannot be frustration of the contract. However, there are two points which bring up the issue of frustration. It would seem to me in the first place that there was a period when this house was occupied by government servants without any payment of rent to anybody. Mr. Raymond in his letter, which I have already referred to, wrote that he had been in the house from 28th February, 1964. The Society in their letter of 17th October, 1966 said that from the information they had received the Borrower had been receiving rents to the tune of Shs. 500/= per month from July, 1965. No evidence was given to the I court as regards rent for the period between the date Mr. Raymond occupied the house and July, 1965, approximately sixteen months. For this period it does not seem to me that the Borrower had any control over this house. I have this feeling from the fact that on 22nd June, 1966 the Commissioner of Police (Zanzibar) wrote to the Borrower demanding that the house be renovated. This was virtually a whole year since rents started being paid by the Ministry of Housing (July 1965). Yet B the Society's Agent wrote to the Society on 14th July 1966 giving information of the demand and adding that:

"Neither the Borrower nor we are in a position to go and inspect the house to see the state of C repairs ...".

Now if during this period when rents were being paid, both the Borrower and the Society's Agent had no access to the house, then one can safely conclude that inaccessibility was even more thorough at the time when no rents were paid. Hence the Borrower did not have any control over the house and she was infact a stranger to it.

My mind is pretty much cognisant of the fact that, and I am in complete agreement with Mr. Msuya that, payment of rents was not a condition precedent to the repayment of the loan. However, I have mentioned the payment of rents to show that for almost sixteen E months the Borrower had absolutely nothing to do with the house. The Society was aware of this. Thus though physically the house was present and existing I would hesitate to say that it was so constructively. The house was taken away from the Borrower without his consent.

But was the continual existence of the house (physical, constructive or otherwise) the basis of the contract? I would answer that question in the affirmative. In the first place by its very essence this mortgage was the transfer of the legal estate in the house to the Society for purpose of securing the repayment of the loan and interest thereon.

Hence I am of the well considered opinion that the 'existence' of the house was the basis of the agreement. In the second place the mortgage agreement provided in clause (2) of article 3:

"That the Borrower will during the continuance of this security keep all buildings or other improvements now or for the time being comprised in the Mortgage Property or Subject to this security in good and substantial repair and "for

the purpose of ascertaining whether the said building or other improvements are for the time being in good and substantial repair the I Society may from time to time survey the same or cause the same to be surveyed ...".

This testifies to the need of maintaining the existence of the house. However, a mortgage A consists of two things: a personal contract for payment of a debt and a disposition or charge of an estate. Now the continuation of the property refers to the latter. Hence the frustration described above will thus not refer to the personal contract for the payment of the debt.

But what is the debt to be paid? Is it the principal amount alone or the principal amount plus interest? I do not have any authority but it is my most considered opinion that the debt surviving the frustration is the principal sum only. The effect of frustration is to discharge the parties from further performance of the contract. The principal amount is the sum that the Borrower has actually received from the Society. The payment of interest is to the Society as the continuance of the house is to the Borrower.

However, this simple state of affairs is complicated by the fact that as from July 1965 the Borrower started receiving rents for the house. Instead of dealing with this aspect let me first return to the second ground of frustration.

This house is very close to the official residence of the Honourable Mzee Aboud Jumbe. It was thus taken over by the Revolutionary Government in 1972 when Mzee Jumbe became the Chairman of the Revolutionary Council and the President of Zanzibar. The Ministry of Lands, Construction and Houses valued the house at Shs.72,850/50. This was the amount of compensation that was awarded to the Applicant. The maximum amount that the Respondent could claim, I feel is this amount of compensation awarded. The acquisition of this house by the government operated as a frustration of the contract. F (Metropolitan Water Board v Dick, Kerr & Co. [1918] A.C. 119).

"I have been informed that the owner of the above plot Mrs Zuwena Hemed died on 18th January, 1967. In view of this all cheques issued by the defunct Ministry of Housing in her favour since January, 1967 are all stale. I shall be grateful,

therefore, if you will let me know the present arrangements for the payment of the house rent". It does not seem that there was any response to that letter and the matter was left in abeyance.

There is a final aspect to the whole of this issue of this house. As I have already commented this issue has been brought to court by the Applicant who already has the money in her possession. The reason advanced by the Applicant is that she wants this matter to be settled once and for all so that her mother's soul would rest in peace wherever it might be. One would have expected, that the Respondent would have taken the initiative. The answer of Mr. Msuya, as I have already said, was that the Respondent would have come to court eventually. Admittedly the period of limitation of a suit by a mortgage for foreclosure has not run out. Under Item 136 of the Schedule to the Limitation Decree Cap. 12 this period is sixty years from the time when the money secured by the mortgage becomes due. Nevertheless the Respondent and the Society before him could have invoked the provisions of the mortgage agreement:

Clause (6) of article 4 of the agreement provides as a follows: "No power (whether statutory or otherwise) of leasing or agreeing to lease or accepting surrenders of leases shall be exercisable by the Borrower without the consent in writing or the Society".

This house, as evidenced by what has already been said in this judgment, has been leased even before the Revolution of 1964. No evidence has been adduced showing that there was any written consent of the Society. In fact no such consent was ever given. The Society and the Respondent after him condoned this breach. Clause (7) of the same article 4 gave the Society power of sale and power of appointing a receiver. Then clause (8)(a) goes on to provide thus: "During the continuance of this security the Society may without any further consent from or notice to the Borrower do all or any of the following acts or things:

(i) Enter into possession of the Mortgaged Property or any part or parts thereof;

(ii) Exercise the said power of appointing a receiver;

(iii) Exercise the said power of sale;

(iv) Let or demise the Mortgaged Property or any part or parts thereof for such tenancy or term of years at such rent and generally upon such terms as the Society in its absolute discretion shall think fit and any tenancy or lease created in exercise of this power may be made in the name of the Borrower and the Borrower hereby appoints the Society or its nominee to be the attorney of the Borrower to sign or otherwise execute any document for the purpose of creating any such tenancy or demise". 

However, there is a proviso that these powers could only be exercised if one of three situations existed. Two of those situations are relevant here and I quote them in full:

"(i) Default shall have been made by the Borrower for one calendar month in the payment of some instalment fine of other money payable here, under or of the moneys owing hereunder in accordance with a notice given to him as aforesaid or under the rules of the Society, or

(ii) There shall have been a breach by the Borrower of some covenant contained in this mortgage ... on the part of the Borrower to be performed and observed other than and besides the covenants for the repayment of the said principal sum and interest hereinbefore contained".

It is evident to me that the Society could have chosen to invoke the provisions of the agreement and particularly exercise the powers under clause 8 after such breaches as renting the house without the written permission of the Society. Anyway may be it is beyond my province to probe into this failure. But this failure is significant and has to be taken note of.

I have dwelt at some length on the other aspects of this issue as an alternative, should I have erred in holding that the proclamation of 19th January, 1964 has the force of law. Now I have to come back to it again. What is the amount of money owing under that proclamation?

The Applicant has said that she is liable to pay Shs. 41,356/46. It has never been explained to me how that figure has been arrived at. The Applicant could not do that. The prayer for the declaratory order is contained in an affidavit drawn and sworn before Mr. Said H. El Maamry, Advocate, Notary Public and Commissioner for Oaths.

As advocates are not allowed to appear before this court, he did not. All that has been said is that "the balance of the principle amount together with interest as in 1964 amounting to Shs. 41,356/46". The Respondent on the other hand did not put up any figure to that effect

But what does the proclamation actually provide? It says:"... Pia ukopeshwaji wa riba na vitu vyote vya rehani virudishiwe wenyewe bila ya malipo au deni lolote lile".

By construing the proclamation literally it would mean that all who borrowed by pledging property were to be given back their properties and they were freed from the obligation to repay what they had borrowed. In this case the Borrower was to retain the house and was not to repay the Society even the principal amount.

After very full deliberation, and under a very heavy and solemn sense of responsibility of justice I cannot accept that that interpretation is what the Revolutionary Council had in mind. Then what did they I intend? The intention was to prohibit the lending of money with interest. The intention was not to prohibit completely the lending of money. Nor was the intention to ban pledging of property to secure loans. So in construing this proclamation I have to use the mischief rule.

The payment of interest was the evil that was combatted. So the Respondent be paid the balance of the unpaid principal amount as it was on the date of this proclamation.

Costs to be born by the Respondent.

Application granted.

1983 TLR p286

C