TANZANIA BUILDING CONSTRUCTION CO. v TANZANIA RAILWAYS CORPORATION 1983 TLR 70 (HC)

TANZANIA BUILDING CONSTRUCTION CO. v TANZANIA RAILWAYS CORPORATION 1983 TLR 70 (HC)

Court High Court of Tanzania - Mwanza

Judge Munyera, J

November 2, 1983 B

CIVIL CASE 11 OF 1983

Flynote

Contract - Fundamental breach - Effect of fundamental breach on exemption clauses.

-Headnote

In a contract of carriage of goods between the plaintiffs and the defendants, the latter

C were to carry the former's 400 corrugated iron sheets and 2 bags of roofing nails

from Dar es Salaam to Mwanza. The goods were loaded into a railway wagon, fixed

with heavy wires and sealed by the employees of the defendants in the presence of an

employee of the plaintiffs. The contract was contained in a consignment note and

carried D the term "loaded and counted by the sender and not checked by Railways".

Only 40 corrugated iron sheets reached the plaintiffs at Mwanza, 360 corrugated iron

sheets and the two bags of roofing nails having got lost. The plaintiffs sought

compensation to cover the value of the lost goods and incidental expenses. The

defendants relied on the E exemption clause to disclaim any liability at all.

Held: (i) It is a settled rule of law that an exclusionary clause aimed at absolving

a party from obligations to a fundamental term of the contract would normally not be

F enforced;

(ii) that the defendants would carry the goods from Dar es Salaam and deliver

them to the plaintiffs in Mwanza was a fundamental term of the contract which they

breached and as such they cannot invoke the exemption clause in their favour.

Case Information

Judgment for the plaintiffs. G

No case referred to.

Butambala, for the plaintiff H

Makunja, for the defendant

Editorial Note:

This case seems to have been decided on the doctrine of fundamental breach. See R.F.

Mboya v Mewa Singh Mangat [1969] H.C.D. No. I

1983 TLR p71

MUNYERA J

1 citing Karsales (Harrow) Ltd. v Wallis [1956]2 All E.R. 866 at p. 868. A

In England the doctrine of fundamental breach is no longer in application. See Suisse

Atlantique Societe D'Armement Maritime S.A. v N.V. Rotterdamsche Kolen Centrale

[1967] I.AC. 362 and especially Photo Productions Ltd. v Securicor B Transport Ltd.

[1980] 1 All E.R. 556 (H.L).

[zJDz]Judgment

Munyera, J. This suit arose out of a contract of carriage of goods. The plaintiff is a

building firm known as Tanzania Building Construction Company based at Mwanza

and C PW1 Sylvester Lubala and PW2 Ezekiel Mabula are the sole partners. The

defendant is a well known common carrier in the country. The facts of the case are

straight-forward. It is the plaintiff's case that last year they secured a contract to build

army quarters near Mwanza airport for 602 battalion. In April same year 1982, when

D construction reached wall plate stage, Lubala (PW1) was sent to Dar es Salaam to

buy corrugated iron sheets for roofing purposes. He went and bought 400 sheets,

gauge 28, from GALCO for shs 37365/40 and 2 bags of roofing nails from BHESCO for

shs. 2240/30. He took the goods to the defendant yard where they entered into this

contract. E The defendant agreed to transport the goods to Mwanza for a

consideration of shs. 4650/= which PW1 paid in cash. The agreement was contained

in the way bill otherwise known as Consignment Note. Pursuant to the agreement

the defendant provided a wagon, CL 62722. According to the plaintiff, all 400 sheets

and the 2 bags of nails were F loaded in the wagon which was closed, fixed with

heavy wires and sealed by the defendant's employees and in the presence of PW1.

Seeing that everything was in order PW1 departed for Mwanza to wait for the wagon.

On 17/5/1982 the other partner, Mabula (PW2) was alerted of the wagon's arrival at

the defendant's terminal, Mwanza G South Port. He hired a lorry and went to the

port. The wagon was opened by the defendant's employee Timothy Mbalilaki (DW1).

Only 40 sheets were found in the wagon. The rest (400-40) (360) sheets and the 2

bags of nails were missing. The loss was reported to Police Mwanza but they advised

the plaintiff to go to Dar es Salaam. H There the police investigations achieved

nothing. The plaintiff demanded compensation for their lost goods. The defendant

declined. The plaintiffs sued. They were represented by Mr. Butambala, an Advocate

based in Mwanza and the defendants were defended by their lawyer, Mr. Makunja.

He argued that the defendants were not liable for the loss I if there was any at all.

That it

1983 TLR p72

MUNYERA J

was a term of the contract that they should not check the goods Lubala (PW1) had

put A in the wagon. Indirectly this means the defendants did not know whether the

goods were loaded and as such they cannot be held liable for the loss of something

they did not know of. By agreement four issues were framed.

I am now tackling the issues. I start with No. 1: whether the plaintiff had purchased

the B goods said to have been lost.

Sylvester Lubala (PW1) narrated how he went to Dar es Salaam and how he bought

the goods. He produced invoice No. 7739 dated 24/3/82 (Ex. PIA) stating that the

plaintiff firm bought from GALCO, gauge 28 C.I. sheets of various sizes total 400. The

price C was paid on receipt No. 5636 dated 30/4/82 (Ex. P1). He also produced a cash

sale receipt No. 19633 (Ex.P2) showing he bought 2 bags of roofing nails from

BHESCO. The defence did not dispute these documents. I am satisfied that they

represent the transactions as recorded thereof and under s. 34C of the Evidence Act I

accept them as D evidence of truth without requiring the authors to come to court. I

find that the plaintiff had bought the goods. The issue is decided in the affirmative.

Now issue No. 2: Whether the goods were lost in the hands of the defendant. To

resolve this issue I must decide whether the goods were in fact loaded in the

defendant's E wagon. As I stated earlier the defendant's counsel argued that it was a

term of the contract that they should not check the goods the plaintiff had loaded. As

such they did not know whether the goods were loaded. He drew the attention of this

court to a F rubber stamp endorsement on the top right hand corner of the

consignment note which reads (block capitals).

"Loaded and counted by the sender and not checked by Railways".

Lubala (PW1) said he was not aware of the endorsement till it was brought to his G

attention at the onset of this suit. He asserted the goods were actually loaded in

wagon CL 62722 under supervision and help of the defendant's employees. I am

inclined to accept Lubala's evidence. It has been undisputed that the plaintiffs were

building army H quarters here in Mwanza. The goods were required to finish the

buildings. It would be unreasonable to think that after buying the goods the plaintiff

dumped them in the sea, then went to the defendants to pay for a wagon, put nothing

in it and come to start a fake case. I do not see what they expect to gain by so doing.

The railways man who closed I and sealed the wagon would, as a reasonable person,

have been struck to find that he was sealing an

1983 TLR p73

MUNYERA J

empty wagon while the consignment note recorded 400 sheets. From the foregoing A

reasons I find that the goods were duly loaded in wagon 62722. Having reached this

conclusion I am wondering whether it serves the defendant any purpose to insist that

they did not check the goods. The court is satisfied they were loaded. Now there was

evidence and the defendant admitted, that when the wagon arrived at Mwanza only

40 B sheets were in it. The wagon arrived with its seals intact. Circumstantially some

clever people had opened it, took out the sheets, reclosed it and fixed a new set of

seals. This must have been done while the goods were still in transit. They were in

the defendant's C care. I decide the second issue in the affirmative. The goods were

lost in the defendant's hands.

I skip issue No. 3 for the moment and come to No. 4: whether the defendants are

liable for the loss.

The defendant's liability for loss of goods is set forth in section 34 of the TRC Act no.

11/77 and exemptions thereof. None of the exemption (a) to (g) covers this situation.

D Likewise the rubber stamp endorsement "not checked by the railways" is of no

legal importance. It was designed to absolve the defendant of their obligations. It is

settled rule of law that an exclusionary clause aimed at absolving a party from

obligations to a fundamental term of the contract would normally not be enforced. In

this case it was a E fundamental term of the contract that the defendant would carry

the goods from Dar es Salaam and delivery them to the plaintiff at Mwanza. Nothing

would displace this obligation. I want to sound an advice to the defendant corporation

not to include on this "not checked by the railways" phrase. It has bad effect. It

encourages dishonesty among F the corporation's workers. This case is a conspicuous

example. I find that the defendants are liable for the loss of the plaintiff's goods. I

finish with issue No. 3. whether the defendants are liable for the alleged incidental

expenses claimed in para 9 of the plaint......

Needless to say much, it is a rule that damages are awarded if they arise as direct

result G of the breach.

Having held the defendant liable for the loss, I shall now proceed to consider the

reliefs claimed. In para 12(a) the claim is for the value of 400 sheets and the 2 bags of

nails, total shs. (37365/40 + 2240/30) 39,6057/70. It should be remembered that 40

sheets H were delivered to the plaintiff (PW2). The claim should have been

restricted to those not recovered which amounted to (400 - 40) 360 sheets. By simple

arithmetic, their value is shs. (37365/40 x 360 over 400) 33,628/85. Combined value of

the sheets and the nails is shs. (33628/85 + 2240/30) 35,869/=. In para 12 (b) they

claimed I

1983 TLR p74

shs. 4650/= freight charges they paid for the goods. This was the consideration by

which A the defendants were bound to the contract. If it is refunded then there is no

contract to be enforced. I disallow this item. In para 12 (c) they claimed incidental

expenses they incurred when PW1 and PW2 went to Dar es Salaam to buy the goods

(PW1) and to help Police investigations after the loss (PW2). Obviously the claim in

relation to Lubala B (PW1) cannot be allowed. The expenses were not the direct

result of the breach. Even if the goods had arrived safely he would still have incurred

the expenses and nobody would have refunded him. The expenses in relation to

Mabula (PW2) arose C because he was instructed by the Police to go to Dar es

Salaam. Had the goods not been lost by the defendant he would not have gone to Dar

es Salaam. The expenses were therefore incurred as a direct result of the breach. He

produced two air tickets to and from Dar es Salaam shs. 980/= each, total shs. 1,960/=.

He also produced hotel D receipts to the value of shs. 2,0010/=. In all the expenses

amounted to shs. (1960 + 2010) 3,970/=. In the final event I give judgment for the

plaintiff. The defendant to pay the value of the sheets and the nails and the incidental

expenses incurred by Mabula (PW2). For the avoidance of doubts the total decree

amount is shs (35,8869 + 3,970) E 39,839/=, plus interest at the usual rate of 9% p.a.

from the date of judgment to finalisation. The plaintiff to have their costs to be taxed

as usual.

F Judgment for the plaintiffs.

1983 TLR p74

G