IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA

(LAND DIVISION)
AT DAR ES SALAAM

LAND CASE NO. 215 OF 2016

MACKRIMAN TRUST FUND LTD.............. ...... PLAINTIFF

VERSUS

NATIONAL BANK OF COMMERCE LTD..... 1st DEFENDANT

LESHEYA INVESTMENT CO. LTD............. 2nd DEFENDANT

SADOCK DOTTO MAGAI.............. .......... 3rd DEFENDANT

JUDGMENT

S.M. MAGHIMBI. J:
The plaintiff's claim against the defendants jointly and severally is for
declaratory orders that the defendant's intention to auction the plaintiffs
property situated at Plot No. 29/1 Kunduchi Salasala Area, Kinondoni
District Dar-es-salaam is unlawful, unjustified and therefore null and void.
She also claims for permanent injunction against the Defendant jointly and
severally for reasons that the act of auctioning the above stated property is
against the law, and for orders of payment of damages in favor of the
plaintiff. In her plaint, the plaintiff prayed for judgment and decree as
follows:
i. A declaration that the 1st and 3rd defendants' intention to auction
the plaintiff's property situated at Plot No. 29/1 Kunduchi, Salasala
Area, Kinondoni Municipality, Dar-es-salaam is unlawful for
reasons that the plaintiff was not involved in the extended banking

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 facility and/or alternatively no formal legal notice was issued as
required by the law.
ii. Alternatively; this honorable court issue an order that the plaintiff
was not involved in the extended banking facility therefore no
contractual obligation existing between the plaintiff and the 1st
defendant and in the event the same do exist, is to the extent of
Tshs 400 million guaranteed by the plaintiff at the first instance.
iii. The plaintiff be released from contractual liabilities between the
defendants.
iv. The defendants be ordered to jointly and severally pay general
damages to be assessed by the Honorable Court.
v. That an order for permanent injunction be issued to retsrain the
defendants jointly and/or severally from interfering the plaintiff's
enjoyment to the suit premises.
vi. Costs of this suit be paid by the defendants.
vii. That any of the relief the court deem fit to grant.

In their Written Statement of Defence, the 1st and 3rd defendants

maintained that under Clause 2(a) of the Mortgage Deed (EXD1), the
plaintiff agreed that the moneys intended to be secured by the mortgage
included all liabilities incurred to the 1st defendant by the 2nd defendant
notwithstanding any irregularity in incurring such liabilities hence the
plaintiff agreed to secure the extended liabilities. On the part of the 2nd
defendant, she disowned liability for damages suffered by the plaintiff
throwing the burden of informing the plaintiff about the extension to the 1st
defendant All the defendants prayed for the dismissal of the suit with
costs.
From the gathered facts and evidence, brief background of the matter
dates back to 29th November, 1999 when the first defendant advanced to
the second defendant an overdraft facility at the tune of Tshs.
400,000,000/-. The facility was for a period of one year to the 30th
November, 2000. The facility was secured by collateral in form of a landed
property described as Plot No. 29/1 situated at Kunduchi Salasala with
Certificate of Title No. 49024 owned by the plaintiff (herein referred to as
the "suit property"). Before the expiry of the facility period, on the 25th
November, 2000 the 1st and 2nd defendants entered into another
agreement varying the facility as well as its securities extending it to
another period of one year. This is where the current dispute arose as the
plaintiff alleges that as the guarantor, she was not involved in the
extension of the facility nor did she agree in the extension of the suit
property to act as security to the extended facility.
Upon conclusion of the pleadings and mediation having failed, the following
issues were deliberated and agreed to be framed for determination:
1. Whether the mortgage deed executed by the plaintiff covered the
extension of overdraft facility granted to the 2nd defendant by the 1st
defendant in the year 2000.
2. If the answer to the first issue is in the affirmative, whether the
plaintiff's mortgage property secured an amount of Tshs
400,000,000/“ only.
3. Whether the 1st and 3rd defendants intended sale of mortgaged
property is lawful
4. To what relief(s) are the parties are parties entitled to.

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In order to prove their case, the plaintiff had one witness to call, so did the
1st and 3rd defendants, on her part, the 2nd defendant also had one witness.
Beginning with the first issue, whether the mortgage deed executed by the
plaintiff covered the extension of overdraft facility granted to the 2nd
defendant by the 1st defendant in the year 2000. On para 10 of her plaint,
the plaintiff alleges that on 25th November, 2000 the 1st and 2nd defendants
entered into another agreement (EXP2) whereby the terms and conditions
of the previous agreement into which the plaintiff had issued guarantee
and its property secured were varied without notice and/or involving the
plaintiff. The extended facility was for another period of twelve months to
expire on the 30th November, 2001.
In his testimony to support this issue, PWl's evidence was that in 1999 the
2nd defendant approached the plaintiff requesting for her guarantee to
secure a loan from the 1st defendant (EXP1). That the plaintiff's
responsibility was to ensure that the 2nd defendant fulfills the conditions in
the mortgage and upon the plaintiff's satisfaction that the 2nd defendant
will be able to pay the loan as the conditions of the mortgage showed that
it will cover any deposit made by the borrower, she guaranteed the facility
through the disputed property as a security (EXD1). Further that the
plaintiff was more certain that the 2nd defendant will service the loan as the
bank had an obligation to conduct quarterly inspections and that on para 3
of the EXP1, the overdraft facility is covered by account receivables and
inventories and they are required to be at 30% margin. EXP1 also requires
the monthly statement of the receivables to go to the bank and on
quarterly basis, the branch manager was obliged to do inventory taking in
the borrowers business.

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PW1 also testified that they were satisfied that the facility is a short term
because paragraph 9 of EXP1 reads:
"Guarantee by Mackriman Trust Fund Limited, supported by L/M
over CT No 49024 Plot No. 29/1 Kunduchi Saiasaia area, Kindndoni
District Dar-es-saiaam. I.N.L Ms Mackriman Trust Fund Limited
valued at Tshs. 766.6 million to be created as collateral to secure
the overdraft facility o f Tshs 400,000,000/- registered in Bank's
favor and remain in force during the currency o f the facility".

He elaborated that the words "remain in force during the currency of the
facility" meant one year hence it was a short term facility not a long term
one. He also testified that after the lapse of the year without hearing any
notice of default of the borrower by the bank, the plaintiff was satisfied
that the borrower serviced his loan accordingly.

PW1 also testified that he came to learn about the extended facility in the
year 2016 while in his office when a Dalai! called Komred came to him with
a piece of The Guardian Newspaper for June 30, 2016 saying that he
intends to sale the suit property (EXP3). Upon seeing EXP3, PW1 went to
see the 3rd defendant to know what was going on and was informed that
the plaintiff has defaulted the facility and he was surprised because he
knew that the first facility was paid. He got conformation of the extension
of the facility from the 2nd defendant saying that after the 1st facility they
met with the bank and agreed on another facility (EXP2) and didn't need to
inform the plaintiff. The EXP2, a document extending the facility, is from
the first defendant to the CEO of the 2nd defendant and the amount is the
same Tshs. 400,000,000/-. Further that the perfection of the papers were

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also done, aggrieved by the omission to be informed, that is when he came
to this court to seek redress.

When cross examined by Mr. Rajab Mrindoko, PW1 admitted that he has
worked for the plaintiffs from the year 2014. This is an implication that the
PW1 was not testifying on direct evidence, rather on what he founds on
records when he joined the company. When further cross examined by Ms.
Salah for the 1st and 3rd defendants, PW1 testified that there is no
document showing that there was a relationship between Lesheya(2nd
defendant) and Mackriman (plaintiff) to have asked for guarantee and that
he didn't know of any personal relationship within the directors of the two
companies.
However, in the same cross examination, the PW1 admitted that one of the
directors who executed the EXD1 was Emiii Owiso, who was a director
then, and that it was possible that it is his signature on EXDl. The core of
PWl's contention during cross examination was that Mackriman was not
involved in the extension of the loan that took place in 2000.
On his part, DW1 testified to be aware of the transactions in dispute that
the plaintiff happens to be the guarantor of the second defendant Lesheya
Investment Limited, who is the bank customer and who has been enjoying
various credit facilities granted by the bank from time to time. On the
facility contained in EXP1, DW1 testified that the facility was fully utilized
and because it was being serviced satisfactorily, the bank, the borrowers
and the guarantors agreed to extend the utilization of the facility for a
period of another year from November 2000. The renewal of the overdraft
was subject to meeting all the terms and conditions of the previous
agreement and all the parties to first agreement were aware of the said

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extension whereby the borrower and the guarantor had full knowledge of
the extension of the overdraft facility.

DW1 also testified that the plaintiff and the second defendant are sister
companies and at all material times the bank has been dealing with the
Emily Woiso and Anna Emily Woiso who are the directors and main
shareholders of the second defendant and also the directors of the plaintiff.
He also pointed out that as per the EXD1, the plaintiff and the 2nd
defendant are affiliate companies. Further that the bank has been dealing
with one person who was the executive director of the second defendant
and also the director of the plaintiff. Therefore at all material times all the
information regarding guarantor ship was duly complied with one Emily
Woiso, a director of both the plaintiff and the second defendant. DW1 also
pointed out that the second defendant defaulted payment way back in
June 2001 and that both the demand notice and a Notice of Default were
sent to the 2nd defendant (EXD2 & EXD3).

Mr. Mrindoko's cross examination of DW1 mainly focused on the

involvement of the plaintiff in the extension of the facility. DW1 admitted
that one of the conditions that discharge the guarantor from liability is the
presence of any changes in the facility which did not involve him, and that
change of time was a change in the facility. DW1 further admitted that in
the loan issued to the 2nd defendant, the first facility was for one year,
renewable, the renewal was not automatic. Time was one of the
fundamentals of the facility extended to the 2nd defendant and that the
guarantor is usually brought by the borrower and by signing the mortgage
it means he knew what he was guaranteeing.

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On his part, DW2 didn't have much to say. As a Financial Director of the
2nd defendant, he testified to support the plaintiffs evidence that the 2nd
defendant extended the overdraft facility without involving the plaintiff. He
admitted that the allegations are true and the facility was extended without
involving the plaintiff.

From the evidence analysed above on the first issue, there are some
emerged facts that are to be first analysed by this court before the framed
issue is answered. The evidence establishes a contention that there is an
existing or rather overlapping relationship between the plaintiff company
and the 2nd defendant company. The relationship, as alleged by DW1 is on
the human personality of the directors of both companies which according
to the 1st defendant, the directors and shareholders of the two companies
are the same as these are the same people, Emily Woiso and Anna Emily
Woiso. DW1 also attempted to establish that since they were dealing with
one Mr. Emil Woiso who is a director in both companies, the implication is
that the plaintiff was aware of, and involved in the extension of the facility.
Now let us see what the prevailing evidence is saying on this fact because
once it is successfully established that the directors are the same, then we
can make a conclusive presumption that the plaintiff was aware of the
transaction and the current suit is just an attempt to play a cat and mouse
game in delaying to discharge their liability.

In his closing submissions, Mr. Issa Mrindoko for the plaintiff strongly
argued that the facility in EXD1 did not cover any extension of the
overdraft facility (EXP1). He referred the court to Section 85 of the Law of
Contract Act, Cap. 345 ("The Contract Act") which provides:

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 "Any variance, made without the surety's consent in the terms of
the contract between the principal debtor and the creditor,
discharges the surety as to transactions subsequent to the
variance."
He elaborated that in his testimony, DW1 relied on clause 4(a) of EXD1
that the property mortgaged was a continuing security and that by signing
the mortgage deed, the plaintiff agreed her property to cover all debts
present and future notwithstanding any irregularity incurred by such
liabilities. Further that DW1 relied on clause 11 of the EXP1 that the
plaintiff is the affiliate company of the 2nd defendant and they have been
dealing with one Emili Woiso the director of the 1st defendant. He then
argued that under the Contract Act, a continuing security in guarantee
means a guarantee which extends to a series of transactions. Further that
the DW1 admitted that there was no any documentary evidence to prove
that the plaintiff was involved in negotiation of the extended overdraft
facility.
Mr. Mrindoko also pointed out that DW1 admitted that EXD1 and EXP1 are
two different documents not to be read together and that the conditions
for discharging the guarantor is when there is any variance between the
principal debtor and the bank or creditor without seeking the consent of
the surety or guarantor. Further 4:hat DW1 admitted that time which was
stipulated in EXP1 was one year, which he argued to be the fundamental
term under the facility agreement. He submitted further that the law does
not stipulate that a continuing security is for indefinite period, but that any
variance made between the principal debtor and the creditor, the surety's
consent has to be sought and the legal consequence of failure is to

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discharge the guarantor as to the future transactions which in this case is
the extension of the facility.
I must elaborate at this point as I have pointed earlier, in answering this
issue, it seems that between parties, it is undisputed that in extending the
facility, the 1st defendant was dealing with a director of the company one
Emil Woiso who is alleged to be a director of the both the plaintiff and the
2nd defendant. The issue here is therefore, by having the same individual
being the director of both the 2nd defendant and the plaintiff, does it suffice
to conclude knowledge of the plaintiff of the extension of the facility rather
that Mr. Issa's lengthy and robust submissions on the meaning of
continuing security, which I appreciate to be precise. I must admit that I
totally agree with his submissions that under the Contract Act, any variance
of terms of contract between the principal debtor and the creditor must be
made known to the surety otherwise the surety is discharged from liability.
I also subscribe to the holding of Lady Justice Kimaro (as she then was) in
the cited case of National Bank of Commerce Vs. Mustapha Issa
Singh & Another, Commercial Case No. 221/2002 (unreported).
However, with respect, the situation in the two cases is distinguishable. In
the current case, there is still an argument to be resolved on whether by
having Mr. Emil Woiso negotiating the extension, the plaintiff had
knowledge of the extension, something which the 1st defendants argue that
she had, being the director of both the plaintiff and the second defendant.

The question to be determined at this point is whether or not, the presence

of one Emily Woiso who happens to be the director of both the 2nd
defendant, the borrower, and the plaintiff, the mortgagor is sufficient to

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make a conclusion that the plaintiff was aware of the extension of the
facility. It must be noted that in his evidence, PW1 disowned any
knowledge of any relationship between the plaintiff and the 2nd defendant.
Well, that did not surprise the court considering that DW2 admitted that
the plaintiff was not involved, while both the PW1 and DW2 joined the
plaintiff and 2nd defendant companies respectively, long after the
transaction was both concluded and extended. Maybe as they were going
through the records for purpose of testifying in this court, they both
accidentally skipped the part where the structure of the company, including
the directors and shareholder, was elaborated. More surprisingly however,
is the PWl's confident denial of existence of any relationship between the
two while the evidence available on record suggests the existence of that
relationship as I will elaborate.

Starting with the same PW1, he admitted that one of the directors then
who executed the EXD1 was Emili Woiso, and that it was possible that it is
his signature on EXD1. Looking at the signature, it does not take a
signature expert to see that one of the persons who executed EXD1 was
the said Emil Woiso who stood as the director of the company, and this is
the same signature that appears on EXP1, the facility letter not in dispute.
Further look at EXP2, it is the same person who signed the extension of
banking facility with the official stamp of the company (2nd defendant)
reading the address as Box 60740 as in EXD1. In the EXP2, the said Emil is
accepting the extension with the words "terms and conditions accepted"
then signed the document. Clause 10 of the EXP1 reads:

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 "The major shareholder's guarantee in respect o f this facility, to be
signed by Mr. Emil Woiso and Mrs Anna £ Wo/so to be obtained
and submitted to the Bank".
From this document, it is undisputed that the major shareholders of the 2nd
defendant are Emil and Anna Woiso. Now looking at the three documents
(EXDl, EXP1 and EXP2), it is the same signature that executed all the
documents. Therefore from the evidence of PW1 that admitted that Mr.
Emil Woiso signed the mortgage deed EXDl as the director then, and here
we have undisputed and unshaken evidence of DW1 that the plaintiff and
the 2nd defendant are sister companies; also corroborated by PWl's
admission that the signatures in ail the 3 documents are the same, it is
safe at this point to make a conclusive finding that Mr. Emil Woiso was a
director of both the plaintiff and the 2nd defendant, and that the bank at ail
times, as testified by the DW1, was dealing with Mr. Woiso as the director
of both companies. Furthermore, by having the same fiesh and blood who
is a director of both the plaintiff and the 2nd defendant present and have
knowledge of the extension, it precludes the plaintiff to come and claim
lack of knowledge while the physical presence of one of its directors was
always at the 1st defendant's offices.
Then there is Clause 7(a) of the EXP2, the extended facility, which reads:
"Guarantee by Mackriman Trust Fund Ltd, supported by L/M
over CTNo. 49024, Plot No. 29/1 Kunduchi Saiasaia Area, Kinondoni
District, Dar-es-saiaam i.n.o M/S Mackriman Trust Fund Ltd valued
at Tshs. 766.6 Million stamped to cover the overdraft facility o f
Tshs. 400 million at 130% coverage, registered in bank's favor and

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 is to remain in force during the currency o f the facility." (Emphasis
is mine)
The document is signed by the same Mr. Emil Woiso, which means that as
the director of the 2nd defendant, he agreed on the terms and conditions of
the extension which terms included a guarantee by the plaintiff, which he
had knowledge of and consented to by conduct as a director of the plaintiff
as well. The issue here is then, should the absence of mere letter sent to
the plaintiff whose director had full knowledge and actually spearheaded
the extension (EXP2) to inform them of the extension, discharge the
plaintiff from liability as a guarantor/mortgagor? The answer is definitely
NO! The plaintiff just wants to play with words and procedures to avoid
liability. Even by conduct as I shall further elaborate, a conclusion can be
reached that the plaintiff had full knowledge of the extension.
When he was testifying, PW1 said that he came to learn about the
extended facility in the year 2016 while in his office when a Dalali called
Komred came to him with a piece of The Guardian Newspaper for June 30,
2016 (EXP3) saying that he intends to sale the suit. At this point, I have
posed to ask myself with no answer; if the plaintiff deposited the title
deeds to the 1st defendant in the year 1999 for a facility of one year to end
in November 2000, and the same person denies knowledge of the
extension of the facility (EXD2), and here is PW1 saying that the plaintiff
came to the knowledge of extension in 2016 when he was served with
(EXP3), how is it possible then for someone to leave their Certificate of
Title in the hand of the Bank for more than 16 good years without making
any follow up and demand for its return? By implication, the plaintiff's story
and conduct do not make any sense, hence supporting the 1st defendant's

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evidence that since it was Mr. Emil Woiso who negotiated the extension of
the facility and being a director and shareholder of the 2nd defendant, the
plaintiff had knowledge of and consented to the extension of the facility.

The current suit is just another way of the 2nd defendant's mode of
avoiding her liability to pay the outstanding amount as she and the plaintiff
are one and the same people in terms of flesh and blood. Am saying so
because what I have gathered from the evidence adduced are many
attempts of the 2nd defendant and the plaintiff avoiding liability to settle the
outstanding amount while yet keeping their own interest, the mortgaged
property. For instance, after the default to pay, the bank was not silent,
and when confronted, the second defendant ran to the court, High Court
Dar Zone and filed a Civil Case No. 442/2001 attempting to defend himself
from paying the money. The case was dismissed in February 2012 (This
fact is also admitted by Mr. Issa Mrindoko in his closing submissions).
There was also another case filed by the plaintiff's neighbor Gipro Mawala
in 2007 on the dispute of the boundaries to the mortgaged property, the
case was settled in 2014 and it successfully bought time for the 2nd
defendant to avoid liability. The bank's hands to precede with any legal
recovery measures were tied by virtue of the two cases pending finalization
of the two matters and in 2016 when they came across the notice of
auction, they again ran to this court and filed the current suit.

The fact that the 2nd defendant was running around filing different cases
corroborates the mysterious fact as to why the plaintiff was silent from the
year 2000 when she alleges that her liability was discharged to the year
2016 to claim his property by this suit, 16 years later. Therefore coming to

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this court is a 3rd attempt to avoid liabilities to pay which they have
successfully done so by having the bank's hands tied for another four good
years.

From the way it is framed and the evidence adduced, the first issue is not
capable of being answered in a yes or no manner. Rather, from the
evidence adduced, although the mortgage deed executed by the plaintiff
(EXD1) did not expressly cover the extension of overdraft facility granted
to the 2nd defendant by the 1st defendant in the year 2000 (EXP2), the
plaintiff had full knowledge of the said extension and could not be
discharged from liability as a mortgagor. That said, the first issue is
answered in favour of the 1st and 3rd defendants, the extension of the
facility is not illegal as the plaintiff was aware through her director, of the
extension.
Having answered the first issue in favor of the 1st and 3rd defendant the
second issue is automatically answered against the plaintiff as the plaintiff's
mortgage property is also liable as a security to the extended facility and
the outstanding amount.
As for the fourth issue, since the extended facility is well secured by the
disputed property, the 1st and 3rd defendants' intended sale of mortgaged
property is lawful as both the demand notice and notice of default (EXD2,
EXD3 and EXD4) were served to both the plaintiff and the 2nd defendant.
They may therefore proceed with the sale as per the requirements of the
law.
As for the last issue, the reliefs that the parties are entitled to, looking at
the above findings, I must point out that the outstanding amount of 9.7
billion (as it was then) is such a huge amount to be played around with. I

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should also not ignore the fact that the 1st defendant is partly Government
owned Bank and it is through the profits made from these businesses that
the Government makes its revenues to run the economy. In the Monetary
Policy Statement 2018/2019 issued by the Governor o f the Bank
of Tanzania in June 2018, ISSN 0856-6976, on page (ix) of the
Executive Summary the Governor wrote:
" The Bank continued to implement prudential measures to
strengthen risk management practices in the financial
sector, by reviewing relevant regulations and guidelines to take
into account new developments. The Bank also made use o f credit
reference bureau report mandatory during loan appraisal process,
directing all banks and financial institutions to develop and
implement strategies that strengthen credit application
processing, credit management, monitoring and recovery
measures
On that note therefore, the policy of the central bank of the country is to
strengthen recovery measures of the banks and financial institution so as
to ensure that the banking sector remained sound, stable and profitable,
impacting the positive prosperity of our economy. This cannot be done by
the banks and financial institutions in isolation; it needs a robust
intervention from other stakeholders especially in the recovery measures.
Therefore as the court, we cannot sit there and let people take advantage
of the court processes like the plaintiff and the 2nd defendant are
attempting to in a struggle to avoid their liability. Indeed such conducts like
the one in question are catalysts in loss of Government revenue which may
impact on the rate of economic growth. The courts cannot be a part of

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such conducts at the risk of becoming a shield to people who hinder
growth of the economy in order to fulfill their personal gains and interests,
forgetting the larger picture, the society. Therefore since the plaintiff has
failed to prove her case, let the 1st defendant proceed with its recovery
process as prescribed by the law.

That said, and as per the findings above, since all the other issues are
decided in favour of the 1st and 3rd defendants whose prayers were for the
dismissal of the suit with costs, the suit is hereby dismissed with costs.

Dated at Dar es Salaam this 27th day of April, 2020.

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