IN THE HIGH COURT OF TANZANIA (LAND DIVISION) AT DAR ES SALAAM LAND CASE NO 294 OF 2014

MARTIN NIKUBUKA WASHINGTON MWANKANYE...... PLAINTIFF VERSUS

ALLY FARHAT...... DEFENDANT

JUDGMENT

11 /6/2018 & 17/8/2018

MZUNA, J.:

Martin is a retired Army Officer who was privileged to purchase a Government house on Plot No. 1915 Block AT, with Title Deed No. 112710 Oysterbay, in Kinondoni Municipality, Dar es Salaam. It has 4477.0 square meters.

On 17th December, 2011 he entered into a Land Development Agreement with Ally as the investor whom he handled the title deed with a view that there should be a joint venture business upon his surrender of plot and title deed. According to the Land development agreement after 15 years from the date of its signing upon construction, the plaintiff was to benefit as a shareholder for 49% as opposed to the defendant who could possess 51%.

Latter, Martin changed his mind upon noticing that the agreement was void and unenforceable as it violated the terms of

i the offer of Right of Occupancy but Ally refused to surrender the title deed. It is therefore being asked for the nullification of the dealership (Land Development agreement) as it is unenforceable. He further prayed for a return of the title deed plus damages and costs of the suit.

The defence on the other hand says the said agreement was entered into without mistake and is an investment agreement not a transfer or sale. That the title deed was withheld to ensure that there is a refund of the money spent by the defendant in furtherance of the terms of the agreement or the advanced money be returned. He is of the view that there is change of mind by the plaintiff and breach of the contract. He prayed for dismissal of the suit, refund of Tshs 130,000,000/- million for breach of contract as a counter claim, plus damages and costs of the suit. Alternatively, it is being asked that the plaintiff should release the plot so as to continue with the development.

Both parties were represented. Mr. Shayo, the learned counsel appered for the plaintiff while the defendant was represented by Mr. Tibanyendera, the learned counsel. Both learned counsels made their written submissions. The same has been considered and I am thankful to them.

Issues for determination are:

1. Whether parties had a binding contract? 2. If the first issue is answered in the affirmative, whether there was a breach, if so, by who? 3. What reliefs are the parties entitled thereto?

Let me start with the first issue, was there a binding contract entered into between the plaintiff and the defendant?

Testifying as PW1, Martin Nikubuka Washington Mwankanye, said that the suit plot was given to him as a civil servant as evidenced by a letter of offer (Exhibit PI). He was then issued with Certificate of title Exhibit P2.

It was mutually agreed with the defendant that he should invest on PWl's plot and Mr. Elias Philemon Nawera (DW2), a lawyer was engaged by the defendant to draft the terms of the agreement.

PW1 contends that the defendant and DW2 went at his home with their draft which was at first resisted but upon insistence by DW2, they signed a draft at about 5.00 PM and then at 11.00 there was brought a bulky document which was signed as a Land Development Agreement (Exhibit P3). The defendant paid him Tshs 30,000,000/- as down payment. It was agreed that the investment project was to commence in January, 2012 and construction was to be complete within one year something which had never been done.

PW1 says the agreement had never been implemented because there is a disagreement on some terms which goes contrary to the offer, in particular, it was argued that there is a condition in Paragraph 2(V) in Exhibit PI which does not allow transfer until after the expiry of 25 years from when the sale was signed (i.e. 5th January, 2009).

3 Other terms which he finds are unenforceable are:-

It is not clear according to the terms how to run the project; It is not clear out of the 4477 Square meters of PWl's Plot, which part was to be used by the investor (the defendant) and which one PW1 was to remain with? Even the schedule thereto are uncertain on a type of a house/bungalow which was to be constructed for the plaintiff and at what exact place (specification); what was the entire payment of the project?

Upon PW1 noticing such defects which according to him makes the agreement illegal, he asked for return of his title deed but the defendant kept insisting that they should do as per the agreement. He never complied even after a reminder by his lawyer as evidenced by Exhibit P4.

There was no other witness for the plaintiff.

In his defence, the defendant DW1 Ali Farhat said is a Lebanese citizen dealing in business. He said that the plaintiff was introduced to him by Mr. Alex (Broker/middleman) after he had agreed that it should be used for investment.

The agreement was that he was to construct Villas at the plaintiff's plot and lease it to potential tenants. Another Villa was for the plaintiff's use. He payed 30,000,000/- as lump sum before giving him the plot for investment and then after 15 years they were to form a joint venture whereby PW1 should get 49% share while DW1 gets 51 % share. He says the agreement (exhibit P3) was signed on 17th December, 2011 at afternoon not at 11.00 PM and both of them signed together with the lawyer DW2, the plaintiff's wife and his son one Niko.

It is his view that the said Exh. P3 does not sell the suit plot but is only meant for investment.

Now, was the contract binding to the parties?

Mr. Sylivester Shayo, the learned counsel for the plaintiff has submitted that the contract was unenforceable for uncertainty. That it was incomplete unless otherwise it had fresh negotiations. He strongly attacked some missing information including the 3rd and 4th schedule to the said agreement (Exhibit P3).

On his part, Mr. Mohamed Tibanyendera, submitted that the said agreement was concluded between the parties after the defendant had paid a consideration of Tshs. 30,000,000/-. Actually, according to him when PW1 tendered it he knew it was intended to be binding among the parties having been dully signed by parties thereto and other witnesses including the plaintiff's own spouse, children and a lawyer. That the plaintiff's claims are mere an afterthought.

Reading from the adduced evidence both for the plaintiff and for the defendant it is clear that Exhibit PI is with all intent and purpose a legally binding contract in view of section 10 of the Law of Contract Act, Cap 345 RE 2002. That provision reads:-

"AH agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void:

Provided that nothing herein contained shall affect any law in force, and not hereby expressly repealed or disapplied, by which any contract is required to be made in writing or in the presence o f witnesses, or any law relating to the registration o f documents. "(Emphasis mine).

As for persons who are competent to contract, it is spelt out under section 11 of the said Act, these are:-

"A person who is o f the age o f majority" and with "sound mind, and is not disqualified from contracting by any law to which he is subject"

The plaintiff falls in that category, a person with sound mind and is of the age of majority.

What the plaintiff wanted to raise is the issue of mistake of fact as stated under sections 20, 21 and 22 of the Law of Contract Act,

Cap 345.

In any case, under section 20 (1) of the said Act, such mistake of fact which renders the agreement void, has a condition that "both parties are under a mistake as to matter of fact essential to the agreement".

Such mistake under section 22 of the said Act, must be unilaterally applied, that is, both parties not that "it was caused by one of the parties to it being under a mistake as to a matter of fact/' In the case of Tanganyika Bus Service Co. Ltd vs. The National Bus Service Ltd (KAMATA) [1986] TLR 203, 205 (HC), the facts were briefly as follows:- The issue involved nullification of sale of a Bus in a tender whereby the plaintiffs tender was accepted and the price was paid. When the plaintiff wanted to take delivery of the vehicle the defendant refused delivery of the same because she/plaintiff was awarded it while not the highest bidder as opposed to one Yohannes s/o Sanga which was by mistake. The plaintiff filed the suit for a declaration that they were the lawfulowners of the vehicle. They also asked for special damages.

It was held that:

"A unilateral mistake by one party to the contract will affect the validity o f the contract only i f the doctrine o f non est factum is successfully proved."

According to the learned Judge, (the position which I fully agree), this did not cover 'negligence'. To amplify his point, the learned Judge, applied and followed what Lord Reid said in the decision of the House of Lords in Saunders v Anglia Building Society: [1970] 3 All E.R. 961 at p. 964 that:-

"There must I think be a radical difference between what he signed and what he thought he was signing - or one could use the words 'fundamental' or 'serious' or 'very substantial'. But what amounts to a radical difference will depend on all the circumstance". Yes, the doctrine of non est factum rule, does not apply in our case because the plaintiff was negligent. He purports to say that it was signed at night (11.00 PM), that the one he signed was bulky as opposed to the draft one. All this cannot negate a fact that it was made voluntarily and he knew what he was signing. The mere allegation that the lawyer was hired by the defendant is not a defence.

Further I do not agree with the plaintiff that when he entered into the Land Development Agreement (Exh. P3) he was not aware that the suit premise could not be "sold, transferred or otherwise enter into a transaction which may result into sale or transfer until the expiry of 25 years" as stated in the Certificate of Occupancy (paragraph 2 (v) of Exhibit P2). I say so because when PW1 was asked question he said that:-

"When I entered into the sale/partnership agreement I knew the terms and conditions attached to that Certificate of Occupancy Exhibit P2... This Land Development Agreement was just an investment. It was meant to be a development agreement."

So, the doctrine of non est factum rule cannot apply because there was no language barriers when he signed it.

Another point which was raised according to PW1 is that it was a sale agreement based on Exhibit P3 which allows the defendant to be a party in case there was an issue of conveyance. However, he

8 admitted that the agreement was drafted in anticipation it was to operate after 25 years.

The Development Agreement clearly stated that the plaintiff was to receive U$ 1,250 monthly for the period from 2014 -2029 which is for 15 years. A joint venture (that is the 49% for the plaintiff and 51 % share for the defendant) was to commence after 15 years.

Exhibit PI (Offer) was signed in January, 2009, therefore, twenty five years ends on January, 2034 not 2029 as stated in Exhibit P3 which covers 15 years. So, the agreement was procured with fraud. The dealership agreement could have started in 2034 not 2029. That is when the 49% and 52 % could come into play. So, on this aspect, the plaintiff in view of the case of Saunders v Anglia Building Society (supra) that what the plaintiff signed "is not what he thought he was signing". To put matters even worse, the defendant had gone to the extent of depositing the title with a view of creating a lien (see Exhibit D7).

There has been an overreliance by the counsel for the plaintiff on Paragraphs 8 (2) and 8 (3) of the Land Development Agreement (Exhibit P3/D6) that in effect it was creating transfer and therefore sale which is not allowed. It purports to transfer the total parcel of landed property measuring 4477SQM.

Disposition on land is defined under section 2 of the Land Act, cap 113 RE 2002 to mean:-

"any sale, mortgage, transfer, grant, partition, exchange, lease, assignment, surrender, or disclaimer and includes the creation o f an easement; a usufructuary right, or other servitude or any other interest in a right o f occupancy or a lease and any other act by an occupier of a right of occupancy or under a lease whereby his rights over that right o f occupancy or lease are affected and an agreement to undertake any o f the dispositions so defined."

Now, can one transfer his plot of land and yet remain with such a percentage? Transfer as used in that provision would mean to my understanding total surrender after consent of the Commissioner for Lands. Sometimes, it can be so even prior to such consent as it was so held in the case of George Shambwe vs. National Printing Company Ltd 1995 TLR 262 (CA) which was cited by Mr. Tibanyendera, the learned counsel. However that case of George Shambwe (supra) is distinguishable because what was being sought was signing of the sale agreement unlike the case under consideration where there was signing already save that there is a change of mind.

Paragraph 8.7 of the said agreement (exhibit P3) clearly said that the Developer/Plaintiff must be a party to Deed of conveyance in respect of the project. That means the defendant could not deal with the plot as the purchaser at will. No such sale in law unless and until 25 years had expired.

The agreement did not say the Investor should pay land rent as can be seen in Exhibit D3. It was I think a condition precedent for the Developer to bless any move touching on the land as the owner.

10 In the case of Merali Hirji And Sons v. General Tyre (E.A.) Ltd [1983] TLR 175, the case involved a dealership agreement of selling tyres and tubes in two Districts within Mbeya Region. The respondent terminated contract without giving notice to the appellant. The court found that in the first place it is quite illogical to think a contract should be indefinite as it was not a master and servant relationship. Therefore it could not be assumed that one party can terminate it at will without giving notice to the opposite party.

The court found reasonable to imply a six moth's notice and proceeded to award damages for breach of contract. It was further observed that:-

"...it is not the function o f the court to make a reasonable contract between the parties but...it is the duty o f the court to imply reasonable terms" (The case(s) of Martin-Baker Aircraft Co.Ltd. and Another v Canadian Flight Equipment. Ltd. [1955] 2 All E.R. 722 and that of Motion v Michaud (7) (1892) S.T.L.R. 253 were followed and applied.

In other words, where as in our case, the contract did not provide for terms "the court had a duty to imply reasonable terms." I say so while fully aware that there is in law sanctity of contract in that once parties execute a contract, it is expected that the same must be honoured.

I would therefore find and impose such "reasonable terms" that the Investor cannot deal with land in any way that may be derogating

n ownership of the suit property. Paragraph 9.1 of the agreement Exhibit P3 says:-

"a unspecified sum shall be acquired and spent on building...bungalow for the developer."

When DW1 was asked questions he said that building such bungalow was only his discretion as if it was a favour. That is wrong. It is a total breach of the terms of the agreement.

Further, even Paragraph 15.2 on consequences of breach on the part of the Investor in case he was in breach, there is an unspecified percentage stated. That means the Developer was disadvantaged.

That would mean the contract though concluded, must be varied by the parties so as to include some important information on the issue of Bungalow for the Developer; and what will be the consequence in case of breach.

Further, the Developer/Plaintiff shall not hand over his house/plot unless a Bungalow of his specification is built and ready for residence within one year as per the agreement.

In that same connection, the schedules which are verge should be amended to include such vital information that are missing. That should be done within two months from the date of delivering the judgment,

So, issue No, 2 is answered in affirmative that there was a breach by both parties.

12 Lastly on the reliefs. Both parties have asked for damages and a counter claim. However, as above noted they were all to blame. I would not grant their prayers.

As for the Title Deed, it was handled to the defendant as security upon constructing two units of Double Storey Residential apartments and swimming pool as evidenced by Exhibit Dl. So I cannot rule otherwise. It cannot be returned to the plaintiff. In any case, the defendant shall not deal with it unless and until it has a blessing of both parties.

For the above stated reasons, this suit is partly allowed and partly dismissed. Both parties had a blaming hand, so I make no order for costs.

M. G. MZUNA,

JUDGE.

13 17/8/2018 Coram: Hon. S.R. Ding’ohi - DR For the Plaintiffs: Mr. Shayo Advocate For the Defendant: Mr. Tibanyendera Advocate CC: Caroline

COURT: Judgment delivered this 17th day of August, 2018.

17/8/2018