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3
When later the respondents discovered that the cheques they had drawn in favour of TANAPA and NCA had not been paid to those clients
they confronted the appellants demanding that the amounts \)f the cheques which had been debited from their account be re-credited,
the latter disputed liability. In the meantime, according to the respondents, they (the respondents) had to use money obtained as
a loan from the International Finance Company (IFC) for other purposes to pay TANAPA and NCA the respective amounts which were due
to them in lieu of the money which had been fraudulently diverted to Mwoga's bank account. The respondents also sued the appellants
for the USD 56,065.00 and for USD 3,360.00 being interest at 12% from 1st December, 1999 to 31st May, 2000 and also interest at 12% p.a. from 1st of June, 2000 till full and final payment.
The appellants argued that the respondents themselves were negligent and contributed to the loss of the money. They further argued
that there was no proof that the respondents had used the loan money from IFC to make a "second payment" to TANAPA and
NCA. There was no basis for the claim of USD 3,360.00 as 12%
4
interest on USD 56,065.00. There was no breach of contract by the appellants and, consequently, no justification for general damages.
\ The trial High Court (Kalegeya, J.) found that the appellants had been grossly negligent in the manner respondents' cheques were
handled by their banker. The respondents were entitled to a refund of the stolen money and they were not guilty of contributory negligence
as there was no evidence to establish it. The trial court finally considered "whether the Plaintiff is entitled to damages and
interest" and whether "charging just 12% as general damages (sic)" was reasonable. Consequently, it ordered that the
respondents should be paid "the interest rate payable by Defendant on Current Account of the type and not Us Dollars 3,360 claimed".
It also allowed a 12% interest on the decretal amount.
In considering this cross-appeal we have to take judicial notice of the fact that the appellants' appeal had been dismissed and, therefore,
the High Court findings of fact, which might have been challenged had the appeal been heard, remain intact. Only the
5
findings of fact by the High Court to the extent that they are relevant to the cross-appeal can now be considered. We think it is
now appropriate to discuss the grounds in the cross-appeal.
\
The grounds read as under:-
1.
The Hon. Trial Court erred in law and in fact in rejecting the special damages claimed by way of interest as per paragraph 14 of the
plaint.
2.
The Hon. Trial Court erred in law and in fact in accepting the uncorroborated evidence of the Appellants witness regarding the interest
rate payable on commercial lending.
3.
The Hon. Trial Court erred in law and in fact in rejecting the Respondents7 claim for general damages for breach of contract.
To begin with, we wish to make a general observation on what appears to be a confusion in the lower court judgment where special
6
and general damages were treated as if they meant one and the same thing. In paragraph 14 of the plaint as filed by the respondents
who were the plaintiffs before the trial court there was a Specific claim of USD 3,360 as "interest at 12% p.a. from 1st December, 1999 to 31st May, 2000 as per mercantile practice obtaining in Tanzania or by way of special damages''. The trial judge, however treated that
claim as one for general damages as well. The confusion is manifested by the following words which were used. The judge said -
"next is whether the Plaintiff is entitled to damages and interest".
No distinction was being made here between special damages and general damages. A little later in the judgment, the learned judge
in considering the respondents' advocate's arguments for special damages based on the rate of interest charged on the I.F.C. loan
said:-
7
"He argues that as the IFC loan attracted 12.38 % interest charging just 12% as general damages is reasonable".
\ Arising from such confusion the High Court disallowed the claim of USD 3,360 which was special damages. We now ask ourselves whether
the respondents were entitled to the claim in paragraph 14 of the plaint on the basis that either the mercantile practice obtaining
in Tanzania allows an interest of 12% or that the claim was special damages.
Looking at the evidence adduced by the respondents through Rajendra Modha (PW1) we can find no evidence of the alleged mercantile
practice. So, clearly the claim was not proved on the basis of a mercantile practice which provided for a 12% interest on a loan.
There was the alternative basis for the claim that it was special damages. The law is that special damages must be proved specifically
and strictly. Lord Macnaghten in Bolag v Hutchson
8
[1950] A.C. 515 at page 525 - laid down what we accept as the correct statement of the law that special damages are:-
\
... such as the law will not infer from the
nature of the act. They do not follow in the ordinary course. They are exceptional in their character and, therefore, they must be
claimed specially and proved strictly.
Although not as comprehensively expressed, this Court in one of its decisions - Zuberi Augustino v Anicet Mugabe, [1992] TLR 137, at page 139 said:-
It is trite law, and we need not cite any authority, that special damages must be specifically pleaded and proved.
The question then is whether the special damages of USD 3,360.00 were specifically pleaded and proved.
Paragraph 14 of the plaint made the claim for the special
damages but strictly speaking the particulars were not given. But
9
even if it is accepted that the way those damages were pleaded met the requirements of pleading, were they special strictly proved?
Again, the only witness for the respondents who was supposed to provide the strict proof did not satisfy the requirement. All he said
in this connection was -
*
We borrowed 300,000 US Dollars. We were not able to service the loan agreement as per terms because we fell short of cash for having
paid for Camp Sites —
It carries interest of 12.38% as per s. 3.02 of the Loan Agreement (Exh.Pl).
We claim US Dollars 59, 425 and 12% interest.
With due respect, that cannot be strict proof of the special damages of USD 3,360.00, let alone proof that it was money from that
loan which was used to pay for the camp sites.
10
The trial judge in apparent reference to the special damages (although he did not use those words) said:-
\
Here, the plaintiff is clamouring (sic) for
damages allegedly because the Defendant's action disturbed its cash flow as it was forced to effect another payment to TANAPA and
NCA for the tourists' safari; that even then it took that money from funds for construction project which was funded by International
Finance Corporation, which act allegedly brought to a standstill the said project. He argues that as the IFC loan attracted 12.38%
interest charging 12% as general damages is reasonable.
On this argument I am on all fours with Defendant that the alleged loan and the issue at hand are not connected in any way. Money
could have been taken from any other source including its reserve fund. That apart, no evidence was led to show that the money paid
if any, came from the IFC funds —.
11
The High Court then granted an interest of 2% "on a current account rate".
\ The 2% interest rate on a current account was testified to by DW1 - Mr. Fidelis Malembeka, the Branch Manager of the appellant Stanbic
Bank at Arusha. He said:-
On a current Account we pay a maximum of 2% interest - that is the rate payable. If the Court was to find us liable this would be
the rate .of interest.
So, apparently the court was minded to find the Bank liable to pay an interest on the 56,065 USD as (special) damages, and hence the
2% interest rate on that amount. Mr. C. Ngalo, could not see the reason for the trial court to accept the 2% interest rate rather
than the 12% which was proposed by them. The reason is not far to seek. In the case of the 2% interest rate, as already mentioned,
there was the evidence of the banker and in the absence of contrary evidence from a professional banker, the court was entitled to
accept that evidence
12
as reliable and dependable compared to the reliance on the IFC loan interest rate. The latter has no relevance to a current account
interest rate. The respondents' money in issue was kept in a current account with the respondents. Although it could be asked if
the special damage had been strictly proved, since at this stage there is no appeal against that finding, we dismiss the first and
second grounds of the cross appeal.
Mr. C. Ngalo submitted forcefully that in view of the finding of the trial court that there was gross negligence and considering that
124 cheques were destroyed within a span of six months, the destruction of each cheque being a separate fraud and a serious betrayal
of trust to their customer, this Court should step into the shoes of the trial High Court and award substantial damages. He referred
the Court to several decisions of this Court, the High Court and of foreign courts. Among the cited cases were Grace Ndeana and NBC Holding Corporation, (CAT) Civil Appeal No. 76 of 1999 (unreported), The Trustees of the Tanganyika National Parks t/a Tanzania National Parks versus The National Bank of
13
Commerce and International Forex Bureau Ltd, (HC - Arusha) Civil Case No. 33 of 1995 (unreported); Cooper Motors Ltd. versus Moshi/Arusha Occupational Health Services [1990] TLR 96; Tournier v National Provincial and Union Bank of England [1924] 1 K.B 461 and Canara Bank versus Canara Sales Corporation and Others [1988] LRC 5. He submitted that although the award and quantum of general damages are in the discretion of the Court, he nevertheless
suggested that they could be in the region of USD 100,000.
Mr. Mujulizi submitted that there was no breach of contract and the decision of the trial judge regarding the general damages as canvassed
in the cross-appeal could not be faulted. Since general damages are awarded at the discretion of the court an appellate Court should
not interfere, even if there was an error. But if this Court found that the trial court was in error regarding general damages, then
it should remit the record to the trial court with a direction that it should consider the issue.
14
According to Mr. Mujulizi, the Grace Ndeana case was not relevant in the case under cross-appeal. There was no evidence that respondents' reputation had been tarnished. No person
from either hyperlink or NCA gave evidence at the trial to say that as a result of the 124 cheques not being paid to them they held the respondent in less
esteem. The other cases cited by the advocate for the respondent were equally irrelevant, according to Mr. Mujulizi. The case which
was before the trial court was one of clear theft, which was a criminal matter, and the Bank would not be penalized by condemning
them in damages for crimes committed by their employees. On the other hand, since the conduct of the respondents' employee, Mr. Mkali,
who handled the cheques before they landed into wrong hands raised many unanswered questions, the respondents cannot be said to have
come to court with clean hands and equity would not help them. The 2% interest which the trial court thought fit to grant the respondents
was sufficient compensation to them. He asked the Court to dismiss the appeal on general damages.
15
Although as mentioned earlier in this judgment the trial judge appeared to have failed to distinguish in his judgment special damages
from general damages it is clear, however, that he did not hyperlink general damages. He found that the appellants were grossly negligent and were in breach of their contractual obligation to the respondents.
The following reasoning from the High Court judgment gives indication of breach of the contractual obligation:-
A banker who encashes a forged cheque by a customer's employee is liable to the customer for having paid without authority or instruction,
and, in the same way the banker becomes liable where, though the signatures are proper, a person other than the payee is paid instead.
Again quoting from Lord Macnaghten in the Balog case mentioned earlier, general damages are:-
... such as the law will presume to be the direct, natural or probable consequence of the action complained of.
16
Damages, generally, are:-
That sum of money which will put the party
who has been injured, or who has suffered, in
\
the same position as he would have been if
he has not sustained the wrong for which he is now getting compensation or reparation. See Lord Blackburn in Livingstone v Rawyards Coal Co. (1850) 5 App. Cas. 25 at page 39.
Asquith, CJ. in Victoria Laundry v Newman [1949] 2 K.B. 528 at p. 539 said damages are intended to put the plaintiff"... in the same position, as far as money can do so,
as if his rights had been observed."
If the appellants' rights as a customer of the bank had been observed the cheques would not have been paid to a person other than
TANAPA and NCA. To redress the failure the trial court ordered that the money - USD 56,065.00 - that was debited from respondents'
bank account be refunded. But before the court order was made there was evidence from PW1 - Modha - that the
17
respondents had to make another payment to their clients - TANAPA and NCA. So, they were put into the inconvenience of having to find
money, from whatever source, to make a second payment. We think Hhe respondents therefore should be recompensed for it.
But although the trial court did not find the respondents guilty of contributory negligence it was not disputed that their employee
-Mkali - was the one who was given the cheques to take to both TANAPA and NCA. He was not called to court by the appellants to explain
what he did with those cheques. All we know is that he was able to bring to the respondents vouchers from TANAPA and NCA suggesting,
as Modha put it, that "... the cheques were received by TANAPA and NCA ..." One would be forgiven if one believed that
the respondents' employee participated in the conspiracy to divert the payment of the cheques into Mwoga's account which means really
that both the appellants and the respondents had dishonest people among their respective staff. We are of the considered opinion,
therefore, that while the respondents are entitled to some general
18
damages, they certainly do not deserve substantial damages as canvassed by Ngalo Advocates.
\ The cases which were cited by the learned advocates for the respondents are not in our view authority for granting substantial damages
in the circumstances of the case before us. We will make brief reference to only some of them.
The Grace Ndeana case is in fact authority for grounds for reducing an award of damages which the trial court had fixed too high. In the TANAPA v NBC case no general damages were awarded. In the Cooper Motor Corporation Ltd case this Court restated the principles on which an appellate court can interfere with the quantum of general damages fixed by the
trial court. It reduced the quantum of general damages which were inordinately high, from Tshs. 600,000/= to Tshs. 150,000/=.
Since under section 4 (2) of the Appellate Jurisdiction Act, 1979 as amended by Act No. 17 of 1993 this Court has "the power,
19
authority and jurisdiction vested in the court from which the appeal is brought" we think we should step into the shoes of the
trial High Court to assess the general damages instead of remitting the case to It. In all the circumstances as we have tried to
consider we think an award of USD 10,000 as general damages would meet the justice of the case. The cross-appeal is allowed on the
third ground to the extent as explained. The respondents are to get a third of the costs and as both Mr. C. Ngalo and Mr. M. Ngalo
are advocates of the same firm, we refuse a certificate for two counsel as prayed and certify for one counsel only.
DATED at DAR ES SALAAM this 3rd day of August, 2006.
J.H. MSOFFE JUSTICE OF APPEAL
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