Hood Transport loses appeal in ruling to pay AfDB Sh1.7 billion

Wednesday June 29 2022
Law bar
By Bernard James

Dar es Salaam. Hood Transport Company Limited has lost an appeal in which it was challenging an order to pay the African Development Bank (AfDB) $776,282 (about Sh1.7 billion) for defaulting agreement after leasing seven buses.

The Court of Appeal has upheld decision of the commercial division of the High Court which ordered the bus company in May, 2019 to pay the bank for breaching the agreement.

The company entered into a lease agreement with AfDB on October 22, 2007 and leased seven Scania Marcopolo buses.

Under the agreement, the company had to settle the initial payment of $579,000 that was to be followed by 35 consecutive monthly installments, including interests.

The regional bank sued the fleet company in 2016 in the High Court (Commercial Division) for payment of $776,282 in rental arrears, interest and general damages after accusing it of defaulting the agreement.

The court issued its judgment in May, 2019 and ordered Hood Transport to pay the claimed amount plus interest.

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Hood aggrieved

Hood was aggrieved by the decision and advanced to the Court of Appeal. Armed with five grounds of appeal, the company claimed, among other things, that the trial judge did not accord them the right to prosecute and close their case, hence denying them the right to be heard.

It was their contention that the trial judge wrongly removed paragraphs of their witness statement, which was yet to be adopted as part of the evidence before the trial court.

They further argued that upon admission by a witness by Hood Transport that they did not exercise their right of repossession as per contract, the trial court erred in ordering the appellant to pay $776,282 with interest and costs, contrary to the parties’ agreement.

Hood Transport was represented by advocates Majura Magafu and Hosea Chamba while the bank had the services of Mr Grabriel Mnyele.

Mr Magafu argued at the hearing of the appeal that his client was denied the right to be heard. According to him after the court expunged paragraphs 7,9,10 and 11 from the appellant’s witness statement, the statement was admitted without the witness allowed to submit the lease agreement that also featured in the witness statement.

The lawyer extended his submission on the struck out paragraphs, arguing that the trial judge misdirected herself and incorrectly struck out the paragraphs from the document which explained the documentary evidence involved, such as financial statements and receipts of payments, which were listed and adopted to form part of evidence before the trial court.

“Had the documents been admitted or paragraphs not struck out, the court would have a clear picture of what transpired, which it could not get after striking out those paragraphs and consequently arrived at the erroneous decision,” argued Mr Magafu.

Pressed by justices of appeal to expound on the reason by the trial judge in expunging those paragraphs, Mr Magafu submitted that the paragraphs were struck out because they were not pleaded, even though at the time, the list of additional documents to be relied on had already been filed.

According to him the trial judge wrongly applied Rule 53 of the High Court (Commercial Division), Procedure Rules of 2012 and her decision was erroneous.

According to the rule, the court may order that any inadmissible, scandalous, irrelevant or otherwise or oppressive mater be struck out of a witness statement during the hearing of the suit and upon an oral application by a party or by the court without any request from parties.

Mr Magafu felt it was wrong for the judge to proceed with hearing of the matter without allowing the appellant’s witness to be heard, thus subjecting the witness to cross-questioning.

The justices of appeal also explored from Mr Magafu if the appellant had another witness to call but there was no response on the question.

Mr Magafu also contended at the hearing of the appeal that the trial judge did not evaluate and analyse the evidence, including the lease agreement.

For his part, Mr Grabriel Mnyele who represented AfDB maintained that the trial judge did not base her Rule 53 of the commercial court rules which she applied when striking out paragraphs from the appellant’s witness statement.

He dismissed Mr Magafu’s assertion that his client was denied the right to the heard, saying that it was incorrect contention by Mr Magafu that the witness statement should have been admitted first and dealt with later, since after admission, the witness statement becomes part of the record, hence tricky to do anything.

Mr Mnyele argued further that the complaint the respondent did not exercise their right of repossession as per the contract was never raised before the High Court, nor was it part of the appellant’s amended written statement or one of the framed issues, addressed by the trial judge.


Appeal fails

After examining the entire record of appeal and sieving through the counsel for the parties submissions, justices of appeal--Augustine Mwarija, Barke Sehel and Patricia Fikirini--were convinced that the appeal was lacking in merits and dismissed it with costs.

The justices said the trial judge correctly passed over the appellant’s witness because the contested paragraphs together with the documents referred in it had already been struck out.

“Subsequently, the appellant’s case was closed since no more witness statement were filed, and the defence case was closed. The claim by Mr Magafu that the appellant’s right to prosecute and close his case were hindered, hence interfering with the right to be heard, is unsupported.

“Similarly, his (Magafu’s) argument that the expunging of paragraphs should have come after the witness statement’s admission rather than before has no basis. This is because the witness statement becomes and forms part of the records upon admission thus could not be challenged after its admission,” said the judges.