How skipping mediation turned sour for CNBMI Tanzania

Dar es Salaam. A case in which distributor of building materials, CNBMI Tanzania Limited, had sued Bujiku Investment Limited for breach of a contract for supply of cement provides a good lesson how failure by parties to resolve disputes through mediation can sometimes turn to be costly.

After spending ten months in pursuing of Sh98 million that was later reduced to Sh19 million from Bujiku Investment in court corridors, CNBMI has found itself losing the case, with the judge reminding parties on the importance of exploring mediation process to settle disputes.

“Just by way of passing, this suit, reasonably, was to end up in mediation stage to avoid unnecessary costs to parties if parties were well advised.

“I strongly urge parties’ learned advocates to use, encourage and exploit fully mediation process with more commercial science than litigation science alone,” said Justice Stephen Magoiga of the Commercial Division of the High Court of Tanzania.

It all started on July 4, 2020 when CNBMI entered into an oral agreement with Bujiku Investment for the supply of 7,440 bags of Simba Cement Barabara brand at Sh17, 000 per bag.

Under the agreement, Bujiku Investment was to supply CNBMI with Simba Cement Barabara brand. In compliance with the terms of the agreement, the plaintiff on 10 July, 2020 transferred to Bujiku Investment Sh120 million.

It was alleged in court that up to July 21, 2020, Bujiku had only been able to supply 1,240 bags out of the agreed 7,440 bags, leaving undelivered balance of 5,580 bags worth Sh98.2 million.

Following the delay, the CNBMI cancelled the order and sued Bujiku Investment in December 2020 for the payment of Sh98 million in outstanding balance of unsupplied bags of cemenbt.

Each party threw blame at each other for the breach of contract. While the suit was still pending in court in March this year, parties signed a partial deed of settlement after Bujiku agreed and paid Sh67.5 million being part of the claimed amount.

On the other hand, the company, wanted the remaining Sh19 million to be off set to carter for the loss it incurred following the unilaterally cancellation of the order.

In his recent decision, Justice Magoiga sided with the Bujiku Investment that it was CNBMI which breached the terms of the contract.

“Having gone through and considered pleadings of both sides, testimony and exhibits, I am satisfied beyond reasonable doubt that in the circumstances of this suit it was plaintiff who breached the terms of the contract.

“I am taking this stance because the time for delivery of cement was not stipulated and therefore cannot be taken as a ground for cancellation of the ordered consignment,” said the judge.

The judge also said since Bujiku Investment was not a manufacturer of the ordered cement but just a supplier, it was unfair to shift blame on him for the delayed supply of cement.

The judge also said the company had managed to prove it incurred cost for transportation of cement before the unilateral termination of the order, thus it was entitled for payment of Sh19 million by way of set off.