IN THE COURT OF APPEAL OF TANZANIA

AT PAR ES SALAAM

( CORAM: MWAMBEGELE. J.A.. FIKIRINI. J.A, And MAKUNGU. J.A.l

CIVIL APPEAL NO. 274 OF 2021

JM HAULIERS LIMITED...... ..............................................................APPELLANT

VERSUS

ACCESS MICROFINANCE BANK (TANZANIA) LIMITED

Former ACCESS BANK TANZANIA..................................................RESPONDENT

(Appeal from the Judgment and Decree of the High Court of Tanzania,

(Dar es Salaam District Registry) at Dar es Salaam)

(MansoonJ)

dated the 17th day of June, 2021

In

Civil Case No. 118 of 2019

JUDGMENT OF THE COURT

18th July & 26th August, 2022.

FIKIRINI, J.A.:

The plaintiff who is now the respondent, Access Microfinance Bank

(Tanzania) Limited, formerly known as Access Bank Tanzania Limited,

successfully sued the appellant, J.M. Hauliers Limited, before the High
Court in Civil Case No. 118 of 2019, claiming the appellant's vacant

possession and eviction order from the suit property in Tungi-Kigamboni

with residential licence No. 002145-TMK/KNG/TNG31/24, Temeke Dar es

Salaam (the suit property). Along the same line, the respondent prayed for

a permanent injunction, and punitive damages to the tune of Tzs.

200,000,000/= (Tanzania Shillings Two Hundred Million) and general

damages of Tzs. 100,000,000/= (Tanzania Shillings One Hundred Million).

Aggrieved by the decision, the appellant lodged this appeal, but

before we deal with the appeal, a brief history climaxing in the present

appeal is necessary. In July, 2015 the appellant obtained a bank loan of

Tzs. 600,000,000/= (Tanzania Shillings Six Hundred Million Only) from the

respondent bank. The loan, exhibited by exhibit PI, was with 2% interest

per month, an extra 1% upon default or delayed instalments for the first

day, and 1.5% for the rest of the days of default. As security for

repayment of the loan amount, the appellant mortgaged a suit property

vide "Leseni ya Makazi" (exhibit P2), valued at Tzs. 1,050,000,000/=

(Tanzania Shillings One Billion and Fifty Million Only), and six (6) motor

vehicles with trailers registration cards (12 cards). The appellant was

2
required to make 27 monthly instalments of Tzs. 29, 113, 399.91/= per

month to pay off the loan by or on 6th November, 2017.

The appellant paid some instalments but later defaulted. Despite

follow ups, the appellant could not fulfil her obligation. The respondent was

thus compelled to issue default notice on 2nd August, 2016, informing the

appellant of the outstanding debt to be Tzs. 17, 097,429.65 (Tanzania

Shillings Seventeen Million Ninety Seven Thousand Four Hundred Twenty

Nine and Sixty Five cents) being the principal amount, Tzs. 12, 032,285.76

(Tanzania Shillings Twelve Million Thirty Two Thousand Two Hundred

Eighty Five and Seventy Six Cents) being accrued interest, and penalties

accrued to Tzs. 29,112,206.56 (Tanzania Shillings Twenty Nine Million One

Hundred Twelve Thousand Two Hundred and Six and Fifty Six Cents)

making a total of Tzs. 58, 241,921.97 (Tanzania Shillings Fifty Eight Million

Two Hundred Forty One Thousand Nine Hundred Twenty One and Ninety

Seven Cents). The respondent had to recall the entire loan of Tzs. 534,

317, 368.41.

In its judgment dated 17th June, 2021, the High Court decided in

favour of the respondent and ordered the sale of the suit property in
Tungi-Kigamboni, Dar es Salaam, establishing vacant possession of the suit

property to Rio Development Company Limited or the plaintiff, failure of

which an eviction order be issued against the appellant. The court also

ordered a permanent injunction against the appellant and payment of

general damages of Tzs. 100,000,000/= (Tanzania Shillings One Hundred

Million) plus costs of the suit.

The exercise of executing the court decree was not easy as the

appellant avoided service. The respondent had thus to resort to using

courier services to serve the appellant with the default notice of sixty (60)

days. Exercising her rights under the loan agreement (exhibit PI), the

respondent appointed Destini Company Limited to sell the suit property

pledged as collateral. The appointed auctioneer carried auction publication

in Mwananchi Newspaper of 12th June, 2019 (exhibit P10) and the auction

was carried out on 29th June 2019, after the initial auction on 22nd June,

2019 was postponed at the instance of the appellant. The appellant filed in

the High Court Land Division, Miscellaneous Land Application No. 301 of

2019 seeking for a temporary injunction. On the 21st June, 2019, a day

before the auction, the appellant's counsel informed the court that parties

have agreed that the appellant pays the promised Tzs. 100,000,000/=. The
appellant failed to fulfil her obligation. The auction was thus postponed to

29th June, 2019, in which Rio Development Company Limited (the bonafide

purchaser) emerged as the highest bidder by purchasing the suit property

at Tzs. 750,000,000/=. Since the appellant refused to give vacant

possession of the suit property to the bonafide purchaser, the respondent

sued the appellant in Civil Case No. 118 of 2019.

As intimated earlier, aggrieved with the decision, the appellant

resorted to this Court, raising four (4) grounds of appeal

1. That, the honourable Judge, erred in law and fact by holding that the
60 days default notice was served on the appellant and refused the
service; thereafter, the appellant was properly served through courier
services.
2. That, the honourable Judge erred in law and fact by holding that the
respondent had a law ful title over the su it property.
3. That, the sale o f the su it property was tainted with irregularities,
including the absence o f the valuation report.
4. That, the honourable Judge erred in law and fact by failure to
understand that there was no public auction conducted on 2 9 h June,
2019.

At the appeal hearing on 18th July, 2022, Mr. Frank Mwalongo,

assisted by Mr. Sylivester Mulokozi, both learned advocates appeared for

5
the appellant. The respondent had the services of Mr. Howard Macfarlane

Msechu and Mr. Humphrey Mwasamboma, also learned advocates.

We have incorporated both advocates' oral and written submissions

in summarizing what transpired before the Court and contained in the

record of appeal before us.

Addressing us, Mr. Mwalongo, outright prayed to adopt the written

submission filed on 20th September, 2021, as per Rule 106 (1) of the

Tanzania Court of Appeal Rules, 2009 (the Rules).

On the first ground that the sixty (60) days default notice was not

served on the appellant, Mr. Mwalongo referred us to page 56 of the

record of appeal, on PW l's testimony that after failing to serve the

appellant physically, the respondent subsequently, opted for courier

services as an alternative. However, the courier service opted, as

contended by PW2, in his testimony on page 63 of the record of appeal

was equally not received. Mr. Mwalongo, further contended that PW2 never

knew the contents of what he was serving the appellant. Since the

unserved notice via courier mode was returned to the appellant's office, it

6
made a mandatory requirement on service of the default notice to the

appellant not complied with.

On the second ground that the respondent had a lawful title over

the suit property, Mr. Mwalongo faulted the trial Judge's decision

protecting the bonafide purchaser under sections 126 and 135 of the Land

Act, Cap. 113 R. E. 2019 (the Act). He contended that no change of

ownership had occurred, referring us to pages 179 to 182 of the record of

appeal and exhibits P2 (leseni ya makazi) and P3 (the registration cards)

that it was still in the appellant's name and not that of the alleged

purchaser. Cementing his proposition, Mr. Mwalongo referred us to a High

Court decision which he would wish this Court to affirm, the case of the

Registered Trustees of African Inland Church of Tanzania v. the

Cooperative Rural Development Bank PLC (the CRDB) and 3

Others, Commercial Case No. 7 of 2017, which quoted the case of Moshi

Electrical Light Co. Ltd & 2 Others v. Equity Bank (T) Ltd & 2

Others, Land Case No. 55 of 2015 ( both unreported), that the provision

of section 135 of the Act, bars reversing the completed process of sale and

transfer of ownership of the land to the bonafide purchaser, on account of

procedural matters such as failure to issue or serve the required notice or

irregularity in the sale.

On the third ground the complaint was that the sale of the suit

property was tainted with irregularities, including the absence of a

valuation report. Starting with the valuation report, Mr. Mwalongo argued

that the suit property was sold without the respondent establishing the

current market value of the sold property. He even challenged the amount

of Tzs. 1,680,000,000/= (Tanzania Shillings One Billion Six Hundred Eighty

Million Only) stated in the loan agreement reflected on pages 105 to 112 of

the record of appeal as to have no basis since it was not derived from a

valuation report but rather an estimate from parties, argued Mr. Mwalongo.

Although the trial judge admitted that there was no valuation report, she

still did not find that as an irregularity; instead, she shifted the burden to

the appellant to tender a valuation report rather than the res ndent. This

according to Mr. Mwalongo contravened the requirements of section 133

(1) of the Act and had an adverse effect on the price fetched at the

purported auction.

8
 On auction's condition of payment Mr. Mwalongo submitted that the

successful bidder has to pay 25% on the same date and 75% after

fourteen (14) days. However, in the present circumstance and according to

exhibit D1 found on page 153 of the record of appeal, it shows that the

75% was paid outside the fourteen (14) days prescribed. And when PW5

was cross-examined as exhibited on page 84 of the record of appeal, he

failed to furnish proof that there was bank transfer carried out on or before

15th July, 2019 in that regard. Buttressing his position, Mr. Mwalongo

referred us to another High Court decision in the case of Maimuna Musa

Sagamiko v. African Banking Corporation & 2 Others, Land Case No.

193 of 2015 (unreported), in which the trial court nullified the auction

conducted for failure to observe the mandatory procedures.

The fourth ground is that the sale was conducted without a public

auction. Mr. Mwalongo referred us to page 13 of the record of appeal and

paragraph 11 of the plaint that the auction was conducted on 29th June,

2019. To support this assertion, the respondent tendered exhibit P6

(amended plaint), which was solely relied on by the trial court in arriving at

its decision. Mr. Mwalongo challenged the auction conducted on 29th June,

2019, not to be the auction date reflected on page 68 of the record of

9
appeal. The newspaper advertisement date was that there would be a

public auction on 22nd June, 2019. Mr. Mwalongo dismissed the auction

conducted on 29th June, 2019, without advertisement as a sham and was

carried out contrary to section 12 (2) of the Auctioneers Act, Cap. 227 R. E.

2002 (the Auctioneers Act).

Concluding his submission, he urged us to allow the appeal and

nullify the auction.

Mr. Msechu, apart from adopting the written submission filed on

20th October, 2021, addressed us as follows: on the default notice

submission, he contended that the sixty (60) days notice was served on

the appellant who declined to accept service. He referred us to PW l's

testimony on page 52 and exhibit P4 and PW3's account, on pages 65 to

66 of the record of ppeal. The courier service option was considered after

the initial service was rejected. Countering Mr. Mwalongo's submission on

service of the default notice vide courier service option, Mr. Msechu, invited

us to look at sections 4 (1) and (2) of the Law of Contract Act, Cap. 345

(the LOCA) on communication when is complete, by stating that once the

envelope has been posted, that is sufficient service of the intended

10
material which in the present case was service of the default otice. He thus

urged us to find that the trial judge was correct when she concluded that

default notice service was duly effected. He further submitted that both

exhibits, P4 and P5, were admitted without objection, connoting that

service rendered was acknowledged. Fortifying his position, he cited the

case of Joseph Kahungwa v. Agricultural Inputs Trust Fund & 2

Others, Civil Appeal No. 373 of 2019 (unreported). In that case, the

Court dismissed the complaint after the appellant failed to heed to the

notice served upon him, while a copy of the said notice was tendered and

admitted as exhibit D3 without objection.

In the present case, since both exhibits P4 and P5 were admitted

without objection, as reflected on pages 54 and 62 of the appeal record,

the default notice could thus not be challenged at this stage, argued Mr.

Msechu. On the reliance of exhibits P6 (amended plaint) and P7 (letter to

the appointment of auctioneer), he contended that the use of exhibit P6 by

the trial judge to justify service of the default notice was not irrelevant. He

nonetheless admitted that the use of exhibit P7, by the trial judge was

unrelated, but he was quick to point out, that no miscarriage of justice had

been occasioned. In support of this point, he cited the case of Selemani

li
Nassoro Mpeli v. R, Criminal Appeal No. 68 of 2020, where this Court

referred to a holding of the Supreme Court of India in Thungadhadra

Industries Ltd v. State of Andra Pradesh [(1964) SC1372], in which it

was stated that no judgment could attain perfection or be beyond criticism.

Responding to the second ground of appeal, on the holding that

the respondent had a lawful title over the suit property, Mr. Msechu

outlined the following reasons for contesting the submission by Mr.

Mwalongo: one, on the transfer of ownership, he argued that transfer of

ownership of suit property is a process, however in the present situation, it

was the appellant who prevented the process from being carried out by

seeking and getting a restraining order. Two, he disputed the assertion

that protection of a bonafide purchaser only comes into play where the

sale is concluded as not flawed. Expounding on the position, Mr. Msechu

cited the provisions of section 135 (5) of the Act, which protects the

bonafide purchaser after the fall of the hammer in a public auction.

Cementing his argument, he cited the case of The National Bank of

Commerce v. Dar es Salaam Education and Stationery [1995] T. L.

R. 272, in which the Court expressed the powers of the mortgagee when

12
dealing with mortgaged property by way of sale, the court cannot interfere

unless there is reason to do so.

Reacting to the issue of the price fetched at the auction being low,

Mr. Msechu disputed that by referring to the case of Juma Jaffer Juma v.

Manager of the People's Bank of Zanzibar Ltd & 2 Others, [2004] T.

L. R. 332, where the Court stated that prices fetched at a public auction

are market price at the auction. He thus urged us to disregard the

appellant's complaint on the price.

Examining the case of The Registered Trustees of the African

Inland Church (supra) cited in support of Mr. Mwalongo's submission that

respondent could not have a lawful title over the suit property, Mr. Msechu

contended that the facts in the cited case were distinguishable from the

present case, in the sense that in the cited case the sale of the mortgaged

property took place before the lapse of sixty (60) days whereas in the

present case the contentious issue is on whether the sixty (60) days notice

was issued or not, of which Mr. Msechu, asserts the notice was issued to

the appellant.

13
 The third ground of appeal is that the sale of the suit property was

tainted with irregularity. It was Mr. Msechu's submission that the property

was sold at Tzs. 750,000,000/=, following the law as the price obtained at

the public auction was above 75% of the market value. The appellant's

complaint that the property was sold at a low price was well answered by

the trial judge, who wanted proof from the appellant as per sections 110

and 111 of the Evidence Act, Cap 6 R. E. 2019 (the Evidence Act), that the

one who alleges must prove, submitted Mr. Msechu. The learned advocate

again drew our attention to the case of Joseph Kahungwa (supra), in

which, when faced with the same scenario, we restated the cardinal

principle of law that in civil cases, the burden of proof lies on the party who

alleges anything in his favour.

On the issue of the payment of the purchase price, Mr. Msechu

submitted that there was full compliance as the payment was to be made

initially to the Legal Recovery Collection Account and later transferred to

the client's account. According to Mr. Msechu, exhibit D1 cannot justify the

allegation that payment was not made after the expiry of fourteen (14)

days from the auction date. He thus contended that the case of Maimuna

Mussa Sagamiko (supra) was distinguishable, as in the cited case, the

14
sale was conducted after three (3) days, while in the present case, the sale

was conducted after sixteen (16) days from the date of advertisement.

On the fourth ground, that no public auction was conducted on

29thJune, 2019, he submitted that the auction, which was to be carried out

on 22nd June, 2019, was postponed to 29th June, 2019, at the appellant's

instance. Otherwise, the respondent had complied with section 12 (2) of

the Auctioneers Act, that the sale should take place at least after fourteen

(14) days of the public notice.

Giving a hand to Mr. Msechu's submission, Mr. Mulokozi learned

advocate denounced the assertion that the auction needed to be re­

advertised. He further stated that even the seven (7) days extension that

the auction will be carried on 29th June, 2019 was to the appellant's

advantage. There was thus no cause for alarm.

Based on his submissions Mr. Msechu implored us to dismiss the

appeal with costs as it is lacking in merit.

In a brief rejoinder, Mr. Mwalongo reiterated his earlier submission

that there was no compliance with the mandatory requirement of issuing

sixty (60) days default notice, and the auction conducted on 29th June,
15
2019 was unlawful. On the protection of the bonafide purchaser, Mr.

Mwalongo submitted that to have surfaced after the finding that no default

notice was served on the appellant as required in law.

In examining the appeal before us, we have dispassionately

considered the learned advocates oral and written submissions, the record

of appeal, cited references, and other things, amongst them undisputed

facts. Our close examination of the record of appeal revealed the following

uncontested facts: one, that there was a loan facility agreement between

the appellant and the respondent to the tune of Tzs. 600,000,000/=. The

said loan agreement was duly signed on 9th July, 2015 by both parties as

exhibited in PI. Two, the said loan was secured by the suit property

situated at Tungi-Kigamboni Municipality within Dar es Salaam City

comprising residential licence No. 002145-TMK/KNG/TNG31/24. Three,

the loan was to be repaid within twenty seven (27) months at the monthly

instalment of Tzs. 29, 113, 399.91/= Four, the last payment was to be

made by or on 6th November, 2017. Five, that appellant managed to pay

some instalments. Six, failure to service the loan debt resulted in the

mortgaged property to be sold at an auction conducted on 29th June, 2019.

16
 What is in dispute and subject to our determination are one,

whereas the respondent maintained that a sixty (60) days default notice

was issued but declined by the appellant compelling the respondent to

resort to using the courier service, the appellant disputes to have been duly

served with the default notice. Two, whether the respondent had a lawful

title over the suit property. Three, whether the sale of the suit property

was tainted with irregularities, and four, whether there was a public

auction conducted on 29th June, 2019.

Starting with the first ground on the issuance of sixty (60) days of

the default notice, the opposing accounts are, according to DW2, an

executive director of the appellant, the appellant was never served with the

sixty (60) days notice or refused service as alleged by the respondent. On

the contrary through PW1 and PW3, they contend that before issuing the

default notice, the respondent made several unsuccessful calls and visited

the appellant's business, as reflected on pages 52 and 65 to 66 of the

appeal record. Later the appellant issued a default notice which was

rejected. Apart from PW1 and PW3's account, there was also the account

of PW2, the Postal Regional Manager, who testified to have served the

17
appellant with sixty (60) days default notice through courier services as

exhibited by P5.

Even though DW2 maintained that no service was made and Mr.

Mwalongo, in his submission, underscored that by arguing, one, that there

was no proof of physical service of the default notice issued on 2nd August,

2016, and two, there was also no proof that it was due to rejection of the

physical service the respondent resorted to courier service option. There is

ample evidence that the appellant was initially served but rejected service.

We say so based on the evidence found on pages 52 and 56 of the record

of appeal, when PW1 was testifying in chief and re-examined. This is what

can be gathered from page 52:

"A fter serious follow up, we decided to forw ard the

60 days notice (notice to the defendant).............In
fact, the clien t refused to adm it the notice by
signing. I t is from that act we decided to deposit the
said notice to Post M aster."

In addition, on page 54 of the record of proceedings, PW1 tendered

a copy of default notice issued, and the same was admitted without

objection as exhibit P4. When cross-examined, as reflected on page 56 of

18
the record of appeal, PW1 maintained that the appellant was served, but

rejected service, which compelled the respondent to opt for courier service

known as EMS, which was also declined. Exhibit P5 on page 143 proves

notice was served on the appellant on 19th September, 2016 as indicated

on pages 62 and 63 of the record of appeal, but not received as per PW2's

testimony.

We have also considered DW2's testimony, as exhibited on page

91. Whereas he does not dispute being in default of repaying the loan and

that the repayment period expired since 2017, but seemed to have been

bothered and annoyed by the respondent's follow-ups. This is an extract

from his testimony:-

" / was servicing the loan; I paid 13 instalm ents,

which is 50% o f the loan. I encountered
problem s,............. I was com m unicating with the
bank by telephone calls and letters. The loan was
unpayable. The rem aining instalm ents was Tzs. 29,
113,300/= and the penalty and arrears were too
much. The arrears and penalties reached Tzs.
90,000,000/= a month. I started worrying that
whatever I deposit would be used fo r repaying the

19
 arrears and penalties. The bank insisted that I m ust
pay the loan......"

It is our firm view, and evident from the extract that the appellant

was avoiding service, knowing by receipt of service of the default notice

while she could not repay the loan, the collateral would be sold. And this

can further be proved by all the efforts the appellant undertook such as

filing a case in the High Court Land Division and an application seeking

injunction order from the court stopping the respondent from exercising its

right for recovery measures. DW2's testimony on page 91 of the record of

appeal speaks volumes. At this juncture, we would let the record speak for

itself:

" / went to court, and the bank stopped threatening me. I file d
a case a t the Samora Avenue, High Court Land Division. Then
we sat down with the bank for negotiation. We got the
injunction and the bank stopped auctioning o r threating me.
We continued with the bank on how to repay the loan. The
bank insisted I m ust pay, the loan am ount increased up to 1.8
billion. I stopped paying the loan."

The recovery measures are well spelt in Clause 3:2 of the loan

agreement (exhibit PI). The Clause states thus:-

20
 " Wenye amana wana haki ya kuuza amana
isipokuwa lazim a izingatie kifungu cha 3:6 cha
Mkataba huu."

Which in English can be translated to mean:-

"The depositors have the right to sell the deposit

but they must comply with Clause 3.6 of this
Agreement."

While Clause 3:6 provides as follow s:

"Wenye amana hawatakiwi kupunguza tham ani ya

amana chini ya kiwango kilichokubaliw a kwenye
kifungu cha 2:3 cha M kataba."

Which in English can be translated to mean:-

"The depositors are not supposed to reduce the

value of the deposit below the level agreed in article
2:3 of the Agreement."

And Clause 2:3 reads thus:-

"Wenye amana wanathibitisha kwamba vifaa na

m alighafi zilizotolew a kama amana vina tham ani
ifuatayo:

(a) Shillingi......... (kwa maneno)

(b) S h illin g i 1,680,000,000/= (Kwa maneno:

BHioni m ia sita them anini)"
21
 Which in English can be translated to mean:-

"The depositors confirm that the equipm ent and

m aterials given as deposit have the follow ing value:

(a) Shillings............... (in words)

(b) Shillings 1,680,000,000/= (in words: One
B illion S ix Hundred and Eighty) . "

Besides, there is sufficient evidence that while all this was going on,

the appellant was still negotiating with the respondent. To us that is proof

that the appellant was fully aware she had defaulted in repaying the loan

and what would be the consequences even without issuance of default

notice, though there is ample evidence that she was twice served with

default notice way back in 2016, but in both instances rejected service.

Considering all that has been going on and the fact that the default

notice saga commenced in 2016 whereas the actual auction took place in

June, 2019, it means all along the appellant despite rejecting the two

default notices served one physically and the other through courier service,

was aware she was in default of servicing the loan. The respondent had no

option but to recall the entire outstanding loan.

Mr. Mwalongo disagreed with the manner the recovery measures was

carried out contending that no default notice was served on the appellant,
22
hinging his stance on the provision of section 127 (2) (d) of the Act, which

provides

" That, after the expiry o f sixty days follow ing receipt
o f the notice by the mortgagor, the entire am ount o f
the claim w ill become due and payable, and the
m ortgagee m ay exercise the right to se ll the
m ortgage land."

We align ourselves with what the provision provides, as well

persuaded with the position taken in the case of Joseph Kahungwa

(supra). Faced with almost the same scenario, we stated:

"Unfortunately, with due respect, the appellant did

not heed to the notice. The appellant cannot be
heard now to dispute the notice dully served upon
him but he rejected it and was adm itted in evidence
w ithout objection ............ "

Also, Mr. Mwalongo's, argument that the contents of courier

service were unknown if it was a default notice or not, was countered by

Mr. Msechu who argued that the disclosure of contents in the envelope is

not required unless the posted item is subject to the insurance policy. We

can reason with Mr. Msechu since the appellant did not dispute the address

23
indicated in exhibit P5, it affirms that the address was theirs, and courier

service was correctly effected, even though declined. Given that, the

courier address was not disputed or receipt of the stated post and even

when the copy of receipt proving service was tendered, it was not objected

to, the appellant was, therefore, the one to tell the contents in the

envelope to disprove that it was not a default notice but a different

document received from the courier service, which he did not.

All the above factors assessed together make us agree with Mr.

Msechu that the default notice was issued but rejected by the appellant.

And this answers the first ground in the negative.

Now examining the second ground on the respondent's lawful title

over the suit property, the appellant asserts that the title over the said

property is still in the appellant's name and not that of the respondent.

Therefore, the respondent could not claim to have a lawful title.

Consequently, the principle protecting the bonafide purchaser could only

take effect upon the sale and transfer conclusion. The respondent

countered the statement, one, that the transfer of ownership is a process,

24
and two, the appellant is the one who hindered the transfer process to be

accomplished.

The fact that the title is still in the appellant's name does not

negate the fact that the same was pledged as collateral to secure the

mortgage. The appellant did not dispute this and was fully aware of the

consequences once repayment of the loan was defaulted. Moreover, this is

well spelt in exhibit PI, which the appellant duly signed before the grant of

the loan. Based on the loan agreement and the fact that the appellant

defaulted to discharge the loan, the respondent was thus at liberty to

exercise its right to sell the mortgaged property under section 132 (1) and

(2) of the Act. There are a number of our decisions in this regard, and

one such case is The National Bank of Commerce (supra). The facts of

the case were that the respondent borrowed money from the appellant

bank, and a house was pledged as security. After failing to repay the loan

the bank exercised its rights under the mortgage deed and sold the house.

Not amused with the action, the appellant filed a suit. On appeal, the Court

held:

"Where a m ortgagee is exercising its pow er o f sale

under a mortgage deed, the court cannot interfere
25
 unless there was corruption o r collusion with the
purchaser in the sale o f the property."

Transfer of right of occupancy and registration does not happen

automatically. It is a process. The purchaser of the mortgaged property

becomes a bonafide purchaser right after the fall of the hammer at the

auction and ought to be protected. Moreover, in the present case, since no

corruption or collusion is registered, we find the bonafide purchaser

deserves protection under section 135 (5) of the Act, which provides:-

"/4 person referred to under subsection (1) whether

acting fo r him self or by o r through the mortgagee
from whom that person obtained the m ortgaged
property sh a ll be entitled to possession o f the
m ortgaged property im m ediately upon acceptance
o f the b id a t a public auction o r contract o f sale o f
the m ortgaged property."

The appellant's reference to the cases of The Registered

Trustees of the African Inland Church of Tanzania (supra), which

quoted the case of Moshi Electrical Co Ltd & 2 Others (supra), in our

view, the two cases are distinguishable. While in The Registered

Trustees of the African Inland Church of Tanzania, the issue was

26
about the issuance of sixty (60) days default notice, which was proved to

have not been effected in compliance with the law, in the present appeal,

there is evidence that the appellant was duly served with sixty days notice,

which was rejected. Also, the publication that there would be a public

auction was carried out in Mwananchi Newspaper, the fact not contested

by the appellant. The sale postponed on 22nd June, 2019 albeit on the

appellant request was conducted on 29th June, 2019, well beyond fourteen

(14) days prescribed under section 12 (2) of the Auctioneers Act, hence the

issue that the auction was illegal does not arise as would be the case in the

cited cases above.

The appellant has failed to challenge the legality of the auction

carried out on 29th June, 2019, in which Rio Development Co. Limited

emerged the highest bidder. The remaining task is to effect the transfer of

ownership from the appellant to the bonafide purchaser, although the

appellant has been hindering the process by failing to cooperate. Again,

the situation in the present case is different from that in The Registered

Trustees of the African Inland Church of Tanzania's

case, in which there was a court injunctive order sought by the appellant

and granted by the court.

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 We find no reason to fault the trial judge. This ground of appeal

equally fails.

Our next venture is to determine the third ground challenging the

sale of the suit property as being tainted with irregularities, including the

absence of the valuation report. We have examined the trial record, and it

is evident that prior to securing the loan, the appellant and the respondent

signed a loan agreement, exhibit PI found on pages 105 to 112 of the

record of appeal. The suit property was valued at Tzs. 1,050,000,000/=

while the other collateral was valued at Tzs. 630,000,000/= the total

adding up to Tzs. 1,680,000,000/=. Mr. Mwalongo, in his written

submission, argued that the suit property was sold four years after the loan

agreement was signed and without conducting any valuation to establish

the current value, which was contrary to section 133 (1) of the Act. The

provision states thus:-

"133.-(1) A m ortgagee who exercises a pow er to se ll the

m ortgaged land, including exercise o f the pow er to se ll
pursuance o f an order o f a court, o w es a d u ty o f ca re to
th e m ortg ag o r, any le n d e r u n d e r a su b se q u e n t
m ortg ag e in c lu d in g a cu sto m a ry m ortg ag e o r u n d e r a

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 lie n to o b ta in th e b e st p ric e re a so n a b ly o b ta in a b le a t
th e tim e o f s a le ."

[Emphasis added]

In the absence of a valuation report that the suit property had

appreciated in value, we find the appellant complaint unsubstantiated. The

appellant was in our observation obliged to furnish the court with the

valuation report showing the increase in value. Sections 110 and 111 of the

Evidence Act, (Cap. 6 R. E. 2019), require the one who alleges must prove.

The appellant is thus not exceptional. We wish once again to restate the

stance we took in Joseph Kahungwa (supra) when we stated:

"The appellant did not produce any evidence to

prove that the su it property could fetch m ore price
than the one sold. I t is a c a rd in a l p rin c ip le o f
la w th a t th e bu rd en o f p ro o f in c iv il ca se s lie s
on th e p a rty w ho a lle g e s a n y th in g in h is
fa v o u r."

[Emphasis added]

The suit property was sold at Tzs. 750,000,000/= which was the

best price as it was above 75% of Tzs. 1,050,000,000/= the value of the

property which secured the mortgage. Certainly, the obtained price cannot
29
be said to be unreasonable or that there was breach of duty of care

imposed on the respondent. See: Cuckmere Brick Co. Ltd v. Mutual

Finance Ltd [1971] Ch. 949.

Moreover, the auction conducted was governed by the Auctioneers

Act, not the respondent. Therefore, going by exhibit PI, the suit property

was sold at a good price and market value at the auction. Mr. Mwalongo's

argument on page 8 of the written submission that there was nowhere in

the said loan agreement (exhibit PI) indicating the value of the suit

property was derived from a valuation report. According to him, the figure

documented came from the parties and not from valuation report.

We are of the view that the appellant's compliant at this stage is

unwarranted. This because on page 100 of the record of appeal, DW2,

when cross-examined, admitted the value of the property to be Tzs.

1,050,000,000/= in 2015, and the loan agreement duly signed then was

still valid. In our observation, contesting the valuation exhibited in exhibit

PI at this juncture is an afterthought since the appellant had an

opportunity to raise the concern before signing the loan agreement. Based

on the above narrative, we find the trial judge was correct to place a

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burden of proof on the appellant, bearing in mind the appellant was the

one who alleged.

The appellant also claimed that the purchase price was not paid

according to the auction terms. The remaining 75%, supposed to be paid

within fourteen (14) days, was not paid timely, as exhibited by D1 found

on page 153. And the explanation given by PW5 indicated there was no

such transaction in the bank statement. However, scrutiny of exhibit D1

reveals that on 29th June, 2019, there was a transfer of 25% from the

public auction account, and the remaining balance, according to Mr.

Mwalongo, was not paid within fourteen days in this case which ought to

be on or before 15th July, 2019. PW5's reaction, as reflected on page 84

of the record of appeal, could only confirm what the auctioneer did, which

was to see the highest bidder deposit 25% as required by the auction

rules. On page 84 of the record of appeal, PW5 informed the court that he

took the highest bidder to the bank, and the rest was between the bank

and the purchaser. This account is supported by PW6's testimony on page

86, that after they were declared highest bidder, he informed his boss who

paid 25% of the purchase price. PW6 was issued with payment slip of the

paid amount. Reliance on exhibit D1 and failure by PW5 to indicate if the

31
remaining 75% was paid timely or not would in our considered opinion be

unfair to PW5.

In view of foregoing, we say the complaints are unfounded as there

was compliance with section 133 (1) of the Act. This ground is lacking in

merit.

The fourth ground is that there was no public auction conducted on

the 29th June, 2019. Mr. Mwalongo's submission on this point is to the

effect that since the auction was advertised to be conducted on 22nd June,

2019, but postponed to 29th June, 2019, the auctioneer ought to have

issued a fresh fourteen (14) days notice. The auction carried out after

seven (7) days was thus improperly conducted, he argued.

On the contrary, the respondent argued that the postponement of

the auction scheduled for 22nd June, 2019 was due to the appellant's

request before the court that she was ready to pay Tzs. 100,000,000/=.

The respondent had no reason to disbelieve the appellant. The auction was

thus postponed out of courtesy to accommodate the appellant, yet she

could not comply and pay the Tzs. 100,000,000/= as promised. The

32
auctioneer proceeded with the auction, which was postponed to 29th June,

2019.

Section 12 (2) of the Auctioneer Act, requires that the auction be

conducted after lapse of fourteen (14) days' notice. The appellant does

not dispute that. On page 97 of the record of appeal, DW2 admitted that

the auction date on the 22nd June, 2019, was published in the Mwananchi

Newspaper on 12th June, 2019. DW2 also does not dispute that there was

a promise made to pay Tzs. 100,000,000/= on 21rst June, 2019. Later the

promise was moved to 22nd June, 2019, but still nothing was forthcoming.

The auction rescheduled for 29th June, 2019, was, without a doubt, to give

room for the appellant to accomplish what she had promised she would do.

Since the postponement allowed the appellant to make payment as

requested, the fact never controverted, the appellant could not come

around and treat the generosity by suggesting the auction conducted on

29th June, 2019 was illegal. We do not find any non-compliance with or

auction being conducted contrary to the provision of the law. Section 12

(2) provides as follows:

33
 "No sale by auction o f land sh a ll take place u ntil
after a t le a s t fourteen days public notice thereof
has been given a t the principal town......"

[Emphasis added]

The law requires fourteen (14) days must have expired after the

notice advertising that there would be a public auction and not, as the

appellant suggested, a new advertisement should have been carried out.

Mr. Mwalongo cited the case of Maimuna Mussa Sagamiko (supra).

Besides it being the High Court decision, we find the same distinguishable.

In the cited case, the auction was conducted after three (3) days which is

different from the facts in the present case, in which the auction was

conducted after the expiry of sixteen (16) days. Furthermore, since the

auction was not cancelled as portrayed but postponed, we disagree that

there was a need to advertise a fresh auction.

Mr. Mwalongo has failed to persuade us that the auction conducted

on 29th June, 2019, was improperly conducted for lack of fresh auction

advertisement notice. The ground fails as well.

 In the end, and for the reasons given above, we find the appeal

lacking in merit and consequently dismiss it with costs.

DATED at DAR ES SALAAM this 24th day of August, 2022.

J. C. M. MWAMBEGELE
JUSTICE OF APPEAL

P. S. FIKIRINI
JUSTICE OF APPEAL

0. 0. MAKUNGU
JUSTICE OF APPEAL

The Judgment delivered on this 26th day August, 2022, in the

presence of Mr. Frank Mwalongo, learned counsel for the appellant and Mr.

Howard Msechu, learned counsel for the Respondent is hereby certified as

a true copy of the original.

A. L. KALEGEYA
DEPUTY REGISTRAR
COURT OF APPEAL

35