Dar es Salaam: Court reverses breach of contract judgment over CRDB Bank

Written by FAUSTINE KAPAMA.

THE Court of Appeal has reversed the High Court's judgment requiring CRDB Bank PLC to pay South Freight and Export Company Limited (South Company) over 200m/-, for breach of contract involving transfer of shipping documents to Durban, South Africa.

"We find no liability for damages can arise where there is no contractual liability. The award for damages both special and general by the trial court in favour of the respondent (South Company) is set aside," Justices Edward Rutakangwa, Nathalia Kimaro and William Mandia ruled.

They allowed the appeal lodged by CRDB Bank to oppose the decree given by then High Court Judge, Musa Kipenka, on June 24, 2011, observing that for the bank to be bound by shipping documents there must have existed privity of contract to join the third party, the consignee to the shipping contract.

"Such privity was missing, so even if the appellant (Bank) handled the documents, he was under no contractual obligation to do so. The High Court was led to find liability on the part of the appellant after it adopted the Uniform Rules for Collection.

We are of the opinion that this was misdirection," they said. It was alleged before the High Court that the South Company entered into a contract for the export of 300 metric tonnes of sisal fibre, groundnuts and gemstones. To finance the contract, the South Company applied for and was granted overdraft facilities by the bank amounting to 25m/-.

The contract for the supply of sisal fibre, groundnuts and gemstones was made with Unicord of South Africa and was a continuing contract of one year. After securing the overdraft facility, the South Company started the business of export of sisal fibre.

On October 23, 1998, South Freight and Export Company Limited exported 15 metric tonnes vide bill of lading number 953 and on November 21, 1998, it exported other 15 tonnes vide bill of lading number 989.

According to the testimony of the South Company's managing director, the bank delayed in sending the shipping documents to the consignee in South Africa. He allegedly made physical check in the bank’s office on November 10, 1998 and found the documents still lying with the bank's export officer.

Such testimony shows that the South Company boss arranged for the shipping documents to be delivered, though late, but that was never done. All the same, South Freight and Export Company Limited managed to get paid for the two consignments it had exported.

On November 2, 2004, South Freight and Export Company Limited filed the suit against CRDB Bank in the High Court at Tanga, claiming 36,500 US dollars as loss of profits for breach of contract and 200m/- as general damages for loss of reputation, credibility and financial embarrassment.

The CRDB Bank, in its defence, requested for dismissal of the suit on ground that it was not bound to send the shipping documents to the consignee. But in his judgment, Judge Kipenka granted the relief sought by the South Company, but reduced the claimed amount of 200m/- damages to 100m/-.

Source: http://www.dailynews.co.tz/index.php/local-news/17887-court-reverses-breach-of-contract-judgment-over-crdb-bank