Felix Rutazengelera, hereinafter called the appellant, instituted a suit in the High Court at G Dar es Salaam in respect of a sum of money which he had deposited with the Cooperative and Rural Development Bank, hereinafter called the respondent bank. The suit was for damages allegedly suffered by the appellant as a result of negligence by the respondent bank in opening a deposit account as instructed by the appellant. The High H Court, Chua, J dismissed the suit with costs. The appellant was aggrieved by that decision, hence this appeal to this court. Mr Semgalawe, learned counsel, appears for the appellant in this appeal, whereas Mr Kalunga, learned counsel appears for the respondent bank. I
The memorandum of appeal contains two grounds which state as follows:
A `1. The Trial Judge erred in fact and in law in holding that the respondents were not negligent in failing to open a deposit account for the appellant as they were complying with court orders and therefore the appellant was not entitled to claim damages and interest.
2. The Trial Judge erred in law deciding that there is no merit in the prayers of the appellant, one B being loss of profit in the appellant's business, the reason being that the Trial Judge wonders as to why the appellant took no steps to raise money from his other business to mitigate such a loss, and that the Trial Judge was left with the impression that the appellant C had deliberately inflated the value of the orders that the appellant missed and the profit that could have accrued if the appellant had been able to supply the timber.'
In the course of hearing this appeal, the second ground was withdrawn by counsel for D the appellant. From the proceedings both in this court and the court below, it is apparent that the following matters are not in dispute between the parties. At the material time, the appellant was a customer of the respondent bank, where he had a current account at its Lumumba branch. He was also a customer of the National Bank of Commerce where E he had another current account at its City Drive Branch. On 29 December 1987 the appellant deposited a sum of Shs 14,000,000/= by personal cheque drawn on his current account with the National Bank of Commerce. The money thus deposited was part of a decretal sum of Shs 16,474,176/70 paid to him by the High Court at Dar es F Salaam, being the proceeds of a decree made in High Court Civil Case No 92 of 1982, in which the appellant, using the name of Felix Bwogi, was the decree holder. One of the judgment debtors in that case, namely the Registrar of Buildings, appealed to the Court of Appeal against the decision of the High Court. On 29 December 1987, that is the very G day when the appellant deposited Shs 14,000,000/= in his current account at the Lumumba branch of the respondent bank, an application for stay of execution was filed in the High Court by the Registrar of Buildings in respect of the pending appeal. H
There is also no dispute that after depositing the cheque of Shs 14,000,000/= the appellant instructed the respondent bank to transfer that money into a deposit account durable for a month. The respondent bank failed to comply with the appellant's instructions. On 20 January 1988, the High Court, Kyando, J made the following interim I order in respect of the application for stay of execution:
A `The application for stay of execution is indeed filed so until it is determined, monies are to remain where they are and status quo is to be maintained as Mr Kesaria has prayed for.'
There is also no dispute between the parties that thereafter there was a series of communications between the appellant and the respondent bank in the course of which B the appellant was informed by the respondent bank to the effect that his instructions were not complied with because of a court order. There is also no dispute that the appeal by the Registrar of Buildings was eventually heard by the Court of Appeal. The appeal was partly successful. On 7 December 1989, the High Court directed the C respondent bank to transfer to the High Court a sum of Shs 16,474,176/70 standing to the credit of the appellant at the bank. The respondent bank transferred only what it had in favour of the appellant, that is, the sum of Shs 14,000,000/=. D
With regard to matters which are in dispute between the parties to this appeal, it is the appellant's case that the respondent bank was duty bound to comply promptly with appellant's instructions to open a deposit account for the sum of Shs 14,000,000/=. It is E part of the appellant's case that there was no court order which prevented the respondent bank from complying with the relevant instructions, but the respondent bank negligently failed to do so thereby causing the appellant to suffer material loss.
The respondent bank's case on the other hand is to the effect that soon after the appellant had given instructions in respect of the deposit account, a court order was F received blocking the appellant's current account, with the result that the respondent bank was prevented from complying with those instructions.
The first important issue for consideration and decision in this case is whether the G respondent bank received any court order prior to the order made by Kyando, J on 20 January 1988. This issue was raised at the trial and in his judgment, the learned Trial Judge stated:
`Learned counsel for the plaintiff Mr Ukonga drew the attention of the court to the fact that the defence H had failed to render in court the order that the High Court had passed whose effect was to freeze the account of the plaintiff. I find the omission to have been a serious slip on the part of the defence. Nevertheless the omission was cured by the tendering of the court record which left no doubt at all on the fact that the plaintiff had been awarded the sum of 16.4 million shillings and that on 20 January I 1988 the High Court ordered that the money should be left where it was ...'
It is apparent that the learned Trial Judge found no evidence to suggest that a court order A existed prior to the order made on 20 January 1988. In the course of hearing this appeal, Mr Kalunga, learned counsel for the respondent, pointed to a document produced at the trial as Exhibit D2, being a copy of a ledger card in respect of the appellant's current bank account. The ledger card contains four significant handwritten B entries at different positions which read as follows:
Care. No withdrawal refer to chief manager 6 January 1988
No withdrawal C
Block as per High Court Order Ref No MC/S/Gen1/25 dd 6 January 1988
Account closed and balance remitted to the High Court of Tanzania Box 9004 DSM vide our BP/Cheque No BP/012929 dd 14 December 1989 D
Garnishee Order dd 7 December 1989 from High Court of Tanzania regarding civil case No 92/82.
Mr Kalunga has submitted to the effect that these handwritten entries are evidence of the E existence of a court order made on 6 January 1988 by virtue of the provisions of s 77 of the Evidence Act, 1967 which states:
`Subject to this Act, a copy of an entry in a banker's book shall in all legal proceedings be received as F prima facie evidence of such entry and the matters, transactions and accounts therein recorded.'
Mr Semgalawe has counter submitted to the effect that the presumption under s 77 applies only to matters of ordinary course of banking business, and that in the present case the presumption does not arise because it is not part of a banker's business to G receive court orders.
With due respect, we think Mr Semgalawe's counter submission is misconceived. While it is true that it is not part of a banker's business to receive any court orders, it is H certainly the law that the account of a bank's customer is liable to court attachment by Garnishee Order. The law in this country is similar to that applicable in England. According to EP Ellinger and E Lomnicka in Modern Banking Law, 2nd ed, p 339--340 the learned authors state: I
`At one stage there were doubts regarding the applicability of garnishee proceedings to accounts maintained with banks. In the case
A of current accounts the doubts were based on the fact that payment was due on demand ... The point was resolved in Joachimson v Swiss Bank Corporation, where Bankers, L J observed that the service of the garnishee notice on the bank operated as a demand.... From a commercial point of view, however, it is sound to enable a judgment creditor to levy execution against the balance standing to B the credit of his debtor's current account, as in practice the funds serve the same purpose as cash.'
The same learned authors state at p 340 in respect of deposit accounts: C
`... For the purpose of garnishee proceedings such accounts were traditionally divided into fixed deposits maturing at an agreed time, and deposit and savings accounts the balance of which was repayable subject to the giving of a minimum period of notice by the customer.... There was authority D for the general view that a debt owed by a bank to a customer and maturing at a given future date was `owing and accruing' and could be garnisheed, but that the amount could not be claimed by the garnishment creditor from the bank before the agreed maturity date ...'
That being the position, it is natural to expect a bank which receives a garnishee order, E to make an entry in its books in respect of a customer's account which is subjected to a garnishee order. The crucial point in this case, however, which ought to have been addressed by counsel for the appellant, is whether the circumstances in this case do F not rebut the presumption arising under s 77. We are satisfied that the presumption concerning the relevant entries is rebutted by two important factors. First, the court record which was produced at the trial disclosed no court order made by the High Court before the order by Kyando, J. Second, there is no trace of either the office file or the purported order Ref No MC/S/GEN1/25 dd 6 January 1988 which is mentioned in the G bank's ledger card. In the light of the available evidence there can be no other conclusion other than that the respondent bank received no court order prior to the order made by Kyando, J and we so find.
The next important issue is whether the Order by Kyando, J was received by the H respondent bank, and if so, what was its legal effect?
Mr Semgalawe, learned counsel for the appellant has submitted to the effect that there is no evidence to suggest that the court order made by Kyando, J on 20 January 1988 was received by the respondent bank. With due respect we think there are two pieces of I circumstantial evidence to the effect that the court order must have
been received by the respondent bank. The first piece relates to the circumstances and A the nature of the court order itself. The order was interlocutory and was made pending the hearing of the application for stay of execution of court decree, pending appeal. Furthermore, the order was made in respect of money which was apparently moving B fast. According to the documents in the court record produced at the trial as exhibit D2, the appellant was paid the sum of Shs 16,474,176/70 on 24 December 1987 as per payment voucher No 127/12 in response to his letter dated 23 December 1987. Between C the date of that payment to the date of the application for stay of execution filed on 29 December 1987, that money moved from the High Court to the National Bank of Commerce and thence, a substantial part of it, to the respondent bank. It is obvious that the order by Kyando, J was a matter of urgency. We have asked ourselves whether under those circumstances it is likely that the order by Kyando, J would not be Dcommunicated to the respondent bank.
The second piece of evidence concerns the conduct of the appellant. In his letter dated 22 June 1990 (Exhibit 7F) addressed to the Chief Manager of the respondent bank, the E appellant apparently conceded that the order by Kyando, J influenced the conduct of the parties. The fifth paragraph of that letter states:
`I only honour the court order issued by Kyando, J and this clearly means that all the transactions that took place from 31 December 1987, to the date of the aforesaid order were illegal, as far as two F accounts above referred were concerned.'
Furthermore, in the last paragraph but one, the appellant wrote:
`Finally, I refer to your letter of 24 May 1988 under ref No CRDB/General/TBM which to me was a G confession of your own negligence, because there was no instruction or order before 20 January 1988. I also refer you to my letter dated 21 May 1988, in which I asked you to give me a certificate of my fixed deposit account, but you neglected to do so.' H
We have carefully evaluated these two pieces of circumstantial evidence, and we are satisfied in our minds that the order by Kyando, J must have been communicated to the respondent bank soon after it was made-that is-on or about 20 January 1988. I
We turn now to the legal consequences of that order. It is established law that the relationship between a bank and its customer is
contractual. As stated by E P Ellinger and E Lomnicka in their Modern Banking Law, 2nd A Ed, p 108:
`The essence of the contract of banker and customer is, therefore, the bank's right to use the money for its own purposes and its undertaking to repay an amount equal to that paid in, with or without B interest, either at call or at a fixed time.'
Under the circumstances of this case, we have no doubt that a contract existed between the appellant and the respondent bank since 29 December 1987 in respect of Shs C 14,000,000/= in a deposit account which was to mature in a month's time. The question arises whether the deposit account matured as agreed or whether it was frozen as asserted by Mr Kalunga, learned counsel for the respondent bank.
Unfortunately the expression `freezing a bank account' does not seem to have been D judicially defined. However, we are certain in our minds that the terms of the order made by Kyando, J that `... the monies are to remain where they are and status quo is to be maintained ...' means that the deposit account in favour of the appellant was neither to be operated by the appellant nor to be utilised by the respondent bank. E
That being the position, we are of the considered opinion that the effect of the court order was to frustrate the contract between the appellant and the respondent bank before the date when the deposit account was expected to mature on or about 29 January 1988. F The principle of frustration of contract is of course well-known under the common law. That principle has not been abolished in this country by the Law of Contract Ordinance, Cap 433, which appears not to cover all aspects of the law of contract. The question which arises here is what was the fate of the appellant's rights in the money deposited Gunder the frustrated contract? We are of the view that the appellant's rights in the principal sum and in any interest that may have accrued, were attached by the garnishee order. This means that from 20 January 1988, all that money standing to the credit of the appellant but not exceeding the sum of Shs 16,474,176/70 was subject to further directions of the court. Those directions came on 7 December 1989 when the H money was required to be remitted to the High Court. There is no evidence to show that there was any other money not covered by the court orders.
It is thus evident that appellant's claim is flawed. This appeal must fail and we hereby dismiss it in its entirety with costs. I