High Court dismisses Hortanzia Limited case

The High Court Commercial Division has dismissed with costs the case lodged by a company operating flower farming business, Hortanzia Limited against Barclays Bank Tanzania, over payments of US$ 145,425.70 (about 232,680,000/-) as excess banking interests allegedly charged.

“In the whole, the plaintiff has failed to discharge the burden of proving its case on the balance of probability with the result that the suit is hereby dismissed with costs,” Judge Robert Makaramba declared.

The judge ruled that there had been no allegations of any fraudulent acts or bad faith in the parties reaching their agreement to warrant interference by the Court.

“The parties having expressly and of their own free volition consented to the interest rates to be calculated on 365-day year, this makes the plaintiff’s claim lack merits,” he said.

In the case, Hortanzia Limited was represented by M/S A. Kirethi from Hallmark Attoneys, while Barclays Bank Tanzania Limited was represented by advocates Paschal Kamala from Kesaria and Company Advocates and Martin Rwehumbiza of MNL Law Chambers.

Facts of the case show that the plaintiff had claimed the said 145,425.70 US dollars being the total amount as result of the Bank allegedly charging excess interest on three accounts of Hortanzia Limited and penalty interest the latter claimed for which the Bank charged on the plaintiff’s loan account.

The plaintiff had alleged that the amount arose from the action by the Bank of using inapplicable rates of interest charges and applying a wrong base in calculating the rate of interest on the said three loan accounts of Hortanzia Limited.

On January 4, 2002, the plaintiff and the Bank executed overdraft and loan facility agreement and overdraft facility agreement. Under the overdraft and loan facility agreement, the Bank granted the plaintiff an overdraft of 140,000 US dollars for one year.

Such loan attracted an interest rate at 7.75 per cent per annum on the outstanding balance and at the default interest of 23.75 per cent per annum. Under the overdraft facility agreement, the Bank provided to the plaintiff 150,000 US dollars at similar rates of interests.

Both loans were secured by legal mortgages over the landed properties comprised various plots located at Momela, Maji ya Chai in Arusha owned by Homer Combos, the Director of Hortanzia Limited. The agreements were further secured by first ranking debenture (agreement on debt) over plaintiff’s assets.

On April 13, 2005, the two credit facilities were consolidated and renegotiated to constitute a term loan facility with effect from April 18, 2005 for the sum of 1,604,847 US dollars payable in five years.

The plaintiff claimed that the consolidated loan attracted interest at the rate of 8.75 per cent per annum. Such interest, the Hortanzia Limited had alleged, was calculated on the basis of a 365-days year.

Hortanzia Limited had claimed that it came to learn of the discrepancies in the amounts claimed sometimes in 2007 after it had liquidated the entire consolidated debt due and owing to the defendant bank. It was at that point when the plaintiff decided to seek court’s redress.
Source: Daily News, reported by Faustine Kapama from Dar es Salaam, Tanzania
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