Q&A – 21 March 2011

Bank taken to Court

Our bank lent money to a company and secured the amount by way of a third party mortgage. The borrower has defaulted even after we sent a demand notice to him. Just as we were about to exercise our rights under the mortgage, we have been sued by the borrower on grounds that we have demanded the wrong amount. It is true that the amount we demanded was slightly overstated, but the overstatement is less then Tsh 1M. What should we do?
RT, Dar

There are conflicting decisions of various Court’s on the validity and effectiveness of a demand that is made with an error in the amount. In your case, it seems like the borrower has admitted that he has borrowed and there is an amount payable by him. The only contentious issue is the difference between what he claims to be the amount payable and what you claimed in the demand. It also appears to us that you have accepted there was a mistake in the amount demanded. If that is the case, he is right but that does not mean he doesn’t pay! His own admission that he has borrowed and not paid should work for you- capitalize on that and finalize the suit by accepting the amount he has pleaded.

Prime property, no insurance

My father has had a bad experience with insurance companies. He believes they are the biggest crooks on earth. Because of his belief, we have major exposure of risks in all assets our father owns. We are a family of eight with five brothers and three sisters. My father has a Will and has left a prime property for me to inherit. That property is currently leased to a company that is involved in mixing and supply of chemicals. This tenant poses a huge risk to the property- nonetheless my father is unwilling to insure the property. Since I am ultimately going to be the owner, can I insure the property to safeguard my interest?
II, Dar

You must remember that this is not your property just yet, assuming of course your dad did not pass away between the time you wrote to us and today. You merely have an expectation to inherit the property. You might have a moral certainty but you do not have a full assurance as the Will is changeable and you might pre decease your father. Unfortunately since you do not own the property, you cannot claim to have an insurable interest in the property and hence cannot insure it in your name.

If such an ‘illusory’ insurance was available, it would be difficult to ascertain the limits on who could insure- your wife and children might also start insuring it, assuming the property will pass to them upon your demise.

Withholding of information by Dr

About 20 weeks ago, a mother who was expecting was referred to me by a junior doctor. After examining her and ordering for some tests, I found out something seriously wrong with the unborn child. The lady’s information card had the number of her husband whom she had consented we could consult in case of any matters. I found the expectant mother to be a person who may not be able to absorb the information and made a decision of asking her to see me after two days. In the interim I called the husband who unfortunately had travelled. I found it difficult to discuss the matter over the phone and insisted that he come see me immediately. The husband appeared the next day and I informed him of the issue. I then did not hear from the couple until recently when their lawyer has sent me a notice with an intention to sue me for not informing the lady that very day. Apparently the lady was treated in Nairobi, and the child passed away but the Doctors in Nairobi wrote in their report that had she been treated earlier, the child would have survived. What should I do?
BV, Dar

Therapeutic privilege is the right of a doctor to withhold information from a patient when it is feared that the disclosure could cause immediate and serious harm to the patient for example because he or she is suffering from severe depression. In exceptional cases, the need to withhold information may be considered to override the requirement to obtain informed consent before proceeding with treatment.

In your case, we do not have all the facts. However you do seem to have a plausible defence and should contact your lawyers.

Lack of board resolution

I am the main shareholder and one of the three directors of a renowned manufacturing company in Dar. When I left for overseas the operations were being run by one of the other directors. I have come to know that this director forged a board resolution and other signatures and has obtained a Tsh 1Bn loan from a multinational bank. The director has mortgaged one of the key yards of the company and the bank is now exerting pressure for us to pay. Can the bank make such a demand?
PO, Dar

The bank can surely make such a demand- in its opinion it has lent your company funds. We guess the main question is whether the bank will have a recourse in case you fail or refuse to pay.

There are many factors that will play a role in this matter. For example did the bank check the signatures and do proper due diligence? Did the bank know of the mischief? Has a mortgage been created? What other signals did the bank have that should have alerted it of this mischief? Who did the bank usually deal with? Is there any abnormality in the speed with which this loan was approved? You will have to weigh in all these and decide whether you have a case against the bank. Your position could then be that the bank has not lent money to you. It might be a rough journey and we suggest you disclose all the facts to your lawyers who can guide you further.