Q&A – 31 October 2016

75% rule for bankers

We are in the banking industry and have been auctioning mortgaged houses that have been secured by us for loans. We are made to believe that the Land Act requires that a mortgaged property be sold at not below 75% of its market value. Is this applicable in practice and how do we go about this? With Court injunctions being issued all the time, it is very difficult for a prospective buyer of an auctioned property to buy the property at very high prices as there always are issues with getting the title transferred in addition to getting vacant possession. In short, the market reality will never meet the 75% rule because of the way Courts are treating defaulters. We are really confused. What should we do?
TY, Dar

To begin with the law is clear in that the sale of any property below 75% of its market price can be void. This will affect both you and the bona fide purchaser. Infact you may end up being sued by the bona fide purchaser, mortgagor and borrower if different from the mortgagor. Whether this is applicable in practice or not is irrelevant as the law makes it mandatory for you to comply with the 75% rule.

We understand your concerns about Court orders and the like. What we recommend to ascertain the market value at the time is for a valuer to prepare a report and factor in all market conditions in the report prior to auction so that you can set the property price with a 75% reserved price. That will minimize the market value arguments that may be raised in the future by the mortgagor.

The law has not addressed what the banker can do if the closest offer is below the 75%. That would likely entail you to commission another valuation to match current market realities before any auctions. What we have noticed at the moment is a number of bankers are not engaging valuers to prepare fresh valuation reports prior to auctions nor setting reserve prices. Remember that the borrower and/or mortgagor has statutory rights that you must always comply with.

Legality of hell or high water clause

Is this clause legal in Tanzania? Can I get out of a contract with a clause that is affecting my rights?
IP, Dar

A hell or high water clause is a clause in a contract which provides that the payments must continue irrespective of any difficulties which the paying party may encounter. It is intended to limit applicability of the doctrines of frustration in contracts.

The term comes from a colloquial expression that a task must be accomplished “come Hell or high water” that is, regardless of any difficulty.

Whether or not such a clause is applicable in Tanzania, one needs to understand in what type of contract it is used, and whether it is trying to sideline any statutory provisions of the law. If it is, then it will not apply to that extent otherwise using it should be fine.

Appeal from labour Court

I am confused as to whether one needs to apply for leave from the High Court (Labour Division) to appeal to the Court of Appeal. There are conflicting decisions and in my appeal such leave has not been applied for. What should I do?
YU, Moshi

Indeed whether leave is to be applied for or not was not clear but in a recent decision of the Court of Appeal, the Justices of Appeal have cemented the position that leave from the High Court Labour Division must be obtained before an appeal can be lodged. If there is no such leave, then the appeal becomes incompetent and will be struck out. If you then show good cause on why time should be extended for you to appeal, you can then proceed to lodge the appeal.

In your case, because your appeal has not yet been called, we recommend you proceed withdraw it so that you can make the necessary applications for leave and extension of time at the High Court Labour Division. We must state that the High Court Labour Division will not automatically grant you leave- you must show that points of law need to be addressed by the Court of Appeal.

Objecting another wife in polygamous marriage

I am one of the two wives of a certain man. Our husband is highly depending on myself and my co-wife on sustaining his own life. I am personally working hard for our family. Surprisingly, our husband now wants to add another wife. We have objected to this but he maintains that we were all married in polygamous marriage thus there is nothing we can raise as an impediment. I am scared about this new marriage because the woman he wants to marry has health which is questionable. We have been tipped that a notice of intention to marry has already been issued to the office of the registrar. Is there a way we can avoid or prevent this marriage?  
ER, Dar

The provisions of the Law of Marriage Act has provisions under Section 20 which covers your situation.

The said provision states that where a man married under a polygamous marriage has given notice of an intended marriage, his wife or, if he has more than one wife, any of his wives may give notice of objection to the registrar or registration officer to whom the notice of intention was given on the ground that either having regard to the husband’s means, the taking of another wife is likely to result in hardship to his existing wife or wives and infant children, if any; or that the intended wife is of notoriously bad character or is suffering from an infectious or otherwise communicable disease or is likely to introduce grave discord into the household. The objection must be decided before the intended marriage can take place.

You might also want to try and resolve this using elders in your community.