This is an appeal from a judgement of the high court dismissing the appellants’ claim for specific performance of the sale of property, a refund of excess money’s paid, damages and interest. The appellant and the respondents had entered into a contract for the sale to the appellant of a property known as subdivision ‘MR16/16 of farm no. 748 in Ndola for the sum of k105,000.00. The appellant paid the full purchase price and an additional sum of K48,800.00 to cover various expenses including building a perimeter wall, ground rent, municipal rates and incidental expenses.
The parties then drew up a deed of assignment in which
the appellant indicated that the purchasing price of the property was k80,000.00.
The reduction of the purchasing price in the deed of assignment turned out to
be a catalyst for the respondents to abandon the contract. They felt the
reduction in the purchasing price did not reflect the correct position and was
done to avoid paying more tax. It was because of this and what the
respondents termed as circumstances beyond their control and other factors in a
letter to the appellant, did they feel that the appellant was a potential
hostile neighbour that the contract was terminated. The respondents then
offered the appellant a refund in instalments but the appellant did not accept
and proceeded to issue an originating summons that was later converted into a
writ of summons.
In the judgement of the high court, the judge said
that the purchasing price was k105,000.00 but the appellant knowingly and
intentionally reduced the price to k80,000.00 to pay less tax and therefore
held that the act of avoiding to pay the correct tax was an illegal act making
the contract unenforceable. The judge then proceeded to dismiss the case with
costs.
The appellant then appealed.
In the appeal, the appellant raised three issues, namely:
I.
The court erred in fact and law when it
found that the case should fail as it was tainted with illegality when no such
contract was produced by any of the parties.
II.
The appellant abandoned all other alternative
claims in the writ of summons when there was no such averment.
III.
Failed to find for the appellant any
relief, in respect to the alternative claims.
With regard to the first issue, the appellant stated
that the only document submitted before the lower court to the extent and effect
of proving purchase was the deed of assignment showing the purchasing price of k80,000.00.
The judge in the court of appeal said that that the lower court made the judgement
based on the finding of k105,000.00 as the deed of assignment made reference to
different cheques reaching to the amount of k152,800.00. The respondents admitted
owing that amount and the judge in the lower court therefore, took the view that
the figure of k80,000.00 was a scheme to pay less tax to the Zambia revenue
authority. As a result, the judge found that it was tainted with illegality and
nullified it.
The appellant then proceeded to state that the judge
in the lower court did not make an order for a refund and it was a misdirection
by the judge as a refund should be there if a contract is tainted with
illegality. The appellant further stated that parties to a contract should be
presumed to take a legal course of proceedings and that the contract made
between the parties might be capable of legal fulfilment as the parties had proceeded
to apply for the states consent to assign the sum of k80,000.00 and the consent
was granted.
The judge in the higher court then went on to state
that the Zambia revenue authority (ZRA) is not bound by the figure in consent
and reserves the right to determine the value of property for tax purposes.
Even if the price on the deed of consent was genuine, ZRA would still determine
the value of the property without putting into consideration the amount on the
deed of assignment.
Section 12 of the property transfer tax act provides
for the recovery of tax under the property transfer tax act and does not
necessarily make contracts as the one entered into between the appellant and
the respondent illegal. In the circumstances of both parties, the court below
should have made an order for specific performance of the contract.
Furthermore, in the second ground of appeal, the
appellant claimed that all other alternative claims were not abandoned and
he had stated that he wanted the land,
not the money and there was no proof by
the lower court that he had said otherwise. The higher court found that the
second ground of appeal had merit and hence, there was an order for specific performance
by the court. The third ground of appeal was connected to the second ground of
appeal, thus was already catered for under the second ground of appeal.
All in all, the appeal was allowed and the court made
an order for specific performance of the sale of the property.