MTSHIYA
J: In this application the relief sought
is as follows:
“It
is ordered that:
1.
The applicants be and are hereby restored to full
occupation of Stand Number 57 Borrowdale Township 6 of Lot 7b of Borrowdale,
also known as number 9 Hunt Road Borrowdale within five (5) days of granting of
this order.
2.
The first respondent shall make transfer of Stand
Number 57 Borrowdale Township 6 of Lot 7b of Borrowdale, also known as number 9 Hunt Road
Borrowdale, into the Applicant's names within five (5) days of the granting of
this order failing which the Deputy Sheriff be and is hereby empowered to sign
all relevant documents in effecting the transfer.
3.
The first respondent shall bear the costs of this
application”
The
dispute in casu revolves around a
property known as Stand Number 57 Borrowdale Township 6 of lot 7b of Borrowdale,
also known as number 9 Hunt Road,
Borrowdale (the property). The property
belongs to the first respondent. In
September 2004 the first respondent indicated a desire to dispose of the
property. A Mr Oliver Chitsinde, “father
and natural guardian” of both applicants expressed an interest to buy the
property in the names of the applicants who were minors. The offer to purchase the property resulted
in a transaction involving three agreements. The agreements quoted three
different prices, namely $572 million, $400 million and $320 million (ie Zimbabwe
dollars). The agreements were all signed
on the same day i.e. 8 September 2004.
It later turned out that the reason for three agreements was to enable
the first respondent to reduce his liability in respect of Capital Gains Tax.
On
16 September 2005 the first respondent, through court application HC 4673/05,
sought to cancel the sale agreement alleging breach by the applicants. On 28 May 2008 and as a result of that court application,
this court ruled in favour of the first respondent and issued the following
order.
“1. It is declared that the
sale agreement between the applicant and the respondents for the purchase and
sale of stand 57 Borrowdale Township 6 of Lot 7B of Borrowdale Estate is null
and void.
2. Consequent upon the
declaration in para 1 above, first and second respondents and all those
claiming occupation through them shall vacate the property within thirty (30)
days of the date of this order.
3. There will be no order
as to costs”
The applicants were duly evicted from the properly on
the basis of the above order. The
above order was,
however, challenged by the applicants in the Supreme Court. On 26 May 2009 the
Supreme Court issued the following order:
“It
is ordered that:-
1.
By consent the appeal be and is hereby allowed.
2.
The order of the Court a quo is amended by the deletion of para 2, with para 3 of the
order becoming para 2.
3.
The costs of this appeal shall be borne by the
respondent”
The
deletion by the Supreme Court of para 2 of the High Court order had the effect
of denying the first respondent the power to evict the applicants from the
property.
Prior
to the finalization of the appeal in the Supreme Court the applicants had 'managed
to interdict the first respondent from alienating or encumbering the property
in anyway'.
The
papers before me indicate that the confirmed final relief following the
interdict referred to above was to the effect that the agreement of sale
earlier entered into by the first respondent with a third party for the
transfer of the property to that third party was cancelled. The property therefore still belongs to the
first respondent and hence the relief sought herein against him.
In
support of this application, the applicants contend that “where one can sever
the illegal part of a transaction or agreement and retain the legal part of the
agreement, capable of being put into full effect without recourse to the
illegal portion, the legal portion shall be upheld and enforced and the illegal
part declared void.” This reasoning is
borne out of the fact that in her ruling in HC 4673/05 GOWORA J, specifically
declared that the agreement indicating a purchase price of $320 million fell
foul of the law because it was intended to avoid paying the correct Capital Gains
Tax. The agreement was therefore
pronounced turpious and could not be enforced.
The applicants do not dispute that position of the law but argue that
the original contract involving a purchase price of $572 million had the
correct/authentic market value of the property, which value had already been
paid to the first respondent. The applicants
argue further that the contract containing that price was not tainted with any
illegality and could therefore be separated from the contract that came for
determination before GOWORA J. The Judge, they argue, only made a pronouncement
on the illegal contract (i.e. the contract with a purchase price of $320
million). The other two contracts, which
include the one with a purchase price of $572, million, they argue, were never
brought to court for determination.
The
first respondent on his part raises a point in
limine. He submits that the matter is
res judicata i.e a final and
definitive judgment has already been made on the merits by a competent court.
That is in reference to the judgment of GOWORA J.
Indeed
if one were to make a finding that the matter is res judicata, that would dispose of it. My mandate to deal with the matter would have
come to an end. That is so because I am
not sitting as an appeal court. A lot of
issues were raised in this matter but if I came to the conclusion that the
matter is indeed res judicata, then
all the other issues raised would automatically fall away.
In
response to the issue of res judicata,
the applicants, in their heads of argument, correctly state that:-
“The
basic requisites for establishing res
judicata are that:
-
a matter between the same parties;
-
in respect of the same issues as are now sought to be
brought before the court;
-
was brought before a court of competent jurisdiction;
-
which court made its determination on that issue”
My
reading of the papers before me leads me to the conclusion that the above
stated requisites regarding the principle of res judicata are all present in this matter.
It
is true that initially the cancellation of the contract bearing a price of $320
million is what was placed before GOWORA J.
However, in determining the validity of that contract the turpious nature
of the whole transaction surfaced before the judge. That certainly brought into focus the other
two contracts which were part of the turpious transaction. A holistic reading, as opposed to a selective
reading of the judgment of GOWORA J, clearly confirms that there was a single
turpious transaction meant to be executed through three separate contracts
signed on the same day for the purchase of the property. The use of three
contracts was meant to enable the first respondent to illegally evade payment
of the correct Capital Gains Tax. Hence in her judgment GOWORA J, observed as
follows:-
“In my view the
applicant did not take the court into his confidence and state the true state
of affairs from the outset. Had the respondents not produced the other two
agreements the applicant would have carried on insisting that there had been
breach on the part of the purchasers and seeking cancellation of the agreement
on the basis of such alleged breach. Fortune has smiled on the applicant in the
guise of the respondents who decided to come clean and reveal that there was
more than one agreement signed by the parties and that the purpose for the
multiple agreements was to enable the applicant to pay reduced capital gains
tax. It is accepted by both parties that the structuring of the sale into three
agreements was meant to evade the payment of proper dues to Zimra in respect of
Capital Gains Tax. In addition upon transfer the property, is subject to
stamp duty which is levied based on the value of the property which is the
consideration for which the property has changed hands. The three agreements
signed by the parties would also have resulted in less duty being paid on the
property as a result of the fictitious price being quoted as the consideration
paid for the sale of the property. It is this agreement by the parties that
has caused their agreement to fall foul of the law. The Stamp Duties Act [Cap 23:09] provides in s 44 thereof:
'Every
contract, agreement or undertaking made for the purpose of evading defeating or
frustrating the requirements of this Act as to the stamping of instruments, or
with a view to precluding objection or enquiry relative to the due stamping of
any instrument shall be void'
The contention
that the contract is void is made by the applicant. Having introduced the
existence of two other agreements, it is difficult for the respondents to argue
that the contract is not illegal and made for purposes of avoiding the proper
stamping of the transfer of the property. I say this for the following reason.
Section 23 of the Stamp Duties Act provides that the value on which duty shall
be payable shall be the amount of consideration payable by the person who has
acquired the property, or if no consideration is payable, the declared value of
the property. It is not in dispute that the actual amount payable by the
purchasers was $570 million. Regrettably that was not the amount on which stamp
duty was calculated. The lesser amount of $420 million was found to be convenient by the parties. Clearly the
agreement for the lesser amount was calculated to avoid the due payment of
stamp duties due under the sale. For
that reason the agreement is void as provided for in the Act. It is therefore
not capable of enforcement and the application that it be cancelled is not
therefore well-founded for one cancel something that does not exist. It will
therefore be in order to issue a declaratur in terms of the amendment sought by
counsel to the draft at the hearing the matter” (my own underlining).
Notwithstanding
the precise declaration that the contract with the lowest amount was void and
that the actual amount payable by the purchasers was $572 million, the multiple
agreements were meant to illegally avoid the payment of the correct Capital Gains
Tax. This, as the judge observed, was a single
transaction for the purchase of the first respondent's property.
Given
the judgment in HC 4673/05, which I have deliberately quoted at length herein,
I do not see how the applicants could ever be allowed to benefit from one part
of an illegal transaction.
I
am satisfied that the status of the entire transaction was determined in HC
4673/05. Accordingly my finding is that the matter is res judicata. The applicants
are therefore estopped from being heard on the same issues by this court.
In
Amler's Precedents of Pleadings (5th edition 1999) it is stated at
page 355:
“A party to
previous litigation is not only prevented from disputing the correctness of a
judgment in the sense that he may not again rely upon the same cause of action, but he is also
prevented from disputing an issue decided by the previous court. The rule is
that where the decision set up as res
judicata necessarily involved a judicial determination of some question of
law or issue of fact, in the sense that the decision could not have been
legitimately or rationally pronounced by the tribunal without at the same time
determining that question or issue in a particular way, such determination,
though not declared on the face of the recorded decision, is deemed to
constitute an integral part of it as effectively as if it had been made so in
express terms”
On
the basis of the foregoing, this application cannot succeed. I therefore order
as follows:
The
application be and in hereby dismissed with costs.
Chikumbirike & Associates, applicants' legal practitioners
C. Nhemwa &
Associates, respondent's legal practitioners
