RWANDA REVENUE AUTHORITY V.NDAMYUMUGABE

# RWANDA REVENUE AUTHORITY V.NDAMYUMUGABE

- Source: Amategeko - Section: Decisions (Judgements) - Date: 2014-05-23 - Case/document no.: RCOMA 0180/12/CS - Collection: Supreme Court

## Text

## Page 1

RWANDA REVENUE AUTHORITY V.NDAMYUMUGABE [Rwanda SUPREME COURT – RCOMA 0180/12/CS (Mutashya, P.J., Rugabirwa and Nyirinkwaya, J.)May 23, 2014] Contracts or obligation law –Sale Contract –Transfer of Ownership –If the buyer and seller agreed on item and price, the item of sale is assumed to be in the ownership of the buyer even though the contract is not yet implemented –Law of 30/07/1888 relating to contracts or obligations, article 264. Traffic laws – transfer of car ownership – The buyer of a car is under a mandate to make a transfer of ownership for that car in his/her names on the registration certificate – Presidential decree n° 85/01 regulating general traffic police and road traffic, article 124, 2° and 3°. Contracts or obligation law–Damages–Financial Damages–Financial Damages awarded to party who proves the loss whose he/she/it has suffered – Moral Damages–If the suffering originate to the requesting party, Moral damages cannot be awarded–Advocate fees–Cannot be awarded to the losing party–Law of 30/07/1888 relating to contracts or obligations, article 258. Facts: Ndamyumugabe Claude bought a Mercedes Benz truck (car) belonging to Gahunga Innocent, however, SALIM SULTAN BIN NASORO was the owner of the car as per the vehicle registration certificate. The truck was ultimately seized by Rwanda Revenue Authority for default payment of taxes. NDAMYUMUGABE proved that he owned the car by submitting the contract of sale and eventually appealed to R.R.A(Rwanda Revenue Authority) commissioner to return the truck but in vain. The commissioner turned down the plea on the basis that the vehicle belonged to SALIM Sultan Bin Nasoro as per the Vehicle registration certificate. NDAMYUMUGABE, submitted a claim in the Commercial High Court requesting for full ownership of the truck. Court ruled that Ndamyumugabe is the the owner of the truck and awarded damages to plaintiff as well as advocates fees totalling to 32.100.000 Frw. It based its decision on case law N0 RC 0010/11/TGI/RSZ and declared that the contract between NDAMYUMUGABE and GAHUNGA is valid RWANDA REVENUE AUTHORITY appealed in the Supreme Court contesting the High Court’s ruling that the contract between NDAMYUMUGABE and GAHUNGA is Valid, that the car still belongs to SALIM Sultan Bin Nasoro as per the registration certificate, more so, RRA argued that there was even no transfer of property(car) and that the appellant was not notified about the sale. NDAMYUMUGABE reiterated by stating that he is the rightful owner of the car since legal channels were used to buy it and that there is no debt owed as regards to taxes. Plaintiff submitted a cross appeal requesting for damages for illegal seizure of the truck. Held: 1. The fact that the Seller and the buyer have concluded a contract, and the seller transfer the full ownership of the item sold at the agreed time and price, even though the sold item is not yet transmitted and the price paid, that the sale is valid. Thus, since there is a sale contract between Ndamyumugabe and Gahunga which proves that the buyer bought a car, has

## Page 2

identification papers and agreed with Seller for a determined price, then full ownership of the vehicle is transferred to the buyer. 2. The new owner is supposed to make a transfer of ownership procedure from the former owner to her/his names as per the vehicle registration certificate within eight days. 3. In Case Rwanda revenue authority seizes a vehicle seeking taxes, basing on the fact that there was no transfer of ownership and that previous owner defaulted in paying taxes, and the tax administration continue to keep it despite buyer’s appeal, The Court can award financial damages to the new buyer if she/he proves that there was illegal and unreasonable seizure of the vehicle, but Moral Damages shall not be awarded since he/she/it is the source of the suffering and also Advocate fees shall not be awarded to a party that lost on some grounds of the case. Appeal has no merit; Cross appeal has no merit; Case appealed changes in part; The appellant ordered to release defendant’s vehicle and pay damages; Court ‘fees to the appellant. Statutes and statutory instruments referred to: Law of 30/07/1888 relating to contracts or obligations, article 258 and 264; Law n° 25/2005 of 04/12/2005 on tax procedures as modified and complemented to date,article51; Presidential decree n° 85/01 regulating general traffic police and road traffic, article 124, 2° and 3°. Cases referred to: Sembagare v Rwanda Revenue Authority, Decided by the Supreme Court on 27/06/2008; Gahunga v Ndamyumugabe, RC 0010/11/TGI/RSZ, Decided by the Intermediate Court of Rusizi on 17/06/2011. Judgment I. BACKGROUND OF THE CASE [1] On the 28/11/2010, Gahunga Innocent made a sale contract of a Mercedes Benz vehicle N0 RAA 907 with Ndamyumugabe Jean Claude. Gahunga Innocent had previously purchased the car from Salim Bin Nasoro, however, in all the transactions; no transfer of ownership of property was ever done. [2] On the 18/01/2011 Rwanda Revenue Authority seized the vehicle due to default payment of taxes and non-transfer of ownership to new owner. [3] Ndamyumugabe Jean Claude appealed to the Commissioner requesting for the release of the car to be under his ownership basing on the contract of sale that was concluded between

## Page 3

himself and Gahunga Innocent but in vain. The commissioner reiterated that the vehicle was seized because the former owner (Salim Sultan Bin) defaulted in paying taxes worthy 7.350.801 Rwf [4] Ndamyumugabe Jean claude submitted a claim to the High Court against Rwanda Revenue Authority requesting for full ownership of the vehicle and damages thereto. The court ordered Rwanda Revenue Authority return the vehicle to claimant and pay damages worthy 31.500.000 Frw as approximate income as vehicle would accumulated business income, 300.000 Frw as general damages and 300.000 Frw as advocates fees, totaling to 32.100.000 frw. [5] High Court ruled that the vehicle with number plate RAA 907 S belongs to NdamyumugabeJean Claude basing on the decision as per the case RC 0010/11/TGI/RSZ by the Intermediate Court of Rusizi which was pronounced on17/6/2011. Court confirmed the validity of the contract between Ndamyumugabe and Gahunga innocent. [6] Rwanda revenue Authority appealed to the Supreme Court arguing that it seized the vehicle so as to force tax defaulters(Salim sultan Bin nasoro) pay the defaulted taxes and that it never released the car because it does not belong to the defendant; defendant(Ndamyumugabe) reiterated that RRA has to release the car and pay damages thereto. [7] The proceedings took place in public on the 22/04/2014, RRA being represented by Me.Kabibi Speciose and Ndamyumugabe being represented by Hategeka placide. II. ISSUES TO BE EXAMINED IN THE CASE AND ITS ANALYSIS 1. Whether the commercial High Court was right in its decision of granting full ownership of the vehicle to Ndamyumugabe Jean Claude [8] Counsel for Rwanda Revenue Authority claims that the Commercial High Court should not be based its decision on the sale contract of 28/11/2010 concluded between Ndamyumugabe Jean Claude and Gahunga Innocent in granting full ownership rights of the vehicle Mercedes Benz n° RAA 907 S to Ndamyumugabe Jean Claude because for tax purpose it belong to Salim Sultan Bin Nasoro .Counsel claims that RRA had rights to seize the vehicle due to non payment of taxes as per the owner on the vehicle registration certificate and that there was no transfer of ownership within a period of eight days as provided in article 124, 2° Presidential decree n° 85/01 regulating general traffic police and road traffic . [9] He explained that Rwanda Revenue Authority had legally kept the vehicle in order to get paid the outstanding taxes amounting to 7.350.801 Frw owed by Salim Sultan Bin Nasser from the years 2006, 2007 and 2008 based on article 51 Law n° 25/2005 of 04/12/2005 on tax procedures that gives right to tax administration to holds a lien on the income and all movable property of the taxpayer, wherever it may be located in order to get paid outstanding taxes and interests since the taxpayer failed to inform that vehicle is no longer among its property, thus, he sold it in order to avoid paying taxes that he owed to the tax administration that had already started requesting payment since on 28/10/2008, and the vehicle was sold on 28/11/2010,the

## Page 4

administration had even notified Ndamu Mugabe that vehicle will not be released until the outstanding taxes are paid [10] Ndamyumugabe Jean Claude’s lawyer allege that, the vehicle belong to his client on the fact that he bought it to Gahunga Innocent as it is proven in the their contract of sale of28/11/2010 which is valid, because article 264 of the book three of civil code, provides that the sale is valid when the seller and the buyer had agreed on price and item to be sold, as it has decided in the case RC 0010/11/TGI/RSZ, Ndamyumugabe v Gahunga, and the case ruled by the Intermediate Court of Rusizi on 17/06/2011, RADA 0015/07/CS Sembagare v Rwanda Revenue Authority,decided by the Supreme Court on 27/06/2008,where the Court had explained that the Contract of sale of the Vehicle FUSO RAA 757 M is valid, and proves that the vehicle belong to Sembagare since he purchased it from Ibambasi. [11] He explained that Rwanda Revenue had illegally kept his vehicle while it is not him who owe outstanding taxes providing to that vehicle but it is Salim Sultan Bin Nasoro who owe taxes and interest in relation to that vehicle whose payment is requested by the tax administration as evidenced in the submissions submitted to the Supreme Court by the tax administration, thus what Rwanda Revenue is saying that the vehicle still belong to Salim Sultan Bin Nasoro because the transfer was not made has no validity. Hence, there is no requirement of the transfer for a contract of sale to be valid as it has been confirmed in the case RADA 0015/07/CS stated above, and when the vehicle was seized, the transfer of the property was in the process, since he purchased it on 28/11/2010,and the vehicle was seized on 18/01/2011,two months after sale. THE VIEW OF THE COURT [12] Article 264 of the book three of Civil Code related to Contract or Obligations that was into force when Contract of Sale was concluded, provides that : “The sale contract is valid when the parties have agreed to the thing and its price, although the sold thing has not yet been delivered or its price paid “ [13] Concerning this Case, the Contract of Sale of 28/11/2010 proves that Gahunga Innocent had sold at 6.000.000 Frw his vehicle brand Truck Mercedes Benz n° RAA 907 S to Ndamyumugabe Jean Claude, and that Contract was duly signed by both parties and witnessed by Ntibiramira Antoine. [14] Following what is provided in 264 of the book of Civil Code explained above, The Court finds that the Contract is valid because Gahunga Innocent and Ndamyumugabe Jean Claude had agreed on Brand of the Vehicle and the purchasing price as decided in the case RC 0010/11/TGI/RSZ decided by the Intermediate Court of Rusizi on 17/6/2011, where it explained that fact the seller owed a debt of taxes, it is not an element which shall lead to the dissolution of the Contract. [15] This is also similar to the case RADA 0015/07/CS sembagara v Rwanda Revenue Authority, decided by the Supreme Court on 27/06/2008, where it explained that the vehicle, brand FUSO RAA 757 M belong to Sembagare Jean Pierre based on the Contract of Sale concluded on 24/01/2006, because the change of names in yellow card was not a prerequisite for the validity of that Contract.

## Page 5

[16] Following these explanations, The Court therefore finds that vehicle does no longer belong to Gahunga Innocent, but it belongs to Jean Claude from the period he purchased it as decided by The Commercial High Court. 2. To know if damages arising from the seizure of the vehicle Mercedes Benz n° RAA 907 S have to be granted to Ndamyumugabe. [17] Rwanda Revenue Authority’s lawyer, allege that the Commercial High Court shall not order his client to pay to Ndamyumugabe Jean Claude 32.100.000 Frw damages, and even damages requested in cross appeal shall not also be granted because the vehicle seized for collecting outstanding taxes amounted to 7.350.801 Frw belong to Salim Sultan Bin Nasoro and not to Ndamyumugabe jean. [18] He add that, in case this Court ruled that, the vehicle belong to Ndamyumugabe Jean Claude, order shall not be given to his client to pay damages since the vehicle was seized with good faith(bona fida) because Salim Sultan Bin Nasoro did not inform Rwanda Revenue that the vehicle was sold and was not aware of the contract of sale made on 28/11/2010 between Gahunga Innocent and Ndamyumugabe Jean Claude and the later did not make any inquiry in order to know if the vehicle has outstanding taxes, he even failed to notify about the sale to Rwanda Revenue within 8 days as provided in article124, 2° of the presidential decree stated above. [19] Ndamyumugabe jean Claude lawyer’s allege that he made a cross appeal due to Commercial High Court that had determined less damages compare to the loss he suffered because it computed them at 50.000 Frw per day, instead of computing them at 100.000Frw per day based on the lease contract of an undetermined period concluded with “Genie Sans Frontières SARL“ Hence ,that money will help in the repairing the vehicle and supplying spare part since it was parked only at one place under rain and sun for a period of (4)year. He requested Rwanda Revenue to grant to him 122.800.000Frw as economic loss that it made him suffered for 1.228 days, meaning from 19/01/2011, when it seized the vehicle up to 23/05/2014, at the pronouncement of the case. [20] He again said that Rwanda Revenue should pay him 10.000.000Frw as moral damages due to the illegal seizure of his vehicle that had lead him of not feeding his family of eight children and his wife not paying school for its children as he was supposed to do. He failed to build another house because the former one was sold in order to buy a vehicle for business and whose finally was illegally seized and due to that issue he had spent a long time seeking Rwanda Revenue to release his vehicle, unfortunately it has refused to give it back to him. . [21] He said again that Rwanda Revenue should pay him 3.000.000 Frw for advocates fees at the level of appeal added to 300.000 Frw as advocate fees that were determined at first instance. THE VIEW OF THE COURT [22] Article 51 of the Law n° 25/2005 of 04/12/2005 on tax procedures as modified and complemented to date, provides that “For the recovery of tax, interest, fines and other costs used

## Page 6

in collection, the Tax Administration holds a lien on the income and all movable property of the taxpayer, wherever it may be located. “. [23] Article 258 of the book of civil code started above provides that “any act of man whih causes damage to another, obliges the one by whose fault happens to repair”. [24] And article 124, 2° , 3° of the Presidential decree n° 85/1 of 02/09/2002 regulating general traffic police and road traffic, says “Every fact requiring to change any mention relating to the owner of the certificate or to the identification of the vehicle must be notified within eight days at the Tax Department, either orally, or by a registered letter; the certificate, according to each case, must be given back to the said Department by hand or attached to the registered letter for change purposes. In case of transfer of ownership of the vehicle the registration certificate initially issued shall be changed into the names of the new owner after payment of a fee determined by order of the Minister having finance in his attributions“. [25] Concerning this case, there is a yellow card in the file and “ Technical inspection certificate “which proves that the truck Mercedes Benz n° RAA 907 S was registered in the names of Salim Sultan Bin Nasoro, and there a letter that was sent to him by Rwanda Revenue Authority requesting the payment of 7.350.801 Frw of taxes, there is also a statement attesting that the vehicle was detained on 18/01/2011 due the defaulting in paying tax and having failed to do the transfer of the property (taxes and transfer of the property). [26] Documents in the file proves that Ndamyumugabe Jean Claude had made appeal on 29/08/2011 for the first time to the Commissioner General of Rwanda Revenue Authority and the letter of appeal was received on 30/09/2011,he was requesting to be given back the truck Mercedes Benz n° RAA 907 S that he bought from Gahunga Innocent on 28/11/2010. And He was responded by Commissioner General on its letter of 28/12/2011 that the truck cannot be given because it belong to Salim Sultan Bin Nasoro who shall pay the outstanding taxes of 7.350.801 Frw [27] The Court finds also that Ndamyumugabe did not notified Rwanda Revenue Authority in (8) after having purchased the vehicle which was bought on 28/11/2010, while he was requested to do so according to article 125 of the presidential decree 85/1. For being paid of its unpaid taxes [28] Following these explanations, The Court Finds that Ndamyumugabe had also contributed to the seizure of his vehicle, if he did what he was supposed to do as explained above by the law, his vehicle would not have been seized by Rwanda Revenue Authority on 18/01/2011. [29] The Court finds that from 18/01/2011 up to 30/09/2011, when Rwanda Revenue Authority had seized the vehicle for getting payment on unpaid taxes due by the Salim Sultan, Rwanda Revenue Authority did not commit any fault since it was aware that the vehicle was still in Salim Sultan’s properties based on article 51 of the Law n° 25/2005 stated above. [30] Rwanda Revenue Authority after having been informed that Ndamyumugabe had bought that vehicle from Gahunga Innocent as explained above, The Court finds that, Immediately, Rwanda Revenue Authority would have released that vehicle, continue holding it from 30/09/2011 up to 23/05/2014 the date of the pronounce of the judgment it obvious that the owner

## Page 7

of the vehicle suffered of economic loss, therefore, he is entitled to Damages according to article 258 of the book stated above. [31] Now Concerning Economic loss, The Court finds that the requested damages of 100.000 Frw per day based on a contract concluded on 12/01/2011 with “Génie Sans Frontières SARL“ are exorbitant for his vehicle which is not new according to its yellow card which show that it was fabricated in the year 1984 and was bought at 6.000.000 Frw only, meaning it was not able to work all the days due to the need of several services in and reparation in the garage because of breakdown and the income supposed to generated by that vehicle was meant to be deducted by the amount used for these services including the payment of the driver and taxes, therefore, the damages are computed at 30.000Frw per day for 21 per month, determined by Court discretion, and those damages shall be computed from 30/09/2011,the day that Rwanda Revenue received the first appeal up to the day of the pronouncement of the judgment on 23/05/2014,thus there are computed as: 30.000 Frw x 664 days = 19.920.000 Frw. [32] Concerning moral damages, The Court finds that, there is no reason for awarding more at this level, because, Ndamyumugabe Jean Claude had also contributed to the holding of his car, as explained above. [33] Concerning the request of advocate fees at this level, The Court finds that they cannot be awarded to Ndamyumugabe Jean Claude since he has at some extend loss in this case. [34] The Court finds that the total of damages that should be awarded by Rwanda Revenue Authority to Ndamyumugabe Jean Claude are19.920.000 Frw for economic loss y+ 300.000 Frw advocate fees + 300.000 Frw for moral damages as determined by the Commercial High Court ,all in total being 20.520.000 Frw. III. DECISION OF THE COURT [35] Decides that Rwanda Revenue Authority’s appeal has no merit; [36] Decides that Ndamyumugabe Jean Claude’s cross appeal has no merit; [37] Orders Rwanda Revenue Authority to to give back the Truck Mercedes Benz n° RAA 907 S To Ndamyumugabe Jean Claude; [38] Orders Rwanda Reveneu Authority to pay Ndamyumugabe Jean Claude 20.520.000 Frw. As damages; [39] Orders that, the ruling of the case RCOM 157/12/HCC decided by the Commercial High Court of Commerce change in part ; [40] Orders Rwanda Revenue Authority to pay 16.900 Frw as Court fees.