Nkhawere Estate Limited v Malawi Revenue Authority (659 of 2005) ((659 of 2005)) [2005] MWHC 103 (03 October 2005);

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IN THE HIGH COURT OF MALAWI

LILONGWE DISTRICT REGISTRY

CIVIL CAUSE NO 659 OF 2005


BETWEEN :


NKHAWERE ESTATE LIMITED ………………………. PLAINTIFF


-and-


THE MALAWI REVENUE AUTHORITY …………….DEFENDANT




CORAM: KAMANGA I.C. (MRS), JUDGE


Mwangera; for the Plaintiff

Daka; for the Defendant

Nakweya C.; Court Interpreter




R U L I N G



The application before me is a summons for an interlocutory injunction restraining the defendant by itself, its employees, servants, agents and others whosoever from collecting or deducting any money from the Plaintiff’s tobacco sales’ proceeds at Auction Holdings Limited or wherever as a tax debt allegedly owed by the plaintiffs to the defendant until the determination of the main action herein. The application is made under Order 29r1 RSC. The defendant opposes the application.


In supporting the application, the plaintiffs’ director Rodwell Munyenyembe deponed that the plaintiffs sell their tobacco under registration number 14462 at Mzuzu Auction Floors. Sometime during the week 23rd – 27th May 2005, he telephoned Mzuzu Auction Floors to find out when the tobacco would be sold and was told that the same would be sold during the week 30th May – 3rd June 2005. He was also advised that there was a Notice of Appointment by which the defendant had appointed Auction Holdings Limited as its agent to collect the sum of K951,815.45 from the plaintiffs’ tobacco sales as outstanding tax. The plaintiffs allege that this was the first time that the company heard of the outstanding tax and that they do not know how this figure was arrived at. The plaintiffs further depone that they had borrowed money from a bank to grow the tobacco. And the bank has the first call on the tobacco sales proceeds. And that the people with the next call on the proceeds are the tenants who did the growing of the tobacco.


In opposing the application the defendant deponed that the plaintiffs, being a person chargeable with income tax are under obligation to prepare and deliver to the Commissioner General a return of income within 180 days from the end of the year of assessment. The last time the plaintiffs prepared and submitted a return of income was in 1999 and despite several reminders of the plaintiffs’ statutory obligation to submit returns, the plaintiffs have never complied with the law. The defendant further submitted that the sum of K951, 815.45 was based on the estimates for the years that the plaintiffs had been absconding.


It appears that the plaintiffs do not dispute that over the years they have been failing to provide the defendant with returns of income to assist the defendant in determining its income tax. This is one clear application where the plaintiffs have instituted an application to court for purposes of buying time. The plaintiffs know that they have an obligation to the defendant. And the plaintiffs continue to depone that despite obligation to the defendant, there are other persons to whom they are indebted. So the plaintiffs are urging the court to appreciate that there are some other people on the line that the plaintiffs have not yet honored and the court should move the defendant to desist from getting what is owed until some other time. This is classic. Fortunately for this court the issue for determination is the interlocutory injunction. And an interlocutory injunction is an equitable remedy. And equity mandates that those who visit it, should do so with clean hands. It appears that in this case, the plaintiffs’ hands are burdened with what is not clean. The plaintiff therefore can not invoke an equitable remedy. Even if their hands were clean, the application would still have not succeeded because the plaintiffs’ first duty is to the State as a debt to the government in terms of tax takes priority over any other charge. A prayer that the plaintiffs are indebted to the bank and tenants and that the proceeds of the sale should first clear these debts before entertaining the defendant cannot hold water. Then there is the American Cynamid formula that an application has to follow and satisfy. The American Cynamid formula requires that in the event that it is found that there is an arguable case and there is need to preserve the status quo, the plaintiffs have to demonstrate that damages will not be an appropriate remedy and if damages are an appropriate remedy, the defendant will not be able to pay the same. In the instant case, the plaintiffs have not demonstrated that the defendant, if found liable in the main cause of action, will not be able to provide the necessary redress. Infact the defendant has indicated that if found liable, the plaintiffs will be compensated.


So this is a clear case where the plaintiffs should not have applied for an interlocutory injunction. The application is therefore dismissed with costs to the defendant.



MADE in Chambers this 3rd day of October, 2005.



I.C. Kamanga (Mrs)

J U D G E