The sale of a property with furniture or equipment may create a dispute between the vendor and the purchaser when there is no inventory attached to the sale contract which values each item separately. Also, the vendor may be obliged to pay capital gains tax on the value of the furniture.
To avoid such a dispute, the parties should either enter into two connected agreements, one for the sale of the property and the other for the sale of the furniture and equipment, or they should enter into a sale contract stating the price of the property and the furniture separately.
When the price of the furniture is included in the purchase price of the property, although the price of the furniture is expressly stated but there is no reference to the price of each item separately, it is possible for some of the furniture to be removed from the property and a dispute may arise as to whether these furniture or equipment were included in the sale.
In such a case, the purchaser is in a difficult position, since he has the obligation to prove the value of the items removed prior to the delivery of the property to him and to convince the court that there was a verbal agreement for their purchase. He must also prove their value through a valuation.
The above issue was examined by the Supreme Court in a judgement issued on 24.11.2017, where the court of first instance had dismissed the action of a purchaser for the value of the furniture removed from the property, the reason being that he failed to prove his damages.
The purchaser had bought a house under a sale contract stating the purchase price and there was a specific term that the purchase price included a significant amount for the value of the furniture and kitchenware. On taking possession of the property, he found out that all the furniture and equipment had been removed.
The verbal excuse given by the vendor was that he had paid capital gains tax, but in his statement of defence he denied having removed all the furniture, claiming that the purchaser was told that some of the furniture would be removed and he agreed. The court of first instance held that the vendor removed only some of the furniture from the property, but it dismissed the action with the reasoning that the purchaser failed to prove the value of the removed furniture.
The Supreme Court disagreed with the court of first instance. It dismissed the vendor’s allegation that there had been a verbal agreement for the removal of some of the furniture, but thereafter it came to the unreasonable conclusion that the vendor removed some of the furniture. At the same time, while it found that the purchaser was a reliable witness, it held that part of the furniture was removed and it did not take into consideration the purchaser’s position that all of the furniture had been removed.
Moreover, the Supreme Court noted that in addition to the sale contract stating the exact amount payable for the furniture and equipment, the purchaser adduced evidence that he had spent a certain amount to buy new furniture and equipment; therefore, his action should not have been dismissed.
Once the court of first instance accepted that the vendor had removed some of the furniture, the value of which could not have been defined, it shouldn’t have dismissed the action with costs, but it ought to have ascertained the said value based on the evidence adduced by the purchaser, who proved the value of the furniture and equipment he purchased.
The court of first instance committed a serious error and the purchaser was right to claim the judgement to be reversed in its entirety so that the agreed amount for the furniture to be awarded to him.
The Supreme Court set aside the judgement of the court of first instance and issued a judgement for the balance of the value of the furniture, plus all the costs.