ACS Computer Pte Ltd v Rubina Watch Co (Pte) Ltd and Another

• Jurisdiction: Singapore
• Judge: Warren Khoo L H J
• Judgment Date: 17 May 1997
• Neutral Citation: [1997] SGHC 129
• Citation: [1997] SGHC 129
• Date: 17 May 1997
• Year: 1997
• Plaintiff Counsel: Muthu Kumaran (WT Woon & Co)
• Docket Number: Suits Nos 924 and 925 of 1996 (Registrar's
• Defendant Counsel: Devinder Rai and Christopher Woo (Harry Elias & Partners)
• Court: High Court (Singapore)
• Published date: 19 September 2003

Judgment:

WARREN LH KHOO J

Cur Adv Vult

By two options of different dates but in similar terms the plaintiffs offered to sell units in the Henderson Industrial Estate to the defendants in each of these suits. The defendants in the two suits are closely related, and they are also related to the end purchasers FJ Benjamin Holdings Pte Ltd. The options were exercised, and eventually by two separate instruments of transfer, the properties were transferred to FJ Benjamin Holdings Pte Ltd. It is common ground that the units are lands governed by the Land Titles Act (Cap 157, 1994 Ed).

2.The option in each case provided that the sale was subject to the Singapore Law Society`s Conditions of Sale 1994 in so far as they were applicable to a sale by private treaty and did not conflict with the terms and conditions of the option. Clause 17 of the terms and conditions of the option provided that the purchaser was liable and must pay the goods and services tax and stamp duty for and in connection with the sale and purchase of the property. I shall use the by now popularly familiar acronym GST to refer to the tax.

3.The sale in each case was completed by an instrument of transfer. There was no mention of the GST by either party before the completion of the sale. There was no mention of it in the instrument of transfer. There was no mention of it until some time in May 1996, when the plaintiffs` solicitors raised it with the defendants` solicitors and asked that it be paid. The defendants refused to pay, contending that upon the completion of the sale by the execution and registration of the transfer the obligation of the defendants in that regard had merged with the transfer, and that they were no longer under any liability.

4.It is common ground that the sale in question attracted GST in accordance with the provisions of the Goods and Services Tax Act (Cap 117A, 1997 Ed) (the GST Act) and in the circumstances of the case. Although by the name of the tax one might imagine that the GST Act applied to only the supply of goods and services, there are deeming provisions in the GST Act which apply it to the sale of real property in certain circumstances. GST was payable for the sale of the land in these cases.

5.The major question in these two suits is the question of merger. The defendants rely on s 66 of the Land Titles Act, which provides as follows:

All obligations created by a contract for the sale of registered land shall, upon registration of the transfer giving effect to the contract, be deemed to have merged in that transfer unless express provision in writing is made to the contrary.

6.There was in this case no provision in writing that the GST obligation was not to merge in the transfer. On an application by the defendants, the assistant registrar Mr Phang Hsiao Chung held, however, that the doctrine of merger did not disentitle the plaintiffs from claiming the GST under cl 17 of the option. The defendants appealed.

7.On the face of it, s 66 is wide ranging. Defendants` counsel submits that it should be given full effect. He says there is nothing in the option that provides to the contrary nor is there any other writing to the effect. Therefore, he submits that, by the operation of this section, the plaintiffs are now precluded from asserting their claim for the GST provided for in the contract of sale.

8.Plaintiffs` counsel, on the other hand, submits that under the common law, the conveyance of land extinguishes obligations under the contract only in so far as the deed of conveyance is intended to cover the same ground as the contract. Those obligations which are not so intended to be covered by the deed do not merge in the conveyance. He submits that s 66 is intended merely to codify this common law rule, with all its limitations; it does not over-ride the common law.

9. My view

In the face of the absolute terms in which s 66 is cast, I had at first considerable difficulties accepting plaintiffs` counsel`s submission, although, intuitively, I felt that there was much substance in it. However, having reflected on the matter, I can say with some conviction that he is more likely to be right than is counsel for the defendants, for the following reasons.

10.First, the position at common law is as stated by plaintiffs` counsel. The general rule was well stated by Lord Russell in Knight Sugar Co v Alberta Railway & Irrigation Co [1938] 1 All ER 266 at p 269 as follows:

It is well settled that, where parties enter into an executory agreement which is to be carried out by a deed afterwards to be executed, the real completed contract is to be found in the deed. The contract is merged in the deed. The most common instance, perhaps, of this merger is a contract for the sale of land followed by conveyance on completion. All the provisions of the contract which the parties intend should be performed by the conveyance are merged in the conveyance, and all the rights of the purchaser in relation thereto are thereby satisfied.

11.As indicated in this passage, merger is not an absolute doctrine, but depends entirely upon the intention of the parties. As Bowen LJ said in Clark v Ramuz [1981] 2 QB 456 at p 461:

It is true that the execution of the conveyance puts an end to all contractual obligations which are intended to be satisfied by the execution. But that doctrine does not apply to cases where the contractual obligation is of such a kind that it cannot be supposed to have been the intention of all the parties that it should be extinguished by the conveyance.

12.Earlier, in the case of Palmer v Johnson [1884] 13 QBD 351 at p 357, it was said:

When one is dealing with a deed by which the property has been conveyed, one must see if it covers the whole ground of the preliminary contract. One must construe the preliminary contract by itself, and see whether it was intended to go on to any and what extent after the formal deed had been executed.

13. The Knight Sugar case

So the common law doctrine and its qualifications are well settled, and they were well settled before the introduction of our land titles legislation in 1956. The question whether the doctrine was also applicable to a sale of land under a Torrens system of land titles registration had arisen in the Knight Sugar case referred to earlier. In that case, their Lordships of the Privy Council, on an appeal from Alberta, held that it did. The relevant sections of the Alberta Land Titles Act provided as follows:

50 After a certificate of title has been granted for any land, no instrument shall be effectual to pass any estate or interest in such land (except a leasehold interest for three years or for a less period) or render such land liable as security for the payment of money, unless such instrument is executed in accordance with the provisions of this Act and is duly registered thereunder; but upon the registration of any such instrument in the manner hereinbefore prescribed the estate or interest specified therein shall pass, or, as the case may be, the land shall become liable as security in manner and subject to the covenants, conditions and contingencies set forth and specified in such instrument or by this Act declared to be implied in instruments of a like nature.

51 So soon as registered, every instrument shall become operative according to the tenor and intent thereof, and shall thereupon create, transfer, surrender, charge or discharge, as the case may be, the land or the estate or interest therein mentioned in the instrument.

14.In the Knight Sugar case, lands held under Crown grants were contracted to be sold subject to the conditions and reservations in the original Crown grants. The Crown grants contained a reservation to the Crown of `all coal mines, coal pit seams, and veins of coal, and the right to work the...