BCH Retail Investment Pte Ltd v Chief Assessor

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeLee Seiu Kin JC
Judgment Date02 September 2002
Neutral Citation[2002] SGHC 205
Citation[2002] SGHC 205
Plaintiff CounselDavid De Souza and Jeanette Lee ( De Souza Tay & Goh )
Subject MatterWhether landlord under obligation to use such contributions for such activities,Concept of rent,Whether tenant's contribution of advertising and promotion fees forms part of shop unitÂ’s annual value,Revenue Law,ss 2 & 35 Property Tax Act (Cap 254, 1997 Ed),Whether such contributions bona fide,Onus on landlord to satisfy Chief Assessor,Annual value,Property tax,Whether expenditure on advertising and promotion activities reasonable
Date02 September 2002
Defendant CounselLeung Yew Kwong And Liu Hern Kuan (Inland Revenue Authority of Singapore, Law Division)
Docket NumberOriginating Motion No 8 of 2000
Published date19 September 2003

Judgment Cur Adv Vult

GROUNDS OF DECISION

1 This is an appeal pursuant to s 35 of the Property Tax Act ("the Act") against the decisions of the Valuation Review Board in VRB Appeal Nos 252-255 and 282-304 of 1999. All the decisions turn on the same issue and they have been dealt with collectively by the Board in its Grounds of Decision dated 16 May 2002. They turn on the same facts and I shall also deal with them together.

2 The Appellant is the owner, operator and landlord of the shopping centre known as Parco Bugis Junction ("the Shopping Centre"). It has approximately 203 shop units which are let out to 168 tenants under written leases. The anchor tenants are Seiyu, a department store, and United Artists, a multi-screen cinema complex. The subject matter of the present appeals pertain to 27 of the non-anchor shop units.

3 The Shopping Centre opened for business in 1995. From then until sometime in 1997, the Appellant signed leases with its tenants in a form that I shall term the Old Lease and after 1997, in a new form that I shall call the New Lease. The New Lease comprised a lease agreement (the "Agreement") and a Memorandum of Supplemental Lease Terms (the "Memorandum") which was made applicable to the Agreement by clause 2.2 of the Agreement.

4 The payments by each of the Appellant’s tenants under its lease comprise four components, viz.:

(i) "Basic Rent" which is a fixed sum payable monthly computed on a per square metre basis as negotiated and agreed between the Appellant and the tenant.

(ii) "Additional Rent" which is the agreed percentage of the tenant’s gross sales from the retail unit and which is negotiated and agreed between the Appellant and the tenant.

(iii) "Tenant’s Contribution" being the tenant’s contribution towards the expenses for cleaning and maintenance services provided by the Appellant to the common areas of the Shopping Centre. Unlike the Basic Rent and Additional Rent, it is a fixed rate of $16.15 per square metre for all tenants (subject to increase).

(iv) "A&P Contribution", expressed in the lease as "the fees payable by the Tenant to the Landlord for advertising and promotion as provided in the Lease". Like the Tenant’s Contribution it is a fixed rate and is set at $3.23 per square metre (subject to a minimum of $100.00 and subject to increase).

5 The provisions relating to A&P Contributions in both the Old Lease and the New Lease are almost identical. In the Old Lease, these provisions are set out in Schedule 6. In the Agreement, they are found in clause 6. There are minor differences in the A&P Contribution provisions in the two leases. The principal difference is that 1.1 of Schedule 6 of the Old Lease mentions that the payment of the A&P Contribution is "by way of additional rent" but this statement is not found in clause 6.1 of the Agreement. However, clause 6.5.2 of the Memorandum provides that all monies payable under the New Lease shall be deemed to be rent in law. Nothing turns on the differences.

6 The Chief Assessor’s assessments of the Annual Value of each of the 27 shop units were based on the actual rates paid of Basic Rent, Additional Rent and A&P Contribution, and did not include the Tenant’s Contribution. The Appellant was dissatisfied with the inclusion of the A&P Contribution, and before the Board submitted that it ought to be excluded. The Board dismissed the appeals and the Appellant now appeals before me.

7 The following facts were disclosed in the Appellant’s affidavits which were not challenged by the Chief Assessor:

(a) The A&P Contribution payments were utilised by the Appellant to help defray its costs in carrying out advertising and promotion ("A&P") activities for the Shopping Centre. For such purposes, the Appellant incurred about $2 million each year. However the total collection in respect of A&P Contributions amounted to approximately $500,000, about a quarter of the actual A&P expenses.

(b) The A&P Contributions were paid by all tenants except the two anchor tenants, Seiyu and United Artists.

(c) The Appellant has an A&P Team who work with an advertising agency. The team’s role is to co-ordinate the promotional activities for the benefit of the tenants. These activities included staging events, conducting lucky draws and running media advertisements. As many as five promotional programmes are conducted annually in the Shopping Centre to draw shoppers to it. There are also numerous activities, events and promotions organised throughout the year in the Shopping Centre.

8 The appeal turns on the interpretation of the term "annual value" in the Act. Section 2 thereof defines it as follows:

"annual value" —

(a) in relation to a house or building or land or tenement … means the gross amount at which the same can reasonably be expected to be let from year to year, the landlord paying the expenses of repair, insurance, maintenance or upkeep and all taxes (other than goods and services tax); …

The question is whether the A&P Contribution is a part of the gross amount that a shop unit can reasonably be expected to be let. I turn to consider the relevant authorities on this question.

9 In Chartered Bank v The City Council of Singapore (1959) SPTC 1 the High Court dealt with an appeal against assessments made by the City Council of certain premises owned by the bank. The assessment for each unit was based on the gross rent received. The High Court allowed deductions to be made from the gross rent of expenses incurred by the landlord for watchmen,...

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10 cases
  • Chief Assessor v HSBC Institutional Trust Services (Singapore) Ltd
    • Singapore
    • High Court (Singapore)
    • 4 June 2012
    ...is unconnected to the threshold question described in [20] above. Similarly, in BCH Retail Investment Pte Ltd v Chief Assessor [2002] 2 SLR(R) 973 (“BCH (No 1)”), the dispute related to the tenants’ A&P contributions. In BCH (No 2), Andrew Phang JA said (at [26]): Having regard to the analy......
  • Tan Hee Liang v Chief Assessor and another
    • Singapore
    • High Court (Singapore)
    • 5 December 2007
    ...appellant Julia Mohamed (Inland Revenue Authority of Singapore) for the respondents. BCH Retail Investment Pte Ltd v Chief Assessor [2002] 2 SLR (R) 973; [2002] 4 SLR 844, HC (refd) BCH Retail Investment Pte Ltd v Chief Assessor [2007] 2 SLR (R) 580; [2007] 2 SLR 580, CA (refd) Bell Propert......
  • Tan Hee Liang v Chief Assessor and Another
    • Singapore
    • Court of Three Judges (Singapore)
    • 28 October 2008
    ...levy did not fall within the categories decided by the High Court in Chartered Bank or in BCH Retail Investment Pte Ltd v Chief Assessor [2002] 4 SLR 844 (“BCH No (b) It was impermissible for the appellant, relying on the English Court of Appeal decision of Bell Property Trust, Limited v As......
  • HSBC Institutional Trust Services (Singapore) Ltd v Chief Assessor
    • Singapore
    • Court of Three Judges (Singapore)
    • 17 January 2013
    ...definition often gives rise to no fixed class. As noted in Bell Property (at 552) and BCH Retail Investment Pte Ltd v Chief Assessor [2002] 2 SLR(R) 973 (“BCH No 1”) (at [17]), modern developments could add to the class of “not rent or letting” and the courts should be alive to these develo......
  • Request a trial to view additional results
3 books & journal articles
  • Revenue and Tax Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2007, December 2007
    • 1 December 2007
    ...the annual value in relation to its shopping centre at Parco Bugis Junction. In 2002, in BCH Retail Investment Pte Ltd v Chief Assessor[2002] 4 SLR 844 (‘BCH No 1’), the High Court (Lee Seiu Kin JC, as he then was) had held that the A&P contributions as paid by the tenants under the terms o......
  • Revenue and Tax Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2013, December 2013
    • 1 December 2013
    ...tenant's contributions towards the landlord's advertising and promotion expenses (as in BCH Retail Investment Pte Ltd v Chief Assessor[2002] 2 SLR(R) 973): at [47]. 23.80 In this case, the Court of Appeal decided (at [57]) that depreciation did not fall under the qualifying words in the fir......
  • Revenue and Tax Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2006, December 2006
    • 1 December 2006
    ...in relation to its shopping centre at Parco Bugis Junction. As noted by Tan J (at [5]), in BCH Retail Investment Pte Ltd v Chief Assessor[2002] 4 SLR 844 (‘BCH No 1’), Lee Seiu Kin JC (as he then was) in the High Court had previously held that the A&P contributions as paid by the tenants un......

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