Cheok Doris v Commissioner of Stamp Duties

• Jurisdiction: Singapore
• Judge: Chan Sek Keong CJ
• Judgment Date: 11 August 2010
• Neutral Citation: [2010] SGCA 28
• Published date: 16 August 2010
• Date: 11 August 2010
• Year: 2010
• Hearing Date: 07 July 2010
• Subject Matter: Stamp Duties,Revenue Law
• Plaintiff Counsel: Gan Hiang Chye (Rajah & Tann LLP)
• Citation: [2010] SGCA 28
• Defendant Counsel: Foo Hui Min and Jimmy Oei (Inland Revenue Authority of Singapore)
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 18 of 2010

Chan Sek Keong CJ (delivering the judgment of the court): Introduction

This is an appeal against the decision of a High Court Judge (“the Judge”) dismissing the appeal of the appellant (“the Appellant”) against the decision of the Commissioner of Stamp Duties (“the Respondent”) that the Appellant was not entitled to a refund of stamp duty of $174,600 paid under s 22 of the Stamp Duties Act (Cap 312, 2006 Rev Ed) (“the SDA”) in connection with an aborted property transaction (see Cheok Doris v Commissioner of Stamp Duties [2010] SGHC 17).

The proceedings in the High Court were brought in the form of a case stated dated 13 May 2009 (“the Case Stated”) under s 40(1) of the SDA. Section 40(1)(b) of the SDA provides that any person who is dissatisfied with the Commissioner’s decision under s 39A(5) on a notice of objection may, upon payment of the duty assessed, appeal against the decision to the High Court, and for that purpose, require the Commissioner to state and sign a case, setting forth the question upon which his opinion was required, and the decision made by him.

Background Facts

The dispute between the Appellant and the Respondent on this issue arose in the following circumstances as set out in the Case Stated: the Appellant and her husband (collectively referred to as “the Purchasers”) had on 26 May 2004 exercised an option to purchase (“the S&P Agreement”) the property known as Residency at Mount Sophia, 96 Sophia Road, comprising 8 residential strata units (collectively called “the Property”, together with the common property) from its owner (“the Vendor”) at the price of $6 million; each of the strata units had been issued with a Subsidiary Strata Certificate of Title (“SSCT”) stating the area of the unit to be exactly the same as that described in the S&P Agreement; prior to the completion of the sale and purchase of the Property, disputes arose between the Vendor and the Purchasers as to (i) whether the Vendor was entitled and could give vacant possession of three out of eight of the strata units; and (ii) the area of the strata units as represented to the Purchasers; the Purchasers’ case was that the Vendor (through his estate agent) had represented to them that the net lettable area of the Property was the same as the total strata area of the Property, ie, 1045 sq m; however, the valuation report obtained by the Purchasers showed that 230 sq m of void space had been computed as part of the total strata area of 1045 sq m (by reason of each living room having a higher than normal ceiling); as a result, the Property had a lettable area of only 815 sq m, and this deficiency in lettable area would reduce the market value of the Property by 14% to $5.159 million; as a result of these disputes, the parties mutually agreed to rescind the S&P Agreement.

After the S&P Agreement was rescinded, the Respondent assessed it to be chargeable for ad valorem stamp duty under s 22(1) of the SDA and assessed the duty at $174,600. The Purchasers served a notice of objection on the Respondent under s 39A(1) of the SDA, relying on the following three grounds to contend that stamp duty was not payable: the S&P Agreement was mutually rescinded ab initio and from the date of such rescission, in law, with retrospective effect, the S&P Agreement did not exist, or alternatively there was no longer in existence any agreement to be stamped; the total strata area of 1045 sq m was stated in the SSCTs, but as 22% of that area was void space, the Vendor’s title to the Property was not a good (or marketable) title; and by reason of the fact that the total strata area as stated in the SSCTs included 22% of void area which carried little or lesser value, the Vendor could not rightfully be said to be able to deliver or prove a title to the Property he had contracted to sell.

The Respondent rejected the above arguments and affirmed his assessment on 10 September 2008 under s 39A(5) of the SDA. In his s 39A(5) notice, the Respondent stated:

We are of the view that the deficiency in net lettable area in the present case does not constitute substantial misdescription. The facts of Yeo Brothers Co (Pte) Ltd v Atlas Properties (Pte) Ltd [1988] 1 MLJ 150 are distinguishable from those of the present case: the former involved the sale and purchase of a single unit in which there was a pure misdescription of the gross floor area (177.07 sq. m instead of 158 sq. m), whereas the latter involved the sale and purchase of an entire development on an en-bloc basis for which your client had erroneously believed that the gross strata area is the same as the net lettable area.

We do not consider such a misunderstanding to amount to substantial misdescription of the said properties. In fact, according to the valuation report by Allied Appraisal Consultants [P]te Ltd which you have provided on the said properties, the high ceilings of the family lounges have to be included in the computation of the strata areas to reflect the true value of the properties. As there is no substantial misdescription in the present case amounting to a lack of good title, a refund of any stamp duty paid cannot be made under section 22(6)(a).

The Appellant paid the assessed stamp duty and required the Respondent to state a case to the High Court to determine issues stated therein. The Case Stated contained the material facts set out at [3] above and also the Respondent’s s 39A(5) notice set out at [5] above. The questions for determination are set out at [16] of the Case Stated (“the Questions”) as follows:

The questions for the opinion of the Court are:

(a) Whether the [S&P] Agreement is liable to the stamp duty as assessed by the Respondent; (b) If so, whether [the] Appellant is entitled to be refunded such stamp duty paid under s 22(6) of the [SDA]; (c) If the [S&P] Agreement is not liable to the stamp duty as assessed, to what stamp duty, if any, is it liable.

The Judge dismissed the Appellant’s appeal as set out in the Case Stated in a short judgment, for the reasons set out in the following paragraphs: 2 ... counsel for the [A]ppellant submitted a technical argument as to why the [V]endor was unable to prove a good title in this case. The argument was advanced on the claim that the parts of the flats, namely, the designated family areas had far higher ceilings than the rest of the flats. However, the [V]endor had calculated the space where the floors were omitted to make way for those high ceilings and counted it as part of the total strata area. The purchase price thus included "empty space". Counsel submitted that the [V]endor was unable to prove title in the void space. Indeed, that was the allegation against the [V]endor - that he had breached his obligation to deliver a good title. This might have been a fascinating issue had the dispute between the [V]endor and [P]urchasers come to trial. The matter was settled without a determination of the issue in dispute. 3 [Counsel for the Appellant] cited passages from the Parliamentary Debates on the amendment of the Act and submitted that the amendment to s 22 was to curb speculation and was not intended to change the position that a vendor must convey a good title. Counsel submitted that "good title" meant "marketable title". He submitted that the [V]endor here wanted to convey 1,045m2 (of each flat) but 22% of that stipulated area was not physical floor area but space. 4 I agree with [counsel] for the [R]espondent, that the burden of proof lay with the [A]ppellant and she had not discharged the burden. Whether the contract in this case was enforceable by either party ([V]endor and [Purchasers]), and whether the [V]endor was able to transfer good title, were questions of fact that cannot and had not been answered on a case stated. The [V]endor was not a party before this court. If that question was not answered, then the [R]espondent was entitled to rely on the [S&P Agreement] and assess the ad valorem duty on the basis of the land area stipulated in it. 5 The appeal is therefore dismissed. I will hear parties on the question of costs at a later date.

It can be seen from these passages that the Judge did not answer the Questions stated for the opinion of the court in accordance with s 40(3) of the SDA. He dismissed the Appellant’s appeal on the ground that the Appellant had failed to discharge the burden of proof on two issues of fact, viz, (a) whether the S&P Agreement was enforceable by either party, and (b) whether the Vendor was able to transfer a good title. The Judge did not accept the facts as stated in the Case Stated which was filed by the Respondent.

Issues on appeal

Before us, the Appellant contended that the Judge was wrong to hold that the Appellant had not proved the facts and to dismiss her appeal based on the Case Stated on the following grounds: the Appellant had disclosed to the Respondent the exchange of letters between the Purchasers’ solicitors and the Vendor’s solicitors which documented the main reason why the parties had mutually rescinded the S&P Agreement (viz, there was a shortfall of 230 sq m in the net lettable area of the Property); the Respondent had not rejected the reason or reasons for the rescission, and accordingly the facts stated in the Case Stated should be accepted at face value, and the Judge should have decided the Questions referred to him on the basis of those facts; and if the Judge did not accept the facts as set out in the Case Stated, he should have ordered a trial of the Questions raised instead of dismissing the Appellant’s appeal.

With respect to Question (a) set out at [6] above, the Appellant’s case is that she is entitled to a refund as the Vendor was unable to give a good or marketable title to the net lettable area of the Property that was represented to the Purchasers. The Appellant’s counsel argued that s 22(6) of the SDA should be construed...