Glengary Pte Ltd v Chief Assessor

• Jurisdiction: Singapore
• Judgment Date: 05 September 2012
• Date: 05 September 2012
• Docket Number: Originating Summons No 1075 of 2011
• Court: High Court (Singapore)

Glengary Pte Ltd

Plaintiff

and

Chief Assessor

Defendant

[2012] SGHC 183

Lai Siu Chiu J

Originating Summons No 1075 of 2011

High Court

Revenue Law—Property tax—Annual value—Whether committed sales of condominium were to be taken into account when calculating annual value of land on basis of s 2 (3) (b) Property Tax Act (Cap 254, 2005 Rev Ed)—Whether principle of reality applied—Section 2 (3) (b) Property Tax Act (Cap 254, 2005 Rev Ed)

Glengary Pte Ltd (‘the Appellant’) acquired a plot of land at Marina Boulevard (‘the Property’) on a 99-year lease in 2002 where a condominium development known as The Sail@Marina Bay (‘The Sail’) now sits. Before construction of The Sail began, the appellant launched the sale of residential units. All the units were sold by January 2007. While The Sail was under construction in 2007, the Chief Assessor (‘the Respondent’) issued a notice increasing the annual value of the Property to $59,091,000 with effect from 1 April 2007. The Respondent had relied on s 2 (3) (b)of the Property Tax Act (Cap 254, 2005 Rev Ed) (‘the Act’) to disregard the committed sales of the units in assessing the annual value of the property. The same annual value was set by the Respondent in the 2008 Valuation List.

The Appellant's objections to the notice and the 2008 Valuation List were rejected by the Respondent. The Appellant appealed to the Valuation Review Board (‘VRB’) against the Respondent's decision. The VRB upheld the Respondent's decision but reduced the annual value of the Property to $51,409,000 from $59,091,000. The Appellant then appealed to the High Court against the VRB's decision.

Held, allowing the appeal:

(1) The purpose of the 1965 amendment to s 2 (b) the Property Tax Ordinance 1960 (No 72 of 1960) (which was in pari materia with s 2 (3) (b) of the Act) was to remove any doubt about whether the Respondent was empowered to calculate the annual value of land by reference to its capital value even where there were buildings being erected thereon: at [28].

(2) As a deeming provision, s 2 (3) (b) of the Act created a statutory fiction which had to be given full effect. However, it was crucial that a statutory fiction be carefully and critically analysed in order to determine its purpose, which in turn defined its ambit. Once the legal meaning of a deeming provision was ascertained through a purposive interpretation, the courts had to give full effect to the legal meaning of the provision: at [32], [35] and [37].

(3) If a consequence necessarily followed from a fiction created by statute, it could be inferred that Parliament had intended that consequence (subject to evidence to the contrary): at [39].

(4) It was not an inevitable consequence of the fiction created by s 2 (3) (b)of the Act that committed sales had to be disregarded in the assessment of annual value. There was no legal basis for saying that there could not be committed sales on a vacant piece of land. The sale of a unit was a separate event from its eventual physical construction. Committed sales were not a consequence of the building being physically erected, in fact committed sales might occur without any construction being started at all. Furthermore, there was no indication in any of the parliamentary debates that s 2 (3) (b)of the Act was intended to exclude committed sales from consideration: at [40], [41], [43] and [44].

(5) The principle of reality dictated that committed sales might be taken into consideration in the assessment of annual value. While there was no doubt that this principle was subordinate to the objective of giving full effect to the statutory fiction in s 2 (3) (b)of the Act, the fiction contained therein did not stretch so far as to impede the consideration of committed sales as part of the reality surrounding the Property at the time of valuation: see [47] and [51].

(6) In the absence of contrary parliamentary intention, ordinary principles of valuation should apply. A fundamental principle of valuation was that the process had to be rooted in reality (rebus sic stantibus), which would include the fact that there were committed sales on the Property: at [50] and [56].

ACC v Comptroller of Income Tax [2011] 1 SLR 1217 (folld)

Best Origin Ltd v Commissioner of Rating and Valuation [2008] HKLT 7 (folld)

Best Origin Ltd v Commissioner of Rating and Valuation [2010] HKCA 368 (refd)

Chief Assessor v First DCS Pte Ltd [2008] 2 SLR (R) 724; [2008] 2 SLR 724 (refd)

Chief Assessor v Howe Yoon Chong [1983-1984] SLR (R) 657; [1984-1985] SLR 218 (folld)

Chief Assessor v Town and City Properties Ltd [1965-1967] SLR (R) 477; [1965-1968] SLR 526 (refd)

Comptroller of Income Tax v GE Pacific Pte Ltd [1994] 2 SLR (R) 948; [1994] 2 SLR 690 (folld)

Ean Lian (Pte) Ltd v Chief Assessor [1975] 1 MLJ xlvi (refd)

East End Dwellings Co Ld v Finsbury Borough Council [1952] AC 109 (refd)

Walton, Ex parte; Re Levy (1881) 17 Ch D 746 (refd)

Federal Commissioner of Taxation v Comber (1986) 64 ALR 451 (folld)

Hoare v National Trust (1998) 77 P & CR 366 (folld)

Spencer v The Commonwealth of Australia (1907) 5 CLR 418 (refd)

Trocette Property Co Ltd v Greater London Council [1974] RVR 306 (refd)

Union of India v Jalyan Udyog (1994) 1 SCC 318 (refd)

Interpretation Act (Cap 1, 2002 Rev Ed) s 9A (1)

Local Government Ordinance 1957 (No 24 of 1957) s 3

Municipal Ordinance 1896 (SS Ord No 15 of 1896) s 3

Municipal Ordinance 1913 (SS Ord No 8 of 1913) s 3

Municipal Ordinance (Cap 133, 1936 Rev Ed) s 3

Municipal (Amendment) Ordinance 1919 (SS Ord No 12 of 1919)

Property Tax Act (Cap 254, 2005 Rev Ed) ss 2 (1) , 2 (3) (b) (consd) ;s 20

Property Tax Ordinance 1960 (No 72 of 1960) s 2 (b)

Indian Act No 25 of 1856 (India) s 4

Finance (1909-1910) Act 1910 (c 8) (UK) s 25 (1)

Town and Country Planning Act 1947 (c 51) (UK) s 53 (1) (a)

Tan Kay Kheng, Tan Shao Tong and Novella Chan (Wong Partnership LLP) for the appellant

Joyce Chee and Lau Kai Lee (Inland Revenue Authority of Singapore) for the respondent.

Judgment reserved.

Lai Siu Chiu J

Introduction

1 This is an appeal against the decision of the Valuation Review Board (‘the VRB’) in VRB Appeals No 236 of 2009 and No 237 of 2009: (see Glengary Pte Ltd v Chief Assessor [2012] SGVRB 1) in fixing the annual value of a piece of land at $51,409,000 for 2007 and 2008.

Factual background

2 The plot of land in question is TS 30 Lot LP 650 (‘the Property’), the site on which a condominium development now known as The Sail@Marina Bay (‘The Sail’) was built. The Property, which is located at Marina Boulevard, was acquired by Glengary Pte Ltd (‘the Appellant’) from the state under the Government Land Sales scheme in 2002 on a 99-year lease with effect from 12 August 2002. The Sail comprises of a seven-storey car park/retail podium (which contains 22 retail units and the car park) and two residential tower blocks (consisting of 1,111 residential units).

3 In December 2003, the Appellant, through its architect, submitted an application to the Urban Redevelopment Authority (‘URA’) for provisional permission to build residential and retail units at The Sail. The URA granted provisional permission in February 2004.

4 According to Ms Chua Beng Ee (‘Ms Chua’), the property valuer engaged by the Appellant, units which are intended to be constructed may be launched for sale once the written planning permission, building plan approval, surveyor's certificate on the floor areas of the units, and housing numbering certificate (collectively ‘the Approval Documents’) have been issued. Ms Chua stated that there was no requirement for any construction to have commenced on the site before the sales of the units to be constructed can take place. Conversely, such sales cannot take place (and construction cannot even begin) if the Approval Documents have not been issued.

5 Before construction of The Sail began, the Appellant launched in October 2004, the sale of the residential units which it intended to construct. Possession was granted to the building contractor on 22 November 2004. The vast majority of the residential units (1,106 units) were sold by the end of 2005, with four units sold in 2006 and the last unit sold in January 2007. While The Sail was under construction in 2007, the Chief Assessor (‘the Respondent’) issued a notice under s 20 of the Property Tax Act (Cap 254, 2005 Rev Ed) (‘the Act’) increasing the annual value of the Property to $59,091,000 with effect from 1 April 2007. The Appellant objected to this notice. The Appellant also objected to the annual value of $59,091,000 in the 2008 Valuation List. The Respondent disallowed both objections, relying on s 2 (3) (b) of the Act to disregard the committed sales of the units in assessing the annual value of the Property. The Appellant appealed to the VRB against the Respondent's decision.

6 The temporary occupation permit (‘TOP’) for Phase 1 of The Sail was issued on 29 May 2008 and the TOP for Phase 2 was issued on 29 September 2008. The entire development received its certificate of statutory completion (‘CSC’) on 17 April 2009.

The statutory provisions

7 Section 2 of the Act provides as follows:

Interpretation

2.- (1)In this Act, unless the context otherwise requires-

...

'annual value'... means the gross amount at which the [house or building or land or tenement] can reasonably be expected to be let from year to year ...

...

1. (3) In assessing the annual value of any property, the annual value of the property shall, at the option of the Chief Assessor, be deemed to be the annual value as defined in this Act or the sum which is equivalent to the annual interest at 5%-

   1. (a) on the estimated value of the property, including buildings, if any, thereon; or

   2. (b) on the estimated value of the land as if it were vacant land with no buildings erected, or being erected, thereon ...

The decision below

8 Both...