Hilti Far East Pte Ltd v Tan Hup Guan

• Jurisdiction: Singapore
• Judge: Chan Sek Keong J
• Judgment Date: 23 April 1991
• Neutral Citation: [1991] SGHC 50
• Docket Number: Originating Summons No 1327 of 1990
• Date: 23 April 1991
• Year: 1991
• Published date: 19 September 2003
• Plaintiff Counsel: Abdul Rashid and Anita Fam (Khattar Wong & Partners)
• Citation: [1991] SGHC 50
• Defendant Counsel: Rai Shriniwas (Hin Rai & Tan)
• Court: High Court (Singapore)
• Subject Matter: Motor car purchased by employer but registered in employee's name,Whether ownership remained with employee,Ownership,Personal Property,Possession,Employee refusing to return motor car after services terminated by employer

The defendant was employed by the plaintiffs. As a term of his employment, he was provided with a motor car (the said car) which the plaintiffs purchased on 2 January 1990 and had it registered in the name of the defendant. The plaintiffs paid the initial registration fee, the insurance premium and the road tax and also the maintenance costs subsequently. The registration book of the said car was kept with the plaintiffs. The defendant took possession of the said car and made a declaration of trust in these terms:

... I stand possessed of the said vehicle in trust for [the plaintiffs] ... I will sign and execute all documents and do all things which may be necessary to effectuate the transfer of the said vehicle to [the plaintiffs] or as it may direct.

The defendant was dismissed from employment on 2 October 1990 for `insubordination and misconduct`. He refused to return the said car to the plaintiffs. On 5 October 1990, the plaintiffs wrote to the Registrar of Vehicles (the ROV) informing him of the ownership of the said car and requesting him not to allow it to be transferred by the defendant without production of the registration book. The ROV replied that he could not stop any application for transfer of vehicle ownership if the requisite documents were submitted.

The plaintiffs commenced this action for the following orders: a declaration that they were the beneficial owners of the said vehicle, an order restraining the defendant from using it, damages, and an order for delivery up to the plaintiffs.

The defendant entered appearance and put in a defence that the trust was illegal and therefore unenforceable as it was: `aimed at evading revenue`, `a deception on the administration of the Republic of Singapore` and contrary to public policy. Counsel referred to a number of authorities: Holman v Johnson [1775-1802] All ER 98, Palaniappa Chettiar v Arunasalam Chettiar [1962] MLJ 143 and Suntoso Jacob v Kong Miao Ming [1984] 2 MLJ 95 ; [1986] 2 MLJ 170 .

Counsel for the plaintiffs argued that the registration of the said car in the name of the defendant was not prohibited by the Road Traffic Act (Cap 276) (the Act) and therefore could not be an evasion of revenue or a deception of the public administration. The plaintiffs adduced evidence to show that they had made full disclosure to the Inland Revenue Department of such transport benefits given to employees in their IR8A Forms and also that they made no claim in their tax returns for depreciation allowances and the expense of maintenance for such cars. In regard to the defendant, the plaintiffs had actually omitted disclosing the said benefit in his IR8A Form for the year of assessment 1990, but I accepted the explanation of the plaintiffs` financial controller that the said omission was inadvertent. The omission did not benefit the plaintiffs in any way.

The issue of revenue evasion had two aspects: (a) income tax and (b) registration fee and road tax. As to the first, the evidence clearly showed no evasion whatever by the plaintiffs. Indeed, the said arrangement adopted by the plaintiffs resulted in the plaintiffs having to pay more income tax.

The second aspect was more problematical as the arrangement did result in the plaintiffs having paid less registration fee and road tax then otherwise they would have paid if the said car had been registered in their name. Was it a case of tax evasion or tax avoidance? Counsel for the plaintiffs argued that in the absence of any statutory prohibition of the said arrangement, the plaintiffs were not obliged to register the said car in a manner which would attract the imposition of higher fees. It was, at the highest, tax avoidance. He referred to a number of cases on tax avoidance which I do not propose to refer to as they have no relevance to the issues before me.

The Act

It is necessary to examine the provisions of the Act to determine whether the registration of the said car in the name of the defendant was illegal or a deception on the public administration. Section 10 (as it was) provided as follows:

(1) Except as otherwise provided by this Act or rules, no person shall keep or use a vehicle unless it has been registered under this Act.

(2) The Registrar may charge such fees as may be prescribed for the registration of a vehicle under this Act.

Section 11, in so far as relevant, provided as follows:

(1) Subject to the provisions of this Act and the rules, a tax shall be charged in respect of -

(a) the first registration of every vehicle under this Act; and

(b) every vehicle used or kept on any road in Singapore,

and the tax shall be paid upon a licence to be taken out by the person keeping the vehicle.

(2) The tax chargeable under subsection (1)(a) in respect of a vehicle shall be of such an amount as the Minister may prescribe from time to time and the Minister may prescribe different taxes for vehicles of different classes, categories or descriptions or vehicles used for different purposes.

(4) Any rates prescribed by the Minister may be so made to apply only to vehicles of a specified class, category or description and the Minister may prescribe different rates for vehicles of different classes, categories or descriptions or vehicles used for different purposes.

Regulations for the registration and licensing of vehicles were made by the Motor Vehicles (Registration and Licensing) Rules 1972 (the rules). In so far as relevant to the present case, the provisions were as follows:

Rule 2(1) defined a `business service passenger vehicle` as `a motor car registered in the name of (a) a statutory board, company, firm, society association or club and ... is used for the owner`s business or (b) an individual and is used for the purpose of any trade, business, profession or vocation.` Rule 2(2) defined a `private motor car` as a motor car registered in the name of a private individual and used by him for social or domestic purposes or for his business, excluding the carriage of goods.

Rule 3 provided for the registration of motor vehicles to be made in such form as the ROV might approve, such form to be fully and correctly completed by the applicant and delivered to the registrar, accompanied by the fees prescribed by the rules. Rule 5(1) provided for a scale of registration fees as set out in Part I of the First Schedule. Rule 6(1) provided for a scale of additional registration fees (`the ARF`) as set out in Part II of the...