HSBC Institutional Trust Services (Singapore) Ltd (trustee of Capitaland Mall Trust) v Chief Assessor

• Jurisdiction: Singapore
• Judge: Mavis Chionh Sze Chyi JC
• Judgment Date: 16 April 2019
• Neutral Citation: [2019] SGHC 95
• Plaintiff Counsel: Tan Kay Kheng and Soh Zi Qing Jeremiah (WongPartnership LLP)
• Date: 16 April 2019
• Docket Number: Tribunal Appeal No 9 of 2018
• Hearing Date: 08 November 2018,22 November 2018
• Subject Matter: Onus of proof,Proof of evidence,Valuation list,Annual value,Property tax,Evidence,Revenue Law
• Published date: 05 March 2020
• Citation: [2019] SGHC 95
• Defendant Counsel: Quek Hui Ling, Pang Mei Yu and Chong Wai Teng Victoria (Inland Revenue Authority of Singapore (Law Division))
• Court: High Court (Singapore)
• Year: 2019

Mavis Chionh Sze Chyi JC: Introduction

The appellant in this case is HSBC Institutional Trust Services (Singapore) Limited (“the Appellant”), in its capacity as Trustee of Capitaland Mall Trust (“CMT”). The respondent is the Chief Assessor. I will refer to him as the “Chief Assessor” in these written grounds. The property which is the subject of the appeal (“the subject property”) comprises #07-01 to #07-15 on the seventh floor of the mall known as Plaza Singapura at 68 Orchard Road, Singapore 238839. The appeal centres on the annual value of the subject property for the year 2008 – which was $3,292,000.

The Appellant had on 29 December 2008 filed a notice of objection against this annual value to the Chief Assessor and sought the amendment of the 2008 Valuation List. Its objection was rejected by the Chief Assessor. The Appellant then appealed to the Valuation Review Board (“VRB”) under s 20A of the Property Tax Act (Chapter 254, 2005 Rev Ed) (“PTA”) in respect of the 2008 annual value. In its notice of appeal, the Appellant stated that its desired annual value for the subject property was $2,127,000 with effect from 1 January 2008 and $2,265,000 with effect from 14 February 2008. The VRB dismissed the appeal after a hearing spread over a number of days between October 2016 and April 2018. The Appellant filed Tribunal Appeal No 9 of 2018 (“TA 9/2018”) in an appeal to the High Court against the VRB’s decision, under s 35 of the PTA. I dismissed the appeal on 22 November 2018, and the Appellant having filed an appeal a month later, I now set out below the written grounds for my decision.

In its written judgement of 23 May 2018¹, the VRB has set out a meticulous review of the key facts in this case. The factual summary I set out below draws predominantly from the VRB’s written judgement.

Factual background

The subject property consists of ten cinema halls and other units on the seventh floor of Plaza Singapura. By way of background, Plaza Singapura was previously owned by Plaza Singapura (Pte) Ltd (“PSPL”) and then acquired by the Appellant in August 2004 as one of the properties in CMT’s portfolio. Plaza Singapura has nine floors of retail space with a diverse tenant mix which – in 2008 (the assessment year in issue) – included Golden Village Multiplex Pte Ltd (“GV”) who occupied the seventh floor, Carrefour (a hypermarket chain), Best Denki (an electronics retailer chain), Yamaha Music School and others.

The subject property was leased by PSPL to GV on 29 April 1999. Two agreements were signed by GV on this date. First, GV signed an Agreement for Lease², pursuant to which it undertook to carry out improvements on the subject property, following which PSPL would grant it a lease of the said property. Second, GV signed a Lease for an initial 6-year term from 14 February 1999 to 13 February 2005, with two options to renew for two consecutive six-year terms. I adopt the terminology used by the VRB in referring to this first tenancy agreement as “TA-1”.

In addition to the first tenancy from 14 February 1999 to 13 February 2005, GV also entered into a second tenancy for three years from 14 February 2005 to 13 February 2008, with an option to renew for three years and a further six-year term (“TA-2”³); a third tenancy for six years from 14 February 2008 to 13 February 2014, with an option to renew for three years (“TA-3”⁴); and presently, a fourth tenancy which runs until 13 February 2020. TA-2 and TA-3 are the two tenancy agreements which relate to 2008.

When GV first leased the subject property, it was a bare shell, the landlord having put in only standard minimal mechanical and electrical services and building finishes. Between 1998 and 1999, GC arranged for fitting-out works on the subject property at a total cost of $7,829,288.53, in order to fit it out as a fully functional cinema complex. A list of these fitting-out works is set out in the table at [49] of the VRB’s written judgement.

In 2008, the subject property was used as a cinema complex, an office space, and a retail space in the following manner:

Component	Description	Area (m2)
Cinema complex	A cinema complex comprising 10 fully functioning cinema halls with 1,733 seats (including 18 handicapped seats), and ancillary outlets selling snacks, drinks and movie memorabilia which were operated by GV	4,373.59
Office space	An office space used as GV’s office headquarters	452.72
Retail space	A retail unit sublet by GV to TKA Amusement (S) Pte Ltd to run a family entertainment centre	536.79
	Total area of subject property	5,363.10

In the course of 2008, GV carried out further works on the subject property, this time mainly for the purpose of converting office space it was then using for its office headquarters into additional retail units which it would let out. GV’s office headquarters were moved to another, larger unit in Plaza Singapura (#B1-10) under a separate lease with the Appellant. These further works during 2008 were not taken into account by the expert witness called on behalf of the Chief Assessor, Ms Ching Yung Ket (“Ms Ching”) when she considered the assessment of the 2008 annual value of the subject property.

In 2008, the rent payable by GV for the subject property comprised base rent alone (excluding separate charges such as advertising and promotion fees, service charges and the like) as there was no turnover rent for 2008. The 2008 base rent for the subject property was as follows: $3.07 per square foot (“psf”) per month between 1 January 2008 and 13 February 2008 (TA-2); $3.27 psf per month between 14 February 2008 and 31 December 2008 (TA-3).

Based on the above figures, the actual rent paid by GV for the subject property for the year 2019 was $2,248,541.

The annual value of the subject property for 2008 is $3,292,000. This was the same annual value assessed in respect of the subject property in the years 2005 to 2007. In TA 9/2018, the Appellant prayed for the annual value to be revised to $2,265,000 with effect from 1 January 2008⁵. In its submissions in the hearing of TA 9/2018 before me, the Appellant also argued in the alternative that the entry of “68 Orchard Road #07-01/15” (the subject property) should be deleted from the 2008 Valuation List along with the stated annual value of $3,292,000⁶.

The four issues put forward by the Appellant in TA 9/2018

In TA 9/2018, the Appellant put forward four main issues on which it said the VRB had erred.

First, the Appellant argued that the VRB had erred in holding that in the appeal before it, the onus of proof lay on the Appellant to show that the Chief Assessor had come to a wrong decision in his assessment of the 2008 annual value of the subject property. According to the Appellant, although it had brought the appeal before the VRB, it was the Chief Assessor who bore the onus of proving to the VRB that its decision on the annual value was correct. For that matter, the Appellant suggested that it was the Chief Assessor who bore the onus of proving the correctness of its decision in “the present appeal” in TA 9/2018.⁷

Second, the Appellant argued that the Chief Assessor’s inclusion of a single annual value in the 2008 Valuation List, in respect of the subject property, was an act “prohibited by the [PTA]”, when he had in fact assessed the subject property “as three separate tenements instead of one whole tenement” ⁸.

Third, the Appellant argued that the VRB had erred in agreeing with the Chief Assessor’s finding that fitting-out works installed by GV on the subject property amounted to fixtures which ought to be included in the assessment of the annual value. The Appellant claimed that GV’s fitting-out works were only chattels.

Fourth, the Appellant argued that the VRB had erred in accepting the Chief Assessor’s determination of the 2008 annual value. The Appellant said that the rental comparison method should have been used to determine the annual value, and that it would have yielded the lower figure of $2,265,000. The Appellant attacked the methodology of the Chief Assessor’s expert witness Ms Ching for using what it decried as a “hotch-podge” approach, which had involved using the Profits Method to assess the cinema component of the subject property and the rental comparison method to assess the office and retail components. The Appellant also attacked Ms Ching’s use of the Rent Plus Amortised Cost Method as a “check” on the correctness of the annual value figure derived using her first approach.

I will explain why I found against the Appellant on each of these four issues.

First issue: Whether the onus of proof in an appeal fell on the Chief Assessor

On the first issue, the Appellant’s case was built firstly on the fact that the PTA – unlike the Income Tax Act (Chapter 134, 2014 Rev Ed) (“ITA”) and the Goods and Services Tax Act (Chapter 117A, 2005 Rev Ed) (“GSTA”) – did not contain any provision which expressly placed on the party seeking a review of the respective Comptroller’s decision the onus of proving that decision wrong. The Appellant pointed to s 80(4) of the ITA and s 52(3) of the GSTA, which expressly placed the onus of proof on the party seeking such a review. s 80(4) of the ITA reads as follows: (4) The onus of proving that the assessment is excessive or that the amount of any unabsorbed losses, allowances or donations that may be carried forward ought to be of a higher amount than that assessed (as the case may be) shall be on the appellant.

s 52(3) of the GSTA reads as follows: (3) The onus of proving that the decision of the Comptroller on the application for review and revision under section 49 is incorrect shall be on the appellant.

In the absence of any similar provisions in the PTA which explicitly provided for the onus of proof to fall on the party seeking a review, the Appellant argued that “the general...