Kaolim Pte Ltd v United Overseas Land Ltd

• Jurisdiction: Singapore
• Judge: D C D'Cotta J
• Judgment Date: 15 September 1981
• Neutral Citation: [1981] SGCA 7
• Docket Number: Civil Appeal No 52 of 1980
• Date: 15 September 1981
• Published date: 19 September 2003
• Year: 1981
• Plaintiff Counsel: Robert Hsieh (Boswell, Hsieh & Lim)
• Citation: [1981] SGCA 7
• Defendant Counsel: Chan Sek Keong (Shook Lin & Bok)
• Court: Court of Appeal (Singapore)
• Subject Matter: Property tax,Mortgaged property,Payment by purchaser of mortgaged property,Revenue Law,Recovery,Whether applicable,Doctrine of subrogation

This appeal relates to the sale of land and building known as Kaolim Building at No 20 Kramat Lane (the property). The appellants were the owners and the respondents are the purchasers of the property.

The owners bought the property in June 1976 for $4,850,000. To complete the purchase, they mortgaged the property to Far Eastern Bank Ltd (the Bank) for an overdraft facility of $3,m. In November 1976 a second mortgage was made to the Bank to increase the facility up to $3,500,000.

On 10 March 1980 the Bank, in exercise of its statutory power of sale, offered the property for sale by tender. On 20 March the purchasers` tender was accepted by the Bank. The property has since been conveyed to the purchasers.

On 2 April 1980 the Bank received a letter from the Property Tax Div of the Inland Revenue dated 31 March wherein the Comptroller of Property Tax (the Comptroller) said that as the property had been sold, and property tax is a first charge, `kindly let me have immediately your cheque for $521,242.53 in settlement of the arrears of property tax ...` due for about three years. Copies of this letter were also sent to the solicitors for the owners, purchasers and the Bank.

On the same day, 2 April the solicitors for the Bank wrote to the Comptroller with copies to the other solicitors that as the property was sold subject to the condition that the purchaser `shall be deemed to have purchased with full knowledge and notice of all ... charges ...`, the claim for property tax should be made to the purchasers.

The purchasers joined issue with the Bank on the interpretation of the abovementioned condition in the conditions of sale in the tender document. They took out a vendor and purchaser summons in which the Bank were the first defendants and the owners the second defendants.

The learned Chief Justice who heard the summons granted a declaration in favour of the purchasers that upon payment of the arrears of property tax to the Comptroller at the date of completion in respect of the property, the purchasers are subrogated to the rights of the Comptroller or the owners to the extent of the amount paid in any surplus arising from the proceeds of sale held in trust for the owners.

On appeal against the said order, at the hearing before us, it was submitted for the owners that the true and proper construction of the condition is that it was the purchasers who have to pay and discharge the arrears of property tax before the completion of the sale. Another...