Lai Ling Wan v Commissioner of Stamp Duties

• Jurisdiction: Singapore
• Judgment Date: 05 August 2011
• Date: 05 August 2011
• Docket Number: Originating Summons No 473 of 2010
• Court: High Court (Singapore)

Lai Ling Wan (alias Lai Lily)

Plaintiff

and

Commissioner of Stamp Duties

Defendant

[2011] SGHC 186

Choo Han Teck J

Originating Summons No 473 of 2010

High Court

Contract—Contractual terms—Purchaser contracting with vendor to buy 83 properties at once—What was nature of parties' bargain

Revenue Law—Stamp duties—Assessment—Purchaser contracting with vendor to buy 83 properties at once—Whether stamp duty payable on single instrument or 83 instruments—Whether one contract of sale or 83 separate contracts—Whether purchases formed part of larger transaction—Whether purchases were on block basis—Sections 22 (1) and 33 A Stamp Duties Act (Cap 312, 2006 Rev Ed)

The appellant purchased 83 strata units in a property development. The court was asked to determine, pursuant to a case stated by the Commissioner of Stamp Duties, the stamp duty that was payable under s 22 (1) of the Stamp Duties Act (Cap 312, 2006 Rev Ed) (‘the Act’) on this purchase. The purchase occurred in this manner. On 7 May 2007, the appellant signed a letter of intent addressed to the vendor developer to express her ‘sincere interest in purchasing’ the said units. This was done to commence negotiations with the developer. During the negotiations which followed, the developer raised a further condition to the sale which was not found in the appellant's letter of intent. In a subsequent letter dated 10 May 2007 which was prefaced ‘Subject to Contract’, the appellant agreed to the new term raised by the developer. On 14 May 2007, the appellant issued a single cashier's order to pay the 5% option fee. On 6 June 2007, a single purchaser's caveat was lodged in respect of all the 83 units. In total, 83 sale contracts all dated 8 June 2007 were entered into pursuant to the exercise of the respective options to purchase. The 15% balance purchase price was also paid with one cashier's order on 9 July 2007.

The Commissioner took the view that the 83 sale contracts could not be stamped individually, and stamp duty had to be paid on the basis that all 83 units were transferred to the appellant under a single instrument of transfer. The Commissioner's argument was threefold. First, that the sale contracts constituted one agreement under contract law. Secondly, that they were part of a ‘larger transaction’. Thirdly, the purchases were made on a ‘block basis’. The revenue authority also issued a circular on 13 March 2008 to describe how stamp duty was to be calculated for purchases made on such a block basis.

Held, allowing the appeal:

(1) The evidence concerning the negotiations between the parties did not show that they intended the appellant to purchase a collective interest. The 7 May letter was not an enforceable contract between the parties. Even if it was an offer by the appellant to buy the 83 units as one collective interest, the offer was rejected by the developer when it made a counter-offer and proposed an additional condition: at [7].

(2) The 10 May letter showed that the parties had agreed upon the essential terms. But it was prefaced with the phrase ‘subject to contract’, which ordinarily meant that until a formal written agreement was drawn and executed by the parties, there would be no binding contract between them. There were no exceptional circumstances here because the parties had intended that enforceable rights in relation to the sale and purchase of the 83 units would arise only from the terms contained in the individual options to purchase which were issued shortly after the 10 May letter: at [8] and [10].

(3) The general effect of s 33 A of the Act was to give the Commissioner the right to disregard or vary arrangements as he thought appropriate, which purpose or effect was to reduce or avoid tax liabilities, without prejudice to the arrangement's validity as it might have in any other respect. The Commissioner did not rely on s 33 A (1) of the Act in this case. There was also no evidence to show that one of the parties' purposes or intentions was to reduce or avoid tax liabilities. Although the parties' bargain had the effect of reducing tax liabilities, the appellant offered persuasive and bona fide commercial reasons for structuring the bargain in that manner which would have brought her within the exception provided in s 33 A (3) (b) of the Act: at [11] and [15].

(4) There were no binding contractual obligations until the 83 sale contracts were executed on 8 June 2007. The objective interpretation of this bargain was that the developer sold and the appellant purchased 83 units of the development as individual strata lots. The appellant was therefore entitled to stamp each of the 83 sale contracts as separate and distinct instruments of transfer, being individual contracts for the sale of the respective interest in each unit: at [12].

(5) That only one caveat was lodged and one cashier's order used each time to make payment did not affect the nature of the bargain: at [13].

(6) The ‘larger transaction’ rule was derived from interpreting the stamp duties legislation of other jurisdictions and was not part of Singapore law. While s 33 A (1) of the Act targeted a similar mischief as that rule, there were fine but important differences in their respective operations: at [16].

(7) The 13 March 2008 circular was not helpful to the Commissioner's case. First, it was irrelevant to the present case because it was published after it had arisen. Secondly, the Commissioner could not rely on its own administrative practice to justify a particular interpretation of the Act's provisions. Thirdly, the terms that were used in the circular - ‘en bloc’ and ‘block purchase’ - were problematic. Neither term was a term of art. A meaningful difference between them in this context was unlikely to be found. Fourthly, the circular would be inconsistent with the Act if it deemed all properties acquired on a block basis to be made under a single contract because s 33 A (3) (b) of the Act precluded such a uniform treatment of block purchases by providing that the tax treatment had to be applied with reference to the purpose behind the arrangement: at [17] to [19], [22] and [23].

AG v Cohen [1937] 1 KB 478 (refd)

Compaq Computer Asia Pte Ltd v Computer Interface (S) Pte Ltd [2004] 3 SLR (R) 316; [2004] 3 SLR 316 (folld)

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

Ng Swee Lang v Sassoon Samuel Bernard [2008] 2 SLR (R) 597; [2008] 2 SLR 597 (refd)

SM Integrated Transware Pte Ltd v Schenker Singapore (Pte) Ltd [2005] 2 SLR (R) 651; [2005] 2 SLR 651 (distd)

UOL Development (Novena) Pte Ltd v Commissioner of Stamp Duties [2008] 1 SLR (R) 126; [2008] 1 SLR 126 (distd)

Land Titles (Strata) Act (Cap 158, 1999 Rev Ed)

Stamp Duties Act (Cap 312, 2006 Rev Ed) ss 22 (1) , 33 A, 33 A (1) , 33 A (3) (b) , 39 A (1) , 39 A (5) , 40, First Schedule

Finance (1909-1910) Act 1910 (c 8) (UK) s 73

Ong Sim Ho, Ong Ken Loon and Guo Jiawen (instructed) (Drew & Napier LLC) and Amolat Singh (Amolat & Partners) for the appellant

Foo Hui Min, Nai Tham Siew Patrick (Inland Revenue Authority of Singapore) for the respondent.

Judgment reserved.

Choo Han Teck J

1 Death and taxes, it is said, are the only certainties in this world. But only one of them is painless on impact. This case is about the other. It is an appeal by one Lai Ling Wan @ Lily Lai (‘the Appellant’) against an assessment of stamp duty that was performed by the Commissioner...