Ma Ong Kee v Kaiyo Reptile Products Pte Ltd

JurisdictionSingapore
CourtHigh Court (Singapore)
Judgment Date16 August 2011
Date16 August 2011
Docket NumberSuit No 642 of 2010

High Court

Woo Bih Li J

Suit No 642 of 2010

Ma Ong Kee and another
Plaintiff
and
Kaiyo Reptile Products Pte Ltd
Defendant

Subramaniam s/o Ayasamy Pillai and Taryn Yap (Colin Ng & Partners LLP) for the plaintiffs

Beh Eng Siew and Bernard Sahagar (Lee Bon Leong & Co) for the defendant.

ACS Computer Pte Ltd v Rubina Watch Co (Pte) Ltd [1997] 1 SLR (R) 1006; [1998] 1 SLR 72 (refd)

Challenger Technologies Pte Ltd v Sheares Edwin Charles Hingwee [1998] 2 SLR (R) 292; [1999] 1 SLR 245 (refd)

Kuo Ching Yun v H & L Investments Holding Pte Ltd [1995] 3 SLR (R) 276; [1996] 1 SLR 47 (refd)

Woon Wee Hao v Coastland Realty Pte Ltd [1998] 3 SLR (R) 463; [1998] 3 SLR 885 (refd)

Goods and Services Tax Act (Cap 117 A, 1994 Rev Ed) s 8 (3)

Goods and Services Tax (General) Regulations (Cap 117 A, Rg 1, 2008 Rev Ed) reg 77 (1)

Land—Sale of land—Conditions of sale—Vendor claiming goods and services tax (‘GST’) from purchasers of land on basis of condition 7.3.1 of Law Society's Conditions of Sale 1999—Whether condition 7.3.1 had effect of imposing liability to pay GST on purchasers—Law Society's Conditions of Sale 1999 condition 7.3.1

Revenue Law—Goods and Services Tax (GST) —Supplier claiming GST from consumer—Whether s 8 (3) Goods and Services Tax Act (Cap 117 A, 1994 Rev Ed) and reg 77 (1) Goods and Services Tax (General) Regulations (Cap 117 A, Rg 1, 2008 Rev Ed) precluded supplier from claiming GST from consumer if there was specific term to that effect—Section 8 (3) Goods and Services Tax Act (Cap 117 A, 1994 Rev Ed) —Goods and Services Tax (General) Regulations (Cap 117 A, Rg 1, 2008 Rev Ed) reg 77 (1)

On 31 March 2010, the vendor granted the purchasers an option to purchase a non-residential property at a price of $3.8 m. On 14 April 2010, the purchasers' solicitors wrote to the vendor's solicitors to exercise the option, enclosing, inter alia, a cheque for the balance of the 5% deposit payable on the exercise of the option. On 15 April 2010, the vendor's solicitors replied, stating, inter alia, that the vendor was registered for goods and services tax (‘GST’) and requesting $13,300 as the 7% GST payable on the deposit. It was not disputed that the option had been validly exercised, notwithstanding the request for the $13,300. Accordingly, when it was exercised there was a binding sale and purchase agreement.

On 11 May 2010, about four weeks after the request for GST, the purchasers' solicitors stated that the purchasers were surprised at the belated request for GST and that they were not obliged to pay it as this was contrary to the contractual bargain between the parties. In response, the vendor's solicitors reiterated that the purchasers were in fact liable for GST, and drew the latter's attention to condition 7.3.1 of the Singapore Law Society's Conditions of Sale 1999 (‘the 1999 Conditions of Sale’) .

The parties could not agree on the GST issue. The purchasers offered to complete the sale but to pay the 7% GST (amounting to $266,000) to the vendor's solicitors or to a neutral third party to be held as stakeholders pending determination of the issue. This was not acceptable to the vendor. Accordingly, the sale and purchase was not completed on 28 July 2010, which was the scheduled date of completion under the terms of the option. On 30 July 2010, the purchasers' solicitors sent a 21-day notice to the vendor's solicitors to complete the sale and purchase. In turn, the vendor's solicitors sent a 21-day notice to complete, also dated the same day. Both notices expired on 20 August 2010.

The purchasers filed a writ of summons on 24 August 2010 (a few days after the expiry of the notices to complete) , claiming specific performance of the agreement and liquidated damages or general damages in lieu of specific performance. The vendor counterclaimed for, inter alia, declarations that it was entitled to rescind the agreement, that the purchasers were to cancel any entry in the land register relating to the agreement, and that the vendor was entitled to forfeit all monies paid by the purchasers.

Held, dismissing the claim and allowing the counterclaim:

(1) Section 8 (3) of the Goods and Services Act (Cap 117 A, 1994 Rev Ed) and reg 77 (1) of the Goods and Services Tax (General) Regulations (Cap 117 A, Rg 1, 2008 Rev Ed) did not preclude a supplier from claiming GST on the purchase price from the consumer. For example, if there was a specific provision in the option clearly stating that the purchasers were to pay the GST on the purchase price, then they would be liable to pay the GST even if the vendor had simply orally quoted the $3.8 m figure, without more, before the option was issued: at [19] and [22].

(2) The default position was that the vendor was to bear the GST. The question was whether condition 7.3.1 of the 1999 Conditions of Sale effected a change and imposed the liability for GST on the purchaser. As drafted, the literal interpretation of condition 7.3.1 focused on the time of payment of GST. It assumed that a purchaser was liable for GST. In that sense, one might argue that it did not impose the liability to pay GST on a purchaser and any such imposition had to be found somewhere else, if at all imposed. However, the purpose of condition 7.3.1 was to incorporate two points, ie, firstly, to stipulate that the purchaser was to pay GST and, secondly, to pay it on completion or earlier. The introduction of condition 7.3.1 was not intended to deal only with the timing of payment of GST by a purchaser when there was no other provision in the 1999 Conditions of Sale to impose liability on a purchaser in the first place: at [31], [33] and [36].

[Observation: When a dispute arose on the interpretation of a contractual or statutory provision, it was only natural that every means should be made to resolve it amicably or on an interim basis, for example, by making payment of any...

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2 books & journal articles
  • Land Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2011, December 2011
    • 1 December 2011
    ...any other Act. Conveyancing Conditions of sale: Liability for goods and services tax 19.42 In Ma Ong Kee v Kaiyo Reptile Products Pte Ltd[2011] 4 SLR 857 (Ma Ong Kee), the High Court was confronted with the issue of whether the plaintiffs purchasers were liable to pay goods and services tax......
  • Revenue and Tax Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2011, December 2011
    • 1 December 2011
    ...on the property tax refund). Goods and Services Tax Sale of non-residential property 22.40 In Ma Ong Kee v Kaiyo Reptile Products Pte Ltd[2011] 4 SLR 857 (Ma Ong Kee) (also reported in (2011) 12 SAL Ann Rev paras 19.42ff), the vendor (defendant) offered to sell a non-residential property to......

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