Tan Kay Thye and Others v Commissioner of Stamp Duties

JudgeChan Sek Keong J
Judgment Date11 February 1991
Neutral Citation[1991] SGHC 26
Citation[1991] SGHC 26
Defendant CounselS Sharma (Inland Revenue Authority of Singapore)
Published date19 September 2003
Plaintiff CounselEric Choa and Ignatius Hwang (Wee Swee Teow & Co)
Date11 February 1991
Docket NumberOriginating Motion No 61 of 1986
CourtHigh Court (Singapore)
Subject MatterFirst Schedule art 24 Stamp Duties Act (Cap 312),Substantial benefit,Deed of assent to beneficiary and equality payment benefit,'Share',Stamp duties,s 16(3) Stamp Duties Act (Cap 312),Words and Phrases,'Severalty','Exchange','Divide','Substantial benefit',Revenue Law,'Co-owner',Whether stampable as partition, conveyance on sale, voluntary disposition or exchange,Assessment,Stamp Duties Act (Cap 312),ss 6, 16, 37 & 40, arts 16, 24, 26 & 34 First Schedule, Stamp Duties Act (Cap 312),s 2 Stamp Duties Act (Cap 312)

This is a case stated under s 40 of the Stamp Duties Act (Cap 312) (the Act) in relation to an indenture of assent dated 25 February 1983 (the indenture) made between the following parties: (1) TGM and CSCC as administrators of the estate of TCB, (2) CSCC, (3) CTGC, (4) STGS and (5) TK Thye, TK Tong, TK Tuan, TGG, TGH, TGM, TGK. The indenture recited as follows:

(a) TCB died in Singapore on 1 March 1964 intestate leaving surviving him his first widow, Yap Suat Tee (YST) and seven children by her viz the persons constituting the fifth party to the indenture, and his second widow, CSCC, and three daughters by her, CTGC, GTGL and STGS;

(b) letters of administration were granted to TKT, TGM and CSCC on 30 July 1969;

(c) YST died on 25 October 1967 intestate leaving surviving her seven children;

(d) GTGL died on 28 October 1969 intestate a spinster survived by her mother, CSCC, who became entitled to the whole of her estate;

(e) in the events that had happened, all the parties to the indenture became entitled to the residuary estate of TCB;

(f) all debts and testamentary expenses of the estate having been paid, the time had come for the winding up of the estate and the distribution of the residuary estate amongst those entitled thereto;

(g) during the lifetime of TCB, the principal wife, YST, and her children were residing at No 385 Pasir Panjang Road, Singapore, while his secondary wife, CSCC, and her children were residing at No 21 St Martin`s Drive, Singapore;

(h) all the residuary beneficiaries were desirous that the two family houses be retained by their respective families and by way of family arrangement they have agreed amongst themselves that the family house No 385 Pasir Panjang Road be conveyed by way of assent to the seven children of YST as tenants in common in equal shares and that No 21 St Martin`s Drive be conveyed by way of assent solely to their mother, CSCC, upon her paying the seven beneficiaries by way of equality of distribution the agreed sum of $137,133.32, the receipt of which they acknowledged.

The other relevant facts for the purpose of the case are: (1) the equality payment was calculated on the basis of a market value given by an independent valuer on 11 February 1980 of $1.45m for No 385 Pasir Panjang Road and of $1.056m for No 21 St Martin`s Drive, the total of which was divided by the number of distributive shares and the amount thereupon adjusted to reflect the total shares of each family; (2) the agreement to distribute the two properties in the way they were done was reached by the beneficiaries on 11 August 1981; (3) it is not disputed that the effective date of the agreement to distribute the residuary estate of TCB was 11 August 1981 and not 11 February 1980 or any other date; (4) the chief valuer has given his valuation of the two properties as at 11 August 1981 as follows: $4,167,162 for No 385 Pasir Panjang Road and $1,357,025 for No 21 St Martin`s Drive.

The respondent, acting under s 37 of the Act, adand assessed the indenture to (i) $10 duty under art 16(g) of the First Schedule to the Act and (ii) $19,787 ad valorem duty on $672,900 under art 26 of the First Schedule read with art 16(a).
Article 16(g) prescribes duty of $10 on a conveyance of any kind not falling within paras (a) to (f). Article 26 prescribes duty in respect of any gift under s 16(1) of the Act as if it were a conveyance on sale.

The appellants were dissatisfied with the assessment of the respondent and have appealed by way of case stated.
As stated, the case requires the court to determine whether the indenture is chargeable to stamp duty as assessed by the respondent, and if not, to what duty it is liable.

Appellants` case

The appellants` case is that the indenture is an instrument of partition subject to stamp duty of $20 under art 35.
Counsel contends that the main object of the indenture was the agreed partition of the two residential properties between the two families, and that the court should apply the main object rule in determining its liability to stamp duty. Counsel has cited a number of authorities on this rule. As it is a well established rule, I need only refer to the statement of the rule by Martin B in Limmer Asphalte Paving Co v Commissioners of Inland Revenue (1872) LR 7 Exch 211 at pp 214-215:

In order to determine whether any, and if any what, stamp duty is chargeable upon an instrument the legal rule is that the real and true meaning of the instrument is to be ascertained; that the description of it given in the instrument itself by the parties is immaterial, even though they may have believed that its effect and operation was to create a security ( sic) mentioned in the Stamp Act, and they so declare. For instance, if a writing were headed by a recital that the parties had agreed to execute the promissory note thereinafter written, yet if in truth the contract set forth was not a promissory note but an agreement of another character, the stamp duty would not be that of a promissory note but of the agreement. The question therefore, stamp or no stamp, and if a stamp to what amount, is to be determined upon the real and true character and meaning of the writing. It is sufficient to refer to the case of Rex v Inhabitants of Ridgewell (1827) 6 B & C 665 to establish that proposition.

In support of his contention that the indenture was a partition, he referred to the meaning of partition as set out in 39 Halsbury`s Laws of England (4th Ed) para 552 which states: `The legal term `partition` is applied to the division of land, tenements and hereditament belonging to co-owners and the allotment among them of parts so as to put an end to community of ownership between some or all of them.
` Notes 3 and 4 to that paragraph state:

(3) Thus, if three persons are co-owners, tenants in fee simple, of Blackacre, Whiteacre and Greenacre, the transaction by which one of them becomes sole owner in fee simple of Blackacre, another of Whiteacre and the third of Greenacre is a partition.

(4) Thus, in the example given in note 3, supra, a transaction by which one person becomes sole owner of Blackacre, while the other two remain co-owners of Whiteacre and Greenacre, is a good partition.

It is contended that the division of the two family houses between the two families fell within notes 3 and 4 above.

Counsel also referred to the definition of `instrument of partition` in the Act.
His submission is that the instrument was within the definition, ie it was an `instrument whereby co-owners of any property divide or agree to divide the property in severalty`. He contends that the definition is wide enough to apply to equitable interests in land, which was what the families had in the residuary estate after the completion of the administration of the estate of TCB.

Counsel also says that the equality payment was not the main object of or even the consideration for the division of the residuary estate but only incidental to it.
He referred to Wharton Law Lexicon (14th Ed) at p 736 which states:

With a view to the more convenient and perfect partition or allotment of the premises, equity frequently decreed a pecuniary compensation to one of the parties for `owelty`, ie equality of partition, so as to prevent any injustice or unavoidable inequality, as where one party has laid out large sums in improvements on the estate.

Respondent`s main case

The respondent`s main contention is that the indenture dealt with two distinct matters and accordingly the resis entitled to charge them separately by virtue of s 6 of the Act.
It is submitted that the indenture related, firstly, to the assent by the administrators to the appellants of their collective 133/210 shares in No 385 Pasir Panjang Road, and secondly, to the conveyance of the other family`s share of 73/210 shares in the said house, which also had the effect of conferring on the appellants a substantial benefit of $672,900 as at 11 August 1981. Counsel says that this benefit falls within s 16(1) of the Act. I shall consider this argument on substantial benefit later.

With regard to the issue of whether the indenture is an instrument of partition, counsel for the respondent argues that there was no partition as (a) the indenture did not convey the second property and (b) the appellants obtained the whole of No 385 Pasir Panjang Road.
He says that it merely operated as a conveyance by way of partition. He relies on Re Frith & Osborne (1876) 3 Ch D 618 .

In that case at p 622, Jessel MR said:

... though the parties recite that they intend to make a partition, what they do is to convey an undivided moiety in consideration of the other undivided moiety in the other lands being conveyed to them. It is not a strict partition, but a conveyance by way of partition; that is how they actually carry it out.

Respondent`s alternative case

The respondent`s case is that the indenture was an `exchange` under art 24 which is defined as `any instrument whereby an exchange of any property is effected`.
The proper duty payable is that as on a conveyance for a consideration equal to the value of the property with the greater value. Counsel contends that the value of the property on this basis is $1.527m being the share of the second family in the first property, the subject matter conveyed under the indenture. The stamp duty would be $45,437 and therefore higher than the claim based on s 16 of the Act.

What is a partition?

As the Act defines partition in terms of the instrument effecting it as `any instrument whereby co-owners of any property divide the property in severalty... `, the relevant question with regard to the nature of the indenture is not what a partition is at common law but as defined.
However, as the expressions `co-owners`, `divide`, `property` and `in severalty` used in the definition are not defined, it is still necessary to resort to the common law in order to...

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    • High Court (Singapore)
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    ...English law subject to modification by local customs. Regardless, as stated in Tan Kay Thye and others v Commissioner of Stamp Duties [1991] 1 SLR(R) 306 (“Tan Kay Thye”) at [15], coparcenary and tenancy by entireties ceased to exist in Singapore from 1 August 1886. This date appears to be ......
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    ...a voluntary disposition inter vivos, by reference to the substantial benefit arising (Tan Kay Thye & Ors v Commissioner of Stamp Duty [1991] 1 SLR(R) 306 at §3, 36, 37, 42[26]). The adequacy of consideration for this purpose is to be assessed on an objective basis and not by reference to th......
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    • Court of Appeal (Hong Kong)
    • 4 October 2019
    ...a voluntary disposition inter vivos, by reference to the substantial benefit arising (Tan Kay Thye & Ors v Commissioner of Stamp Duty [1991] 1 SLR(R) 306 at §3, 36, 37, 42[26]). The adequacy of consideration for this purpose is to be assessed on an objective basis and not by reference to th......
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