Woon Wee Hao v Coastland Realty Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 16 September 1998
• Neutral Citation: [1998] SGCA 58
• Docket Number: Civil Appeal No 264 of 1997
• Date: 16 September 1998
• Published date: 19 September 2003
• Year: 1998
• Plaintiff Counsel: Muthu Kumaran (WT Woon & Co)
• Citation: [1998] SGCA 58
• Defendant Counsel: Chong Pik Wah (Lim Kia Tong & Partners)
• Court: Court of Appeal (Singapore)
• Subject Matter: Liability for GST,s 66 Land Titles Act (Cap 157, 1994 Ed),Sale and purchase agreement provides purchaser liable to pay GST,s 8 & First Sch Goods and Services Tax Act (Cap 117A, 1997 Ed),Merger of obligations upon completion,Sale of land,Whether merger of purchaser's obligation to pay GST on completion,When liability for GST arises,Purchaser refuses to pay,Land,Completion of transfer

Judgment:

LP THEAN

Cur Adv Vult

(delivering the judgment of the court): This is an appeal against the decision of Lai Siu Chiu J in which she dismissed the application of the appellant for a declaration that the respondents` obligation to pay Goods and Services Tax (GST) under a sale and purchase agreement made between the appellant and the respondents for the purchase by the respondents of an undivided share of a certain property had not merged in the transfer upon completion of the sale and purchase.

2. Facts

The material facts that gave rise to this appeal are not in dispute. The appellant entered into an agreement with the respondents on 9 April 1997, whereby the appellant agreed to sell to the respondents an undivided 1/6th share of the land known as Lot 3268 of Mukim 26 with the premises thereon known as Nos 222, 224, 226, 228, and 230 Changi Road (the property) for the sum of $1,833,333.33. At or about the time of execution of the agreement, the respondents also entered into similar agreements with the owners of the remaining undivided shares in the property for the purchase of their undivided shares. The dispute which arose here is only between the appellant and the respondents relating to their sale and purchase agreement (the agreement) and centred on the effect of cl 17 thereof which reads as follows:

The Purchaser shall be liable and shall pay for the Goods and Services Tax and the stamp fees in respect of or in connection with the sale and purchase of the Vendor`s share in the Property or the said sale price.

3.After the agreement was entered into, the appellant was advised by his solicitors that based solely on the sale of his undivided share in the property he could be considered to have made a taxable supply in excess of $1m within the period as provided in the GST Act (Cap 117A, 1997 Ed) and therefore the sale of his undivided 1/6th share (the undivided share) in the property could attract GST under the Act. As a result, the appellant by his solicitor`s letter dated 28 May 1997 sought to claim from the respondents an amount representing the GST payable on the sale of the undivided share or some form of security for that amount. The respondents refused to pay any amount or furnish any security. To avoid jeopardising or delaying the sale, the appellant proceeded to complete the sale under protest and reserved his rights, if any, to claim the GST from the respondents should it be necessary; but the respondents disputed the appellant`s entitlement to do so. Nevertheless, the parties completed the sale and purchase of the property. After the completion, the appellant took out an originating summons seeking a declaration that the respondents` obligation to pay GST under cl 17 of the agreement had not merged in the transfer on the completion of the sale and purchase.

4. The decision below

While the application was pending, Warren LH Khoo J delivered his judgment in the case of ACS Computer Pte Ltd v Rubina Watch Co [1998] 1 SLR 72 in which he held that a purchaser`s obligation to pay GST under a similar clause in the sale and purchase agreement of a certain property did not merge in the transfer upon completion of the sale. Thus, when the originating summons came on for hearing before Lai Siu Chiu J, the respondents accepted the decision of Warren LH Khoo J. Nevertheless, the respondents argued that at the time of completion, the appellant was not registered for the purpose of GST, and therefore no GST was payable. The appellant, on the other hand, argued that while he was not registered for GST purpose at the time, he might be liable to be registered under para 1(1) of the First Schedule to the GST Act and therefore might be liable to pay GST. Lai Siu Chiu J rejected the appellant`s argument and dismissed his application on the ground that he was not a taxable person under s 8(2) of the GST Act at the time of the completion of the sale and purchase. She said at [para ] 5 of her grounds of judgment:

While I accepted that the [appellant] may be liable for registration and that registration is made with retrospective effect to the date when the supplier is liable for registration, this simply means that the [appellant] will have an obligation to account for GST from that date. However, the fact remains that only registered persons can charge and collect GST. The [appellant`s] liability to be registered, if any, would, at the earliest, arise at the end of the quarter - 30 June 1997. He would, as from this date, have an obligation to account for GST but until he is registered, he cannot collect GST on his sales or for that matter claim GST incurred on his purchasers. In the present case, the sale of the [appellant`s] 1/6th share in the property clearly took place before any liability to pay GST on the plaintiff`s part arose. The plaintiff was simply not a taxable person under s 8(2) of the GST Act at the time of supply. No GST was therefore payable by the [respondents] in turn.

5. The appeal

Against her decision, the appellant has now appealed. The main question is whether the appellant is entitled to the declaration that the respondents` obligation under cl 17 of the agreement had not merged in the transfer on completion of the sale and purchase of the undivided share in the property.

6.In determining this issue, it would be helpful to examine in some detail the case of ACS Computer Pte Ltd v Rubina Watch Co (Pte) Ltd . There, the vendors under two separate but similar agreements agreed to sell to the purchasers two properties respectively. Each of the sale agreements provided, inter alia, that the sale was subject to the Singapore Law Society`s Conditions of Sale 1994, in so far as they were applicable to a sale by private treaty and were not inconsistent with or varied by the terms and conditions of the agreement. Each agreement by cl 17 (which was similar to cl 17 of the agreement in the present case) provided that the purchasers were liable to pay any GST incurred in connection with the sale and purchase of the property. The sale and purchase of each property was completed, and no payment of GST was made at or before the completion of the sale. Subsequently, the vendors requested the purchasers...