Clifford Development’s request to waive $2.18 million in stamp duty for the change of ownership of two properties has been dismissed.
The Court of Appeal last Tuesday supported an advanced decision that making Clifford Development accountable to give stamp tax on Change Alley Aerial Plaza and Overseas Union House transfer.
The lawsuit arose after Clifford, a completely owned subsidiary of Overseas Union Enterprise (OUE), signed a joint venture arrangement in March 2006 to allow OUE and the United Overseas Land (UOL) to make a co-investment in Clifford, in order to commence the transaction property redevelopment.
The agreement also foreseen that the sides will propose a payment for and cooperatively develop an estate at Collyer Quay.
In May 2006, Clifford Development and Overseas Union Enterprise (QUE) signed a reconstruction contract where OUE should change the ownership of Clifford’s properties for $73 million comprising 50% shares in Clifford as well as a shareholders’ loan worth $7.3 million. UOL then acquired a 50% stake in Clifford.
After the second arrangement, Clifford applied for relief from the stamp duties under Section 15 of the Stamp Duties Act, referring to the properties transfer as an undertaking under the reconstruction scheme of OUE and Clifford Development.
Section 15 of the Stamp Duty Act provides relief from the stamp duty on the instruments made in relation with the amalgamation or reconstruction of companies.
Nonetheless, the tax authority made the unapproved application, and Clifford Development later petitioned against the High Court’s decision. However, the High Court supported the tax authority, and Clifford Development later on brought the case to the Court of Appeals.
The Court of Appeal supported the decision of the High Court as it viewed that the agreement of reconstruction was not purposely made due to, “or in connection with the transfer of the undertaking with respect to the properties from OUE to Clifford, which was in fact a transfer to effect the terms of the joint venture agreement”, the Singapore’s Inland Revenue Authority said.
Due to the joint venture, some disagreement came out afterwards and it activated the deadlock mechanism. As an outcome, Overseas Union Enterprise purchased back United Overseas Land’s 50% stake in Clifford Development for a consideration of $212 million last 14 October 2006.
Clifford Development took part in the URA bidding of a site located at Collyer Quay which has finished last 17 October 2006, but its payment proposal was unsuccessful.