OUE unit Clifford loses appeal to waive stamp duty

Source : Business Times - 26 Feb 2009

CLIFFORD Development’s appeal to waive some $2.18 million in stamp duty for the transfer of two properties has been dismissed.

On Tuesday, the Court of Appeal upheld an earlier ruling that made Clifford liable to pay stamp duty on the transfer of Overseas Union House and Change Alley Aerial Plaza.

The case arose when Clifford, a wholly owned subsidiary of Overseas Union Enterprise (OUE), inked a joint venture agreement in March 2006 to enable OUE and United Overseas Land (UOL) to co-invest in Clifford, in order to undertake the business of redeveloping the properties.

The agreement also envisaged that the parties will bid for and jointly develop a property at Collyer Quay.

Then in May 2006, OUE and Clifford signed a reconstruction agreement where OUE was to transfer the ownership of those properties to Clifford for $73 million - comprising 50 per cent shares in Clifford and a shareholders’ loan of $7.3 million. UOL then obtained a 50 per cent stake in Clifford.

Following the second agreement, Clifford then made an application for relief from stamp duties under Section 15 of the Stamp Duties Act, citing the transfer of properties as a transfer of undertaking under a scheme of reconstruction of OUE and Clifford.

Section 15 of the Stamp Duty Act gives relief from stamp duty on instruments made in connection with the reconstruction or amalgamation of companies.

However, the tax authority did not approve the application, and Clifford later appealed against the decision at the High Court. But the High Court sided with the tax authority, and Clifford subsequently filed an appeal to the Court of Appeal.

The Court of Appeal upheld the High Court’s decision as it took the view that the reconstruction agreement had not been made for the purpose of, ‘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’, said the Inland Revenue Authority of Singapore.

As for the joint venture, some disagreement arose later and it triggered a deadlock mechanism. As a result, OUE bought back UOL’s 50 per cent stake in Clifford for a consideration of $212 million on Oct 14, 2006.

Clifford participated in the URA tender of a site at Collyer Quay which closed on Oct 17, 2006, but its bid was unsuccessful.