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ACS Computer Pte Ltd

v
Rubina Watch Co (Pte) Ltd and another
[1997] SGHC 129
High Court Suits Nos 924 and 925 of 1996 (Registrars Appeals Nos 238 and 39
of 1996)
Warren L H Khoo J
10 September 1996; 25 March; 17 May 1997
Land Sale of land Conditions of sale The Singapore Law Societys Conditions
of Sale 1999 Whether purchasers liability for GST under condition 17
extinguished under doctrine of merger
Land Sale of land Doctrine of merger Scope of doctrine of merger in relation
to registered land Whether purchasers liability for GST extinguished under
doctrine of merger Section 66 Land Titles Act (Cap 157, 1994 Rev Ed)
Statutory Interpretation Construction of statute Conflict between statute and
common law Resolving conflict with assistance of written materials Construing
provision in context of neighbouring provisions and the Act as a whole Section 9A
Interpretation Act (Cap 1, 1997 Rev Ed)
Facts
The plaintiff sold units in a Henderson Industrial Estate to the defendants under
two separate options. The options were subject to the Singapore Law Societys
Conditions of Sale 1994. Clause 17 of the terms and conditions of the option
provided that the purchasers were liable to pay any goods and services tax
(GST) and stamp duty incurred in the sale and purchase of the property. There
was no mention of payment of GST by either party before the completion of the
sale. It was only mentioned after completion when the plaintiff's solicitors raised
it with the defendants solicitors and asked that it be paid. The defendants
refused and this resulted in the plaintiff commencing the present action.
The defendants relied on s 66 of the Land Titles Act (Cap 157, 1994 Rev Ed)
(the Act), which stated that all obligations created under a contract for the sale
of registered land shall merge with the transfer of the land upon registration of
the transfer of the land unless express provision in writing was made to the
contrary. The defendants argued that as there was no express provision in
writing to the contrary, their obligations under the terms and conditions of the
option had merged with the transfer. Therefore, they were no longer under any
liability to account for the GST. The defendants also submitted, in the
alternative, that their liability was inchoate as the plaintiff had not, as yet, paid
the GST in question to the authorities. The plaintiff, on the other hand, argued
that under the common law, the conveyance of land extinguishes obligations
under the contract only in so far as the deed of conveyance is intended to cover
the same ground as the contract. Those obligations which are not so intended to
be covered by the deed do not merge in the conveyance. Section 66, according to
the plaintiffs counsel, intended merely to codify this common law rule with all

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its limitations and does not override the common law. The assistant registrar
held in favour of the plaintiff. The defendants appealed.
Held, dismissing the appeal:
(1) The draftsman for the Act (or Land Titles Ordinance as it was then called)
had the intention of importing the common law doctrine of merger as a whole
into the Act. Moreover, it is also possible to reconcile the wide wording of s 66
with the common law doctrine of merger by construing the section in the
context of neighbouring provisions and the Act as a whole. Therefore, the same
rules of merger should apply to dealings in land subject to the Act and dealings
in unregistered land. This approach would mean that the defendants liability for
GST had not been extinguished: at [22], [25], [30] and [34].
(2) The defendants should not be allowed to resist payment on the ground
that the plaintiff had not paid the authorities, as there was a present and
immediate obligation to pay the plaintiff at the time of completion. That the
plaintiff would not ordinarily have to pay the authorities immediately was
entirely irrelevant: at [36].
Case(s) referred to
Christopherson v Lotinga (1864) 33 LJCP 121 (refd)
Clarke v Ramuz [1891] 2 QB 456 (refd)
Colquhoun v Brooks (1889) 14 App Cas 493 (refd)
Knight Sugar Company, Ltd v The Alberta Railway & Irrigation Company [1938]
1 All ER 266 (refd)
Lawrence v Cassel [1930] 2 KB 83 (refd)
Palmer v Johnson (1884) 13 QBD 351 (refd)
R v Scott (1856) 25 LJMC 128 (refd)
Legislation referred to
Goods and Services Tax Act (Cap 117A, 1997 Rev Ed)
Interpretation Act (Cap 1, 1997 Rev Ed) s 9A (consd)
Land Titles Act (Cap 157, 1994 Rev Ed) s 66 (consd);
ss 63(1), 63(2), 64, 65, 67
Land Titles Ordinance 1956 (No 21 of 1956) s 51
Land Titles Act 1906, c 24 (A) (Can) ss 50, 51
Muthu Kumaran (WT Woon & Co) for the plaintiff/respondent;
Devinder Rai and Christopher Woo (Harry Elias & Partners) for the defendants/
appellants.

17 May 1997

Judgment reserved.

Warren L H Khoo J:
1
By two options of different dates but in similar terms the plaintiffs
offered to sell units in the Henderson Industrial Estate to the defendants in
each of these suits. The defendants in the two suits are closely related, and

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they are also related to the end purchasers FJ Benjamin Holdings Pte Ltd.
The options were exercised, and eventually by two separate instruments of
transfer, the properties were transferred to FJ Benjamin Holdings Pte Ltd. It
is common ground that the units are lands governed by the Land Titles Act
(Cap 157, 1994 Ed).
2
The option in each case provided that the sale was subject to the
Singapore Law Societys Conditions of Sale 1994 in so far as they were
applicable to a sale by private treaty and did not conflict with the terms and
conditions of the option. Clause 17 of the terms and conditions of the
option provided that the purchaser was liable and must pay the goods and
services tax and stamp duty for and in connection with the sale and
purchase of the property. I shall use the by now popularly familiar acronym
GST to refer to the tax.
3
The sale in each case was completed by an instrument of transfer.
There was no mention of the GST by either party before the completion of
the sale. There was no mention of it in the instrument of transfer. There was
no mention of it until some time in May 1996, when the plaintiffs solicitors
raised it with the defendants solicitors and asked that it be paid. The
defendants refused to pay, contending that upon the completion of the sale
by the execution and registration of the transfer the obligation of the
defendants in that regard had merged with the transfer, and that they were
no longer under any liability.
4
It is common ground that the sale in question attracted GST in
accordance with the provisions of the Goods and Services Tax Act
(Cap 117A, 1997 Rev Ed) (the GST Act) and in the circumstances of the
case. Although by the name of the tax one might imagine that the GST Act
applied to only the supply of goods and services, there are deeming
provisions in the GST Act which apply it to the sale of real property in
certain circumstances. GST was payable for the sale of the land in these
cases.
5
The major question in these two suits is the question of merger. The
defendants rely on s 66 of the Land Titles Act, which provides as follows:
All obligations created by a contract for the sale of registered land shall,
upon registration of the transfer giving effect to the contract, be
deemed to have merged in that transfer unless express provision in
writing is made to the contrary.

6
There was in this case no provision in writing that the GST obligation
was not to merge in the transfer. On an application by the defendants, the
assistant registrar Mr Phang Hsiao Chung held, however, that the doctrine
of merger did not disentitle the plaintiffs from claiming the GST under cl 17
of the option. The defendants appealed.

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7
On the face of it, s 66 is wide ranging. Defendants counsel submits
that it should be given full effect. He says there is nothing in the option that
provides to the contrary nor is there any other writing to the effect.
Therefore, he submits that, by the operation of this section, the plaintiffs are
now precluded from asserting their claim for the GST provided for in the
contract of sale.
8
Plaintiffs counsel, on the other hand, submits that under the
common law, the conveyance of land extinguishes obligations under the
contract only in so far as the deed of conveyance is intended to cover the
same ground as the contract. Those obligations which are not so intended
to be covered by the deed do not merge in the conveyance. He submits that
s 66 is intended merely to codify this common law rule, with all its
limitations; it does not override the common law.
My view
9
In the face of the absolute terms in which s 66 is cast, I had at first
considerable difficulties accepting plaintiffs counsels submission,
although, intuitively, I felt that there was much substance in it. However,
having reflected on the matter, I can say with some conviction that he is
more likely to be right than is counsel for the defendants, for the following
reasons.
10 First, the position at common law is as stated by plaintiffs counsel.
The general rule was well stated by Lord Russell in Knight Sugar Company,
Ltd v The Alberta Railway & Irrigation Company [1938] 1 All ER 266 at 269
as follows:
It is well settled that, where parties enter into an executory agreement
which is to be carried out by a deed afterwards to be executed, the real
completed contract is to be found in the deed. The contract is merged
in the deed. The most common instance, perhaps, of this merger is a
contract for the sale of land followed by conveyance on completion. All
the provisions of the contract which the parties intend should be
performed by the conveyance are merged in the conveyance, and all
the rights of the purchaser in relation thereto are thereby satisfied.

11 As indicated in this passage, merger is not an absolute doctrine, but

depends entirely upon the intention of the parties. As Bowen LJ said in
Clarke v Ramuz [1891] 2 QB 456 at 461:
It is true that the execution of the conveyance puts an end to all
contractual obligations which are intended to be satisfied by the
execution. But that doctrine does not apply to cases where the
contractual obligation is of such a kind that it cannot be supposed to
have been the intention of all the parties that it should be extinguished
by the conveyance.

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12 Earlier, in the case of Palmer v Johnson (1884) 13 QBD 351 at 357, it

was said:
When one is dealing with a deed by which the property has been
conveyed, one must see if it covers the whole ground of the preliminary
contract. One must construe the preliminary contract by itself, and see
whether it was intended to go on to any and what extent after the
formal deed had been executed.

The Knight Sugar case

13 So the common law doctrine and its qualifications are well settled,
and they were well settled before the introduction of our land titles
legislation in 1956. The question whether the doctrine was also applicable
to a sale of land under a Torrens system of land titles registration had arisen
in the Knight Sugar case referred to earlier ([10] supra). In that case, their
Lordships of the Privy Council, on an appeal from Alberta, held that it did.
The relevant sections of the Alberta Land Titles Act provided as follows:
50
After a certificate of title has been granted for any land, no
instrument shall be effectual to pass any estate or interest in such land
(except a leasehold interest for three years or for a less period) or
render such land liable as security for the payment of money, unless
such instrument is executed in accordance with the provisions of this
Act and is duly registered thereunder; but upon the registration of any
such instrument in the manner hereinbefore prescribed the estate or
interest specified therein shall pass, or, as the case may be, the land
shall become liable as security in manner and subject to the covenants,
conditions and contingencies set forth and specified in such
instrument or by this Act declared to be implied in instruments of a
like nature.
51
So soon as registered, every instrument shall become operative
according to the tenor and intent thereof, and shall thereupon create,
transfer, surrender, charge or discharge, as the case may be, the land or
the estate or interest therein mentioned in the instrument.

14 In the Knight Sugar case ([10] supra), lands held under Crown grants
were contracted to be sold subject to the conditions and reservations in the
original Crown grants. The Crown grants contained a reservation to the
Crown of all coal mines, coal pit seams, and veins of coal, and the right to
work the same. However, the transfers executed for the purpose of the
transfer of title on the sale excepted from the transfer all coal and other
minerals in and under the said land and the right to use so much of the land
or the surface thereof as the company may consider necessary for the
purpose of working and removing the coal and minerals. The certificates
of title subsequently issued to the purchasers contained the words
excepting thereout all coal and other minerals.
15 The divergence between the contract of sale on the one hand and the
transfer and certificate of title on the other was, essentially, that whereas the

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sale contract reserved only coal and not other minerals, the transfer and the
certificate of title reserved coal and other minerals. Some years later,
petroleum and natural gas apparently having been found, the appellants
claimed, on the basis of the reservation in the contract of sale, that they
were entitled to all minerals other than coal. It was argued that that doctrine
of merger did not apply to the case of a sale of land to which the Land Titles
Act applied, and that a transfer of land under the Act was nothing more
than an order to the Registrar to cancel the existing certificate of title and to
issue a new certificate. This argument was rejected. Lord Russell, after
referring to ss 50 and 51 of the Act, said that the transfer was a document
prepared in a form approved by transferor and transferee in order that,
when registered, it would become operative according to its terms, and
would thereupon transfer the land mentioned in it. He held that for the
purpose of the application of the doctrine of merger, the transfer differed in
no relevant respects from an ordinary conveyance of unregistered land.
16 After saying that all the provisions of the contract which the parties
intended should be performed by the conveyance were merged in the
conveyance, his lordship found that the parties in the case clearly had
intended that the provisions of the sale agreement should be performed by
the transfer and the subsequent certificate of title. In other words, the
provisions in regard to what was reserved, merged, and were to be found, in
the transfer and certificate of title.
17 So the Knight Sugar case ([10] supra) affirmed that the common law
doctrine applied to the sale of land registered under a Torrens system,
although on the facts it was found that the reservation in regard only to coal
had merged with the reservation in respect of coal and other minerals.
The Baalman commentary
18 Our Land Titles Ordinance (as it was then called) was drafted largely
or solely by a consultant Mr John Baalman, an expert in the Torrens system
of land titles registration in New South Wales. Mr Baalman afterwards
wrote an extensive commentary on the Act and its provisions in the form of
a book published by the then Government Printer. At this point, it is
appropriate for me to consider to what extent reference may be made to
such a commentary. Last year, Parliament passed amendments to the
Interpretation Act which by s 9A allow references to any relevant written
material for the purpose of (a) confirming the ordinary meaning of the
provision or (b) ascertaining the meaning of a statutory provision when
(i) the provision is ambiguous or obscure; or (ii) the ordinary meaning
conveyed by the words of the provision leads to a result which is manifestly
absurd or unreasonable.
19 Section 9A sets out a list of what is written material to which
reference may be made, such as any explanatory statement relating to a Bill
containing the provision and the relevant Ministers speech introducing the

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Bill. However, the list is not exhaustive, and the general provision of the
amendment allows reference to any material capable of assisting in the
ascertainment of the meaning of the provision in the circumstances stated
in s 9A.
20 The subject matter of Mr Baalmans commentary is a highly technical
one, and Parliament relied on Mr Baalmans work as the Bill on which it
acted. Mr Baalmans commentary in the circumstances may be regarded as
having a similar status to the materials listed in s 9A; it also no doubt merits
the general description of material capable of assisting in the ascertainment
of the meaning of a provision of the Act for the purposes set out in the
section.
21 Section 66 in one fell swoop appears to negate the doctrine of merger
as developed by and entrenched in the common law. Instead of
approaching the question whether a contractual provision has merged in
the transfer in the manner of the common law, as enunciated, for example
in the cases cited, including the Knight Sugar case ([10] supra) itself, the
terms in which s 66 is cast prescribe that all obligations in the sale contract
merge in the transfer unless express provision in writing is made to the
contrary. This is such a surprising result on the basis of everything we know
about the doctrine of merger (with all its limitations and qualifications) that
a reference to any written material such as Mr Baalmans commentary is
justified to answer the question: did Parliament (or its predecessor) really
intend to go so far? Did it really intend to change the common law? Or, in
the words of s 9A of the Interpretation Act, what does s 66 really mean
when, read literally, it appears to lead to a manifestly absurd or
unreasonable result?
22 Mr Baalmans commentary on s 66 (then s 51) opens by saying that
the question of merger of interests registered under the Torrens system had
been the subject of conflicting judicial decisions, the conflict being in regard
to the extent to which the doctrine of merger at common law applied to
estates and interests under a Torrens statute. He then quotes the passages
from the Privy Council judgment in the Knight Sugar case ([10] supra)
which I have already referred to, and then says that s 51 merely echoes that
decision. It is clear that the avowed intention of the draftsman was not to
change the contents of the merger doctrine, but to import the doctrine as a
whole to the transfer of lands under the Act. That, of course, includes all its
limits and qualifications.
23 This statement in Mr Baalmans commentary encourages one, if
encouragement be needed, to adopt what are otherwise well established
principles of construction where the provisions of a statute appear to
conflict with the principles of the common law. In R v Scott (1856) 25 LJMC
128, at 133, Coleridge J said that if there is a seeming conflict between the
common law and the provisions of a statute, it is not right to begin by
assuming at once that there is a real conflict and sacrificing the common

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law; the court ought rather to proceed in the first place by carefully
examining whether the two may not be reconciled, and full effect given to
both.
24 Words in a statute must always be construed in the context in which
they are used. The context includes other sections and other parts of the
Act. In Colquhoun v Brooks (1889) 14 App Cas 493, at 506, Lord Herschell
said:
It is beyond dispute, too, that we are entitled, and indeed bound, when
construing the terms of any provision found in a statute, to consider
any other parts of the Act which throw light on the intention of the
legislature, and which may serve to show that the particular provision
ought not to be construed as it would be alone and apart from the rest
of the Act.

25 It seems to me entirely possible to reconcile the apparently wide

wording of s 66 with the common law doctrine of merger by construing the
section in the context of the Act as a whole as well as the context of the
neighbouring provisions in the part of the Act where s 66 is found. The Act
essentially deals with the registration of estates and interests in land
brought within its purview and the registrations of dealings with estates and
interests in such land. Part VII, in which s 66 is found, is headed
Transfers. Section 63(1) provides as follows:
The proprietor of an estate in land, or of a lease, mortgage or charge,
may transfer the same by an instrument of transfer in the approved
form, and upon the registration of such instrument the estate or
interest of the transferor as therein set forth, together with all
easements, rights and powers belonging or appertaining thereto, shall
pass to and be vested in the transferee thereof as proprietor.

26 Section 63(2) deals with the rights, powers and remedies of the person
to whom a mortgage or charge is transferred, and s 64 deals with the
obligations of the person to whom land subject to a mortgage or charge is
transferred. Section 65 deals with the transfer of land for an estate for life or
for an estate in remainder. This is followed by s 66, the subject section.
Section 67 then provides that where upon the registration of a transfer or
other instrument, the interests of (a) lessor and lessee; (b) mortgagor and
mortgagee; or (c) chargor and chargee, vest in the same proprietor, any
intention to merge such interests shall be evidenced by a surrender of lease,
or by a discharge of mortgage or of charge, as the case may be.
27 It is clear that all these sections in Pt VII, like almost all the other parts
of the Act, deal primarily with estates and interests in registered land and
transactions affecting them. When one considers obligations of a contract
for the sale of land registered under the Act, I think it is important to make
a distinction between the obligation to transfer title, ie to transfer the estate
or interest in the land, and obligations not related to the estate and interest
in the land, for example, obligations to construct a building in a

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workmanlike manner, as in Lawrence v Cassel [1930] 2 KB 83. Transfers of

registered land, as required by s 63(1), is effected by an instrument in the
prescribed form. As to be expected, the prescribed form purports to transfer
only the estate and interest of the proprietor to the transferee; it does not
deal with any other obligations of the sale contract not related to the
transfer of the estate or interest in the land.
28 It seems to me that in the context of the part of the Act in which s 66 is
found, particularly s 63(1), s 66 can be reconciled with the common law
rule and full effect can be given to both if one were to confine the operation
of s 66 to those provisions of the contract of sale which deal with estates and
interests in the land contracted to be sold, and, to borrow the words in
s 63(1), all easements rights and powers belonging or appertaining to the
land. Provisions of the contract relating to such matters, in the absence of
any express provisions in the contract to the contrary, would merge in the
transfer, since according to s 63(1), the registration of the transfer will pass
and vest the land and such easements, rights and powers to and in the
transferee. However, provisions not dealing with, or related to, estates and
interests in the land or with such easements, rights and powers, would not
merge in the transfer. Section 66 thus makes perfect sense if read as an
adjunct of s 63(1).
29 It is to be noted that the Knight Sugar case ([10] supra) concerned
precisely the question of merger of provisions in the sale agreement relating
to an interest in land, ie the proprietorship of the coal or other minerals in
the substratum, which by express definition or otherwise was undoubtedly
part of the land. Since the transfers there also referred to the interests in the
land which were reserved, it is not surprising that the contractual
reservation was held to have merged in the transfer and the certificate of
title. This result was reachable by applying the normal common law rule
about merging, and did not require any change in the contents of the rule.
30 Construing s 66 in the way I have proposed would lead to the result
that the rules of merger apply similarly to dealings in land subject to the Act
and dealings in unregistered land. There is no reason at all why different
rules should apply depending on whether land has or has not been brought
under the Act.
31 Reading s 66 in the way proposed in the context of the case at hand,
also makes good sense. The contract provided for the payment of the
purchase price and the payment of the GST on the part of the purchaser.
The instrument of transfer by its own terms transferred only the estate and
interest of the plaintiffs to the defendants in consideration of the payment
of the purchase price only. The purchase price has been paid, but the GST
has not. It is still outstanding. The obligations to transfer the title and the
obligation to pay the main purchase price have no doubt merged in the
transfer. But obviously the obligation to pay the GST has not merged, and
was not intended to merge, in the transfer. Reading s 66 in the way

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proposed is fully in accord with the intention of the parties, and produces a
result which is at once just and fair. Reading it literally would produce a
result which is patently unreasonable and absurd. If the restricted reading
of s 66 attracts the criticism that it might amount to adding words from s 63
(such as in so far as they relate to the estate or interest in the land), so be
it. Although the general rule of construction is to adhere to the ordinary
meaning of words used in a statute, if that meaning leads to a manifest
repugnancy or absurdity, the language of the statute may be modified or
varied so as to avoid it. Christopherson v Lotinga (1864) 33 LJCP 121 at 123,
per Willes J.
32 Counsel for the defendants refers to certain conditions in the Law
Societys Conditions of Sale to show that if it is intended to save any
provision of the contract from merger, an express stipulation is inserted. An
example is condition 17, which provides that liability for property tax
accruing prior to date of completion does not merge in the conveyance.
33 My view is that these provisions are merely there to make the position
regarding specific matters clear and to remove doubts, as far as the question
of merger is concerned. Their presence does not have any decisive influence
on a proper construction of s 66.
34 I therefore find and hold that notwithstanding the registration of the
transfer in both cases, the liability for GST has not been extinguished.
No debt due point
35 Counsel for the defendants raises an alternate ground for resisting the
claim. He says, simply, that under the Act the liability for GST is that of the
vendor. Yes, he says cl 17 provides that the purchaser shall pay the GST, but
until the vendor has paid it to the authorities, the liability is only inchoate.
At the date of the writ, the plaintiffs had not paid the GST. There was
therefore no cause of action in debt. The plaintiffs in fact have not paid to
date.
36 My view on the matter is that in the absence of anything to the
contrary, the defendants vis--vis the plaintiffs were liable to pay the GST,
and the time for payment was the date of completion of the sale. In the
absence of anything to the contrary, the obligations on the part of the
purchaser to pay the GST and other payments under the contract were
obligations to be performed concurrently with the performance of the
vendors obligations under the contract, such as to deliver a duly executed
transfer, and that is at the time when the sale was completed. The rate of
GST was known, so the amount was known. The defendants could not have
resisted payment on the ground that the plaintiffs had not paid, because vis-vis the plaintiffs, there was a present and immediate obligation to pay at
the time of completion. That the plaintiffs would not in the ordinary course
have to pay the authorities immediately is entirely irrelevant. Just as a

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consumer buying goods in circumstances where GST is payable cannot

refuse to pay the GST because the seller has not paid, so the purchaser here
cannot say there is no liability to pay until the vendor has paid.
Conclusion
37 In the result, the learned assistant registrars decision that the doctrine
of merger does not disentitle the plaintiffs from claiming GST under cl 17
of the option, is correct, and the appeal in both suits is dismissed, with
costs.
Headnoted by Nathaniel Khng.