The Plaintiff then made an offer to the Defendant to purchase the property at $550,00. That offer, made on 2nd February 1998, is at
Annexure B te B to Charan Jeet Singh’s affidavit. It reads, inter alia:
“My offer to purchase the said property is for $550,000 (VIP) anduld be able to settle within 60 days from your confirmationation
on this deal.”
The Plaintiff says that “VIP” meant “Vat Inclusive Price” and that the offer therefore included 10% Value Added Tax.
On 4th March the Defendant accepted the offer in the following terms:
“We are pleased to confirm acceptance of your tender of $550,000 (five hu and fifty thousand dollars) for the purchase of the above-bove-mentioned
property subject to the following terms and conditions -
bsp; Fell smetleto t effected cted 30 days from the dahe date hereof.
Should the above terms and conditions be acceptable, kindly sign and returnoriginal of this letter in confirmation. If we do not receireceive
any response within the next 14 days from the date of this letter, the offer will be cancelled without further notice.”
The Plaintiff signed the letter signifying acceptance. The Defendant’s letter made no mention of VAT. Nor, it appears, did the Plaintiff
query the absence of any mention of VAT in this letter of 4th March 1998.
A sale and purchase agreement was then executed by the parties on 29th May 1998. Clause 3 reads as follows:
“The full purchase price for the said property shall be the sum of $550,000 Vat Inclusive which shall be paid as fols follows:
i) &nbssp; The sum o,000 w000 will bell be deposited in NBF Asset Management Bank;
ii) &nnbsp;; &nsp; Tsp; The balance sum of,0500,0500,000 shall be paid and satisfied by the Purchaser to the Vendor upon settlement.”
 an> The property, on settlement was then transferred to the Plaintiff. The Plaintiff requested the Defendant to issue a tax invoice on
$50,000 (being 10% of the purchase price) but the Defendant refused to do so.
In the meantime, in January 1998, the Defe advertised another property, in Labasa, for sale. That property, comprised in Native LeaseLease
No. 16954 and 19483 in Labasa contains a substantial commercial buildings. The Plaintiff offered $1,000,000.00 (one million dollars)
for this property on 13th February 1998. The Defendant accepted this offer on 10th March. Again, the acceptance letter is silent
on VAT. The sale and purchase agreement of 8th June 1998 however specifies that the purchase price is “$1,000,000 VIP”.
The Plaintiff claims that the VAT component of $90,909.09, was not paid to the Inland Revenue Department by the Dant, nor was a tax
invoice oice for this amount, paid to the Plaintiff to allow it to claim VAT credit.
The Plaintiff therefore claims $140,909.09 as the VAT component on the purchase prices of these propertispan>
The Defendant filed the affidavit of Robert Escudier, Chief Manager of the Dant Bank, in reply.
He states that the Plaintiff had made several offers tohase the Labasa property, in different capacities, and for different amounts.
He states thas that the Plaintiff is a property developer, and was aware that the purchase of the properties was VAT exempt under
the provisions of Section 2 Schedule 2 of the VAT Decree. The purchase of both properties was VAT exempt because they were being
sold with existing tenants, and were going concerns.
The Defendant says that the Plaintiff knew this, and that the terms of setnt were therefore silent on payments to the VAT Unit. At
paAt paragraph 18 of the his affidavit, Robert Escudier states:
“It is apparent that the Plaintiff alleges non-payment of VAT as inability to receive a VAT credit. This is misguided and and an
attempt to abuse the tender process as it knows, and it knew at all material times, that no VAT was payable nor was VAT credit to
be afforded to it. It simply now wants to fulfil its sale and purchases at a price less than it tendered for.”
He further states that the reference to VAT in the agreement was VAT if payable.
These are the facts of this case. The Plaintiff also states that he had conversations with staff from the Defendant Bank which confirmed
that VAT was payable on the purchases, but this is disputed by the Defendant. The Plaintiff in a further affidavit by Charan Jeet
Singh states that the Defendant now executes agreements with the words (“VAT if payable”) or “VAT if applicable”) in them to cover
the situation.
Finally the affidavit of Hirday Pande sworn on 21 March 2000, states that ractice in Fiji is that if a price does not include VAT,
orT, or the transaction is zero-rated, then it is stipulated as price “plus VAT (if payable)”.
The question is, for the purpose of this application, wh the plaintiff is now entitled to a 10% refund from the Defendant for a VAT
payment that waat was not due.
At the hearing of this application, both counsel made helpful submissions. The real issue for determin is what the intention of the
parties was in relation to t to the purchase price.
The advertisements for both properties were silent on VAT. The “offer letter” by the Plaintiff specified the inclusion of VAT Bank’s
acceptances of the the offers, were silent on VAT. However both Sale and Purchase Agreements specify the inclusion of VAT.
It is not suggested by either party, that the contracts for the sale of the are invalid. It therefore follows that both parties agree
tree that there was, at the time of execution of the contract, certainty as to the exact amount of the purchase price, and that the
contract is therefore enforceable. Indeed, the parties are, in my view, right to take this position. In the words of Lord Wright
in Scammell(G) & Nephew Ltd. -v- Ousten (1941) AC 251, the words in the contracts are not “so obscure and so incapable of any definite or precise meaning that the court is unable to attribute
to the parties any particular contractual intention.”
What then did the parties intend? The plaintiff’s offer clearly included VAT. Although VAT was not mentioned in the Bank’s acceptance
of the offer, I consider that the parties were at this stage negotiating towards a binding contract. At the execution of the contracts
the parties clearly agreed that VAT was included in the purchase price. Although the Defendant argues that VIP means “Vat if Payable”,
I note that the contract for the Nabua Property has “VAT Inclusive Price” specifically included in Clause 3, and I accept Nirdhay
Pandey’s evidence that VIP in Fiji means Vat Inclusive Price.
Scott J, in the authority cited by counsel for the Plaintiff, in Tacirua Transport Company Ltd. -v- Vakatora Holdings and Other Civil Action No. HBC 1HBC 191 of 1998, said at page 2:
“In Fiji, the expression “VIP” is generally used not to describe lounges at airports but to mean “VAT Inclusive Price”.”
p class=MsoNormal stal style="margin-top: 1; margin-bottom: 1"> In that case tenders had been invited “with VAT Inclusive Prices”. The Plaintif made an offer including VAT. It had been accepted
and a co a contract drawn up for a sum inclusive of VAT. It later transpired that no VAT was payable to the Inland Revenue Department
and the Plaintiff sought orders to refund 10% of the purchase price. Scott J found for the Plaintiff saying at page 5:
“The point is that the 2nd Defendant knew perfectly well that he was receiving $38,180 worth of the total amount of $420,000 not as
part of the purchase price but contingently by way of VAT and that therefore in the outcome when in fact VAT was not found to be
payable it was not his to retain.”
I consider that the same principle applies is case. Although the tenders called for did not specify VAT, and although the Defendant’s
at’s acceptance of the Plaintiff’s offers did not specify VAT, both sale and purchase agreements stated that the purchase prices
included VAT. If there was any uncertainty at the time of negotiation about the VAT component, it was clarified at the time of the
execution of the agreements. If the Defendant knew at that time that VAT was not payable, and if the Plaintiff knew this as the Defendant
claims he did, then there is no reason why the parties should list the purchase price as a VAT inclusive price. I decline to draw
any inference from the fact that the Plaintiff is a property developer or investor, and that its officer knew that VAT was exempt.
Furthermore, I decline to draw any inference from the several tenders made by the Plaintiffs for the purchase of the properties,
that the company was involved in some dishonest scheme to obtain the properties for less than the agreed amount.
For these reasons, I find for the Plaintiff in the sum of $140,909.09.
The Plaintiff has asked for interest of this sum. However as Scott J said in Tacirua Transport (supra), it irehensible that the Plaintiaintiff and the Defendant did not discuss VAT at the time of the signing of the contracts,
and did not clarify this issue prior to settlement. I decline to award interest.
Costs are to be taxed if not agreed.
Nazhat Shameem
JUDGE
At Suva
4th May 2000
Hbc058j.99s
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