The Supreme Court of Victoria has held that a Special Condition concerning GST inserted in a contract for the sale of a property was “void for uncertainty”.
The first respondent, Mr Booth, bought a property from the applicant, Cityrose Trading Pty Ltd (which was the trustee of a family trust), by contract of sale signed and exchanged on 20 May 2006. The second respondent (“Kay & Burton”) was the real estate agent that sold the property. The dispute before the Tribunal was whether Mr Booth was required to pay only the purchase price stipulated in the Particulars of Sale or whether he was liable to pay that amount and a further amount referrable to GST payable on the sale.
The purchase price was recorded in the Particulars of Sale as $2,250,000. The offer to pay that amount was accepted by Cityrose and a contract of sale was executed. The sale price of $2,250,000 was inserted in the Particulars of Sale, along with the amounts for the deposit and the residue. However, the contract of sale contained Special Condition 7, which concerned GST. It provided in part:
“(c) Expressions used in this special condition which are defined in the GST Act have the same meaning as given to them in the GST Act.
7.2 The consideration payable for any taxable supply made under this contract represents the value of the taxable supply for which payment is to be made;
Where a taxable supply is made under this contract for consideration which represents its value, then the party liable to pay for the taxable supply must also pay at the same time and in the same manner as the value is otherwise payable the amount of any GST payable in respect of the taxable supply.”
In the Court’s view: “… the competing constructions [in the Special Condition] are equally ‘open’ (or not) and the Court is unable by legitimate means to divine what the parties should be taken to have intended as to whether Special Condition 7 rendered the purchase price GST-inclusive or GST-exclusive.”
The Supreme Court held that the GST clause was void for uncertainty, and was to be removed from the contract. The Court held that the parties to the contract of sale did not conclude any bargain for the payment of GST and the purchase price of $2,250,000 in the Particulars of Sale was therefore to be understood to be inclusive of any GST payable on the sale.
(Cityrose Trading Pty Ltd v Booth & Anor [2013] VSC 504, Supreme Court of Victoria, Emerton J, 19 September 2013.)
[LTN 187, 26/9/13]