Y&P NZ Ltd v Wang - [2017] NZCA 280

IN THE COURT OF APPEAL OF NEW ZEALAND

CA58/2017
[2017] NZCA 280

BETWEEN	Y&P NZ LIMITED Appellant
AND	YANG WANG AND CHEN ZHANG Respondents

Hearing:	11 May 2017
Court:	Cooper, Mallon and Wylie JJ
Counsel:	B P Rooney for Appellant G P Blanchard for Respondents S J Leslie and M T Szymanik for Attorney-General as Intervener
Judgment:	3 July 2017 at 10.30 am

JUDGMENT OF THE COURT

A The appeal is dismissed.
BThe appellant must pay the respondents costs for a standard appeal on a band A basis and usual disbursements.

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REASONS OF THE COURT

(Given by Mallon J)

Introduction

The appellant owns four adjoining properties. On 2 May 2016 it entered into agreements to sell these properties to the respondents. Settlement date was agreed to be 28 July 2016. The purchase price was $2,430,000 “[p]lus GST (if any)”. Schedule 2 to the agreements recorded that the respondents were not, and at settlement would not be, registered for GST and that they did not intend at settlement to use the properties for making taxable supplies. This meant that GST at 15 per cent was payable on the purchase price.
A dispute arose at settlement about whether the respondents had provided proper notice to the appellant of a change to their GST position which meant GST on the purchase would be zero-rated. The appellant insisted there had not been proper notice and refused to settle the purchase unless the respondents paid GST at 15 per cent. The respondents issued summary judgment proceedings seeking an order that the appellant settle on the zero-rated basis. They also sought an order that caveats they had lodged against the properties not lapse.
In the High Court Associate Judge Sargisson held summary judgment was not appropriate.[1] She accepted, however, that it was reasonably arguable the appellant was not entitled to insist on settlement with GST payable at 15 per cent. She therefore made an order sustaining the caveats. The appellant appeals this latter decision.

The GST legislation

[1]Wang v Y & P New Zealand Ltd [2016] NZHC 3173.

Payment of GST is governed by the Goods and Services Tax Act 1985 (the GST Act).[2] The general position under the GST Act is that GST is payable at a rate of 15 per cent. However, under certain circumstances GST must be zero-rated. One of those circumstances is set out in s 11(1)(mb), which, at the relevant time, provided as follows:[3]
11 Zero-rating of goods
(1)A supply of goods that is chargeable with tax under section 8 must be charged at the rate of 0% in the following situations:
…
(mb)the supply wholly or partly consists of land, being a supply—
(i)made by a registered person to another registered person who acquires the goods with the intention of using them for making taxable supplies; and
(ii)that is not a supply of land intended to be used as a principal place of residence of the recipient of the supply or a person associated with them under…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Y&P NZ Ltd v Wang

Details

AGLC: Y&P NZ Ltd v Wang [2017] NZCA 280
Case: [2017] NZCA 280
Decision Date: 3 July 2017 at 10.30 am

CaseChat Overview and Summary

In the New Zealand Court of Appeal, Y&P NZ Limited (the appellant) appealed against the decision of the High Court to sustain caveats lodged by Yang Wang and Chen Zhang (the respondents) on four properties they had contracted to purchase from the appellant. The dispute centred around whether the respondents had provided proper notice of a change to their GST position, which would have entitled them to a zero-rate GST on the purchase. The High Court found that it was reasonably arguable that the appellant had waived its right to timely written notice of the GST information, and thus, the appellant could not insist on settlement with GST at 15 per cent. The appellant contested this, arguing that statutory notice requirements could not be waived and that the respondents had not provided the necessary written notice.

The Court of Appeal found that it was arguable that the provision of amended settlement statements with zero-rated GST and the request for GST numbers constituted a waiver of the contractual requirement for written notice. The Court also found that there was no effective withdrawal of this waiver by the appellant. The issue of statutory waiver did not arise because the statute required notice to be given by or on the settlement date. The respondents were not given the opportunity to provide the necessary notice due to the appellant's insistence on settlement at the 15 per cent GST rate. Therefore, the Court of Appeal dismissed the appeal and upheld the High Court's decision to sustain the caveats. The appellant was ordered to pay the respondents' costs for the appeal.

Orders