Hawthorn v Smallcorn
| Jurisdiction | England & Wales |
| Judgment Date | 10 February 1998 |
| Date | 10 February 1998 |
| Court | Chancery Division |
Chancery Division.
Laws J.
David Ewart (instructed by Wintle & Co, Bognor Regis) for the plaintiff.
Richard Morgan (instructed by Chamberlain Martin & Spurgeon, Littlehampton) for the defendant.
The following cases were referred to in the judgment:
C & E Commrs v Glassborow VAT(1974) 1 BVC 4
C & E Commrs v Leightons Ltd; C & E Commrs v Eye-Tech Opticians Ltd No. 1 VAT[1995] BVC 192
EC Commission v United Kingdom VAT(Case 353/85) (1988) 3 BVC 265
Value added tax - Partnership - Retiring partner - Deed of retirement provided for retiring partner to be paid his share of current assets less liabilities as at the date of the deed - Whether retired partner entitled to share of VAT repayment.
This was an action brought by a retired partner against a continuing partner claiming a share in a VAT repayment obtained as a result of a change in the law after his retirement.
The plaintiff was a member of a partnership carrying on business as opticians. In November 1992 the plaintiff entered into a deed of retirement which provided by cl. 3 that he should be paid a sum representing his share of the partnership assets, less current liabilities. By cl. 5.1 the plaintiff was obliged to indemnify the continuing partners against all taxes which might be levied or assessed on the partnership properly attributable to his share in the profit or losses of the partnership while he was a member of it.
In 1995, as a result of the decision of the High Court that the dispensing element in the supply of spectacles was exempt under the Value Added Tax Act 1983, Sch. 6, Grp 7, item 1 (Value Added Tax Act 1994 schedule 9 group 7Value Added Tax Act 1994, Sch. 9, Grp. 7, item 1) the defendant successfully claimed a substantial repayment of VAT.
The plaintiff claimed that he would have been entitled to recover from Customs such overpaid sums as were attributable to his share of the partnership because the effect of the VAT registration of a partnership was as though the names of the partners were recorded as registered. The plaintiff therefore contended that, subject to the deed of retirement, the continuing partner held his share of the money in trust for him.
The defendant contended that cl. 3 of the deed entitled the plaintiff only to his share of current assets at the date of the deed. The repayment of VAT arising after that date was not included in the deed.
Held, giving judgment for the plaintiff:
Inferring the intention of the parties from the whole of the deed. The provision regarding the potential liability of the plaintiff for his share of any tax arising after the date of the deed showed that a line was not drawn as at the date of the deed. Since the plaintiff would have been liable for his share of any underpayment which might later be claimed, it could not be inferred that any overpayment later recovered would be lost to him. Such an unjust contrast could not have represented the parties' intentions.
Laws J: This case principally concerns the proper construction of cl. 3.3 of a deed of retirement entered into on 17 November 1992 between the plaintiff, the defendant, and a third party by name Mr Wadge.
In 1985 the plaintiff, the defendant, and a Mr Dymock entered into partnership as opticians in Bognor Regis. Mr Dymock retired from the partnership in 1987. In October 1987 Mr Wadge became a partner and a written partnership agreement was executed. That agreement, as one might expect, contained provisions as to the events that would happen upon the partnership's dissolution. Thus for example cl. 14 provided:
Upon the dissolution of the partnership the value of the retiring or deceased partner shall be made by the Accountants to the partnership or if the parties fail to accept such evaluation then the valuation to be made by the Accountant for the time being of the Association of Optical Practitioners …
Until September 1988, Sch. 6, Grp. 7, item 1(c) to the Value Added Tax Act 1983 provided that supplies of both services and goods made by a registered optician should be exempt from VAT. However in EC Commission v United Kingdom VAT(Case 353/85) (1988) 3 BVC 265 the European Court of Justice held that this provision was incompatible witheu-directive 77/388 article 13(A)(1)art. 13(A)(1) of the sixth...
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...abuse of its process: [15]. Chee Siok Chin v Minister for Home Affairs [2006] 1 SLR (R) 582; [2006] 1 SLR 582 (refd) Hawthorn v Smallcorn [1998] STC 591 (refd) Kuo Ching Yun v H & L Investments Holding Pte Ltd [1995] 3 SLR (R) 276; [1996] 1 SLR 47 (refd) Lai Shit Har v Lau Yu Man [2008] 4 S......
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Ang Tin Yong v Ang Boon Chye and another
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