Comptroller of Income Tax v BLO: Winding Up Application Dispute

The Comptroller of Income Tax applied to the High Court of Singapore on 7 September 2016 to wind up BLO, the Defendant, for failure to pay debts. Hoo Sheau Peng JC heard the application and declined to stay the application, ordering the Defendant to be wound up on 13 March 2017. The Defendant's application for a stay was based on its intention to object or appeal against tax assessments under the Income Tax Act. The court found that there was no substantial and bona fide dispute over the underlying debt.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Application to wind up the Defendant granted.

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The Comptroller of Income Tax sought to wind up BLO for failure to pay debts. The court ordered BLO to be wound up, declining a stay.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Comptroller of Income TaxPlaintiffGovernment AgencyJudgment for PlaintiffWon
BLODefendantCorporationWinding up order made against DefendantLost

3. Judges

Judge NameTitleDelivered Judgment
Hoo Sheau PengJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
Teh Ee-VonInfinitus Law Corporation
Mahmood Gaznavi s/o Bashir MuhammadMahmood Gaznavi & Partners
Tan Wee En AylwinMahmood Gaznavi & Partners

4. Facts

  1. The Comptroller of Income Tax sought a winding up order against the Defendant.
  2. The Defendant was incorporated in Singapore on 13 April 2007 and manages/invests in property.
  3. The Comptroller sent the Defendant a letter on 13 November 2014 stating that the gain from the sale of two properties was taxable.
  4. The Comptroller revised the Defendant’s tax assessments for the years of assessment 2011 and 2013.
  5. The Defendant did not make any payments before the Comptroller’s due date of 21 February 2015.
  6. The Comptroller’s solicitors served a statutory demand dated 5 July 2016 on the Defendant for $1,131,130.25.
  7. The Defendant did not make any further payments to the Comptroller after the statutory demand.

5. Formal Citations

  1. Comptroller of Income Tax v BLO and another matter, , [2017] SGHC 50

6. Timeline

DateEvent
Defendant incorporated in Singapore
Comptroller sent letter to Defendant stating gain from sale of properties is taxable
Deadline for Defendant to inform Comptroller of any objection
Comptroller sent letter informing Defendant of additional assessments
Deadline for Defendant to pay additional tax
Defendant purportedly sent objection letter
Comptroller's tax officers made telephone calls to Defendant requesting immediate payment
Series of correspondence between parties via letters and emails began
Defendant arranged for payment of $75,000
Defendant arranged for payment of $10,000
Comptroller's tax officers made telephone calls to Defendant requesting immediate payment
Series of correspondence between parties via letters and emails ended
Statutory demand served on Defendant
Assistant Comptroller of Income Tax issued certificate pursuant to s 89(4) of the Income Tax Act
Comptroller filed application to wind up Defendant
Defendant filed Summons No 5094 of 2016 to stay the application
Hearing of application
Decision made to wind up the Defendant

7. Legal Issues

  1. Winding up of a company unable to pay its debts
    • Outcome: The court found that the Defendant was unable to pay its debt to the Comptroller and ordered the winding up of the Defendant.
    • Category: Substantive
  2. Existence of a substantial and bona fide dispute over the debt
    • Outcome: The court found that there was no substantial and bona fide dispute over the underlying debt.
    • Category: Substantive
    • Related Cases:
      • [2006] 1 SLR(R) 218
      • [2008] 2 SLR(R) 491
  3. Admissibility of communications under 'without prejudice' privilege
    • Outcome: The court found that the communications were not sent in the course of negotiations to settle a dispute and were not covered by 'without prejudice' privilege.
    • Category: Procedural
    • Related Cases:
      • [1988] UKHL 7
      • [2006] 4 SLR 807
      • [2009] 4 SLR(R) 769
      • [2007] 2 SLR 433
  4. Whether tax assessed is payable regardless of any objection or appeal
    • Outcome: The court held that tax assessed is payable regardless of any objection or appeal.
    • Category: Substantive
    • Related Cases:
      • [1965-1967] SLR(R) 322
      • [1979-1980] SLR(R) 75

8. Remedies Sought

  1. Winding up order

9. Cause of Actions

  • Winding up application due to inability to pay debts

10. Practice Areas

  • Winding Up
  • Tax Litigation
  • Commercial Litigation

11. Industries

  • Property Management
  • Investment

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
De Montfort University v Stanford Training Systems Pte LtdHigh CourtYes[2006] 1 SLR(R) 218SingaporeCited for the principle that the court should stay or dismiss a winding up application when there is a bona fide dispute over the debt claimed by the creditor.
Pacific Recreation Pte Ltd v S Y Technology Inc and another appealCourt of AppealYes[2008] 2 SLR(R) 491SingaporeCited for the principle that a company cannot defeat a winding up application merely by alleging a substantial and bona fide dispute over the debt and the applicable standard of proof.
Comptroller of Income Tax v A Co LtdHigh CourtYes[1965-1967] SLR(R) 322SingaporeCited to support the proposition that tax assessed is payable, regardless of any objection or appeal on the ground that the assessment is incorrect.
Comptroller of Income Tax v Beaver Singapore Pte LtdHigh CourtYes[1979-1980] SLR(R) 75SingaporeCited to support the proposition that a dispute over the liability to tax or the amount due is not sufficient ground entitling the defendant to have leave to defend an action brought by the Comptroller to recover payment of the amount due on the notice of assessment.
Rush & Tompkins Ltd v Greater London CouncilHouse of LordsYes[1988] UKHL 7United KingdomCited for the general principles governing 'without prejudice' privilege.
Mariwu Industrial Co (S) Pte Ltd v Dextra Asia Co Ltd and anotherCourt of AppealYes[2006] 4 SLR 807SingaporeCited for the principle that s 23(1)(b) of the Evidence Act covers cases where a statement is not expressly made 'without prejudice', but made in the course of negotiations to settle a dispute.
Cytec Industries Pte Ltd v APP Chemicals International (Mau) LtdHigh CourtYes[2009] 4 SLR(R) 769SingaporeCited for the principle that whether a communication is made in the course of negotiations to settle a dispute must be determined by objectively construing it as a whole in the context of the factual circumstances.
Sin Lian Heng Construction Pte Ltd v Singapore Telecommunications LtdHigh CourtYes[2007] 2 SLR 433SingaporeCited for the principle that 'without privilege' privilege will not apply if it can be shown that the communication contains an admission of liability such that there is no longer a dispute between the parties.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Companies Act (Cap 50, 2006 Rev Ed)Singapore
s 254(1)(e) of the Companies ActSingapore
s 254(2)(a) of the Companies ActSingapore
Income Tax Act (Cap 134, 2014 Rev Ed)Singapore
s 85(1) of the Income Tax ActSingapore
s 89(4) of the Income Tax ActSingapore
s 79(1)(a) of the Income Tax ActSingapore
s 76(2) of the Income Tax ActSingapore
s 76(6) of the Income Tax ActSingapore
s 78 of the Income Tax ActSingapore
s 81 of the Income Tax ActSingapore
s 76(4) of the Income Tax ActSingapore
Evidence Act (Cap 97, 1997 Rev Ed)Singapore
Section 23 of the Evidence ActSingapore

15. Key Terms and Keywords

15.1 Key Terms

  • Winding up
  • Statutory demand
  • Tax assessment
  • Objection letter
  • Without prejudice privilege
  • Insolvency
  • Companies Act
  • Income Tax Act

15.2 Keywords

  • Winding up application
  • Insolvency
  • Tax debt
  • Companies Act
  • Income Tax Act
  • Singapore
  • Tax assessment
  • Without prejudice

17. Areas of Law

Area NameRelevance Score
Winding Up95
Income taxation70
Company Law60
Administrative Law30
Evidence Law20
Bankruptcy10
Civil Procedure10
Contract Law10

16. Subjects

  • Taxation
  • Winding Up
  • Insolvency