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ARTICLE · 08 OCTOBER 2013

Poor contract drafting prevents collection of GST

Corrs Chambers Westgarth
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A recent case highlights the danger of a poorly drafted GST clause.

AustraliaCorporate/Commercial Law
Heran Kim
Heran Kim
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A recent case highlights the danger of a poorly drafted GST clause. The GST gross up clause in the contract for sale of land was so poorly drafted that the Court held that the clause was void for uncertainty and declared that the clause was severable from the contract.

This was a costly mistake for the vendor who, as a consequence, is unable to collect a GST gross up payment from the purchaser, and is left to fund the GST liability arising from the sale of the land out of its own pocket.

CITYROSE TRADING PTY LTD V NOEL BOOTH AND KAY & BURTON PTY LTD [2013] VSC 504

In Cityrose Trading Pty Ltd v Noel Booth and Kay & Burton Pty Ltd [2013] VSC 504, Noel Booth (Purchaser) bought a residential property from Cityrose Trading Pty Ltd (Vendor) by a contract of sale after the property had earlier been passed in at auction.

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