Dalvir Dhaliwal was ordered to repay fifteen per cent of the purchase price on an Auckland house sale after promising his vendor company was not GST registered and hence ineligible to recover GST, when in fact it was.
The High Court was told his company DSD Homes Ltd sold a property in McKean Road Manurewa to Rajesh Aggarwal and Sakshi Khanna in September 2021. An extra clause was written into the standard-form sale and purchase agreement: DSD stated it was not GST registered; the price was to be reduced by fifteen per sent if it was registered; and both DSD and its director Mr Dahliwal were liable to repay the fifteen per cent if DSD was in fact registered.
Initially Mr Aggarwal and Ms Khanna intended to occupy McKean Road as a family home. Plans changed. Considering the house was not ideal for their family, they decided instead to redevelop the property. They registered for GST one month before completing the purchase. Only when applying for a GST credit did they learn DSD was in fact GST registered. The legal effect of both vendor and purchaser being GST registered was that no GST credit was allowed; the transaction was zero-rated.
They sued both DSD Homes and director Mr Dhaliwal. Justice Tahana ruled terms of the contract were unambiguous. Mr Dhaliwal and his company were ordered to repay $166,956. In addition, they were liable to pay interest at 14 per cent; the default interest rate in the sale agreement.
Neither Mr Dhaliwal nor his company appeared in court to defend the claim.
Aggarwal v. DSD Homes Ltd – High Court (24.04.23)
23.055