Special conditions prevail

The claimant company sold a freehold property for £130 000 to the defendants in August 2006. The contract contained special and general conditions including one that stated the special conditions were to prevail in the event of conflict.

Clause 1.4 one of the general conditions stated “An obligation to pay money includes an obligation to pay any VAT chargeable in respect of that payment… All sums made payable by the contract are exclusive of VAT.”

The claimant opted to waive the exemption from VAT and became liable to pay the tax on the transaction of the property.

HMRC raised a VAT assessment in 2007. The claimant’s solicitors wrote to the defendants’ legal team saying the defendants were liable under clause 1.4 to pay to the claimant the amount of VAT it had to pay. The defendants refused.

The claimant issued proceedings and applied for summary...