THE COMMISSIONER OF INLAND REVENUE v. EMERSON RADIO CORPORATION

FACV Nos. 3 and 6 of 1999 (Consolidated)

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FACV No. 3 of 1999

FINAL APPEAL NO. 3 OF 1999 (CIVIL)

(ON APPEAL FROM CACV NO. 196 OF 1998)

(Consolidated with Final Appeal FACV No. 6 of 1999)

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JUDGMENT ON COSTS

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Mr Justice Litton PJ:

1. This is the judgment of the Court on costs.

2. Both parties' appeals having been dismissed by our judgment handed down on 14 December 1999, it would seem logical that each side should be left to pay its own costs. That is what we provisionally decided by our order nisi.

3. The Commissioner is content with that order but not Emerson. In its written submissions Emerson asks us to set aside the costs orders made by the two lower courts and award to it 80% of its costs incurred all the way. The basis for saying that it should recover 80% of its costs against the Commissioner is this: The fees accruing to Emerson in relation to the sale of goods manufactured in Hong Kong is said to represent only about 20% of the total fees payable : In other words, 80% of the fees would drop out of the Hong Kong tax net : Hence Emerson should be awarded 80% of its costs.

4. In our judgment this argument is misconceived. The appeal to the Recorder from the Board of Review proceeded on a Case, stated on a point of law. The Recorder rejected Emerson's primary submission, likewise the Commissioner's, and determined the appeal on the parties' "fall-back position", remitting the matter back to the Board of Review to determine the amount of fees received for the use in Hong Kong of the trade mark, in the light of his judgment. Both parties were dissatisfied. The Commissioner appealed to the Court of Appeal. Emerson cross-appealed. But the issue on appeal remained the same: Whether the Board of Review had erred in law in refusing to annul the assessments. The Recorder's order as to costs, consequential on his determination of the appeal before him, was never an issue in the Court of Appeal. And when the matter reached this Court, the issue remained the same. The appeal before us never involved the orders for costs made in the lower courts.

5. In determining the appeal before us, the "event" in terms of Order 62 r.3(2) of the Rules of the High Court was not a costs order on appeal. It was the point of law stated in the Case. Having reached this point, it is unnecessary to go on to consider whether Emerson's submission as to the proportion of costs sought against the Commissioner, based on a 20%-80% apportionment on tax liability, is sound. We would simply express skepticism on this point.

6. We make the order nisi absolute.