WANG WEICHEN ZHAO BINGQING v. COLLECTOR OF STAMP REVENUE

HCAL 823/2020

[2021] HKCFI 224

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 823 OF 2020

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J U D G M E N T

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INTRODUCTION

1.  This is the rolled-up hearing of an application for judicial review by the Applicants seeking to challenge “[t]he decision of the Collector dated 10 March 2020 rejecting the application of each of the 1^st and 2^nd Applicants for partial refund of Ad Valorem Stamp Duty paid by each of the 1^st and 2^nd Applicants in respect of the Agreement for Sale and Purchase of the Property dated 28 April 2016”.  For reasons which I shall endeavour to explain in this judgment, the application for leave to apply for judicial review is dismissed.

2.  In this judgment, unless the context indicates otherwise, references to “Section” or “s” shall be to the Stamp Duty Ordinance, Cap 117 (“the Ordinance”).

BASIC FACTS

3.  On 6 September 2010:

(1)  the 1^st Applicant (“Wang”) became the beneficial owner of a residential property known as Flat H, 50/F, Tower 5, Metro Town, No 8 King Ling Road, Sai Kung, New Territories (“the 1^st Property”), pursuant to an agreement for sale and purchase dated 16 July 2010 entered into by him as the purchaser; and

(2)  the 2^nd Applicant (“Zhao”) and her parents became the beneficial owners of another residential property known as Flat G, 50/F, Tower 5, Metro Town, No 8 King Ling Road, Sai Kung, New Territories (“the 2^nd Property”), pursuant to (i) an agreement for sale and purchase dated 16 July 2010 entered into by Zhao as the sole purchaser, and (ii) a Nomination dated 29 July 2010 entered into by Zhao and her parents.

4.  In June 2012, Wang and Zhao married each other.

5.  On 28 April 2016, Wang and Zhao (as tenants-in-common in equal shares) entered into an agreement for sale and purchase (“the Acquisition Agreement”) to purchase a residential property known as Flat C on 21/F and 22/F (Duplex), including the balcony thereof and the flat roof adjacent thereto, of Tower 1 of Ultima, No 23 Fat Kwong Street, Kowloon (“the Subject Property”) at the consideration of HK$102,470,000.

6.  On 10 May 2016, Wang and Zhao paid ad valorem stamp duty on the Acquisition Agreement in the amount of HK$8,709,970 (“the Enhanced ADV”) (HK$102,470,000 x 8.5%, being the prevailing applicable rate under Part 1 of Scale 1 of Head 1(1A) of the Ordinance).

7.  On 2 December 2016, the Acquisition Agreement was completed, and Wang and Zhao, as tenants-in-common in equal shares, were assigned the Subject Property pursuant to a conveyance on sale executed in conformity with the Acquisition Agreement.

8.  On 6 March 2017:

(1)  Wang entered into an agreement for sale (“the 1^st Disposal Agreement”) to dispose of the 1^st Property; and

(2)  Zhao and her parents entered into an agreement for sale (“the 2^nd Disposal Agreement”) to dispose of the 2^nd Property.

9.  On 11 May 2017, the Collector received Wang and Zhao’s application (“the Refund Application”) for a partial refund of the stamp duty paid on the Acquisition Agreement pursuant to s 29DF (the terms and effect of which I shall further discuss below).  The amount of the refund sought was HK$4,354,975.

10.  On 15 June 2017:

(1)  Wang assigned the 1^st Property to the purchaser named in the 1^st Disposal Agreement; and

(2)  Zhao and her parents assigned the 2^nd Property to the purchaser named in the 2^nd Disposal Agreement.

11.  By a letter to Wang and Zhao dated 20 June 2017, the Collector rejected the Refund Application (“the Decision”), stating as follows:

“ Under the prevailing interpretation of the Ordinance, a partial refund is not available under section 29DF if the applicant owned more than one residential property in Hong Kong at the date the subject property was acquired. In other words, the partial refund regime only applies where an applicant changed his or her sole residential property in Hong Kong. It would not apply, for instance, where more than one residential property was sold and then replaced by one residential property.

The Court of Appeal delivered the judgment on the Judicial Review case [Ho Kwok Tai v. Collector of Stamp Revenue] (CACV 52/2016) on 31 October 2016. It was held that section 29DF of the Ordinance did not apply to the situation where the purchaser owned more than one original residential property and [thus] upheld the Stamp Office’s decision.

In your present case, Wang Weichen & Zhao Bingqing each owned 1 residential property on the acquisition date of the Subject Property.  Accordingly, I regret to inform you that the partial refund of AVD under section 29DF of the Ordinance does not apply to your case.”

12.  Subsequently, Wang and/or Zhao, acting either by themselves or through their solicitors, repeatedly requested the Collector to reconsider the Decision, which requests were all turned down by the Collector. In particular:

(1)  Wang’s written request dated 6 July 2017 was rejected by the Collector on 19 July 2017;

(2)  Wang’s written request dated 9 August 2017 was rejected by the Collector on 18 August 2017;

(3)  Fairbairn Catley Low & Kong’s written request dated 15 July 2019 was rejected by the Collector on 28 November 2019; and

(4)  Fairbairn Catley Low & Kong’s written request dated 17 December 2019 was rejected by the Collector on 10 March 2020.

13.  On 6 May 2020, Wang and Zhao made the present application for leave to apply for judicial review, contending that the Collector erred in law in rejecting the Refund Application.  Their argument runs, essentially, along the following lines:

(1)  The Collector’s approach of treating Wang and Zhao together as “one” applicant under s 29DF was wrong, in that they should have been treated as “2 separate entities” and therefore as “two separate applicants”, because they purchased the Subject Property as tenants-in-common in equal shares and not as joint tenants (§30 of the Form 86).

(2)  As a matter of law, in April 2016, each of Wang and Zhao, as a tenant-in-common in equal share, had acquired a separate and distinct 50% share of the Subject Property under one formal sale and purchase agreement and paid their respective share of the Enhanced ADV; and later in March 2017, each of them had disposed of their respective beneficial interests in their only original property, ie the 1^st Property and the 2^nd Property (§36 of the Form 86).

(3)  Although there was only one sale and purchase agreement in respect of the Subject Property, “the reality is the 1^st and 2^nd Applicants purchased the [Subject Property] as tenants-in-common in equal shares, which, as a matter of law, means that each of the 1^st and 2^nd Applicants, as a tenant-in-common in equal share, had acquired a separate and distinct 50% share of the Property” (§49 of the Form 86).

(4)  As such, the Collector should have treated the Refund Application as “two separate and distinct applications” under s 29DF for a partial refund of the Enhanced ADV by each of Wang and Zhao respectively (see §38 of the Form 86), and the Enhanced ADV paid on the Acquisition Agreement should be “deemed to be borne by each of the 1^st and 2^nd Applicants separately as tenants-in-common in equal shares respectively” (§39 of the Form 86).

(5)  Accordingly, the Collector should have made a partial refund in the sum of HK$2,177,487.5 (being 50% of the total amount of the refund sought under the Refund Application) to each of Wang and Zhao (§50 of the Form 86).

14.  In the rest of this judgment, I shall consider the following issues in the following order:

(1)  the statutory regime relating to the partial refund of stamp duty under s 29DF;

(2)  Wang and Zhao’s core contention that because they purchased the Subject Property as tenants-in-common in equal shares, the Collector should have regarded (i) each of them as having acquired a separate and distinct 50% share of the Subject Property under the Acquisition Agreement, (ii) the Enhanced ADV as having been borne by each of them separately, and (iii) the Refund Application as having been made by 2 separate entitles separately (“the Tenants-in-Common Argument”);

(3)  whether the Collector should have made a partial refund of the Enhanced ADV to Wang and Zhao (whether jointly or severally) under s 29DF in the circumstances of this case; and

(4)  the question of delay in making the present application for leave to apply for judicial review.

THE STATUTORY REGIME FOR PARTIAL REFUND OF STAMP DUTY

15.  In a recent judgment in Yau Sun Yee v Collector of Stamp Revenue [2021] HKCFI 88 handed down on 13 January 2021, I gave a brief explanation of the statutory regime relating to the partial refund of stamp duty under s 29DF.  I shall set out below the relevant passages in that judgment (with necessary modifications) in so far as they are relevant for the purpose of the present discussion.

16.  In order to understand the context and purpose of s 29DF, it is necessary first to refer to some basic provisions in the Ordinance relating to the charging of ad valorem stamp duty on agreements for sale of residential property under Division 3 of Part IIIA of the Ordinance.

17.  The starting point is s 29BA(a), which provides that, subject to certain specified exceptions, an agreement for sale is chargeable with stamp duty under Part 1 of Scale 1 of Head 1(1A) in the First Schedule (“Scale 1 - Part 1”) if the property concerned is residential property.  At the time when the Acquisition Agreement was entered into (ie 28 April 2016), where an agreement for sale was chargeable with stamp duty under Scale 1 - Part 1, the amount of stamp duty was calculated at rates between 1.5% and 8.5% depending on the amount or value of the consideration under that agreement[1].

18.  However, under s 29BB, lower rates of stamp duty (“Scale 2”) are applicable in relation to certain agreements for sale of residential property where the purchaser is a Hong Kong permanent resident (“HKPR”) and is not, at the time of acquisition, a beneficial owner of any other residential property in Hong Kong.  The version of Section 29BB applicable on the date of the Acquisition Agreement states as follows:

“Certain agreements for sale of residential property to Hong Kong permanent residents chargeable with ad valorem stamp duty at Scale 2 rates

(1) An agreement for sale is chargeable with stamp duty under Scale 2 of head 1(1A) in the First Schedule if -

(a) the property concerned is residential property; and

(b) it is shown to the satisfaction of the Collector that subsection (2) or (3) applies to the agreement.

(2) This subsection applies to the agreement if, on the date of acquisition of the property -

(a) the purchaser, or each of the purchasers, under the agreement is a Hong Kong permanent resident acting on his or her own behalf; and

(b) that purchaser, or each of those purchasers, is not a beneficial owner of any other residential property in Hong Kong.”

19.  For the purpose of s 29BB, a HKPR who has entered into an agreement to dispose of his original residential property before entering into an agreement to acquire a new residential property is regarded as not being a beneficial owner of the original property on the date of acquisition of the new property.

20.  Where an agreement for sale is chargeable with stamp duty under Scale 2, the amount of stamp duty is calculated at rates between HK$100 and 4.25% depending on the amount or value of the consideration under that agreement.  In particular, where the amount or value of the consideration exceeds $21,739,120, the amount of stamp duty is calculated at the rate of 4.25%.

21.  The purpose of s 29BB was explained in the Legislative Council Brief on Stamp Duty (Amendment) Bill 2013, TsyB R 183/700-6/5/0 (C), dated April 2013 (“the LegCo Brief”) prepared by the Financial Services and Treasury Bureau, at §9:

“Having regard to the Government’s prevailing policy of according priority to the housing needs of HKPRs, we are mindful that any new measures[2] to address the overheated property market should not impose undue financial burden on HKPRs who aspire to be homeowners.”

22.  In addition, it was recognized that some HKPRs might acquire a new residential property before disposing of their original one, and it was decided that the lower rates under Scale 2 should also be available to those HKPR purchasers by means of a refund mechanism provided that certain conditions were met: see §15 of the LegCo Brief:

“As set out in paragraph 12 above, HKPRs who have disposed of all their old residential properties before acquiring a new residential property (‘先賣後買’) would be charged the old AVD rates. As for HKPR purchasers/transferees who acquire a new residential property before disposing of their original one (must be their only other residential property) (‘先買後賣’), they have to pay stamp duty on the instrument for the newly acquired property at the enhanced AVD rates (applicable instrument) in the first instance. Yet, the Bill proposes to provide for a refund mechanism, whereby after the disposal of the old property is completed, IRD will refund, on application by the HKPR purchasers/transferees within two years from the date of the applicable instrument, the stamp duty for the difference between the enhanced and the old AVD rates on the newly acquired property, on the condition that the agreement to dispose of their old property was entered into within six months from the date of the applicable instrument[3].”

23.  The purpose of the refund mechanism was stated in the Report of the Bills Committee on Stamp Duty (Amendment) Bill 2013, LC Paper No CB(1)1703/13-14, dated 2 July 2014 (“the Bills Committee Report”), at §32:

“The proposed section 29DF stipulates that a HKPR, having entered into an agreement for sale and purchase to dispose of his/her original and only other residential property in Hong Kong within six months from the date of acquiring a new residential property, can apply to the IRD, within two years from the date of the instrument in acquiring the new residential property, for the refund of AVD of an amount equal to the difference between payments according to the old and new rates on the newly acquired property. The refund mechanism for HKPR purchasers/transferees having acquired a new residential property before disposing of their original property is to cater for the replacement needs of HKPRs having regard to the fact that one may own more than one residential property during the transitional period in the process of acquiring a new property for replacement of the original one.”

24.  The refund mechanism is given effect by s 29DF. The version of s 29DF applicable on the date of the Acquisition Agreement states as follows:

“Partial refund of ad valorem stamp duty on disposal of residential property in certain circumstances

(1) In this section -

applicable instrument(適用文書) means an instrument-

(a) under which a residential property (whether or not together with a car parking space permitted for the parking of 1 motor vehicle) is acquired; and

(b) on which stamp duty had been paid according to … Scale 1 of head 1(1A), in the First Schedule;

original property(原物業), in relation to a person who acquires a subject property under an applicable instrument, means another residential property (whether or not together with a car parking space permitted for the parking of 1 motor vehicle) of which the person is a beneficial owner on the date of that acquisition;

specified amount(指明款項) means -

…

(b) for an applicable instrument on which stamp duty had been paid according to Scale 1 of head 1(1A) in the First Schedule - an amount equal to the difference between the stamp duty paid and the stamp duty that would have been payable on that instrument if it were chargeable under Scale 2 of head 1(1A) in the First Schedule in accordance with Division 3;

subject property(標的物業) means the residential property, or the residential property and car parking space, acquired under an applicable instrument.

(2) The Collector may, on an application made by a person (applicant) who had paid stamp duty on an applicable instrument, refund to the applicant the specified amount if -

(a) subsection (3) … applies to the disposal of an original property of the applicant; and

(b) had the original property been disposed of before the subject property was acquired, the applicable instrument would have been chargeable with stamp duty under … Scale 2 of head 1(1A), in the First Schedule.

(3) This subsection applies to the disposal of an original property of the applicant if -

(a) it is shown to the satisfaction of the Collector that the original property is disposed of by the applicant under an agreement for sale that is made within the period specified in subsection (5);

(b) it is shown to the satisfaction of the Collector that the original property is transferred or divested from the applicant under a conveyance on sale executed in conformity with that agreement; and

(c) the application for refund is made by the applicant not later than 2 years after the date of the applicable instrument, or not later than 2 months after the date of the conveyance on sale under which the original property is transferred or divested, whichever is the later.

(5) For subsections (3)(a) …, the following period is specified -

…

(b if the applicable instrument is an agreement for sale - 6 months after the date of the conveyance on sale executed in conformity with the agreement for sale.”

25.  It can be seen that there are 2 conditions which have to be satisfied in order to obtain a partial refund of stamp duty under s 29DF(2), namely: (i) subsection (3) applies to the disposal of the original property of the applicant; and (ii) “had the original property been disposed of before the subject property was acquired, the applicable instrument would have been chargeable with stamp duty under … Scale 2 of head 1(1A), in the First Schedule”.  I shall return to the second condition later in this judgment when I consider the issue of whether the Collector should have made a partial refund of the Enhanced ADV to Wang and Zhao (whether jointly or severally) under s 29DF in the circumstances of this case.

THE TENANTS-IN-COMMON ARGUMENT

26.  The Applicants’ whole case is built upon the premise that they purchased the Subject Property under the Acquisition Agreement as tenants-in-common, which, says Ms Kei, means that each of them acquired a separate and distinct 50% interest in the Subject Property.  This much, I believe, is not controversial.  As stated in Megarry & Wade, The Law of Real Property, 9^th Edition, at §12-010:

“Unlike joint tenants, tenants in common hold in undivided shares. Each tenant in common has a distinct share in property which has not yet been divided among the co-tenants. Thus tenants in common have quite separate interests. The only fact which bring them into co-ownership is that they both have shares in a single property which has not yet been divided among them. While the tenancy in common lasts, no one can say which of them owns any particular piece of land.”

27.  Of the four unities of a joint tenancy, the only unity which is essential to a tenancy is common is the unity of possession, meaning that each co-owner is as much entitled to possession of any part of the land as the others, and each cannot point to any part of the land as his or her own to the exclusion of the other(s) (see Megarry & Wade, at §§12-005 and 12-012).

28.  It does not, however, follow from the fact that Wang and Zhao acquired the Subject Property as tenants-in-common in equal shares that for the purpose of stamp duty, the Collector should regard the Enhanced ADV paid on the Acquisition Agreement as having been borne by each of them separately in equal shares, or the Refund Application as having been made by 2 separate entitles separately.

29.  In relation to the question of whether the Collector should have regarded the Enhanced ADV paid on the Acquisition Agreement as having been borne by Wang and Zhao separately in equal shares, my views are as follows:

(1)  It is trite that stamp duty is a charge on instrument, not transaction.  Under s 4(1), subject to the Ordinance, “every instrument, wherever executed, specified in the First Schedule shall be chargeable with the stamp duty specified in respect thereof in that Schedule, and the headings, notes and explanations in that Schedule shall have effect accordingly.” [emphasis added]

(2)  Under s 4(3), “[i]f any instrument chargeable with any stamp duty (other than buyer’s stamp duty) is not duly stamped in respect of that duty, the person or persons respectively specified in … the First Schedule as being liable for stamping such instrument with that duty …, shall be liable, or jointly and severally liable, as the case may be, civilly to the Collector for the payment of the stamp duty … and may be proceeded against without reference to any civil liability of such person inter se for the payment thereof.”

(3)  In Head 1(1A) in Schedule 1 to the Ordinance relating to agreement for sale chargeable with ad valorem stamp duty, it is expressly provided that the “Persons liable” for stamping the instrument are “All parties except a party who on the relevant date (within the meaning of section 29B(3)) does not know that the agreement affects that party, and all other persons executing”.

(4)  It is thus clear that both Wang and Zhao are jointly and severally liable to pay the whole of ad valorem stamp duty (ie the Enhanced AVD) chargeable on the Acquisition Agreement.  Neither can claim to be liable to pay only half of the stamp duty calculated by reference to the 50% share or interest in the Subject Property which he/she acquired under the Acquisition Agreement.

(5)  As a matter of fact, the Stamp Certificate issued by the Stamp Office in respect of the stamping of the Acquisition Agreement stated that a single payment of HK$8,709,950 was made.  There was no indication that Wang and Zhao each paid half of the said sum, or that the said payment was regarded as having been paid by Wang and Zhao separately in equal shares.

(6)  On behalf of the Collector, Ms Cheng fairly refers the court to s 10(2), which provides that an instrument “containing or relating to several distinct matters shall be separately and distinctly charged, as if it were a separate instrument, with stamp duty in respect of each of the matters”.  Ms Kei expressly states that she does not rely upon this subsection in support of her argument.  Anyhow, it seems to me to be clear that the Acquisition Agreement contains or relates to only one distinct matter, namely, the Subject Property.  Wang and Zhao’s respective interests in the Subject Property cannot, in my view, be regarded as two “distinct matters” contained in the Acquisition Agreement within the meaning of s 10(2) such that they should be separately and distinctly charged with stamp duty.

(7)  That this must be so is clear from a consideration of the statutory provisions relating to the charging of stamp duty at the lower rates (ie Scale 2) under s 29BB.  It will be recalled that under s 29BB(2)(b), in the case of a purchase of a single residential property by two (or more) purchasers, the benefit of the lower stamp duty rates would only be available if, on the date of acquisition of that property, (i) each of the purchasers is a HKPR acting on his or her own behalf, and (ii) each of those purchasers is not a beneficial owner of any other residential property in Hong Kong.  Take for example a purchase of a residential property by 2 HKPRs as tenants-in-common, one of whom (P1) is on the date of acquisition a beneficial owner of another residential property in Hong Kong, while the other (P2) is not.  If it is permissible to treat the interest acquired by each of the purchasers under the agreement for sale as a “distinct matter” for the purpose s 10(2), in the example mentioned above, it would be open to P2 to claim that the agreement for sale chargeable with stamp duty relating to his/her 50% interest in the property should be separately and distinctly charged, as if it were a separate instrument, with stamp duty at the lower rates.  This would plainly be contrary to the legislative intention of s 29BB(2)(b) that in such a scenario, the agreement on sale as a whole should be chargeable with stamp duty at the higher rates (ie Scale 1 - Part 1).

(8)  In my view, there is no basis either in law or in fact for treating the Enhanced AVD paid on the Acquisition Agreement as having been borne by each of Wang and Zhao separately in equal shares.

30.  In relation to the question of whether the Collector should have regarded the Refund Application as having been made by 2 separate entitles separately, my view are as follows:

(1)  The starting point is that Wang and Zhao submitted one single application to the Collector for a partial refund of the whole amount of HK$4,354,975 (being the difference between the Enhanced ADV paid on the Acquisition Agreement and the stamp duty that would have been payable on the Acquisition Agreement if it were chargeable under Scale 2), and not two separate applications each for HK$2,177, 487.5 (ie 50% of HK$4,354,975).

(2)  Neither did Want or Zhao suggest in their respective statutory declarations made in support of the Refund Application that he/she was making a separate refund application for HK$2,177, 487.5.

(3)  The statutory scheme for partial refund of stamp duty under s 29DF also does not support the contention that 2 (or more) purchasers purchasing a residential property as tenants-in-common may make two (or more) separate applications for refund each in respect of the interest in the property acquired by him/her under the relevant agreement on sale (assuming that the conditions for refund are otherwise satisfied).  In particular, subsection (2) refers to a refund of the “specified amount”, which is defined, in the case where stamp duty had been paid according to the Scale 1 - Part 1, to mean an amount equal to the difference between the stamp duty paid and the stamp duty that would have been payable on the relevant instrument if it were chargeable under Scale 2.  There is nothing to suggest that an applicant may apply for refund of a portion of the specified amount, or that the Collector has power to refund a portion of the specified amount to an applicant.

(4)  There is, in my view, no basis either in law or in fact for the Refund Application to be treated having been made by 2 separate entitles, or to be dealt with by the Collector as 2 separate applications by Wang and Zhao respectively.

31.  The Applicants’ reliance on the judgment of the Court of Appeal in Ngasi Sau Ying v Collector of Stamp Revenue [2019] 5 HKC 547 is misplaced.  In that case, the issue was whether 2 assignments of properties, one by a former husband to his former wife and the other vice versa, executed pursuant to an order of the Family Court in ancillary relief proceedings should be regarded as an exchange of properties within the meaning of s 25(7).  The Court of Appeal held that the principle that stamp duty was a charge on instruments and not on transactions did not mean that one should merely look at the form of the instrument and nothing else to decide on chargeability.  Instead, the proper approach was to ascertain the true nature, meaning and legal effect, or the true substance, of the transaction as effected by the instrument.  On the facts of that case, it was held that the true substance of the transactions effected by the two assignments was an exchange of two properties (with an equality consideration) within the meaning of s 25(7) such that the two instruments should be chargeable with stamp duty as provided for in that subsection (effectively on the equality consideration only).  In the present case, the true substance of the Refund Application is that it was a single application by Wang and Zhao for refund of the entire specified amount of HK$4,354.975 under s 29DF.  I do not see how the judgment of the Court of Appeal in Ngasi Sau Ying can advance the Applicants’ case here.

32.  In all, I consider that the Collector’s approach of treating the Refund Application as a single application by Wang and Zhao for partial refund of the Enhanced ADV paid on the Acquisition Agreement under s 29DF is correct in law.

APPLICATION OF SECTION 29DF TO THE FACTS OF THE PRESENT CASE

33.  Ms Kei has not seriously argued that, if the Refund Application should be treated as a single application by the Applicants, the conditions for refund under s 29DF(2) are satisfied.  I can therefore deal with this issue briefly.

34.  Whether the conditions for refund under s 29DF(2) are met in this case depends on the true construction of s 29DF.

35.  The court’s approach to the construction of a statute is now well settled.  The task is to ascertain the intention of the legislature as expressed in the language of the statute having regard to its proper context and purpose (see Chan Ka Lam v The Country and Marine Parks Authority [2020] HKCFA 33, at §§26-27).

36.  I have already alluded to the context and purpose of s 29DF in §§22 and 23 above, namely, to benefit those HKPRs who acquire a new residential property before disposing of their original one (“先買後賣”), or to “cater for the replacement needs of HKPRs”.  Nevertheless, the precise scope of the benefit available under s 29DF is a matter for the legislature.

37.  In Ho Kwok Tai v Collector of Stamp Revenue [2016] 5 HKLRD 713, at §§38-41 the Court of Appeal held that, upon its true construction, the hypothetical scenario envisaged in s 29DF(2)(b) (namely, had the original property been disposed of before the subject property was acquired, the applicable instrument would have been chargeable with stamp duty under Scale 2) could not be satisfied where the applicant was the beneficial owner of more than one residential property at the time of the acquisition of the new property.  The essential reasoning leading to that conclusion appears at §40 of the judgment:

“Coming back to the condition under Section 29DF(2)(b), it is clear, in our view, that the hypothetical scenario envisaged in that subsection cannot, generally, be satisfied in the situation where the applicant was the beneficial owner of two (or more) residential properties at the time of the acquisition of the new property and disposed of them within the specified statutory period. This is because, had one (or another) of his existing properties been disposed of prior to the acquisition of the new property, the applicable instrument (ie the agreement for sale pursuant to which the applicant acquired the new property) would still have been chargeable with stamp duty at the enhanced (Scale 1) ADV rates instead of the lower (Scale 2) ADV rates in view of the fact that he was, as a matter of fact, the owner of some other residential property or properties on the date of the acquisition of the new property. Moreover, even if the applicant should dispose of all his existing properties within the specified statutory period, if each disposal of an existing property by the applicant is considered separately or individually, in the hypothetical scenario referred to in Section 29DF(2)(b) the applicable instrument would not have been chargeable with stamp duty at the lower (Scale 2) ADV rates, and thus the condition under Section 29DF(2)(b) could not be satisfied.”

38.  Although in Ho Kwok Tai, there was only one purchaser (holding two properties on the date of acquisition of the subject property) under the relevant agreement for sale, I consider the above reasoning to be equally applicable to the situation where there were two purchasers (as tenants-in-common) of the subject property under the relevant agreement for sale and each of them was on the date of acquisition of the subject property a beneficial owner of a different residential property: had one (or another) of those properties held by the two purchasers been disposed of before the subject property was acquired, the agreement for sale would still have been chargeable with stamp duty under Scale 1, not Scale 2, because the condition in s 29BB(2)(b) (namely, the purchaser, or each of the purchasers, is not a beneficial owner of any other residential property in Hong Kong) could not be met.

39.  Further, at §41 of the judgment in Ho Kwok Tai, the Court of Appeal stated that “the expression ‘original property’ in Section 29DF is not intended to refer to more than one property”.  Since Wang and Zhao was each a beneficial owner of another, different, residential property (ie the 1^st Property and the 2^nd Property respectively) on the date of acquisition of the Subject Property, s 29DF has no application to their situation.

40.  In passing, I note that, as pointed out by Ms Kei and accepted by Ms Cheng, if, instead of entering into one agreement for the purchase of the Subject Property as tenants-in-common, Wang and Zhao each entered into a separate agreement with the vendor of the Subject Property for the purchase of a half share in that property, it may be that each would be entitled to obtain a partial refund of the stamp duty paid on his/her agreement under s 29DF.  There may also be other ways by which they could have arranged the transaction so as to avail themselves of the benefit of a stamp duty refund under s 29DF.  However, “there is no equity about a tax”, per Deputy High Court Judge To in Wong Tai Wai v Commissioner of Inland Revenue, HCIA No 2 of 2003 (unreported, 15 September 2003), at §8.  As this court pointed out in Yau Sun Yee, at §42, the true interpretation of a tax statute cannot be affected by the fact that there may be individual cases where a different interpretation would or could lead to what one may consider to a fairer result.

41.  In all, I consider that the Collector correctly applied Ho Kwok Tai in rejecting the Refund Application.

DELAY

42.  An application for leave to apply for judicial review of a decision of a public authority must be made promptly and in any event within three months from the date when grounds for an application first arose (Order 53, r 4(1) of the Rules of the High Court, Cap 4A).  The Collector rejected the Refund Application on 20 June 2017.  That was the date when grounds for the application to challenge the Collector’s decision first arose, and time for making an application for leave to apply for judicial review began to run as from that date.  In Ms Kei’s Skeleton Submissions dated 11 January 2021, she has sought to label the Collector’s letter dated 20 June 2017 as “Decision 1”, the Collector’s letter dated 19 July 2017 as “Decision 2”, the Collector’s letter dated 28 November 2019 as “Decision 3”, and the Collector’s letter dated 10 March 2020 as the “Final Decision”.  These labels cannot help the Applicants get around the time limit for making the present application for leave to apply for judicial review, because time began to run from the date when grounds for the application first arose, not from the date of the decision sought to be challenged (in this case the so-called “Final Decision”).  As this court stated in Nisa Azizan v Director of Immigration, HCAL 203/2015 (unreported, 15 April 2016), at §29: “An applicant cannot get around or avoid this time requirement by the device of asking the decision maker to ‘reconsider’ his decision by putting forward different arguments or providing additional information, still less by repeating the same arguments or relying on the same information previously advanced in support of the original application”.  See also Lo Siu Lan v Hong Kong Housing Authority, CACV 378/2004 (unreported, 17 December 2004), at §39; Super Lion Enterprises Ltd v Commissioner of Rating and Valuation, HCAL 71/2005 (unreported, 6 October 2006), at §128; Martin Tao Ming Lee v Secretary for Civil Service, HCAL 82/2010 (unreported, 8 August 2011), at §8; and E T Investment Limited v Director of Health, HCAL 13/2015 (unreported, 3 February 2016), at §§17-18.

43.  Where there has been delay in applying for leave to apply for judicial review, the court’s approach in deciding whether to grant an extension of time to the applicant to make the application is well established (see AW v Director of Immigration [2016] 2 HKC 393).  The court should take into account the following non-exhaustive list of factors: (i) length of delay, (ii) explanation for the delay, (iii) merits of the substantive application, (iv) prejudice, and (v) whether any question of general public importance is raised in the application.

(i)      Length of delay

44.  The delay in the present case is more 31 months. As stated by the Court of Appeal in AW, at §37(3)(iii), “[w]here an applicant is many months out of time, leave may be refused ‘however strong the complaint might otherwise be’… An Applicant who sleeps upon his rights may be barred from pursuing them in judicial review even though he may have a meritorious case”.

(ii)     Explanation for the delay

45.  None of the matters put forward by Ms Kei on behalf of the Applicants can amount to a good explanation for the delay: absence of legal advice, new legal arguments put forward by the Applicants’ lawyers (which it is said were “seriously” considered by the Collector), the Court of Appeal’s decision in Ngai Sau Ying (which, as earlier mentioned, I do not consider assists the Applicants’ case), and the COVID-19 pandemic (as a matter of fact, the Applicants made the application on 6 May 2020, less than 3 months after the Collector’s letter dated 10 March 2020).

(iii)    Merits

46.  For the reasons given above, I am of the view that the intended application for judicial review is not reasonably arguable, and has no realistic prospect of success.

(iv)    Prejudice

47.  The prejudice to the Applicants if time is not extended, and the prejudice to the Collector if the challenge is allowed to proceed out of time, are purely monetary.  It has not been suggested by Ms Cheng that there would be any detriment to public administration should the court grant an extension of time to the Applicants to apply for leave to apply for judicial review.  Bearing in mind the relative position of the Applicants and the Collector, it is clear that the monetary prejudice would be more significant to the Applicants than the Collector (representing the public revenue).

(v)     Question of general public importance

48.  The question of law raised in the present case is one of potential general application to the situation where 2 or more HKPRs purchase a residential property as tenants-in-common, which is not an uncommon situation in Hong Kong.  This factor would tend to favour an extension of time being granted to the Applicants.

49.  Having come to the view that the Applicants’ intended application for judicial review is not reasonably arguable, and has no realistic prospect of success, it is clear that the court should not grant any extension of time for the Applicants to apply for leave to apply for judicial review.

50.  Even if, contrary to my view, the intended application for judicial review is reasonably arguable, and has a realistic prospect of success, the merits are not strong.  The delay in the present case is very substantial, and there is no good explanation for the delay.  Notwithstanding the other two factors (prejudice and question of general public importance) being in the Applicants’ favour, I would decline to exercise my discretion to grant any extension of time to the Applicants to make the present application for leave to apply for judicial review in the overall circumstances of this case.

DISPOSITION

51.  The application for leave to apply for judicial review is dismissed.

52.  The principles governing an award of costs in an unsuccessful application for leave to apply for judicial review are well settled (see Leung Kwok Hung v President of the Legislative Council (No 2) (2014) 17 HKCFAR 841, at paragraph 17), and do not have to be repeated here.  I consider that the Applicants should pay the costs of the Collector in this case, because (i) the Collector filed evidence and attended the rolled-up hearing pursuant the court’s directions, and has provided substantial and helpful assistance to the court; (ii) the Applicants have effectively had a hearing on the merits of their intended application for judicial review, and (iii) the Applicants have substantially delayed in making the present application.  I make an order that the Applicants shall pay the Collector’s costs of this application, including the costs of the hearing on 25 January 2021 and all reserved costs (if any), to be taxed if not agreed, with certificate for one counsel.