CHAN GAN LAN v. THE DIRECTOR OF LANDS

[English Translation – 英譯本]

LDGA 3/2001

-------------------------------------

-------------------------------------

----------------------

JUDGMENT

----------------------

1. The present case involves the question whether the land known as Lot No. 41 on Ground Floor of No. 15 Ha Tsuen Shi, Yuen Long, New Territories (“the Lot”) is exempted from Government rent.

2. The Appellant Mr Chan Gan Lan is the owner of the Lot and also an indigenous inhabitant of the New Territories.  The documents provided by Mr Chan show that the Lot was transferred to him by his father Mr Chan Chun Cheung by way of assignment on 28 September 1990.  The relevant assignment indicates that Mr Chan Gan Lan did not have to pay his father any purchase price for the said Lot.  It can therefore be said that the assignment operated as a deed of gift, transferring the Lot to Mr Chan Gan Lan on 28 September 1990.

3. At the hearing of this appeal, Mr Chan Gan Lan also informed the court that his father Mr Chan Chun Cheung is still alive and that Mr Chan Chun Cheung has two sons besides Mr Chan Gan Lan.

4. That Mr Chan Gan Lan and Mr Chan Chun Cheung are indigenous inhabitants is not disputed by the Respondent.

5. Regarding the application for exemption from liability to pay Government rent, the Director of Lands notified Mr Chan Gan Lan by letter of 31 January 2001 that the application was rejected, which means that the Lot could not be exempted from Government rent.  The Director of Lands set out the reasons for his decision in the said letter, and I quote the relevant passage below:

You acquired the said Lot or property after 30 June 1984.  However, you did not acquire the Lot or property by means of succession in the male line.  Therefore, pursuant to section 6 of the Government Rent (Assessment and Collection) Ordinance, the said land is not exempted from Government rent, and the amount payable annually is 3% of the rateable value.

The letter also stated that, if Mr Chan was dissatisfied with the above decision, he could appeal to the Lands Tribunal.

6. On 5 February 2001, Mr Chan Gan Lan appealed to this Tribunal against the said decision of the Director of Lands.  The ground of appeal is that Mr Chan is an indigenous inhabitant and the said Lot is a gift for him from his father.

7. The relevant legislation is the Government Rent (Assessment and Collection) Ordinance, Cap. 515 of the Laws of Hong Kong (“the Ordinance”).  Section 6 of the Ordinance provides that, subject to section 4 of the Ordinance, all lessees are liable to pay, by way of Government rent, to the Commissioner of Rating and Valuation in accordance with the Ordinance an annual rent of an amount equal to 3% of the rateable value of the land leased. 

8. The key issue in the present case is whether section 4 of the Ordinance, which provides for exemption from liability to pay Government rent, is applicable to Mr Chan Gan Lan’s case.  I refer to the following relevant provisions under section 4:

(1)        Subject to other provisions of this section, an exemption from liability to pay Government rent applies to an interest held under ―

(a)     an applicable lease of a rural holding that an indigenous villager held on 30 June 1984;

…

and ―

(i)      which the indigenous villager continues to hold; or

(ii)     which ―

(A)    has not since its ceasing to be held by the indigenous villager been conveyed to any person who is not a lawful successor in the male line of the indigenous villager; and

(B)    continues to be held by a person who is a lawful successor in the male line of the indigenous villager.

Section 4(7) provides as follows:

An exemption from liability to pay Government rent in respect of an interest held under an applicable lease ceases on the transfer of the interest unless ―

(a)     the transferee applies to the Government in the form issued by the Director [of Lands] for the recognition of the right to an exemption from liability to pay Government rent in respect of the interest; and

(b)    the Director [of Lands] is satisfied that the interest continues to be eligible for the exemption in the terms of this section.

Section 4(8) provides as follows:

If an exemption from liability to pay Government rent ceases to apply to an interest held under an applicable lease, the rent payable in respect of that interest under the lease is the Government rent payable under section 6.

Section 4(11) provides as follows:

A person who is aggrieved by the decision of the Director [of Lands] may appeal to the Lands Tribunal under section 26.

9. In the present case, I understand the Respondent has agreed that the Lot was held by an indigenous villager on 30 June 1984 and is an applicable lease of a rural holding.  The question is whether the Appellant is able to prove that his interest falls within the ambit of section 4(1)(ii)(A) and (B) of the Ordinance, which provide that, for the exemption to apply, the relevant interest must be held by a lawful successor in the male line of the indigenous villager.

          The term “lawful successor” is defined in section 2 of the Ordinance as follows:

‘lawful succession’ means succession whether testate or intestate or in accordance with Chinese customary law operating in the New Territories and includes a succession on a succession;

‘lawful successor’ means a person, male or female, who on the death of an indigenous villager is or becomes entitled to an interest in the estate of the deceased by lawful succession and which person is a descendant through the male line of the deceased.

10. In fact, there is no provision in the Ordinance which expressly provides that the right to an exemption only applies to an indigenous inhabitant who has acquired the relevant interest by means of succession.  Although the Ordinance defines “lawful successor” as “a person […] who on the death of an indigenous villager is or becomes entitled to an interest in the estate of the deceased by lawful succession”, this definition is only pertinent to the identity of a lawful successor and does not require that the interest on the relevant lot to be transferred to the lawful successor by means of lawful succession.  Neither do section 4(1)(ii)(A) and (B) expressly provide that the successor must acquire the interest that he holds by means of lawful succession.

11. Nevertheless, I still have to consider whether the Applicant’s case satisfies the requirements of paragraphs (A) and (B).  In other words, I have to consider whether the Appellant can properly be described as “a lawful successor in the male line of the indigenous villager”.

12. In this respect, the Appellant faces a temporal difficulty.  At present, the Appellant cannot be described as “a lawful successor in the male line” because, on his own submission, his father is still alive, which means that his father is still entitled to alter his right to succeed to his father’s estate.  This is to say, his father may make a will at any point of time, granting the right to succeed to his estate to any person who may or may not be the Appellant.  A definite answer to this question will not emerge until after his father passes away.

13. In light of this, the Appellant cannot at this moment be regarded as a lawful successor in the male line of his father.  And as at the date of the transfer of the Lot, the Appellant could not be described as a lawful successor of his father.  This Tribunal in fact made the same conclusion on the same issue in a previous case: see the judgment dated 11 September 1998 in Tsang Wo-pong v Director of Lands, LDGA 4 of 1998.

14. As the Appellant cannot be regarded as “a lawful successor in the male line” whether at present or at the time of transfer of the Lot, the interest on the Lot cannot, in my view, be described as one which “continues to be held by a person who is a lawful successor in the male line of the indigenous villager”; in other words, the interest fails to meet the requirement of section 4(1)(ii)(B).  Furthermore, at the time of the transfer, the Lot was not assigned to a lawful successor in the male line of the relevant indigenous villager, and therefore the interest on the Lot also fails to meet the requirement of section 4(1)(ii)(A).

15. For the above reasons, I hold that the Appellant cannot be exempted under section 4 of the Ordinance from liability to pay Government rent.  Pursuant to section 4(8), the Appellant has to pay Government rent in respect of the Lot.

16. The Appellant’s appeal has to be dismissed accordingly.