WONG WING WAH v. COLLECTOR OF STAMP REVENUE

DCSA 97/2016

[2020] HKDC 336

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

STAMP APPEAL NO. 97 OF 2016

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D E C I S I O N

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Introduction

1.  By summons dated 21 January 2020 (“the Summons”), Madam Wong applies for leave to appeal against the decision of this court dated 8 January 2020 (“the Decision”) whereby this court dismissed her appeal against a stamp duty assessment made by the Collector of Stamp Revenue (“the Collector”). In this decision, I shall adopt the abbreviations used in the Decision and rely on the background facts stated therein.

2.  The general principles and the statutory requirements under section 63A(2) of the District Court Ordinance, Cap 336 relating to this kind of applications are trite and need no citation here. I should also bear in mind that it must be shown that the appellant has an arguable case with a reasonable prospect of success and leave to appeal should not be lightly granted: SMSE v KL [2009] 4 HKLRD 125 at §17 per Le Pichon JA.

4  Grounds

3.  In her draft Notice of Appeal, 4 grounds are included. In his skeleton submissions, Mr Lam, for Madam Wong, elaborates on the 4 grounds as follows:

Ground 1:  Whether in the exercise of the government’s right to legislate on tax under Article 108 of the Basic Law to levy BSD, the individual’s right to acquire property under Article 105 would be engaged.  This question involves two sub-questions:

(a)  whether Weson Investment Ltd v Commissioner of             Inland Revenue [2007] 2 HKLRD 567, which is a   case on the right to compensation for deprivation of             property under Article 105 of the Basic Law, applies to the right to acquire; and

(b)  whether Weson was correctly decided.

Ground 2:  If so, whether imposition of BSD infringes the individual’s right to acquire property under Article 105;

Ground 3:  If so, whether the infringement is proportional or not; and

Ground 4:  If so, as a conclusion, whether the imposition of BSD on a HKPR trustee for a HKPR buyer is invalid as inconsistent the Basic Law and the Collector has no authority to collect the BSD from Madam Wong.

Major reasons in the Decision

4.  Before I deal with each of these 4 grounds in turn, by way of background, I first summarise the reasons why I dismissed Madam Wong’s appeal.

5.  The fundamental issue identified by Mr Lam when arguing Madam Wong’s appeal is whether Article 105 is engaged. If not, her appeal falls to be dismissed.

6.  In the first place, I followed Weson, albeit concerning a different right under Article 105, and held that Article 105 has no application to legitimate taxation including BSD.

7.  I further held that the imposition of BSD cannot be characterized as a restriction on or an interference with individuals’ right to acquire property under Article 105.

8.  Therefore, I concluded that Article 105 is not engaged. I refused to discuss the correctness of Weson, which is binding on this court, for obvious reasons.

9.  I also refused to discuss the proportionality test in light of the conclusion I had reached.

Analysis

Ground 1

10.  This ground was argued in the appeal. It was actually a challenge to the relevance and the binding effect of Weson and I dealt with this in the Decision.

11.  This court expressly accepted Mr Lam’s submission that the present case and Weson are about different rights under Article 105. The former purportedly concerns the right to the acquisition of the property whilst the latter concerned the right to compensation for lawful deprivation of the property.  Nevertheless, I concluded that the distinction is without a difference: see §29 of the Decision. 

12.  In Weson, the plaintiff’s case was that on the basis that the demand for payment of tax despite an unresolved objection was lawful and the individual had been required to pay tax and no interest was paid on the return of that money, there had been a lawful deprivation of the property and, thus, he should be entitled to compensation pursuant to Article 105.  Rogers VP (with whom Le Pichon concurred) held that Article 105 has no application to legitimate taxation: §18.

13.  This is the ratio of Weson and is binding on this court. I believe that it is of general application to all the rights enshrined in Article 105 including the right to acquisition of property.

14.  Both Rogers VP and Tang VP referred to and relied on Australian Tape Manufacturers Association Ltd & Others v Commonwealth of Australia (1993) 176 CLR 480. Mr Lam submits that this authority has little bearing on the present case as it involved a different constitutional right, i.e. the government’s right of acquisition of the property on just terms. His observation is correct but I do not think this would curtail the general applicability of the ratio in Weson.

15.  For completeness, I should point out that Tang VP (as he then was) reached the same conclusion via a different route. The judge was of the view that suing for tax by action or for example, the recovery of a penalty or fine by action, even if it subsequently turned out to be wrong cannot amount to or come within the scope lawful deprivation (expropriation) under Article 105 at all: §79. He then held that unless the taxation scheme cannot be regarded as genuine, but was in fact a disguised expropriation of the property, Article 105 has no application: §85.

16.  On the other hand, it is not open to this court to say that Weson was wrongly decided and grant leave to appeal on that basis.

17.  Mr Lam merely repeats his arguments here by Ground 1 and I do not think it is reasonably arguable. All other 3 grounds become irrelevant and must be rejected as a result. I should, however, briefly dispose of them.

Ground 2

18.  As submitted by Mr Lam, this ground is relevant only if Ground 1 succeeds. Given my foregoing assessment of the merit of Ground 1, Ground 2 is irrelevant and strictly speaking I need not deal with this ground.

19.  In any event, for this ground, Mr Lam rehashes his argument that the imposition of stamp duty or BSD does constitute a restriction on or an interference with the right to acquire property and supports this argument with some examples showing how BSD could affect an individual’s affordability of acquiring a particular property. I believe I have sufficiently dealt with this argument in the Decision: see §§30-33 of the Decision.

Ground 3

20.  Again, Mr Lam accepts that this ground is relevant only if Grounds 1 and 2 succeed. It is, therefore, not relevant.

21.  I should just point out that on the authority of Weson, legitimate taxation under Article 108 is not really subject to an overriding requirement of proportionality stemming from Article 105: §26 per Rogers VP. 

Ground 4

22.  Mr Lam submits that this ground is merely a conclusion following from Grounds 1, 2 and 3 if they succeed.

23.  It is not a freestanding ground and by reason of my foregoing conclusions, I find no merit in it.

Conclusion

24.  None of the 4 grounds advanced has any merit and I am not convinced that the test set out in section 63A(2) of the District Court Ordinance has been met. I, therefore, dismiss the Summons and refuse to grant Madam Wong leave to appeal.

25.  There is no reason why costs should not follow the event. I make an order nisi that Madam Wong should pay the Collector his costs of and occasioned by the Summons forthwith, to be taxed if not agreed.