LEE MA LOI v. COMMISSIONER OF INLAND REVENUE AND ANOTHER

1991, MP No.2936

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J U D G M E N T

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1. This is an application by the Commissioner of Inland Revenue ("the Commissioner") to stay proceedings under an order of the court made on 12th December 1991, pending the outcome of the Commissioner's appeal to the Court of Appeal.

2. The Commissioner has given due notice of appeal to the Court of Appeal. The appeal is listed to be heard on the 20th and 21st May 1992. (I should note that the order under appeal contains a clerical error.. I have already directed that that be corrected under the provisions of 0.20, r.11. The order of 12th December 1991 requires to be amended by the insertion of the words "IT IS" before the words "that the appellant" in the second paragraph of the order and for those words to be treated as the words commencing a new paragraph.)

3. The Commissioner, if successful on this application, is prepared to give an undertaking to prosecute the appeal with a11 due diligence and an undertaking to concur in any application which may be made by the applicant to expedite of the hearing of the appeal.

4. The order dated 12th December 1991 was an order declaring that the applicant was entitled to have returned to him a sum of $1,200,000.00. The Commissioner's grounds for making the application for a stay are set out in the affidavit in opposition to that application filed on behalf of the applicant himself (this is an affidavit made on 29th January 1992 of a Mr John Pickavant, the solicitor who has the conduct of the matter on behalf of the applicant).

5. Mr Pickavant, in paragraph 8 of his affidavit, says this :-

"8. What might possibly result from the return of the money is an inability on the part of the Commissioner to look to the seized sum of $1,000,000 (I believe $200,000 has ralready been repaid) as the source of payment of any final tax liability of the Applicant, assuming the money is returned to him and lost and he is ultimately assessed and determined to owe as tax a sum which exceeds his ability at the time to pay. Should the Court of Appeal decide that the Commissioner was entitled to seize the sum of $1,200,000 (or that the Applicant is not entitled to be granted relief in respect of the unauthorised seizure thereof) and the Applicant, having received the sum of $1,000,000 under the Order of this Court, dissipates that money, a subsequent determination under Part XI of the Ordinance, by the Commissioner (or by the Board of Review on appeal) that tax is owing may be unenforceable, assuming the Applicant has no other assets."

On behalf of the Commissioner, what Mr Pickavant says there is adopted. I am urged in addition to recall the following matters.

6. In the judgment which I delivered in these proceedings and which led to the order of 12th December 1991, I expressed the view that the applicant "was plainly a liar". The tenor of my judgment was that the applicant was untrustworthy. It was said that he has been in the habit of hiding himself and his money and is to be expected (if it suits him) to do so again. It was said that he lives on a boat and is accordingly mobile and able to escape from the reach of the Inland Revenue and of this Court more easily than others; and that he has or must have connections on the mainland. For all these reasons, the Commissioner says there is a serious risk that his appeal would be nugatory. If successful, it might be found that the money was not there to be repaid.

7. In my judgment, these concerns of the Commissioner are well-founded. I will therefore grant this application for a stay of proceedings under the Order of 12th December 1991, unless and until I am satisfied that he can be otherwise properly protected. If the applicant can provide proper security for the repayment of the money to the Commissioner in the event of the Commissioner's appeal made under the Order of 12th December 1991, pay the $1,000,000 to the applicant.

8. There is a long-standing practice under which a defendant on his appeal may be ordered to pay money due from him to the plaintiff, the plaintiff giving security for repayment of the money to the, defendant if the appeal is successful : see the Supreme Court Practice 1991, Vol.1, 59/13/2.

9. Following a suggestion made from the Bench, Mr Darwyne for the applicant in the present case has indicated that the applicant is prepared to provide proper security for repayment of the $1,000,000 to the Commissioner if the Commissioner's appeal is successful.

10. In my judgment, it would be proper to give the applicant an opportunity of providing that security to the satisfaction of the court. I shall therefore stay all proceedings under the Order of 12th December 1991, for the reasons I have given; but I shall reserve to the applicant liberty to apply to the Court, on giving proper security for repayment to the Commissioner of the $1,000,000 (if the Commissioner's appeal is sucesful), for a lifting of the stay and for an order supplemental to the Order of 12th December 1991 ordering the Commissioner to repay the money to the applicant.

11. It will be up to the applicant to launch the appropriate application for removal of the stay and to tender, in support of that application, proper security to the satisfaction of the Court as the price of having the stay lifted.

12. In summary then, as of today, the stay will be granted. But, as soon as the applicant can get his tackle in order, he is to be at liberty to apply for the stay to be lifted upon provision of proper security to the satisfaction of the court.

13. Since the Commissioner's application for a stay has succeeded (although it was opposed) I propose to order that the costs of the Commissioner of this application should be taxed (if not agreed) and paid by the applicant to the Commissioner. The costs of any subsequent application by the applicant to lift the stay will be dealt with by the master or the judge before whom that application comes.