WONG YU CHO ROLLY t/a MARCO POLO AND CHINA OVERSEA TECHNICAL DEVELOPMENT v. INLAND REVENUE DEPARTMENT

HCMP 599/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 599 OF 2007

(ON AN INTENDED APPEAL FROM HCAL 15 OF 2007)

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D E C I S I O N

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Extension of time to appeal

1. The applicant applied before Saunders J for leave to commence judicial review proceedings against the Inland Revenue Department (‘IRD’).  The judge refused to grant leave on 1 March 2007. 

2. On 28 March 2007 the applicant applied for an extension of time to appeal against the decision of the judge. 

3. The applicant first appeared before me on 11 May 2007.  He was not legally represented.  I explained to him that as he was asking for an extension of time he needed to address the following issues :

(1)	the length of the delay;
(2)	the reason for the delay;
(3)	the merits of his application; and
(4)	prejudice to the other party if extension of time was granted to him.

4. As the applicant’s affirmation in support did not contain any of these matters, I adjourned the hearing to enable him to file a further affirmation to address these matters.  The applicant filed two further affirmations on 30 May 2007 and 12 July 2007 respectively.  He further submitted a written submission for the hearing. 

Time to appeal

5. Under Order 53, rule 3(4) of the Rules of the High Court, when the application for leave to apply for judicial review is refused by a judge, the applicant may appeal against the judge’s order to the Court of Appeal within 10 days after such order. 

6. Under the rules the applicant should have filed his notice of appeal on 11 March 2007.   The application for extension of time was only taken out on 28 March 2007.  The delay cannot be described as a short one. 

7. The explanation given by the applicant for the delay was that he was advised by the Resource Centre for Unrepresented Litigants in the High Court that he had 21 days to appeal against the judgment.  Relying on the information he did not file the appeal within 10 days. 

8. I accept that if the applicant was so advised, then he has given a satisfactory explanation for the delay in lodging the appeal. 

Merits of the case

9. However, the most relevant factor to be considered in this application is whether the applicant has a meritorious case to apply for judicial review. 

The applicant’s case

10. The applicant’s case is based on four grounds :

(1)	wrongful assessment of taxation by the IRD;
(2)	trespass on 24 August 2001 by officers of the IRD;
(3)	the freezing of the applicant’s bank accounts pursuant to section 76(1) of the Inland Revenue Ordinance on 16 August 2004; and
(4)	failure by the IRD to adhere to directions given by the District Court on 21 December 2006.

Background of the case

11. The applicant had been engaged in litigation with the IRD for many years.  The earliest action was commenced by the applicant on 26 August 2004 in the District Court, namely, DCCJ 4492 of 2004.  Under this action the IRD obtained default judgment in respect of its counterclaim in the sum of $831,600 together with interest and costs.  H H Judge Chow dismissed the applicant’s application to set aside the default judgment. 

12. Judge Chow further refused to grant the applicant leave to appeal.  Further application for leave to appeal was dismissed by the Court of Appeal (Yuen JA and Tang JA (as he then was)) on 7 March 2006 in HCMP 2032 of 2005.  The background can be gleaned from the judgment of this Court on 7 March 2006.  This is what the court said :

‘	Plaintiff’s tax position
	4.	The brief background of this application is that the Plaintiff was the sole proprietor of certain businesses.  He failed to file tax returns for the years of assessment 1996/1997 and 1997/1998.  In the absence of returns, the Commissioner of Inland Revenue issued certain notices of assessment for those years.
	5.	The Plaintiff objected to those assessments in writing.  However, since he failed to substantiate the objections by tax returns, his objections were invalid (s.64(1)(b) Inland Revenue Ordinance) and the Commissioner’s assessments became final and conclusive (s.70 IRO).
	6.	The Commissioner therefore issued a Notice for Recovery of Tax in the total sum of $831,600 on 16 August 2004 which was served on the Plaintiff’s banks (s.76 IRO).
	Plaintiff’s claim in DCCJ 4492/2004
	7.	On 26 August 2004, the Plaintiff (acting in person) issued proceedings in the District Court against the Inland Revenue Department (DCCJ4492/2004) in which he sought the following relief:
		-	"compensation for the loss of my convenience, honour and right, the damage to my goodwill & reputation and violation to my privacy caused by the above-mentioned actions by the defendant; and
		-	withdraw the above notice of tax assessment and demand for tax for both companies; withdraw the Notice for Recovery of Tax issued on 16 August 2004 and restore all my rights to my bank accounts;
		-	costs;
		-	damages;
		-	special damages;
		-	further or other relief".
	Counterclaim
	8.	On 24 September 2004, the Defendant filed a Defence and Counterclaim.  In the Counterclaim, the Defendant claimed tax in the total sums of $831,600, together with interest, further or other relief and costs.
	9.	On 18 October 2004, the Defendant issued a notice to the Plaintiff that it would enter judgment in default of defence to the Counterclaim.
	10.	The Plaintiff says that the next day, 19 October 2004, there was a threat to kidnap members of his family.
	Summons for time to file Defence to Counterclaim
	11.	On 20 October 2004, the Plaintiff issued a summons for an extension of time to file a Reply and Defence to Counterclaim within 14 days.
	12.	The summons for time was heard before Master Ko in the District Court on 27 October 2004.  The Plaintiff appeared in person and Mr Ho Chi-sum, senior government counsel, appeared for the Defendant.  According to the master’s notes, the Plaintiff asked for 28 days to file the Reply and Defence to Counterclaim to which Mr Ho made no objection.  The master therefore made an order in terms of the summons but giving the Plaintiff 28 days to file the Reply and Defence to Counterclaim instead of the 14 days originally sought in the summons.
	Default judgement on Counterclaim
	13.	No Reply and Defence to Counterclaim was filed within the 28 days which expired on 24 November 2004.
	14.	On 30 December 2004, the Defendant entered judgment on the Counterclaim in default of defence.
	Summons to set aside default judgment on Counterclaim
	15.	On 17 January 2005, the Plaintiff issued a summons to set aside the default judgment.
	16.	The Plaintiff alleged in an affirmation filed on 17 January 2005 that at the court hearing on 27 October 2004 he had informed the master of the kidnap threat and he had also shown to Mr Ho outside the courtroom police statements regarding the kidnap threat.  The Plaintiff alleges he asked and Mr Ho orally agreed "to temporary set aside of DCCJ 4492 of 2004 until I give him further notice to proceed further with the matter ...".  The Plaintiff alleges that he had posted a letter the following day (28 October 2004) to Mr Ho confirming the agreement to "temporarily put aside this case until my further notice to you".  Accordingly the Plaintiff says the Defendant was not entitled to enter default judgment as that was in breach of the agreement.
	17.	The Plaintiff also alleged in the affirmation that he had a strong case against the Counterclaim as he had on 15 April 2004 filed his tax returns for (amongst other things) the years in question (1996/1997, 1997/1998).  As the tax returns showed losses, he was not liable to pay any tax for the years in question.
	18.	Mr Ho filed an affirmation in opposition on 15 February 2005 exhibiting a transcript of the hearing before Master Ko which showed clearly that the Plaintiff had only asked for 28 days to file the Reply and Defence to Counterclaim, and that Mr Ho had in fact warned the Plaintiff that if the Defendant did not receive the pleading after 28 days, it would enter judgment.  Mr Ho denied having received the letter dated 28 October 2004.
	19.	As for the tax position, a letter from the Defendant dated 13 September 2004 indicated that even as at that date, no tax returns for the years in question had been provided and certain documents allegedly sent by the Plaintiff had not been received.  As such the tax assessments became final and conclusive under s.70 IRO.
	20.	The Plaintiff filed an affirmation in reply on 1 March 2005 in which he said, amongst other things, that the letter dated 28 October 2004 amounted to written notification to the Defendant that he needed further time, as he indicated at the hearing before the master the day before that he might do if there were any problems after he had made arrangements.
	Judge Chow’s decision not to set aside default judgment
	21.	This was the state of the evidence before Judge Chow when he heard the Plaintiff’s summons to set aside the default judgment.
	22.	In a written decision handed down on 20 June 2005, the judge dismissed the summons.  It is this decision that is the subject of the present application for leave to appeal.’

13. The Court refused the applicant’s application for leave to appeal against the decision of Judge Chow. 

The present application

14. In this application the applicant repeats his disputes with the IRD concerning his tax assessment and the alleged agreement that he had entered into with the counsel for IRD in the District Court action.  However, these are the subject matters of DCCJ 4492 of 2004 of which adjudication had been made and leave to appeal was refused.  In the circumstances I really cannot see how the applicant can re-open the same subject matter again by way of judicial review.  Hence his reliance on grounds 1 and 3 is clearly not sustainable. 

15. In respect of his allegation for trespass, as Saunders J had pointed out in his judgment, the applicant had commenced another District Court action against the IRD namely, DCCJ 5016 of 2005 for damages for trespass.  This dispute must be litigated in that action and not by a fresh judicial review proceedings.  Hence this particular ground is also not sustainable.

16. In respect of the failure by the IRD to adhere to court directions, the allegation by the applicant was that the court had directed the parties to negotiate and the IRD had failed to comply with this request, specifically the IRD had failed to respond to the applicant’s proposal dated 27 December 2006.  As pointed out by Saunders J, the IRD has the right to refuse to negotiate with the applicant, this cannot be the ground for judicial review. 

Conclusion

17. The applicant has not demonstrated that his application for judicial review should be allowed to proceed. 

18. In the circumstances I would not grant the applicant extension of time to appeal.