THEE COMMISSIONER OF INLAND REVENUE v. YEUNG KWOK YING

HEAD NOTE

                A discretionary power of stay or other qualification cannot be read into section 77 of the Inland Revenue Ordinance, which imposes a mandatory duty to issue a "stop order" directing the Commissioner of Police to stop a tax-payer from leaving Hong Kong upon the receipt of a certificate from the Commissioner of Inland Revenue to the effect that the tax-payer is about or likely to leave Hong Kong without paying all tax assessed upon him. The issue of the order is not a true judicial act in the sense of an adjudication on the merits after an ex parte or adversary hearing but merely putting a judicial stamp on an administrative act.

                 The District Court is only concerned with the immediate enforcement of payment of taxes not with the merits of the assessment. The tax-payer must pay first to leave Hong Kong once such a stop order is issued. His remedy lieswith sections 64, 68 and 69 the last of which empowers the High Court to annul the assessment and order repayment to him should the assessment be held wrong.

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

MISCELLANEOUS PROCEEDINGS

ACTION NO. 477 OF 1983

___________________

BETWEEN

__________________

___________________________________

REASONS FOR RULING - EX TEMPORE

___________________________________

1. As refined by Mr. Hingorani, this application in essence is for a review of an order made by my brother Cameron (who is now on overseas leave) whereby he directed the Commissioner of Police to stop the Respondent from leaving the Territory under Section 77 of the Inland Revenue Ordinance. What I am in effect asked is to put a stay of the "stop order" to a time after the Respondent's return to Hong Kong so that he might leave for England to assist Counsel in the preparation and conduct of a murder appeal.

2. The amount of taxes outstanding is in dispute between the Commissioner of Inland Revenue and the Respondent.

3. Section 77 under which the stop order was issued stands on its own with no direct cross-reference to any of the other sections of Cap. 112 nor any other statutory provisions. The main issue before me turns on Section 77 itself.

4. It is submitted by Mr. Hingorani that I am entitled to look at not only the circumstances made known to Judge Cameron but also those which were not and now brought to my attention in the affidavit of the Respondent.

5. Mr. Winffield submitted that I cannot, and he went so far as to say that in the circumstances of this instant case the only way the Respondent can leave Hong Kong is to pay up the taxes outstanding albeit in dispute.

6. Mr. Hingorani further submitted that had the facts as disclosed in the said affidavit been made known to Judge Cameron, he could have put a stay or at least a time factor on and thus qualify the order that he made. Ingenious as it may be, I do not think Mr. Hingorani's argument can hold ground. Had that been the intention of the Legislature to confer a discretionary power on a Judge making an order under Section 77, it would have been expressly provided for. In its absence, it must not be taken and it must not be read into Section 77 that such a power was intended. In Federal Steam Navigation Co. Ltd. v. Department of Trade and Industry [1974] 2 All E.R. 97 at 100, Lord Reid categorically lucidly stated the law:

"        Cases where it has properly been held that a word can be struck out of a deed or statute and another substituted can as far as I am aware be grouped under three heads: where without such substitution the provision is unintelligible or absurd or totally unreasonable; where it is unworkable; and where it is totally irreconcilable with the plain intention shown by the rest of the deed or statute."

7. The issue can be narrowed down to whether without reading into Section 77 what I am invited to, would Section 77 in its strict interpretation be absurd or totally unreasonable. I think not. Standing on its own the section was not intended to be a purely 100% judicial act in the sense of an adjudication resulting in a judicial decision after an adversary hearing under our system. It was in truth a judicial act which is required by the law-makers to put a judicial stamp on an administrative function. No hearing was intended and perhaps Mr. Wiffield was right when he submitted that it was not in the nature of an ex parte application. The closest example to it would be a Closer Order made by District Court on the application of the Building Authority under Section 27 of the Building Ordinance. Like under Section 77, the Court is not given the power of qualifying or modifying the order from what it is statutorily required to order in its prescribed manner.

8. One could argue, of course, there was greater urgency in the Closer Order than a stop order under Section 77. However, the "judicial-stamp" characteristic of the order is common in both. It was made entirely on the strength of an opinion given by the Executive Branch of the Government. Upon such opinion or information it was mandatory on Judge Cameron to make it. He was not to query, let alone question, the propriety or the correctness or even the fairness of the information or opinion supplied.

9. I was a little worried about the lack of right of challenge by the Respondent to such an order made as it would appear that Mr. Winffield is right that the only way the Respondent can leave Hong Kong now was to pay up the taxes first. However, as rightly pointed out by him the Court in this context is required to deal with the enforcement aspect of Inland Revenue and not the merits aspect of it. It is comforting to note Sections 64, 68 and 69 of the Inland Revenue Ordinance which empowers the High Court ultimately to annul an assessment by the Commissioner if it is found legally incorrect. A District Judge is not concerned with that. It is the function of a High Court Judge. Our law is such that a tax payer must now pay up whatever taxes assessed before he can leave the Territory when an order under Section 77 has been obtained. The Court, at least the District Court, is not entitled to question the validity of the Commissioner's judgment in his decision to obtain a stop order. Of course, if the tax payer, the Respondent in this case, ultimately wins his law suit against the Commissioner if there be one, what he has paid up will be refunded to him, perhaps with costs and interest. I am convinced that I should not and I cannot read into Section 77 so that I may review my brother's order by putting a stay on it. For the above reasons this application is refused. I shall hear the Counsel on the matter of costs.