DIAMOND DRAGON FINANCE CO v. THE COLLECTOR OF STAMP REVENUE

DCSA 4/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL JURISDICTION

STAMP APPEAL NO. 4 OF 2004

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Decision

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1. This is an application by the Appellant Diamond Dragon Finance Company against The Collector of Stamp Revenue for an order that leave be granted to the Appellant to appeal against the adjudication of the Respondent by way of a Notice of Assessment and Demand dated 1st September 2003 out of time. The application is made under section 14 (5B) of the Stamp Duty Ordinance Cap 117 (hereinafter referred to as "the Ordinance").

2. Section 14 (1) of the Ordinance states:

"(1) Any person who is dissatisfied with the assessment of the Collector under section 13 may-

(a) within a period of 1 month from the date on which the assessment is made or within such further period as the court may allow under subsection (5B)

(b) . . ."

3. Section 14 (5B) of the Ordinance states,

"(5B) Where the court, on an application made by a person who is dissatisfied with an assessment of the Collector under section 13, is satisfied that the person was prevented by illness or absence from Hong Kong or other reasonable cause from bringing an appeal within a period of 1 month from the date on which the assessment is made in accordance with subsection (1), the court may by order allow the appeal to be brought within such further period as it may consider appropriate."

4. The Appellant stated that the basis for it to apply for extension of time is that there was reasonable cause for the delay. The Appellant's solicitor admitted that the delay was a 4- month delay, which was not an insubstantial period. In fact the period of delay was longer for the Notice of Assessment and Demand was dated 1st September 2003 and the Notice of Appeal was filed on 16th February 2004 without leave. The reasons for the delay are stated in the Affirmation of Lo Shi Ki filed on the 16 March 2004. In paragraph 10 of the Affirmation it is stated that initially the Appellant had hesitation in lodging the appeal in view of the substantial legal fees and costs to be incurred in the appeal. Secondly, the Appellant had submitted its case to its legal advisors for a detailed review and assessment of the merits thereof with the assistance of Counsel. It took a considerable time for the Appellant's legal advisors and Counsel to review the case and also for the Appellant to make the decision to appeal against the assessment.

5. The Appellant's Solicitor sought to rely on the principles for extension of time that would be applicable to an application under Order 3 Rule 5 of the Rules of the District Court. He referred to the Judgment of Brian Keith JA in Trident Engineering Company Limited v. Mansion Holdings Limited CACV 311 of 2000 unreported. The principles stated by the learned Justice of Appeal were in respect of an application for extension of time pursuant to Order 3 Rule 5 of the Rules of the High Court.

6. The Respondent's Counsel Mr. Chong submitted that Order 3 Rule 5 of the Rules of the District Court does not apply as this is not an application for extension of time pursuant to such a Rules.

7. From the reading of Order 3 Rule 5 of the Rules of the District Court it is clear that this rule would not apply to this application for Order 3 Rule 5 (1) states:-

"(1) The Court may, on such terms as it thinks just, by order extend or abridge the period within which a person is required or authorized by these rules, or by any judgment, order or direction, to do any act in any proceedings."

8. It is clear that the time period for which extension is sought is a time period stated by section 14 (1) of the Ordinance and is not a period stipulated by the District Court rules, or by any judgment, order or direction. Such being the case, the perimeter in which these rules apply does not extend to a period of time to do an act stipulated by Ordinance. Having so found, the principles that govern an application under Order 3 Rule 5 as stated in the judgment in Trident would not be applicable to this application.

9. The Respondent's Counsel submits that in Bangkok Capital Antique Co. Ltd. v. Collector of Stamp Revenue [1984] HKC 16, CA it is stated that section 14 (2) of the Ordinance is strictly construed. He submitted that by analogy, the time stipulated in section 14 (1) should also be strictly observed unless the special grounds for delay provided in section 14 (5) are made out.

10. He further submits that the wording in section 14 (5) of the Ordinance follows that of 66 (1A) of the Inland Revenue Ordinance, Cap 112 and also section 64 (1) of the Inland Revenue Ordinance. He submitted that cross-reference should therefore be made to the two provisions and to the annotation of the two sections of the Inland Revenue Ordinance found in the Encyclopaedia of Hong Kong Taxation - Taxation of Income Vol 3 at II[20387]-[20390].

11. In [20390]-[20430] of the Encyclopaedia of Hong Kong Taxation - Hong Kong Taxation 4, in relation to s. 64 (1) of the Inland Revenue Ordinance states:

'absence . . . sickness or other reasonable causes' The words 'or other reasonable cause' are not required to be construed ejusdem generic with the preceding words. Where the taxpayer is a corporation the fact that the sole active director is ill and the remaining two directors are either too old or too busy to attend to the corporation's affairs has been held not to justify an extension of time for lodging an objection (Lam Ying Bor Investment Co Ltd. v. CIR (1979) 1 HKTC 1098).

12. In [20660]-[20700] of the Encyclopaedia of Hong Kong Taxation - Hong Kong Taxation 4, in relation to the phrase 'such further time as the Board may allow under subsection (1A)' of s. 66 of the Inland Revenue Ordinance states:

"subsection (1A) allows the Board to extend the time limit of one month if satisfied that an appellant was prevented by illness or absence from Hong Kong or other reasonable cause from giving notice of appeal within the time permitted. If the Board is not satisfied that the appellant was prevented from giving timely notice by illness, absence from Hong Kong or other reasonable cause, no extension of time can be granted. In this regard, no de minimus rule operates (see D 3/91 5 IRBRD 537 where the Board refused to admit an appeal late y one day " waiting for counsel's opinion was not a satisfactory explanation for the delay). In D 18.92 7 IRBRD 144 the Board refused to accept as reasonable cause for a late appeal the facts that (1) the taxpayer did not have sufficient information to formulate grounds of appeal within the time limit and (2) there was delay in transmitting the determination to the taxpayer by post, although there was sufficient time to file an appeal whether counting from the date of the determination or the date of transmission thereof. . .The Board should be scrupulous in considering all relevant and no irrelevant matters, and must reach its decision on whether to extend the time limit in a fair and rational manner."

13. In [20704.1] it states:

"In assessing whether a 'reasonable cause' exists, many decisions of the Board of Review refer to the following precedents:

(1) D 9/79 1 IRBRD 354 'The word 'prevented' . . . is opposed to a situation when an appellant is able to give notice but failed to do so. In our view, therefore, neither laches nor ignorance of one's rights or of the steps to be taken is a ground upon which an extension may be granted.'

(2) 'Even if the taxpayer had been prevented, he had no reasonable excuse because he had had more than sufficient time to put his house in order': D 11/89 4 IRBRD 230 and

(3) 'Time limits are imposed and must be observed. Anyone seeking to obtain the exercise of the discretion of a legal tribunal must demonstrate that they are "with clean hands" and that there are good reasons for the extension of time': D 3/91 5 IRBRD 537.

14. In the light of the aforesaid decisions of the Inland Revenue Board of Review, related to section 66 (1) (a) of the Inland Revenue Ordinance, it is clear that the time limit must be strictly adhered to and such allowance for extension of time according to subsection (1A) is strictly construed.

15. With the aforesaid in mind I consider the reasons given by the Appellant as basis for the application. The period of delay is 5 months or thereabouts. The reason given includes indecision, concerns about legal fees and costs implications, length of time taken by legal advisors and counsel. The Appellant were not prevented from filing an appeal. The situation is one of laches and delay by the Appellant and its legal advisors and counsel. In my view these do not amount to reasonable cause. I find that the Appellant has not established that it has been prevented by illness or absence from Hong Kong or other reasonable cause from bringing an appeal within a period of 1 month from the date on which the assessment is made in accordance with subsection (1). I therefore dismiss the application.

16. Application be dismissed with an order nisi for costs of the application to be paid by the Appellant to the Respondent to be taxed if not agreed.