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Ngai Sau Ying v Collector Of Stamp Revenue

Judgment Cited authorities 16 Cited in Precedent Map Related
Vincent
Judgment Date04 October 2019
Neutral Citation[2019] HKCA 1104
Year2019
Judgement NumberCACV460/2018
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV460/2018 NGAI SAU YING v. COLLECTOR OF STAMP REVENUE

CACV 460/2018 AND CACV 461/2018

[2019] HKCA 1104

CACV 460/2018

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 460 OF 2018

(ON APPEAL FROM DCSA NO 15 OF 2017)

________________________

BETWEEN
NGAI SAU YING (倪秀英) Appellant
(Respondent)
and
Collector of Stamp Revenue Respondent
(Appellant)

________________________

AND

CACV 461/2018

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 461 OF 2018

(ON APPEAL FROM DCSA NO 16 OF 2017)

________________________

BETWEEN
HUNG IP SHING (孔業成) Appellant
(Respondent)
and
Collector of Stamp Revenue Respondent
(Appellant)

________________________

(Heard together)

Before: Hon Kwan VP, Yuen JA and Au JA in Court
Dates of Hearing: 4 April 2019 and 17 September 2019
Date of Judgment: 4 October 2019

________________________

J U D G M E N T

________________________

Hon Kwan VP (giving the Judgment of the Court):

1. These two appeals are brought by the Collector of Stamp Revenue (“the Collector”) against the judgments of His Honour Judge Leong handed down on 11 June 2018[1]. The judge gave leave to appeal against his judgments on 13 September 2018[2].

2. The duty payers, Madam Ngai Sau Ying (“Ngai”) and Hung Ip Shing (“Hung”), are a divorced couple. They acted in person in the court below and on appeal. They each brought an appeal in the District Court against the assessments of stamp duty of the Collector in respect of two assignments of properties. The judge allowed their appeals. The Collector appealed against his judgments to the Court of Appeal.

3. The appeals first came before us on 4 April 2019. We adjourned the hearing for the Collector to make a proper application to amend the Notice of Appeal to incorporate certain parts of the submissions lodged on his behalf as grounds of appeal. We have since given leave to the Collector to amend the Notice of Appeal in each appeal. In view of the points of law raised in these appeals, and as the duty payers have been acting in person, we have appointed Mr Stewart Wong, SC and Ms Esther Mak as amici curiae to assist the court. The Collector appeared by Government Counsel Mr Suen Sze Yick and at the adjourned hearing with Mr Paul H M Leung as leading counsel. We are obliged to all counsel involved for their comprehensive and helpful submissions. Ngai and Hung have also responded to the further submissions of the Collector.

Background

4. The relevant background matters, taken from the Case Stated of the Collector dated 17 January 2018 and the documents annexed thereto, may be stated as follows.

5. Hung became the registered owner of a residential property at 8th Floor, Block A, Cheung On Building, No 218 Yu Chau Street, Kowloon, Hong Kong (“8A Property”) in 1983 and Ngai became the registered owner of another residential property at 8th Floor, Block B of the same building (“8B Property”) in 1988. The 8A Property was the matrimonial home of Hung and Ngai. In 2005, Hung petitioned for divorce in the District Court (FCMC 5647/2005).

6. Deputy District Judge Chan Chan Kok (as he then was) gave judgment in the ancillary relief proceedings on 22 April 2008. The order (“the Court Order”)[3] was in these terms:

(1) Within three months of the making of the decree absolute, Hung was to transfer the 8A Property to Ngai without monetary consideration[4]. Ngai was to pay the related expenses for this transfer.

(2) Hung was to move out of the 8A Property on the transfer of this property.

(3) Within three months of the making of the decree absolute, Ngai was to transfer the 8B Property to Hung without monetary consideration. Hung was to pay the related expenses for this transfer.

(4) Within six months of the making of the decree absolute, Hung and Ngai were to sell the factory premises in Shunde, Guangdong Province, at the best market price and they were to share the net proceeds of sale equally (after deduction of tax, agent’s commission, legal fees and other reasonable expenses). If there was rental income of the factory premises pending sale, the parties were to share such income equally.

(5) Hung was to pay Ngai each month the amount stipulated for the maintenance of two of the children of the family, until they reached the age of majority or completed full time education, whichever was later.

(6) No order was made as to costs.

7. On 1 November 2013, Hung and Ngai each executed an assignment in respect of the transfer of the 8A Property (“Assignment A”) and of the 8B Property (“Assignment B”). In Assignment A, the 8A Property was described as “the Property” and the 8B Property as “the Other Property”. In Assignment B, the description of the two properties was interchanged. The parties to each assignment were referred to as “the Assignor” and “the Assignee”.

8. The recitals of each assignment contained inter alia these provisions:

“(C) By an Order made by Deputy District Judge C K Chan on the 22nd day of April 2008 in the District Court of the Hong Kong Special Administrative Region under Matrimonial Causes No 5647 of 2005 and registered in the Land Registry by Memorial No 08091001030018 (“the Court Order”), it was ordered, inter alia, that the Assignor shall transfer the Property to the Assignee and the Assignee shall transfer the Other Property to the Assignor; and

(D) The parties hereto have agreed to enter into this Assignment dealing with the Property and another Assignment also dated the 1st November 2013 dealing with the Other Property pursuant to the terms of the Court Order.”

9. The operative part of each assignment contained inter alia these provisions:

“1. In pursuance of the Court Order and in consideration of the premises the Assignor as the Beneficial Owner hereby ASSIGNS to the Assignee the Property at nil monetary consideration TO HOLD the same unto the Assignee for the residue of the terms of years created by the Government Leases …”

“5. It is hereby certified that the transaction hereby effected does not form part of a larger transaction or of a series of transactions in respect of which the amount or value or the aggregate amount or value of the consideration exceeds HK$_________.”

10. The Rating & Valuation Department assessed the value of the two property as at 1 November 2013 at $3,150,000 for the 8A Property and $2,450,000 for the 8B Property.

11. On 12 November 2013, Ngai’s solicitors sent the assignments to the Collector for adjudication and stated in the covering letter that the assignments amounted to an exchange of the two properties in law, so in assessing the amount of stamp duty on the assignments, only the difference in value of the properties was chargeable for stamp duty.

12. The Collector replied to Hung and Ngai by letters dated 21 July 2016, stating that as the assignments were executed in pursuance to the Court Order, the transactions effected thereby each formed part of a larger transaction in respect of which the amount or value, or the aggregate amount or value, of the consideration does not exceed $6 million. Accordingly, Assignment A should be chargeable with stamp duty of $94,500 and Assignment B should be chargeable with stamp duty of $73,500[5].

13. Ngai and Hung, through their respective solicitors, objected to the proposed assessments. They maintained that the transfer of the two properties was akin to an exchange of the properties by the parties, that only the difference in value of $700,000 should be chargeable to stamp duty in the amount of $10,500[6] to be paid by Ngai as the transferee of the more valuable property and that Hung should not be required to pay stamp duty.

14. By letters dated 20 December 2016, the Collector maintained the view that the transactions formed part of a larger transaction or series of transactions as each of the transfers was not fortuitously made but made pursuant to a court order and the transfers were “clearly interdependent and co-related” and “each transfer cannot be effected alone [without][7] the others being effected also”. As stamp duty is a charge on instruments and as the properties were transferred under two separate instruments, stamp duty would be calculated based on the respective consideration or market value of the property transferred under each instrument and that a charge on equality money will only be applicable to an instrument under which properties are exchanged.

15. After considering further response from the solicitors, on 2 May 2017, the Collector issued the notices of stamp duty assessment and demand for payment as proposed in the letters dated 21 July 2016. Ngai and Hung lodged their appeals against the assessments to the District Court on 31 May 2017.

16. The Collector submitted these two questions for the determination by the court in the Case Stated for each appeal: (a) whether the assignment is chargeable with any stamp duty; and (b) if so, the stamp duty chargeable thereon.

The judgments below

17. The reasons of the judge in allowing the appeals of Ngai and Hung may be shortly stated as follows.

18. He found that the nature of the two assignments was for the exchange of properties, even though the instruments did not state that the transaction was an exchange[8]. As such, the Collector should have assessed the stamp duty liability in accordance with section 25(7) of the Stamp Duty Ordinance, Cap 117 (“the Ordinance”)[9]. The judge did not however rule on the two questions submitted for determination in the Case Stated.

These appeals

19. The Collector’s primary argument is that the two assignments do not...

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