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Wong Suet Foon Shirly v Collector Of Stamp Revenue

Judgment Cited authorities 27 Cited in 1 Precedent Map Related
Vincent
Judgment Date29 July 2021
Neutral Citation[2021] HKCA 1090
Judgement NumberCACV66/2020
Citation[2021] 3 HKLRD 862
Year2021
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV66/2020 WONG SUET FOON SHIRLY v. COLLECTOR OF STAMP REVENUE

CACV 66/2020

[2021] HKCA 1090

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 66 OF 2020

(ON APPEAL FROM DCSA NO. 5 OF 2016)

________________________

BETWEEN

WONG SUET FOON SHIRLY Appellant
and
COLLECTOR OF STAMP REVENUE Respondent

________________________

Before: Hon Lam VP and Chu and Au JJA in Court

Date of hearing and judgment: 15 December 2020

Date of Reasons for Judgment: 29 July 2021

________________________

REASONS FOR JUDGMENT

________________________


The Court:

A. Introduction

1. This is the appeal of Madam Wong Suet Foon Shirly (“the appellant”) against the decision (“the Decision”)[1] of His Honour Judge Andrew Li (“the Judge”) given on 27 February 2019. By the Decision, the Judge dismissed the appellant’s appeal against the assessment made by the Collector of Stamp Revenue (“the Collector”) on the stamp duty chargeable on an assent executed by her as the administratrix upon the administration of her mother’s intestate estate.

2. The core issues in this appeal are (1) whether an assent executed by an administratrix upon the administration of the estate in intestacy for the vesting and assigning of property disclaimed by some of the beneficiaries to the remaining beneficiaries is a conveyance operating as a voluntary disposition inter vivos and is chargeable with ad valorem stamp duty under section 27(1) of the Stamp Duty Ordinance, Cap 117 (“the Ordinance”); and (2) if so, whether the lower rate in Scale 2 of Head 1(1) in the First Schedule of the Stamp Duty (Amendment) (No. 2) Ordinance 2014 (“the 2014 Amendment Ordinance”) applies by reason of section 29AL of the Ordinance.

3. On 9 March 2020, Au JA granted leave to appeal against the Decision[2]. In light of the questions of law involved in this appeal and the fact that the appellant acts in person, Ms Bonnie Cheng was appointed as amicus curiae to assist the Court.

4. At the hearing of the appeal, after hearing submissions, we allowed the appeal. Our reasons appear below.

B. The facts

5. The relevant background facts, taken from the Case Stated of the Collector dated 15 December 2017 and the Decision at [2] to [15], are summarised below.

6. Madam Ming Sum Yee (“the Deceased”) died intestate on 20 February 2012. Letters of administration in respect of her estate were issued in favour of the appellant on 4 June 2012. The only persons entitled to the Deceased’s estate are her five surviving children, including the appellant. They are:

(1) Wong Yau Kung (“WYK”);

(2) Wong Suet Mui Alice (“Alice”);

(3) The appellant;

(4) Wong Yau Leung (“WYL”); and

(5) Wong Yau Shing (“WYS”).

7. The Deceased was the registered owner of a property in Toa Yuen House, Chuk Yuen (North) Estate, No. 8 Wing Chuk Street, Wong Tai Sin, Kowloon (“the Property”), which she acquired by an assignment dated 29 September 2010. It was a purchase under the Tenants Purchase Scheme of the Hong Kong Housing Authority, which restricts, inter alia, alienation.

8. To give effect to the grant and for the purpose of seeking approval of alienation by succession, the five surviving children, represented by the appellant, made enquiries to the Housing Authority and were given to understand (which subsequently turned out to be incorrect) that only two children could become the succeeding owners of the Property under the Housing Authority’s rules or policy.

9. In reliance on the above advice, the five surviving children entered into a Deed of Family Arrangement dated 3 May 2014 (“the Deed”) under which it was agreed that WYK, WYL and WYS (“the 3 Siblings”) would abandon, disclaim or renounce their rights and interests in the Property, leaving the Property to the appellant and Alice. The material terms of the Deed provide as follows:

(1) “This Deed shall bind the parties hereto and shall, in so far as and to the extent that this Deed is inconsistent with any law or rule of intestacy of Hong Kong governing distribution of the estate (including the Property) of the Deceased, take effect in substitution and variation of any such intestacy law or rule”. (Clause 1)

(2) Each of the 3 Siblings “absolutely unconditionally and irrevocably waives disclaims and renounces all his rights title benefits interests claims and demands of and in the Property”. (Clauses 2, 3 and 4)

(3) The appellant and Alice “shall become the beneficial owners and as joint tenants of the Property”. (Clause 5)

(4) All the five surviving children “agree to execute all and any assent, assignment, conveyance or deed necessary to carry into effect this Deed”. (Clause 5)

10. The Deed was presented to the Inland Revenue Department (“IRD”) for adjudication of any stamp duty on or about 9 May 2014. A stamp duty of HK$16,650 was assessed on it, which the appellant paid on 1 December 2015 under protest and objection.

11. Pursuant to the Deed, and by a Deed of Assent dated 16 October 2014 (“the Assent”), the appellant, as the administratrix of the Deceased’s estate, assented to the vesting and assignment of the Property unto Alice and herself, in her personal capacity as one of the beneficiaries, as joint tenants.

12. The Assent was presented to the IRD for adjudication of any stamp duty on about 21 October 2014. On 1 December 2014, the IRD adjudicated that it was not chargeable with any duty. No reason was given for this adjudication, but the Judge considered this was “probably due to the fact that stamp duty of the same amount had already been charged or imposed on the [Deed]”[3].

13. By a letter dated 4 June 2015 to the appellant’s former solicitors, the IRD (acting for and on behalf of the Collector) stated that:

(1) The Deed and the Assent “operate as voluntary disposition(s) inter vivos” to the extent that “the transfer(s) of the Property is in excess of the transferees’ entitlement in the estate in accordance with the Intestates’ Estates Ordinance, and is/are chargeable with stamp duty as conveyance(s) on sale by virtue of section 27(1) of [the Ordinance]”.

(2) Ad valorem stamp duty at Scale 1 of Head 1(1) in the First Schedule of the 2014 Amendment Ordinance (i.e. the higher rate) applied to both the Deed and the Assent, as these instruments were executed after 23 February 2013. The 2014 Amendment Ordinance had retrospective effect commencing on 23 February 2013[4].

(3) Further, as the appellant “assigned the [Property] to the beneficiaries in the capacity of the administrator of the [Deceased’s estate], not her own capacity”, the IRD did not accept that the transferor and the transferee were “closely related” for the purpose of section 29AL of the Ordinance (which provides for a lower rate under Scale 2 of Head 1(1) in the First Schedule of the 2014 Amendment Ordinance).

(4) The Property was valued by the Commissioner of Rating and Valuation at HK$1,850,000 as at the date of the Deed. On the basis that 60% of the Property was in “in excess of the transferees’ entitlement in the estate” (as, but for the Deed, the appellant and Alice would have been entitled to only 40% of the Deceased’s estate), the IRD assessed the ad valorem stamp duty to be $16,650 (i.e. $1,850,000 × 60% × 1.5%).

14. In spite of the appellant’s objection, on 28 December 2015, the Collector issued the assessment and charged the stamp duty of HK$16,650 on the Deed and the Assent.

15. By two letters dated 18 April 2016 and 14 November 2017 respectively, the appellant objected to and appealed against the Collector’s assessment.

16. On 15 December 2017, the Collector submitted to the District Court a Case Stated which raised two questions for determination as follows:

(1) Whether the Deed and the Assent are chargeable with ad valorem stamp duty; and

(2) If so, with what amount of stamp duty they are chargeable.

C. The Judge’s decision

17. The case came before the Judge on 12 September 2018. The Collector’s position at the hearing was that only the Assent (but not the Deed) was chargeable with stamp duty[5]. This was different from his previous position that both the Deed and the Assent were liable to be charged with the Scale 1 rates[6].

18. By his decision dated 27 February 2019, the Judge dismissed the appeal.

19. In respect of the first question, the Judge agreed with the Collector, and held that the Assent (but not the Deed) is chargeable with ad valorem stamp duty on the 60% interest of the Property disclaimed by the 3 Siblings. His reasons are that:

(1) The Assent was a conveyance for the purpose of section 27(1) of the Ordinance as it conveyed a substantial benefit to the appellant and Alice (i.e. the extra 60% of the beneficial interests which was in excessive of their original entitlement of 40% in aggregate under the applicable intestacy law). In reaching this conclusion, the Judge relied on the District Court decision in So Kam Shing & So Kam Wai v The Collector of Stamp Revenue [2018] 2 HKLRD 1260, [2018] HKDC 503, at [21] to [26]; the Singaporean case of Tan Kay Thye v Commissioner of Stamp Duties [1991] 3 MLJ 150; as well as the English case of Baker v Commissioner of Inland Revenue [1924] AC 270 at 275-276[7].

(2) The Judge rejected the appellant’s contention that no beneficial interest in the Property passed under the Assent. He was of the view that the Assent operated as an assignment transferring the Property, together with all rights and interests (including beneficial interests) in it, to the appellant and Alice pursuant to section 16(1) of the Conveyancing and Property Ordinance, Cap. 219[8].

(3) The Judge also rejected the appellant’s argument that the “conveyance” or “transfer” by way of the Assent was made under a trust[9]. Accordingly, section 27(5) of the Ordinance did not apply.

20. On the second question, the Judge held that section 29AL of the...

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