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HCAL 1479/2020
[2021] HKCFI 11
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 1479 OF 2020
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| BETWEEN |
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WONG WING WAH |
Applicant |
and |
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COLLECTOR OF STAMP DUTY |
Putative |
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Respondent |
________________________
| Before: |
Hon Chow J in Court |
| Date of Hearing: |
15 December 2020 |
| Date of Judgment: |
6 January 2021 |
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J U D G M E N T
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INTRODUCTION
1. This is an application for leave to apply for judicial review of the assessment (“the Assessment”) of the Collector of Stamp Revenue dated 7 June 2016 in respect of a provisional agreement for sale and purchase dated 18 January 2013 (“the Agreement”) for a property known as Apartment No 12, 2/F, 55A Kwun Tong Road, Kowloon (“the Property”), which was purchased by the Applicant (“Madam Wong”), a Hong Kong permanent resident, as trustee for another Hong Kong permanent resident (“Mr Wong Tak Hung”).
2. For reasons which I shall explain in this judgment, the application for leave to apply for judicial review is dismissed.
3. In what follows, references to:
(1) “Section”, or “s” shall be to the Stamp Duty Ordinance, Cap 117 (“the Ordinance”); and
(2) “BL” shall be to the Basic Law of the HKSAR.
BACKGROUND FACTS
4. The background facts of this matter have been set out in §§3 to 12 of the decision of H H Judge Kent Yee in DCSA 97/2016 dated 8 January 2020 (“the Decision”), which I gratefully adopt for the purpose of this judgment:
“[3] On 18 January 2013, Madam Wong signed the Agreement to purchase the Property at a consideration of HK$7,181,585. The Property is a residential property within the meaning of section 29A(1) of the Ordinance.
[4] The Agreement was stamped with ad valorem stamp duty of $269,310 under the then prevailing head 1(1A)(i) in the First Schedule to the Ordinance on 6 February 2013. Madam Wong raised no issue with the amount of ad valorem stamp duty payable on the Agreement.
[5] On 29 January 2013, Madam Wong executed a trust deed (‘the Deed’) in which she declared, among other matters, that the Property did belong to one Mr Wong. She merely held the Property for Mr Wong, who had paid and would pay all monies relating to the purchase and maintenance of the Property.
[6] On 21 February 2013, Madam Wong entered into a formal agreement for sale and purchase of the Property by incorporating the terms of the Agreement. The sale was completed on 30 April 2013.
[7] The HKSAR Government announced on 26 October 2012 proposed measures to address the overheated residential property market and sought to introduce, among other things, the Buyer’s Stamp Duty (‘BSD’) by amending the Ordinance through Stamp Duty (Amendment) Bill 2012 (‘the Bill’) which was subsequently published in the Gazette on 28 December 2012.
[8] In or about June 2016, Messrs Philip T.F. Wong & Co., the former solicitors for Madam Wong, supplied documentary evidence to prove the financial contribution of Mr Wong to the acquisition of the Property. The Collector, as a result, adjudicated that the Deed should not be chargeable with any stamp duty by virtue of section 27(5) of the Ordinance due to the lack of any beneficial interest thereby transferred.
[9] However, the Collector concluded that the Agreement was chargeable with BSD by virtue of section 29CB(1) of the Ordinance and the exemption under section 29CB(2)(a) of the Ordinance was not applicable because Madam Wong was not acting on her own behalf under the Agreement, but as trustee for and on behalf of Mr Wong.
[10] Section 29CB(1) of the Ordinance provides,
‘(1) Subject to the other provisions of this section, head 1(1C) in the First Schedule applies to a chargeable agreement for sale of any residential property executed on or after 27 October 2012.
(2) A chargeable agreement for sale is not chargeable with buyer’s stamp duty under head 1(1C) in the First Schedule if it is shown to the satisfaction of the Collector -
(a) that the purchaser, or each of the purchasers, under the agreement is a Hong Kong permanent resident acting on his or her own behalf’.
[11] On 7 June 2016, under section 13(3)(b) of the Ordinance, the Collector raised the Assessment in respect of the Agreement to HK$1,077,238 ($7,181,585 x 15%) with BSD being chargeable. Madam Wong has paid the said amount in full pending her appeal.
[12] Madam Wong has filed an affirmation of Peter Fu to support her appeal. There, it is deposed to that Mr Wong is in fact a Hong Kong permanent resident (‘HKPR’). The Collector takes no issue with this assertion and this appeal is to be argued on that basis.”
PROCEDURAL HISTORY
5. By a Notice of Appeal dated 6 July 2016, Madam Wong brought an appeal against the Assessment pursuant to s 14 of the Ordinance.
6. On 30 June 2017, a Case Stated was signed by the Collector for the purpose of the appeal.
7. The sole ground of the appeal, as advanced by Mr Lam on behalf of Madam Wong before the learned Judge, was -
“whether section 29CB(2)(a) of the Ordinance is against the Basic Law and hence unconstitutional in that it allows BSD to be levied on agreements even executed by a HKPR buyer as a nominee/trustee for a genuine HKPR buyer. Mr Lam argues that this provision infringes the constitutional rights to acquire property under Articles 6 and 105 of the Basic Law. The gravamen of his complaint is that the provision contravenes the stated objectives of the BSD and unjustifiably and disproportionally imposes a restriction on a HKPR buyer’s right to acquire property through a conventional and legitimate asset protection arrangement by way of trust.” (see §13 of the Decision)
8. On 8 January 2020, the learned Judge dismissed Madam Wong’s appeal, essentially on the basis that the Government’s right to levy tax (including stamp duty) under BL 108 cannot be restricted or circumscribed by the rights protected under BL 6 and BL 105 (see §§30, 31 and 37 of the Decision). In coming to that conclusion, the learned Judge relied upon the judgment of the Court of Appeal in Weson Investment Ltd v Commissioner of Inland Revenue [2007] 2 HKLRD 567, as did H H Judge Andrew Li in another stamp duty appeal raising the same issue (Wong Chak Sin v Collector of Stamp Revenue [2016] 12 HKLRD 981).
9. On 15 May 2020, the learned Judge dismissed Madam Wong’s application for leave to appeal the Decision.
10. On 27 May 2020, Madam Wong applied to the Court of Appeal for leave to appeal the Decision.
11. At the hearing of the application for leave to appeal on 6 July 2020, the question was raised as to whether Madam Wong’s constitutional challenge to the Assessment should have been made in an application for judicial review, instead of in an appeal by way of case stated. As I understand it, the Court of Appeal was of the view that judicial review was the appropriate, or more appropriate, procedure[1], and made the following order:
“The Application be adjourned pending for the Appellant to apply for Judicial Review on condition that the Appellant should file the Judicial Review leave application within 28 days from the date hereof”.
APPLICATION FOR JUDICIAL REVIEW
12. On 14 July 2020, Madam Wong made the present application for leave to apply for judicial review. In the Form 86, Madam Wong argues that BSD as applied to a HKPR trustee purchasing for a HKPR beneficiary “restricts the constitutionally protected right to acquire property under [BL 6 and BL 105] without justification and/or [is] disproportionate to the legitimate aim of the BSD, despite the HKSARG’s authority to legislate on tax as provided under [BL 108]” (see §9 of the Form 86).
13. At §29 of the Form 86, Madam Wong further argues that even if BL 105 is not engaged, the exercise of the power under BL 108 to legislate on tax is irrational, Wednesbury unreasonable, arbitrary and/or abusive insofar as BSD is applied to HKPR trustees purchasing for HKPR beneficiaries. At the hearing on 15 December 2020, Mr Lam confirmed that Madam Wong would not be relying on this ground of judicial review. Thus, it will not be further considered in this judgment.
14. The following provisions of the Basic Law are relevant for the present purpose:
“[6] The Hong Kong Special Administrative Region shall protect the right of private ownership of property in accordance with law.
[105] The Hong Kong Special Administrative Region shall, in accordance with law, protect the right of individuals and legal persons to the acquisition, use, disposal and inheritance of property and their right to compensation for lawful deprivation of their property…
[108] … The Hong Kong Special Administrative Region shall, taking the low tax policy previously pursued in Hong Kong as reference, enact laws on its own concerning types of taxes, tax rates, tax reductions, allowances and exemptions, and other matters of taxation.”
AVAILABILITY OF JUDICIAL REVIEW
15. On behalf of the Collector, Ms Chan argues that where there is an available statutory appeal procedure, the court should normally not allow the collateral process of judicial review to be used to attack an appealable decision. This principle is well established in Hong Kong (see Canray International Ltd v Commissioner of Inland Revenue [2012] 4 HKLRD 792, at §25; Koo Ming Kwan v Commissioner of Inland Revenue (2014) 19 HKPLRR 498, at §11). The fact that Madam Wong has in fact made use of the statutory appeal process to challenge the Assessment and failed in her appeal is an added reason why she should not be allowed to pursue the present application for judicial review.
16. Nevertheless, having regarded to the order of the Court of Appeal referred to in...
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