Read the full judgment text of CACV 000026/1993 on BabelCite. This Court of Appeal judgment was delivered on 29 April 1994 before Penlington, J.A., Nazareth, J.A., Mortimer, J.A..
Tax law – judicial review of tax assessment – Inland Revenue Ordinance Cap. 112 – property tax and profits tax – section 5(2) exemption for corporations carrying on trade, profession or business – section 5B assessment of net assessable value on lump sum premium – section 5B(4) spreading of premium over three years – section 14 charge of profits tax – section 25 proviso (a) reduction of profits tax by property tax where commercial profits from property are part of business profits – section 59(3) power to assess where no return furnished – section 60 additional assessments within six years – section 70 finality of assessments determined on objection – Part XI Board of Review procedure – section 65 constitution of Board – section 69(1) finality subject to stated case on point of law – two-step transactions in 1985 by Hutchison Whampoa subsidiaries Harley Development Inc and Trillium Investment Limited acquiring interests in China Building at 29 Queen's Road Central and immediately granting HSBC 30-year leases for lump sum premia – Harley net cost $17.125 million, Trillium net cost $7.875 million – Commissioner assessed profits tax at nil on basis premia were capital receipts from sale of capital asset – Commissioner then raised property tax assessments on premia spread over three years – appellants sought judicial review contending assessments were ultra vires and constituted abuse of power/breach of legitimate expectation – Mayo J. refused application – Court of Appeal dismissed appeal – whether Commissioner acted ultra vires – whether appellants had legitimate expectation of property tax exemption – whether judicial review appropriate remedy given Part XI appeal procedure – Commissioner had bona fide jurisdiction under s.59(3) to assess – disputed construction of s.25 proviso (a) and meaning of 'profits' not so clearly wrong as to be ultra vires – no clear representation or practice giving rise to legitimate expectation that premia would be exempt from property tax – nil profits tax assessment did not determine property tax liability – judicial review only very rarely available where statutory appeal procedure exists – Board of Review is specialist fact-finding tribunal better placed to resolve mixed questions of fact and law – costs to respondent on order nisi
Legal issues: Whether the Commissioner acted ultra vires in raising property tax assessments · Whether the appellants had a legitimate expectation of property tax exemption · Whether judicial review was the appropriate remedy in light of Part XI Board of Review procedure
Outcome: Appeal dismissed; application for judicial review of the Commissioner's property tax assessments refused.