Commissioner of Inland Revenue v. Cheng Hung Kit

CAMP 126/2018

[2018] HKCA 643

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 126 OF 2018

(ON AN INTENDED APPEAL FROM DCTC NO 1163 OF 2017)

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J U D G M E N T

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Hon Poon JA (giving the Judgment of the Court) :

INTRODUCTION

1.By a judgment dated 12 June 2018 (with Reasons for Judgment handed down on 17 July 2018), His Honour Judge H Leong (“the Judge”) dismissed the defendant’s appeal against the order of Registrar Ho dated 19 January 2018 ordering that the defendant to pay the tax due in the sum of HK$4,021,883 plus interest and costs to the plaintiff.  The defendant's application for leave to appeal out of time against the decision was refused on 6 August 2018 (with Reasons for Judgment handed down on 23 August 2018).  The defendant now renews the leave application to this Court by way of a summons dated 20 August 2018.  Having considered the parties’ submissions, we take the view that the renewed application can be disposed of on paper without an oral hearing.  We now hand down our judgment.

2.The background may be briefly stated thus.  The plaintiff issued to the defendant a notice of payment of salary tax in the sum of HK$3,828,000 for the financial year 2009/2010 on 4 March 2016.  The defendant objected to the assessment for the reason that he did not receive any salary for the said financial period.  The plaintiff considered the objection and agreed to allow the defendant to holdover the sum of HK$338,000 and to pay the balance of HK$3,490,000 on or before 15 April 2016.  The defendant however did not pay before the deadline.  The plaintiff then commenced the proceedings below on 11 September 2017.  On 19 January 2018, the Registrar entered summary judgment against the defendant as aforesaid.

3.The defendant appealed to the Judge against the Registrar’s decision on two main grounds: (i) he did not receive any income for the relevant financial period and therefore, the assessment by the plaintiff was lacking in basis and ultra vires; and (ii) the case involved questions of great, general or public importance that should warrant the intervention of the upper court.  The Judge held that the jurisdiction of the District Court is limited in tax recovery cases and does not extend to review of tax assessment made by the Commissioner.  Since the defendant was in essence requesting the District Court to review the Commissioner’s assessment, this was outside the court’s jurisdiction.  The Judge also noted that there was evidence showing the defendant was assessed for income tax and the defendant had admitted failing to pay the tax assessed.  The Judge considered summary judgment was correctly entered against the defendant.  He therefore dismissed the defendant’s appeal.

4.In refusing to grant the defendant leave to appeal out of time against his judgment, the Judge held that although the defendant’s delay of 17 days was not serious, he had failed to convince the Judge that there was a real prospect of success in the intended appeal.  It was because the defendant only repeated his previous grounds of appeal which had been rejected already.  The Judge said that he had explained clearly in the main judgment that the District Court has no jurisdiction to review the tax assessment and the defendant should proceed under the relevant sections of Inland Revenue Ordinance, Cap 112 (“IRO”) for appeal against the assessment.

DISCUSSION

5.Leave to appeal shall not be granted under section 63A of the District Court Ordinance, Cap 336, unless the Court of Appeal is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interest of justice that the appeal should be heard.  The defendant bears the burden of satisfying this Court that his appeal has a reasonable prospect of success which means an appeal with prospects that are more than fanciful but which do not need to be shown to be probable : SMSE v KL [2009] 4 HKLRD 125 at [17].

6.The defendant sought to raise two grounds of appeal, namely :

(1)  There was an important question on a point of law and the Judge erred in failing to address or deal with it, namely :-

“ Whether the doctrine of Briggs CJ in Ng Chun-kwan v. Commissioner of Inland Revenue [1976] HKLR 94 at 98 or [1976] HKTC 636 at 638 as cited in Commissioner of Inland Revenue v. Choy Sau Kam [1983] 2 HKTC 10 at 16 is applicable to this instant case?”

(2)   Substantial and grave injustice has been done to the defendant.

7.In determining the appeal against the Registrar’s decision, the Judge had clearly explained at [10] to [12] of the judgment that :

“有關法理

10. 參考Commissioner of Inland Revenue v Lau Chi-sing DCCJ 12121/2000，林法官在該案例清楚說明：

‘ 區域法院在處理稅款追討時只需滿意被告人的確有被評稅及的確有欠交款項，不會多考慮更闊的範疇⋯’

‘ 法律上是容許反對稅務局的稅務評核，如有需要可向Board of Review上訴，和如有需要再向高等法院申請上訴。’

11. 由此可見，本法庭的管轄權是有限的，法律上是不容許本法庭覆核評稅結果，而被告人上訴的理據，正是要求本法庭覆核評稅結果。

12. 由於證據顯示被告人的確有被評稅，而被告人亦承認有拖欠稅款，所以本席決定駁回被告人的上訴，及作出以上的命令。”

8.As held by His Honour Judge Lam (as Lam VP then was) in Lau Chi-sing, the scope of section 75(4) of IRO is limited and does not extend to investigate whether the assessment is excessive, incorrect, or to take into account the assessment is subject to objection or under appeal.

9.We agree with the Judge’s holding that the defendant has no arguable defence to the claim, and the appeal was rightly dismissed.  Further, the facts of the present case are wholly different from Ng Chun-kwan (mistaken identity of taxpayer) and Choy Sau-kam (the taxpayer did not receive a notice of assessment).  We do not consider they can possibly assist the defendant at all.  This disposes of ground (1).

10.As for ground (2), the defendant’s complaint of “substantial and grave injustice” is misconceived and has no merit. The IRO distinguishes carefully between assessment and tax which is to be found in Part XI “Objections and Appeals” of the Ordinance.  Although the court’s jurisdiction under section 75 is limited, it does not mean that the taxpayer has no means of redress.  The defendant may challenge an assessment in the Board of Review through the procedures laid down by sections 64, 68 and 69 of IRO, whereby he can raise all the objections he wished to raise by way of defence.

11.To conclude, the defendant has failed to satisfy us that there was any error of law in the decision made by the Judge.  The two intended grounds of appeal are totally devoid of merits and are doomed to fail.

DISPOSITION

12.For the reasons set out above, we are not satisfied that the defendant’s intended appeal has any reasonable prospect of success.   Nor is there any other reason in the interest of justice why the appeal should be heard.  Accordingly, we dismiss the defendant’s summons dated 20 August 2018.

13.As the defendant’s application is wholly unmeritorious, we make an order pursuant to Order 59 rule 2A (8) of the Rules of the High Court, Cap 4A, that no party may under rule 2A (7) request the determination of this Court to be reconsidered at an oral hearing inter partes.

14.Costs should follow event.  We order the defendant to pay the costs of the plaintiff in this action, summarily assessed in the sum of HK$18,000.00.

Mr Jesse Yu, Senior Government Counsel (Ag), of the Department of Justice, for the Plaintiff

The Defendant, unrepresented, acted in person