Yau Sun Yee v. Collector of Stamp Revenue
Read the full judgment text of HCAL 3514/2019 on BabelCite. This High Court CFI judgment was delivered on 13 January 2021.
1. This is an application for judicial review of the decision (“ the Decision ”) of the Collector of Stamp Revenue (“ the Collector ”) on 25 November 2019 refusing to refund a part of the ad valorem stamp duty paid by the Applicant on the agreement for sale and purchase (“ the Purchase Agreement ”) of Flat A, 10/F, Tower 1(1A), Wings at Sea, Phase IVA, Lohas Park, 1 Lohas Park Road, Tseung Kwan O, New Territories (“ the Subject Property ”) dated 31 October 2017.
Cited by 3 cases · Cites 9 cases
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HCAL 3514/2019 [2021] HKCFI 88 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 3514 OF 2019 ________________________ BETWEEN
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________________________ J U D G M E N T ________________________ INTRODUCTION 1.This is an application for judicial review of the decision (“the Decision”) of the Collector of Stamp Revenue (“the Collector”) on 25 November 2019 refusing to refund a part of the ad valorem stamp duty paid by the Applicant on the agreement for sale and purchase (“the Purchase Agreement”) of Flat A, 10/F, Tower 1(1A), Wings at Sea, Phase IVA, Lohas Park, 1 Lohas Park Road, Tseung Kwan O, New Territories (“the Subject Property”) dated 31 October 2017. 2.In this judgment, unless the context indicates otherwise, references to “Section” or “s” shall be to the Stamp Duty Ordinance, Cap 117 (“the Ordinance”). BACKGROUND FACTS 3.On 19 October 2017, the Applicant entered into a preliminary agreement for sale and purchase to acquire the Subject Property, then still under construction, at the price of the HK$14,683,700. 4.At the time of the preliminary agreement, the Applicant was the beneficial owner of another residential property known as Flat A, 3/F, Block 9, Beverly Garden, 1 Tong Ming Street, Tseung Kwan O, Sai Kung, New Territories (“the Original Property”). 5.On 31 October 2017, the Applicant entered into a formal agreement, ie the Purchase Agreement, for the purchase of the Subject Property. Completion of the Purchase Agreement was to take place within 14 days after the date of the notification to the Applicant that the vendor was in a position to validly assign the Subject Property to him. 6.On 8 November 2017, the Applicant paid ad valorem stamp duty of HK$1,101,278 (HK$14,683,700 x 7.5%) at the then prevailing rate under Scale 1 of Head 1(1A) in the First Schedule to the Ordinance. 7.On 7 February 2018, after the enactment of the Stamp Duty (Amendment) Ordinance 2018, additional ad valorem stamp duty of HK$1,101,277 (HK$14,683,700 x 15% - HK$1,101,278) was paid on the Purchase Agreement pursuant to s 72. 8.On 11 March 2019, the Applicant entered into an agreement for sale and purchase (“the Disposal Agreement”) to dispose of the Original Property. Completion of the Disposal Agreement took place on 15 April 2019. 9.Completion of the Purchase Agreement took place on 20 November 2019. 10.On 25 November 2019, the Applicant went to the Stamp Office to apply for a partial refund of the ad valorem stamp duty paid on the Purchase Agreement. The amount of the refund sought, defined in s 29DF(1) as the “specified amount”, was HK$1,651,916 (HK$14,683,700 x 15% - HK$14,683,700 x 3.75%). His application was orally rejected by an officer of the Stamp Office over the counter on the ground that the application was not made within the applicable statutory time limit. Pausing here, it may be noted that, under s 29DF(3)(c), an application for refund is required to be made by an applicant “not later than 2 years after the date of the applicable instrument[1], or not later than 2 months after the date of the conveyance on sale under which the original property is transferred or divested, whichever is the later”. I shall examine the meaning and effect of s 29DF(3) later in this judgment when I consider the grounds of judicial review raised by the Applicant. 11.In the “Note of Counter Interview” prepared by the officer dated 25 November 2019, the following was stated -
APPLICATION FOR JUDICIAL REVIEW 12.On 26 November 2019, the Applicant, then acting in person, filed a Form 86 to apply for leave to apply for judicial review of the Decision. In the Form 86, the Applicant stated that he objected to the Decision, but did not state any ground on relief was sought. 13.The Applicant’s grounds of complaint against the Decision can, however, be gleaned from his various affirmations. In his affirmation dated 26 November 2019, the following is stated:
14.Attached to the Applicant’s affirmation dated 9 December 2019 is a letter from the estate agent who acted for the Applicant in the purchase of the Subject Property dated 6 December 2019, in which the following is stated:
15.Finally, attached to the Applicant’s affirmation dated 10 March 2020 is a letter from the Applicant dated 5 February 2020, in which the following is stated:
16.In short, the Applicant says that both he and his estate agent were told by the Stamp Office that the application for refund could be made within (i) 2 months after the sale of the Original Property, or (ii) 2 years after the date of completion of the purchase of the Subject Property, whichever was the later. Further, it appears that the Applicant was advised, and decided, not to make the application for refund within 2 months after the sale of the Original Property, but to wait until after completion of the purchase of the Subject Property, because (according to the developer) an application for a refund of the ad valorem stamp duty made prior to the completion of the purchase of the Subject Property would have an adverse impact on the discount of the purchase price of the Subject Property offered by the developer to the Applicant. 17.On 9 June 2020, the court granted the Applicant leave to apply for judicial review. 18.In the Applicant’s Originating Summons dated 19 June 2020, the Applicant seeks the following relief:
19.The Applicant also states, in the Originating Summons, that the grounds of the application for judicial review are:
20.At the hearing on 5 January 2021, Ms Wong (on behalf of the Applicant) confirmed that the Applicant would not rely on the ground of legitimate expectation in the present application. Accordingly, this ground will not be further considered in this judgment. 21.Ms Wong’s principal argument in support of the application is that the time limit for making an application for refund under s 29DF(3)(c) has no application to the scenario, as in the present case, where the “original property” is disposed of after the acquisition but before the conveyance of the “subject property”. Ms Wong did not say, in her Skeleton Submissions dated 23 December 2020, what would be the applicable time limit in such scenario. When asked by the court at the hearing, Ms Wong submitted that, in such scenario, there was no time limit, or no definite time limit, for making the refund application, although she qualified her submission by adding that it should be made within a “reasonable time” after the date of conveyance of the “subject property”. 22.Ms Wong argues, alternatively, that the application for refund, which was made only 5 days after the date of conveyance of the Subject Property, was within time; in the further alternative, the Collector had a discretion to entertain an application for refund made out of time and ought to have exercised such discretion in favour of the Applicant in the present case. THE APPLICATION DEADLINE UNDER S 29DF 23.Whether the deadline for making an application for refund under s 29DF(3)(c) is applicable to the circumstances of the Applicant’s case depends on the true construction of s 29DF(3). 24.The court’s approach to the construction of a statute is now well settled. For the present purpose, I need go no further than the recent pronouncement on this topic by Ma CJ and Cheung PJ (as he then was) in Chan Ka Lam v The Country and Marine Parks Authority [2020] HKCFA 33:
25.In order to understand the context and purpose of s 29DF, it is necessary first to refer to some basic provisions in the Ordinance relating to the charging of ad valorem stamp duty on agreements for sale of residential property under Division 3 of Part IIIA of the Ordinance. 26.The starting point is s 29BA(a), which provides that, subject to certain specified exceptions, an agreement for sale is chargeable with stamp duty under Part 1 of Scale 1 of Head 1(1A) in the First Schedule (“Scale 1 - Part 1”) if the property concerned is residential property. Where an agreement for sale is chargeable with stamp duty under Scale 1 - Part 1, the amount of stamp duty is calculated at the flat rate of 15% of the amount or value of the consideration under that agreement[2]. 27.However, lower rates of stamp duty are applicable in relation to certain agreements for sale of residential property where the purchaser is a Hong Kong permanent resident (“HKPR”) and is not, at the time of acquisition, a beneficial owner of any other residential property in Hong Kong:
28.The purpose of s 29BB was explained in the Legislative Council Brief on Stamp Duty (Amendment) Bill 2013, TsyB R 183/700-6/5/0 (C), dated April 2013 (“the LegCo Brief”) prepared by the Financial Services and Treasury Bureau, at §9:
29.In addition, it was recognized that some HKPRs might acquire a new residential property before disposing of their original one, and it was decided that the lower rates under Scale 2 should also be available to those HKPR purchasers by means of a refund mechanism provided that certain conditions were met: see §15 of the LegCo Brief:
30.The purpose of the refund mechanism was stated in the Report of the Bills Committee on Stamp Duty (Amendment) Bill 2013, LC Paper No CB(1)1703/13-14, dated 2 July 2014 (“the Bills Committee Report”), at §32:
31.The refund mechanism is given effect by Section 29DF which, so far as relevant, provides as follows:
32.It can be seen that, where the applicable instrument is an agreement for sale on which ad valorem stamp duty has been paid under Scale 1, there are two deadlines to be met by a HKPR purchaser who wishes to obtain a partial refund of the stamp duty under s 29DF:
33.In the present case:
34.Ms Wong submits, however, that s 29DF is intended to apply only to the situation where a person sells his original property within 12 months after the date of the conveyance of the new property. In this case, however, the Applicant sold his original property before the date of the conveyance of the new property. As such, the Application Deadline under s 29DF(3)(c) has no application to his case. In support of this argument, Ms Wong makes 3 main points. 35.First, she argues that the Disposal Deadline provided for under s 29DF(3)(a) and (5)(b), upon its natural and ordinary reading, envisages that the agreement for sale of original property (“disposal agreement”) would be made during the period of 12 months commencing on the date of the conveyance on sale executed in conformity with the agreement for sale of the subject property (“acquisition agreement”), and hence s 29DF is intended to apply to that scenario only. There is some superficial attraction to this argument if one reads s 29DF(3)(a) and (5)(b) in a strict and literal sense. However, the preferable way of reading those subsections, in order to give reasonable sense to them, is that, to qualify for refund, the disposal agreement could be made at any time during the period from (a) the date of the acquisition agreement to (b) 12 months after the date of the conveyance on sale executed in conformity with the acquisition agreement. This is because s 29DF is intended to benefit those HKPRs who acquire a new residential property before disposing of their original one (“先買後賣”) (as mentioned in §15 of the Legco Brief), or to “cater for the replacement needs of HKPRs” (as mentioned in §32 of the Bills Committee Report). There is no sensible reason why the right to apply for refund should exclude cases where the disposal agreement is made during the period between the date of the acquisition agreement and the date of completion of the acquisition agreement. 36.This matter was in fact considered by Deputy High Court Judge Keith in Ho Kwok Tai v Collector of Stamp Revenue, HCAL 49/2015 (18 February 2016), at §§13-14 (the learned Judge’s view on this matter was not affected by the judgment of the Court of Appeal [2016] 5 HKLRD 713):
37.Second, Ms Wong argues that s 29DF fails to cater for the situation where there is a long completion period under an acquisition agreement, which is possible in the case of a sale of a flat in an uncompleted development. In this regard, Ms Wong refers to the discussion at §33 of the Bills Committee Report:
38.It seems clear that the Bills Committee’s concerns related to the short timeframe of 6 months (calculated from the date of the acquisition agreement) allowed for the disposal of the original property under the original s 29DF(3)(a) of the Stamp Duty (Amendment) Bill 2013 which it was thought might cause difficulty to some buyers of long-term uncompleted flats, and it was suggested that the timeframe should be extended to 12 months. In this regard, it may be noted that in the 2013 Bill:
39.With a view to meeting the above concerns expressed by the Bills Committee, the Government proposed various amendments to the 2013 Bill, as explained in §39 of the Bills Committee Report:
40.Eventually, in Ord No 14 of 2014 as enacted by the Legislative Council:
41.From the above legislative history of s 29DF, Ms Wong’s suggestion that s 29DF fails to cater for the situation of a long completion period under an acquisition agreement is incorrect. It may be argued that the relevant amendments did not go far enough, but that is not a valid ground to hold that s 29DF only applies to the situation where a person sells his original property within 12 months after the date of the conveyance of the new property, but not where he sells the original property before the date of the conveyance of the new property. 42.Third, Ms Wong argues that the time limit for making an application for refund under s 29DF(3)(c) should allow a purchaser to make the application after the purchase of the subject property has been completed because various things may happen which prevent completion from taking place and it would impose an unreasonable requirement on the purchaser to make the application for refund before completion of the purchase of the subject property. It should be noted, however, that there is no requirement on a purchaser seeking a partial refund of stamp duty under s 29DF to make the application prior to completion of the purchase of the subject property. He may do so within the period of 2 months after the date of the conveyance on sale under which his original property is transferred or divested, and the relevant disposal agreement may be entered into within the period of 12 months after the date of the conveyance of the subject property to him. There may, of course, be cases where the purchaser, because of his personal or financial circumstances, would need to dispose of his original property prior to the completion of the purchase of the subject property. However, the true interpretation of a tax statute cannot be affected by the fact that there may be individual cases where a different interpretation would or could lead to what one may consider to be a fairer result. It has been said that “there is no equity about a tax, as by nature it is ‘inequitable’ …” (Wong Tai Wai v Commissioner of Inland Revenue (unreported, HCIA No 2 of 2003, 15 September 200-3), at §8 per Deputy High Court Judge To). In Feng Hongyan v Collector of Stamp Revenue [2018] 2 HKLRD 1471, Anthony Chan J also stated as follows:
43.In all, I am of the view that s 29DF is applicable not only to the situation where the person seeking refund disposes of the original property after the date of the conveyance of the subject property, but also to the situation where he disposes of the original property after the date of the acquisition but before the date of the conveyance of the subject property. In either situation, the person seeking refund is required to make the application for refund within the time limit laid down in s 29DF(3)(c). I pause to observe that if, as submitted by Ms Wong, s 29DF is not intended to apply, and has no application, to the Applicant’s situation, there would be no legal basis on which he can apply for a partial refund of the stamp duty paid on the Purchase Agreement. APPLICATION OF SECTION 29DF TO THE FACTS OF THE PRESENT CASE 44.The next question is whether the Applicant failed to comply with the time limit for making the application for refund laid down in s 29DF(3)(c), and, if the answer is “yes”, the consequence of such failure. This court recently considered the question of the nature of a statutory requirement as to time and the consequence of a non-compliance with such requirement in Cheung Shui Kam v The Registrar of Companies [2020] HKCFI 2947:
45.I shall adopt the “modern” approach, and consider the 3 questions, ie the substantial compliance question, the discretionary question and the consequences question, in this case. 46.In respect of the first (substantial compliance) question, it is clear from the judgment of the Court of Appeal in Re Au Kwok Hung and that of Kwan J (as she then was) in Re Merck Sharp & Dohme Ltd that generally speaking, there is no question of a substantial compliance with a statutory requirement as to time - the time requirement is either complied with or not complied with. In this case, the time requirement for making an application for refund under s 29DF(3)(c) was not complied with. 47.The second (discretionary) and third (consequences) questions can be taken with together. In my view, the Collector has no discretion to extend, or waive, the time requirement for making an application for refund under s 29DF(3)(c), and a failure to make the application within time means that the right to apply for refund is lost, for the following reasons. 48.First, the language of s 29DF(2) and (3) is plain. The statutory requirements set out in those subsections, including the requirement as to the time of the application under s 29DF(3)(c), are “conditions” which must be fulfilled before the Collector has power to make a partial refund of stamp duty under s 29DF. 49.Second, there is nothing in the Ordinance to suggest that the Collector has any power to extend, or waive, the Application Deadline under s 29DF(3)(c). On the other hand, where the legislature intends that the Collector should have power to extend a time requirement under the Ordinance, such power is given expressly (see, for example, s 48(2)(a) in respect of an application for allowance for spoiled stamps and stamp certificates rendered unfit for the purpose intended which may be made within 2 years after certain specified events “or such further time as the Collector may determine …”). 50.Third, the legislative history of s 29DF referred to in §§37 to 41 above shows that the Application Deadline, together with the Disposal Deadline, were extended or relaxed in order to address some perceived hardship or difficulties which a purchaser of an uncompleted flat might face where the acquisition agreement provided for a long completion period. It was considered that the proposed arrangements could “strike the right balance between safeguarding the effectiveness of the measures and addressing the replacement needs of both owners who acquire existing stocks and uncompleted flats, and would enable buyers changing properties, including those who acquire uncompleted flats, to apply for refund after completion of transactions” (see §39 of the Bills Committee Report). In fact, there was also a proposal raised by a member of the Bills Committee (Mr Tony Tse) that the Application Deadline should be changed to within 2 years from the date of the conveyance on sale of the new property, instead of from the date of the agreement on sale. However, that proposal was rejected by the Government (for reasons which are not relevant to the present discussion) and did not eventually become part of the law (see §§37 and 38 of the Bills Committee Report). The legislative history of s 29DF indicates, in my view, a legislative intention that the time requirements under subsection (3) have to be complied with strictly, and that the Collector has no power to extend the relevant deadlines. 51.Fourth, the general importance of finality and certainty in fiscal legislation (see Moulin Global Eyecare Trading Ltd v Commissioner of Inland Revenue at §74) lends support to the view that the Application Deadline under s 29DF(3)(c) is not capable of being extended, or waived, by the Collector. 52.The above conclusion makes it unnecessary for me to consider Mr Liu’s alternative submission that even if the Collector has the discretion to extend, or waive, the Application Deadline, the factual context and circumstances of the present case do not warrant the exercise of such discretion in favour of the Applicant. I would merely observe that in that scenario, the proper course to adopt would be to remit the application to the Collector for fresh consideration. DISPOSITION 53.The application for judicial review is dismissed, with costs to the Collector, to be taxed if not agreed, with certificate for one counsel.
Ms Carol L W Wong, instructed by Chan, Wong & Lam, for the Applicant Mr William Liu, Senior Assistant Law Officer (Civil Law) and Ms Minnie Wong, Senior Government Counsel of Department of Justice, for the Respondent [1] Being the Purchase Agreement dated 31 October 2017 in this case. [2] When s 29DF was first enacted in 2014, the amount of stamp duty chargeable on agreement for sale under Scale 1 - Part 1 was calculated at rates between 1.5% and 8.5% depending on the amount or value of the consideration under that agreement (see s 28(16) of Ord No 14 of 2014). Stamp duty charged under the then prevailing Scale 1 - Part 1 was commonly known as “DSD” (Double Stamp Duty), because the relevant rates were double the previous rates of ad valorem stamp duty charged on certain instruments dealing with residential properties. DSD was introduced by the Government with a view to cooling the property market in Hong Kong. The rates were subsequently changed to became a flat rate of 15% (see s 11(6) of Ord No 2 of 2018), commonly known as NRSD (New Residential Stamp Duty), with retrospective effect as from 5 November 2016. [3] The “new measures” referred to included increasing the ad valorem stamp duty rates on transactions for residential properties by “doubling across the board the rates of the existing AVD applicable to … residential … properties” (see §§1 and 8 of the LegCo Brief). [4] In the original Stamp Duty (Amendment) Bill 2013, the deadline for disposal of the old property was fixed at “6 months after the date of the applicable instrument” (ie the agreement for sale in respect of the new property). In the eventual Ord No 14 of 2014 enacted by the Legislative Council, the disposal deadline was extended to “6 months after the date of the conveyance on sale executed in conformity with the agreement for sale”. The period of 6 months was further extended to 12 months in 2018 (see s 9 of Ord No 2 of 2018), with retrospective effect as from 5 November 2016 (see s 10 of Ord No 2 of 2018). |
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