Commissioner of Inland Revenue v. Inland Revenue Board of Review and Another

HCMP001504A/1988

1988 M. P. 1504

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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BETWEEN

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Coram: Hon. Barnett J. in Court

Dates of hearing: 12 - 13 December 1988

Date of delivery of judgment: 23 December 1988

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JUDGMENT

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1. On 11th August 1987, the Board made a decision which was adverse to the Commissioner. By letter dated 9th September 1987, the Commissioner, in accordance with the provisions of section 69(1) of the Inland Revenue Ordinance, Cap. 112, applied to the Board to state a case. Section 69 reads :-

2. In his letter, the Commissioner required the Board to state a case for the opinion of the High Court on three questions of law which were:-

3. I shall refer to these questions respectively as the first, second and third questions.

4. In January 1988, the Commissioner produced a draft Case Stated for consideration by the 2nd respondent's solicitors. The draft proposed that there should be included a transcript of the evidence of two of the witnesses who gave evidence before the Board, together with documents which were proved or admitted. The case also proposed four questions of law for the opinion of the Court, which were :-

Question (iv) is identical to the 3rd question.

5. By letter dated 1st February, the 2nd respondent's solicitors objected to the inclusion in the Case Stated of the documents and transcript of evidence and also to the questions which had been posed. They proposed, instead, that the Case Stated should incorporate the Board's decision and that the documents should be available for the Court at the hearing if required. They also proposed one point of law based upon the Commissioner's first question, which read:-

"Whether on the facts found by us, it was open to the Board of Review, as a matter of law, to hold that the shares in Boppardson constituted capital assets with the consequence that the profit arising from the acquisition and disposal of the same was not chargeable to profits tax. "

6. The Commissioner's first reaction was that he agreed to the draft proposed by the 2nd respondent's solicitors but proposed to identify and extract certain parts of the evidence for inclusion in the Case Stated. In the event, the Commissioner found that he could not extract the relevant evidence from the transcript and put forward a revised draft Case Stated which would include a transcript of all the evidence and which re-posed the 3rd question.

7. By letter dated 14th April 1988, the Clerk to the Board wrote to the Commissioner advising him that the first, second and third questions raised by the Commissioner, which included the one question in his final draft Case Stated, had not been sufficiently understood by the Board to enable them to draft the Case. Accordingly, the Board proposed to give the Commissioner an opportunity of satisfying the Board that the 3rd and remaining question was a proper question of law for the opinion of the Court.

8. On 18th April, the Commissioner and the 2nd respondent, each by counsel, appeared before the Board. The Commissioner contended that of his three questions, the first and second were subsumed in the third, which, he maintained, was a proper question of law for consideration by the Court. He indicated that it involved a challenge as to findings of fact by the Board, but that it was not necessary for the purpose of the Case Stated to identify the findings which were being challenged. He said that it was proper to place before the Court, for consideration, the whole of the evidence which was before the Board in order to "test the temperature of the water and see whether the court can come to a separate and different conclusion".

9. In a reserved ruling dated 18th May, the Board accepted that it is proper to impeach findings of fact by the Board on the basis that there was no evidence which could have supported such findings, or to impeach the Board's failure to find as facts, matters upon which the evidence pointed only one way. The Board further accepted that in order to demonstrate that there was no evidence to support a particular finding of fact, it might be necessary to include the whole of the evidence adduced before the Board. Before such a course could be countenanced, however, the Board took the view that it would be necessary to identify the findings of fact which were impeached to enable the Board to state a case. In the circumstances, the Board declined to state a case upon the basis of the Commissioner's letter dated 9th September 1987.

10. By way of an application for judicial review, the Commissioner now seeks to have quashed the Board's ruling dated 18th May, and an Order of Mandamus directing the Board to state a case for the opinion of the High Court upon the three questions of law contained in his letter date 9th September 1987.

11. For the Commissioner, Mr Feenstra submitted that the three questions are questions of law, that the Board has a statutory duty to state a case when an application is made under section 69(1) and that the Board has no discretion to decline to state a case when such an application has been made. The Board and the 2nd respondent accepted the second submission, but disagreed with the first and third.

12. With regard to the first question, Mr Feenstra said that the issue which the Board decided, namely, that on the facts which it considered relevant, the profits were not taxable under section 14 of the Inland Revenue Ordinance, involved the construction of that section. Whether an Ordinance has been correctly interpreted is a question of law. Further, it is a question of law whether the Board properly applied the law to the facts found, or as they ought to have been found on the whole of the evidence.

13. There was, I think, no dispute about those contentions.

14. Mr Feenstra said that it was not necessary for him to give further details or particulars of what facts or other points were being challenged. For this proposition, he relied upon C.I.R. v. International wood Products Limited [1971] H.K.T.C. 551. In that case, Blair-Kerr, Ag. C.J., after reviewing the "questions of law" on which he had been asked to express an opinion, said at P.571 :-

"Clearly these so-called 'questions of law' are, for the most part, nothing more than grounds of appeal. "

15. Mr Feenstra therefore contended that, by identifying findings of fact, he would not be submitting questions of law but rather grounds of appeal.

16. Mr Feenstra further argued that the Board could not find that the first question was not a question of law or that no question of law arose in its decision. Therefore, the Commissioner was entitled to have a Case Stated on this question alone. Mr Feenstra referred to C.I.R. v. Rico International Ltd. [1965] H.K.T.C. 229. This was an appeal from the decision of a judge sitting in appellate jurisdiction on a Case Stated under section 69. At page 268, Blair-Kerr J. said :-

"Counsel for the appellants objected to submissions (b) and (c) on the ground that they raised new points of law which should have been expressly raised in the case stated; counsel did not seek an adjournment on the ground that he was taken by surprise; he put his objection on the footing that, as the Commissioner had not asked the Board to include these points of law in their case, it was not open to him to raise them at this stage. Before the learned judge the appellants did not take the point that the case stated raised no point of law.

Appeals from decisions of the Board of Review are regulated by section 69 of the Ordinance which reads in part :-

The phraseology used in the Income Tax Acts 1918 and 1952 is to the same effect. Under section 149 of the former Act, the appellant, if dissatisfied with the determination of the Commissioners as being erroneous in point of law, may require them to state and sign a case which shall set forth the facts and the determination of the Commissioners; and under section 149(2)(a) :-

'The High Court shall hear and determine any questions of law arising on the case. '

In other words, in both the English and Hong Kong enactments the case stated  must include the facts and the determination; but not necessarily agreed points of law. The effect of the decisions appeals to be summarised in Simon's Income Tax (2nd Ed.) Vol. 1 at p.280, where the learned author says :-

'The Court will give effect to any point of law arising on the facts stated in the case; but when it is sought to raise a question which was not raised before the tribunal below and this depends upon further evidence being taken, the Court will refuse to give effect to the point so sought to be raised. '

Of coarse, while it may be legally unobjectionable for the Board to frame one question in terms sufficiently general to include any question of law which could arise on the facts and on their determination, it is also desirable that whenever possible they should be asked to say on what particular questions of law the opinion of the judge is being sought. However, section 69(5) is in the same terms as the corresponding English provision; and it would appear that the judge not only may, but is under a duty to hear and determine 'any question of law arising on the case stated' (which need only include the facts and the determination) provided, of course, it is open to counsel to argue the point on the facts as found. The position in tax appeals appears to be different from that which obtains in appeals under section 103 of the Magistrates Ordinance.

In my view, the fact that the Board were not asked to, and did not, include the specific questions of law raised before this court and before the learned judge, is not fatal to this appeal. "

17. I note that there is a difference in the phraseology of the English and Hong Kong legislation. I do not, however, consider it material. The legislation "is to the same effect".

18. On the basis of this authority, Mr Feenstra said that it is permissible to raise a question of law in a wide form and that an applicant is entitled to have the High Court determine any question of law arising on the Case Stated. I am unable to accept a proposition in such wide terms. I accept, and indeed I am bound by that authority, that once the Court is seized of a Case Stated, it must, subject to any necessary adjournment, deal with any point of law arising out of the Case Stated. There must first, however, be a Case Stated before the Court. That situation is brought about by compliance with section 67, that is to say the formulation of a question of law and the preparation of a Case Stated. Until a satisfactory question has been identified so as to trigger the preparation of the case, it is not, in my judgment, permissible for the applicant simply to say that there must be a point of law which will arise for consideration by the High Court.

19. In The Attorney General v. Leung Chi-kin [1974] H.K.L.R. 269, Huggins, J. delivering the decision of the Full Court said at p. 272 :-

"The basic requirements of a case stated are that it should be complete in itself and should not have any annexure unless it is essential to the decision of the appeal that such annexure should be before the Court. In particular the magistrate's judgment should not normally be exhibited and it is not desirable as a general rule, although it may not always be wrong, for the notes of evidence to be annexed even if the Court is asked to decide whether there was evidence on which the magistrate could properly come to his conclusion : Hickton v. Hodgson (1914)78 J.P.93. The case stated should contain in numbered paragraphs -

20. That statement of the law was approved by Macdougall J. in Chinachem Investment Co. Ltd. v. Commissioner of Inland Revenue. On appeal from the judge's decision to the Court of Appeal (Civil Appeal 1986, No. 116), Sir Alan Huggins, V. -P. said :-

"There was much discussion before us and before the judge as to the form of the Case Stated and the procedure for settling it. It has never ceased to amaze me how much argument this  simple and straightforward process engenders. A properly drafted Case Stated is the most satisfactory Process of all for deciding a question of law, for it concentrates attention on the essentials of the case, but it does require those concerned to marshall and state with precision the issues, the facts (and, where necessary, the evidence), the arguments and, finally, the conclusions attacked. Criticism was directed at the Board of Review for failing to produce an acceptable case. In my view that criticism was almost entirely misdirected. Whatever may be the present practice in England, the established practice in Hong Kong is that where parties are professionally represented they shall draft the Case Stated and submit it to the tribunal. The reason is obvious: the parties know better than anyone else what points they wish to take on the appeal, what findings of fact they wish to contend are relevant to those points and what arguments they advanced. The tribunal has the final responsibility for stating the Case and is not bound by the draft submitted to it. It can therefore, after consulting the parties, alter the draft if it is inaccurate or incomplete. Even if the drafting were to be done by the tribunal itself, it would be the duty of the parties to apply for any necessary amendment. As I have often said before, there may be cases where it is impossible adequately to state the Case without annexing one or more documents, but such cases are few and far between. The documents may even include a transcript of evidence, but that is to be avoided if possible, because such a transcript inevitably contains unessential matter which it is the object of the process to exclude. Thus, where the issue on appeal is whether there was any evidence to support a finding of fact, a transcript of all the evidence may be a necessary annexure, but a transcript is not to be annexed where what is required is a statement of the facts found or assumed or where with proper diligence a precis of the material evidence can be included in the Case Stated itself. I appreciate that in the present case it is urged that the facts should have been found and not assumed, but that is a different matter (which I shall deal with in an appropriate part of the judgment) involving a criticism of the Board's Determination and not of the Case Stated.

The Case as ultimately stated include no less than 513 pages, amongst which were the Commissioner's determination and copies of some law reports. On any view those were not documents which it was proper to annex. In the event, as was to be anticipated, only about a score of the pages of exhibits were even referred to on the appeal.

All too often the Case Stated process is adopted in an attempt to raise as an issue of law what is in truth an issue of fact. Some of the questions posed for the consideration of the High Court show this to have been such a case. It is one thing to allege that a tribunal has found a fact which was unsupported by any evidence : that raises an issue of law. It is quite another thing to allege that a tribunal of fact has disregarded evidence or that the evidence 'did not substantiate' a finding. "

21. In relation to Young Chi-kin, Mr Feenstra pointed out that the case related to appeals by way of Case Stated from a magistrate. He said that it is wrong to equate the decision of a magistrate in a criminal case with the complex factual and legal issues which are commonly argued before the Board. He said that there is a greater risk of error in findings of fact by the Board in such cases. I accept that there is a difference between the two types of case. Nonetheless, the guidelines laid down in Young's case and accepted in Chinachem do offer useful guidance, which, in my view, should be followed if possible. The cases also emphasise that the case stated is the Board's responsibility. Thus, if it is to provide a satisfactory case for the Court, it must know about what precisely it is stating a case.

22. In Ransom v. Higgs [1973] 1 W.L.R. 1180, Roskill L.J. after reciting a number of conclusions or inferences of fact contained in the special case, at P. 1204 said:-

"Mr Beattie argued that there was no evidence to justify these various conclusions or inferences of fact and it was therefore not only open to the court but it was the duty of the court to ignore these findings. Reliance was placed both by him and Mr Walton in this connection on the speeches in the House of Lords in Prendergast v. Cameron [1904) A.C. 549, 558, per Viscount Maughan, and in Edwards v. Bairstow [1956] A.C. 14, per viscount Simonds at pp. 30-31 and Lord Radcliffe at pp: 33-36. But, as Mr MacCrindle pointed out, in both those cases their Lordships were concerned with findings, conclusions or inferences, whichever word be used, of a very different kind from those here sought to be challenged. In Edwards v. Bairstow, the special commissioners had, as the House of Lords ultimately held wrongly, reached a conclusion that the transaction there in question was not an adventure in the nature of trade which was quite contrary to the remainder of their findings. It was, in Lord Radcliffe's phrase, at P. 36 a 'determination, it is, obviously, erroneous in point of law having regard to the facts found..........

........... If it is desired to contend on the hearing of a special case that there was no evidence to justify a particular conclusion of fact, then a party must ask for the case to include the question whether there was any evidence to justify such a conclusion. If he does not do so, then that question is not before the court because the court does not know what evidence was called before the tribunal of fact, and if that question is not before the court, then the conclusion sought to be complained of can only be attacked if other findings in the case make it perverse or manifestly wrong in law. That clearly is not so in the present case. The special commissioners heard evidence; we do not know what that evidence was. Very properly it was not exhibited to the special case. The special commissioners were not asked to exhibit that evidence nor indeed fully to summarise it.

In revenue cases the parties have the advantage, denied to parties in commercial arbitrations, of seeing a draft of the special case in advance. There should therefore be no practical difficulty in seeking the statement of the requisite question of law, if necesary as an additional question, whether there was any evidence to justify a particular conclusion at which the special commissioners proposed to arrive. "

23. In the light of these dicta of the most persuasive authority, I am not prepared to accept that an applicant for a case stated may rely on a question of law which is imprecise or ambiguous and which gives the Board no clear idea of what material must be marshalled in their case.

24. Mr Feenstra maintained that the second question is also a question of law. He recognised that the Board expressly stated where the onus lay, i.e. on the taxpayer. He maintained, however, that the evidence before the Board may have been such that the court could consider that on the proper application of the onus of proof, certain inferences of fact were not properly made by the Board and insupportable. In plain terms, if there was evidence going either way, it could not be said that, on the balance of probabilities, the taxpayer had proved its case.

25. In my view, this is a thinly disguised attack upon the fact-finding function of the Board. Unless there was no evidence to support a finding of primary fact, or unless the primary facts could not support an inference found by the Board, whether the onus was discharged was a question of degree which depends upon the evaluation by the tribunal of fact.

26. To impugn the Board's evaluation would be to undermine the whole purpose of the Board as a fact-finding tribunal. Unless the Commissioner can identify findings of fact for which there is no evidence or inferences which are wholly unsupportable and thus wrong in law, this question is untenable. I do not regard the second question as a question of law.

27. According to Mr Feenstra, the third question is taken from the wellknown passage of Lord Radcliffe's judgment in Edwards (Inspector of Taxes) v. Bairstow & Anr. (1956) A.C. 14, where he said at P. 36 :-

"When the case comes before the court it is its duty to examine the determination having regard to its knowledge of the relevant law. If the case contains anything ex facie which is bad law and which bears upon the determination, it is, obviously, erroneous in point of law. But, without any such misconception appearing ex facie, it may he that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. In those circumstances, too, the court must intervene. It has no option but to assume that there has been some misconception of the law and that this has been responsible for the determination. So there, too, there has been error in point of law. I do not think that it much matters whether this state of affairs is described as one in which there is no evidence to support the determination or as one in which the evidence is inconsistent with and contradictory of the determination, or as one in which the true and only reasonable conclusion contradicts the determination. Rightly understood, each phrase propounds the same test. For my part, I prefer the last of the three, since I think that it is rather misleading to speak of there being no evidence to support a conclusion when in cases such as these many of the facts are likely to be neutral in themselves, and only to take their colour from the combination of circumstances in which they are found to occur. "

28. In that case, the facts found were not disputed. The only issue was whether those facts supported the Commissioners' conclusion that there was no adventure in the nature of trade. The House of Lords determined that the facts found did not support that conclusion.

29. Nonetheless, Mr Feenstra contended that if the findings of fact are challenged, the Commissioner is entitled to frame his question of law on the basis of the third description used by Lord Radcliffe. He pointed out that, in any event, Lord Radcliffe spoke of evidence.

30. For the 2nd respondent, Mr Gardiner contended that this passage must be looked at in the context of the case. Lord Radcliffe was not referring to evidence in the sense of the raw material from which facts are found, but rather to the facts which had been found by the Commissioners. I accept that contention. It is quite clear that Lord Radcliffe was not talking about evidence in the general sense.

31. Nonetheless, Mr Feenstra maintained that the third question is a question of law, that the Commissioner is entitled to frame the question as he sees fit, and is entitled to have it determined by the court by virtue of his right of appeal under section 69.

32. This question is, as Mr Feenstra described it to the Board, the ultimate question. On the face of it, it could involve an attack on the Board's findings of fact, or, accepting those findings, an attack upon the conclusion from the findings. If the latter attack only is involved then, undoubtedly, it is an Edwards v. Bairstow question of law. However, Mr Feenstra made it plain to the Board, and has made it plain to me, that findings of fact are under attack. Indeed, Mr Feenstra has now placed all his cards on the table and admits that the Board is under attack in respect of facts found, in respect of facts not found but which should have been found, in respect of inferences drawn and generally for misdirection. He did, and does, not consider it necessary to particularise which individual matters are impugned.

33. In Ransom v. Higgs (1974)1 W. L. R. 1594, Lord Simon of Glaisdale said at P. 1618 :-

"But many words and phrases in English have many shades of meaning and are capable of embracing a great diversity of circumstance. So the interpretation of the language of an Act of Parliament often involves declaring that certain conduct must as a matter of law fall within the statutory language (as was the actual decision in Edwards v. Bairstow [1956] A.C. 14); that other conduct must as a matter of law fall outside the statutory language; but that whether yet a third category of conduct falls within the statutory language or outside it depends on the evaluation of such conduct by the tribunal of fact. This last question is often appropriately described as one of 'fact and degree'. "

34. In reliance upon that passage, Mr Feenstra contended that an applicant is entitled to take his case to the Court for a determination as to whether conduct inexorably falls within statutory language or outside it, or whether it is matter of fact and degree which depends entirely upon a tribunal's evaluation and determination. The Court, he said, should not be obstructed from determining on which side of the line conduct falls.

35. For the Board, Mr Chang maintained that the position adopted by the Commissioner amounts to an abuse of the Case Stated procedure and that the Board properly declined to state a case on the "ultimate question". He said that if Mr Feenstra is right in insisting that the Commissioner is entitled on a Case Stated to frame a question in such a general manner, he is effectively requiring the court to rehear the whole review on paper, without the benefit of hearing the witnesses. Thus, the losing party before the Board could, on every occasion, appeal to the court, hoping that it would come to a different conclusion, whether or not there was a bona fide challenge on a question of law which the Court ought to be asked to answer.

36. Mr Chang said that a tax appeal should be dealt with expeditiously so that the Board's decision should, in general, be final and conclusive, save where a question of law is clearly identified. Further, if the Commissioner's contention is correct, the taxpayer will be put at risk of having his business affairs disclosed in an open hearing before the Court in every case. This would defeat the policy of secrecy which lies behind the in-camera hearing required before the Board in accordance with section 68(5) of the Inland Revenue Ordinance.

37. Mr Chang maintained that the Court should not be burdened with the rehearing of the whole matter on paper every time an appeal is made against the Board' s decision. He drew my attention to the judgment of Pearson L.J. in Tersons Ltd. v. Stevenage Development Corporation where at P. 370 he said :-

"We are concerned in this case with only one aspect of that jurisdiction, namely, the procedure under Sect. 21 of the Arbitration Act, 1950, of stating any question of law arising in the course of the reference, or an award, or part of an award, in the form of a special case for the decision of the High Court. The intention is that questions of law may be raised in this way for the decision of the High Court.......... the procedure should be kept within its proper limits, confined to questions of law, and should not be extended so as to encroach upon the general finality of the arbitrator's decision as provided by S ct. 16 of the Arbitration Act, 1950. There is a danger of attempts being made to turn questions of fact into questions of law with a view to having them retried by the Court, with the result that all the objects sought to be attained by means of arbitration - decision by the tribunal chosen by the parties, and finality and quickness and cheapness - would be defeated by protracted proceedings in the High Court arising out of the arbitration. I think that the special case procedure is meant to provide a simplified form of appeal, limited to questions of law and to be determined by reference only to the matters set out in the special case. That is the evidence statutory intention. It would be frustrated if there grew up a practice of stating a special case on questions whether there was any evidence to support this, that and the other findings of fact, and of appending to, and incorporating in the special case, a complete transcript of the evidence so that the Court, with the assistance of Counsel, would have to spend days and days going through the transcript and collecting evidence on this, that and the other points. "

38. Mr Feenstra pointed out that that case dealt with an appeal from an arbitrator. He contended that the Board should be equated with a jury, in which case an appellate court has a revising function to see whether there was any evidence in support of any conclusion found by the jury and whether its verdict can stand as being one which reasonable man might have come to; see Mechanical and General Inventions Co. Ltd. and Lehwess v. Austin and The Austin Motor Company Limited (1935) A.C. 346.

39. I am unable to accept that contention. It is clear to me that the positions of arbitrator and Board are wholly analogous. They are fact-finding tribunals whose decisions are intended to be final, subject only to review upon an alleged error of law. The only difference which I can discern is that while parties submit voluntarily to arbitration, a taxpayer is compelled by statute to go to the Board if he wishes to contest a determination by the Commissioner.

40. Mr Chang also reminded me of the criticism voiced by the Court of Appeal in Chinachem to which I have already referred.

41. Mr Chang submitted that if the Board is right to decline to state a case where it clearly appears that the procedures being abused, the problems which he has pointed out can be held in check and the procedure made to perform its proper statutory function. He said that unlike the judicial review procedure, which is the subject of the present hearing, no leave has to be obtained from the Court before the hearing of a Case Stated. Once a case is stated, the Court will have to hear it (although, of course, the Case Stated may be remitted for amendment). The Board therefore, provides a useful preliminary check and ensures that only genuine questions reach the court.

42. That the Board has power to decline to state a case is, said Mr Chang, supported both by authority and principle. He pointed out that under section 69, it is the duty of the Board to state a case. The Board, therefore, has to be responsible for the form which the Case Stated eventually takes. The form which a Case Stated should take has been clearly indicated by the guidelines laid down in the Leung Chi-kin and Chinachem cases. The guidelines show that the Board, or any other tribunal, should not simply adopt a rubber stamp position, but take certain steps to ensure that the object of the procedure is achieved.

43. Mr Chang said that if the circumstances surrounding an application to state a case are such that the object of the procedure cannot be achieved, i. e. to deal expeditiously with a clearly identified point of law, the situation amounts to an abuse. In such circumstances, the Board or tribunal has both the power and the duty to decline to state a case as requested by the applicant. The Board can, and should, decline to state a case where the only question raised is, in substance, a question of fact and not a question of law; see R. v. Sheil (1884)50 LT 590. Where the question raised is one of law, but the question has been decided by the Board in accordance with a previous binding decision of an appellate court, the Board should decline to state a case; see R. v. Shiel (1900)82 LT 587. And where the question raised is one of law, but is obviously a had point, a case should not be stated; see R. v. Special Commissioners of Income Tax, (In Re G. Fletcher) (1891)3 Tax Cases 280.

44. The Board should not, said Mr Chang, be put in a position where it has to search for, or speculate upon, points of law on which to state a case. It is incumbent upon the applicant clearly to identify the points of law which he wishes to raise. Failing such identification, the Board is entitled to decline to state a case.

45. Mr Feenstra said that the cases which I have just cited should be treated with care. He said that there has been a great development in the law as to when the courts will intervene with the decision of a tribunal is law. He drew my attention to Ashbridge Investments Limited v. Minister of Housing and Local Government [1965]1 W.L.R. 1320 where at P. 1326, Lord Denning M. R. said :-

"Seeing that that decision is entrusted to the Minister, we have to consider the power of the court to interfere with his decision. It is given in Schedule 4, para. 2. The court can only interfere on the ground that the Minister has gone outside the powers of the Act or that any requirement of the Act has not been complied with. Under this section it seems to me that the court can interfere with the Minister's decision if he has acted on no evidence; or if he has come to a conclusion to which on the evidence he could not reasonably come; or if he has given a wrong interpretation to the words of the statute; or if he has taken into consideration matters which he ought not to have taken into account, or vice versa; or has otherwise gone wrong in law. It is identical with the position when the court has power to interfere with the decision of a lower tribunal which has erred in point of law. "

46. Mr Feenstra said that it is an error of law if a tribunal takes into consideration irrelevant matters or fails to take into consideration relevant matters. In dealing with such a question of law, the courts should give the question a wide and liberal interpretation.

47. I accept what Mr Feenstra says. Nonetheless, I think the cases cited by Mr Chang to be good for the principle that the Board is not to be treated as a mere cipher.

48. Mr Gardiner emphasised the need to distinguish between evidence and fact. He said it is for the Board to evaluate evidence and to find facts based upon that evidence. The applicant cannot demand a case to be stated in respect of those facts and seek the court's re-evaluation of the evidence unless, of course, it is contended that there was no evidence from which a fact could he found. But, if it is contended that there was no evidence, the court's function is confined to considering whether there was evidence to support the finding of fact. In Tersons, Lord Upjohn said at P. 366:-

"When an arbitrator is preparing to state a case raising the question whether there was evidence upon which he reached a certain conclusion of fact, he must in principle proceed in exactly the same way as when he is preparing a case stated to raise some other question of Law. He must set out the relevant facts, but the facts, when his conclusion of fact is so questioned, must consist of the evidence on which he relies to support his conclusion. When he is setting out this evidence, he must remember that he is bound only to set out the evidence on which he relies to support his conclusion. He is not bound to set out the whole of the evidence for and against the conclusion of fact which he has reached. Indeed, strictly it is wrong for him to set out the evidence tending to show that his conclusion was wrong, for it is irrelevant. The Court is not concerned with his finding of fact; the Court is concerned only to see that there is evidence to support his finding. If there is, then the arbitrator's decision is final. Thus, an arbitrator could perfectly properly state: 'The evidence of Mr Smith was to the following effect' (setting it out) 'and I accepted it'. It is then quite immaterial that there were 20 witnesses who gave evidence in a contrary sense. With all respect to Mr Dunn's argument to the contrary, it is, in my judgment, the arbitrator's duty to state the effect of the evidence which he accepted, and not to set out question and answer in a transcript, or even his own note. That this must be so is, I think, clear when one considers that very few witnesses, however honest, give evidence-in-chief which is not to some extent affected by cross- examination; and if all that the arbitrator does is to set out some questions and answers, the Court is left with the task of evaluating that evidence, and deciding what is its effect. That is the very task that the parties have committed exclusively to the arbitrator. Consequently it is his duty to evaluate the evidence himself, and therefore to set out in summary form the effect of the evidence on his mind. It is wrong to leave that bask to the Court which, furthermore, has not seen or heard the witnesses, and therefore is denied the right of assessing it properly.

The arbitrator can in a few simple cases, where it is easy and practicable, set out the evidence in the form of a transcript or his own note, but normally that will not be so. "

49. Mr Gardiner drew my attention to a number of cases distinguishing between matters of fact and law :

Caledonian Railway Company v. Banks l T.C. 487

New Zealand Shipping v. Shephens 5 T.C.5S3

Smart v. I.R.C. 29 T.C. 338

Nello Simoni v. A/S M/S Straum (1949) 83 L1.R. 157

Faradayd V. Carter 11 T. C. 565

Furniss v. Dawson [1984] A.C. 474

50. In the New Zealand Shipping case, Farwell, L. J. said at p. 567 :-

"..... the Commissioners ought not to state either side out of Court by stating, under the guise of fact, that which is really law. Nor do I suppose for a moment that they would intentionally do it. If either side desired to urge to the Commissioners that there was no evidence to justify some particular finding which they were proposing to make, I think it is the duty of that party to ask the Commissioners to state, for the opinion of the Court, whether there is any such evidence as would justify such a finding. That would be a question of law, a question of evidence or no evidence, but if there is any evidence at all then it is for the Commissioners and not for the Court. "

In Faraday v. Carter, Rowlatt, J. said at p. 572 :-

"In these cases the only jurisdiction which the Court has is to decide questions of law. The Court cannot entertain an appeal upon a question of fact and it cannot entertain what I may call an original jurisdiction upon questions of fact: that is to say, it is not within the power of the Commissioners to state the evidence for and against in the form of a summing up and then ask the Court to step into their place and to decide what is the true conclusion of fact. The Commissioners have not the power to do that, and the Court has not the power to do it if the Commissioners try to do it. I think it is now well understood - Lord Justice Pickford (as he then was) made it perfectly clear in the New Zealand case - that when the Commissioners set out all the facts it is in order that the Court may see whether there is any evidence to support their findings of fact or, if it is a question of a legal inference, whether the proper legal inference has been drawn, or whether they have gone wrong on any point of law; and very often it is a very right thing for the Commissioners themselves to set out the facts rather than to come to a conclusion which may be regarded as a conclusion of fact looked at in one way but which may have embedded in it a conclusion of law also. That is what was meant by Lord Justice Farwell when he deprecated stating people out of Court in the form of a finding of fact which was really a conclusion of law. That is the position. "

51. It seems to me clear that an applicant for a case stated must distinguish between matters of fact and law because, depending upon the nature of the attack, the case will have to be prepared very differently. If a finding of primary fact is attacked, the case will have to identify the evidence relied on. If an inference or conclusion from primary facts found is attacked, the case will recite the facts found and not the evidence.

52. I fail to understand why the Commissioner cannot or will not identify the individual matters he wishes to challenge. In my judgment it stems from a misunderstanding of the passages in Ransom v. Higgs and Edwards v. Bairstow to which I have already referred.

53. In my view, the dicta of Lord Simon in Ransom v. Higgs apply only to a situation where primary facts have been found by the tribunal and have been accepted. Those facts may admit of only one conclusion, in which case the court can overturn the decision of the tribunal if it has reached the wrong conclusion. If, however, the facts admit reasonably of either conclusion, the decision of the tribunal as the fact-finding body is left undisturbed. The Court does not, and cannot, seek to substitute its own view for that of the tribunal because that would be to interfere with matters of "fact and degree".

54. If an applicant seeks to challenge the findings of primary fact, however, a different situation arises. The court will only interfere with a tribunal's finding of primary fact if it is demonstrated that there was no evidence to support that finding. That is not a question of fact and degree.

55. The same considerations apply to the passage from Edwards v. Bairstow. Although Mr Feenstra tried to persuade me that when he used the word "evidence", Lord Radcliffe meant evidence as opposed to facts found, it is clear that the reference should have been to facts. The court will interfere with an inference drawn from primary facts, or with a conclusion drawn from a combination of primary fact and inference, if the true and only reasonable inference or conclusion was not the one reached by the tribunal. But where the primary facts themselves are disputed, it is necessary, as I said earlier, for the applicant to demonstrate that there was simply no evidence to support such a finding.

56. Where, therefore, findings of primary fact are under attack, it is a misuse of the third test propounded by Lord Radcliffe to mount that attack. If a question of law such as the third question based upon the third test is permitted, the Board would appear to have no option but to attach the whole of the evidence, i.e. a transcript of any oral evidence, statements of witnesses and documents, to the Case Stated, for a review by the court. In my view, that cannot be right. Such a course is clearly rejected by the authorities to which I have already referred.

57. Further, if such a course is permissible, there would seem to be little point in setting up a Board of Review as a fact-finding body whose decision is intended to be final. It reduces the Board's function to one that is little more than secretarial, i.e. receiving and recording the evidence which it then transmits to the court for consideration and for a finding.

58. Mr Feenstra also drew my attention to Richfield International Land and Investment Co. Ltd. v. C.I.R. Civil Appeal No. 59 of 1988 and C.I.R. v. Waylee Investments Limited, Inland Revenue Appeal No. 3 of 1988. Mr Feenstra said that in each case, general questions "whether there was evidence on which the Board could properly arrive at their decision", similar to his third question, had been asked. He said that no point was taken that the questions were improper. No point was taken. In Richfield, however, there was no dispute or challenge to the facts found. The dispute was whether the Board's conclusions from those facts were, in law, proper, i.e. an Edwards v. Bairstow question. In Waylee, recently decided by me, again there was no real challenge. The effective question, therefore, was "whether on the facts found, the Board could properly arrive at its decision", again an Edwards v. Bairstow question. Although some evidence in the transcript, which was a very short one, was considered, it was evidence which was not controversial.

59. The decision of a Board of Review is like a pyramid. At its base is a number of blocks consisting of primary facts found by the Board upon evidence presented to it. Above these is another line of blocks, consisting of inferences drawn from the primary facts. At the apex of the structure lies the Board's final conclusion based upon the primary facts and inferences.

60. The final conclusion may be attacked in three principal ways. First, it can be impugned upon the basis that the Board has misdirected itself, for example, upon the burden of proof, or by misinterpretation of a statute. Second, an inference or inferences or the final conclusion may be attacked upon the basis that the primary facts do not admit of an inference drawn from them, or that the primary facts or inferences, or a combination, do not admit of the final conclusion. Third, one or more findings of primary fact may be attacked upon the basis that there was no evidence upon which they could be found. Alternatively, it may be contended that the Board should have made findings of other relevant facts. If the applicant is successful in displacing any of the blocks below the final conclusion or is successful in inserting additional blocks of fact, the structure may be so distorted that the final conclusion must topple and will be set aside by the court.

61. After reviewing the authorities and carefully considering the arguments which have been addressed to me, I am satisfied of the following matters:-

62. I have already dealt with the second question. The first and third questions are superficially questions of law but vague in the extreme and unsatisfactory. It was proper in the circumstances for the Board to query them. Enquiry revealed that it was findings of primary fact that were under attack but the facts, the subject of that attack, were not specified.

63. In my judgment, these two questions do not admit of the preparation of a satisfactory Case Stated and are an embarrassment to the Board. In particular, the third question must, as it stands, require the Board to annex the whole of the evidence to the Case Stated. If the authorities to which I have referred are followed, the Board need only give a general indication of the evidence relied on in reaching any finding of primary fact. Assuming that the Board are able to indicate the existence of such evidence, that is the end of the matter. The Court is not permitted to re-evaluate that or any other evidence to see whether it might have made a different finding.

64. It is clear that the Commissioner does not, understandably, like the Board's decision and hopes to upset it by launching an attack on a broad front with a view to an exhaustive examination of the evidence. What he wants is permission to go beating about the evidential undergrowth in the hope of flushing out some useful pieces of evidence that support his view, in total disregard of settled law that the Board's findings of primary fact, in so far as there is any evidence to support them, are sacrosanct. That is wholly impermissible.

65. In the circumstances, this application is dismissed. Subject to any representations which may be made within 14 days, costs to follow the event.

Representation:

Mr Feenstra, C.C., Attorney General's Chambers, for the Appellant.

Mr D. Chang, Q.C. & Mr J. Mok, M/s Allen & Overy for the 1st Respondent.

Mr J. Gardiner, Q.C. & Mr J. Swaine, M/s. Woo, Kwan, Lee & Lo for 2nd Respondent.