The Commissioner of Inland Revenue Hong Kong v. Borneo Greenland & Co Ltd

DCCJ005485/1976

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION NO. 5485 OF 1976

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Coram: Judge Addison, D.J. in Court.

Date of Judgment:

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JUDGMENT

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1. The single point arising for determination in this case is whether the District Court is the expressed exclusive forum for the recovery of tax due and payable under the Inland Revenue Ordinance Cap. 112. If it is not, then, by reason of section 37A of the District Court Ordinance, Cap. 336, as read with sub-sections (1) and (2) of section 5 of the Small Claims Tribunal Ordinance, Cap. 338, claims for arrears of tax of not more than $3,000 must be brought in the Small Claims Tribunal.

2. Section 37A of the District Court Ordinance came into existence as a consequential amendment in the Second Schedule to the Small Claims Tribunal Ordinance, Cap. 338. It enacts:

"Notwithstanding this Part but subject to section 5(3) of the Small Claims Tribunal Ordinance 1975, the Court shall not have jurisdiction to hear and determine any action or matter that lies within the jurisdiction of the Small Claims Tribunal, unless the Court has jurisdiction under the Small Claims Tribunal Ordinance 1975."

3. The jurisdiction of the Small Claims Tribunal is set out in section 5 of the Ordinance, the relevant sub-sections of which, for the purposes of this case, are sub-sections (1) and (2). Those are as follows:-

4. Turning to the relevant paragraph of the First Schedule, which is headed, "Jurisdiction of Tribunal", paragraph 2 enacts that jurisdiction is conferred on the tribunal in respect of

"Any claim for the recovery of any penalty, expenses, contribution or other amount which is recoverable by virtue of any enactment and for the recovery of any amount which is declared by any enactment to be recoverable as a civil debt if -

5. Section 75(1) of the Inland Revenue Ordinance Cap. 112 expressly declares that tax due and payable under the Ordinance,

"shall be recoverable as a civil debt due to the Crown."

6. Thus, unless the Inland Revenue Ordinance expressly provides that tax shall be recoverable only in the District Court, claims for not more than $3,000 must be brought in the Small Claims Tribunal.

7. It is the contention of the Crown that s.75 of the Inland Revenue Ordinance expressly provides that arrears of tax shall be recoverable in the District Court only.

8. Mr. Fuller referred me to s.75(2) thereof which reads:

9. He submits that the Commissioner is not obliged to sue every person who defaults in paying tax but if he does elect to sue then the Commissioner can only bring his action in the District Court. He argues that where, as in this action, a special procedure is laid down then it is not open to the suitor (here the Commissioner) to institute proceedings in a different manner or forum than that provided for by the legislation.

10. In referring to the fore-runner of section 75, learned Crown counsel directed my attention to section 75 of the Inland Revenue Ordinance, No.20 of 1947. In those days recovery of tax was effected by a certificate being issued by the Commissioner to any Collector or bailiff who thereupon levied execution upon the defaulter's movable property. If the arrears were not paid within five days then the property was sold by public auction. Section 76 of the earlier Ordinance did allow an alternative procedure where to follow the practice under section 75 would have proved impracticable or inexpedient, for example, in those cases where the tax--payer was about to leave the Colony. In those cases, a certificate was issued under section 76 to a magistrate who would then summons the tax--payer before him to show cause why further proceedings for the recovery of tax should not be taken. In default of sufficient cause being shown the tax due was deemed to be a fine imposed by the magistrate and recoverable as such.

11. No power was given to the Commissioner under the earlier Ordinance to sue as an ordinary litigant.

12. Sections 75 & 76 of Ordinance No. 20 of 1947 were replaced and replaced by sections 75 and 76 of the Inland Revenue (Amendment) Ordinance, No. 49 of 1956 and these sections remain more or less unchanged today.

13. Counsel for the Crown, who alone appeared before me in this case, argued that the amendment to the law in 1956 introduced a completely new code for the recovery of arrears of tax. He maintains that the reference to the District Court in section 75(2) is tantamount to an express reference to that court and to that court alone. It is contended that the wording in section 75(2), "notwithstanding that the amount is in excess of the sum of $20,000" is a clear indication that the District Court has an unfettered jurisdiction and emphasises that its jurisdiction is exclusive.

14. Certainly the section provides certain evidential and procedural devices in the claim brought in the District Court; for example, in sub-section (3) of section 75 a certificate signed by the Commissioner stating the name and last known postal address of the defaulter and particularizing the tax due is sufficient evidence for a District Court to give judgment for the amount claimed. Further, by section 75(4) the District Court is precluded from entertaining various defences, most important of which are that the tax is excessive, incorrect or under appeal.

15. If, then, by the Small Claims Tribunal Ordinance, jurisdiction for arrears of tax of not more than $3,000 is transferred to that tribunal it would follow that a number of procedural and evidential devices would be swept aside and that a defaulting tax payer would be able, inter alia, to challenge the amount of tax claimed.

16. This would confer an advantage upon a tax-payer who owes a sum of less than $3,000 which a tax payer owing more would not have the benefit of.

17. Furthermore, the Commissioner's right to legal representation in the District Court would be disallowed in the tribunal by virtue of section 19(2) of the Small Claims Tribunal Ordinance, and at a time when he might have more need of it.

18. Differences in practice as to appeals from the respective forums would also arise.

19. In his submission that the District Court expressly had exclusive jurisdiction, I was referred to a passage in the judgment of Lord Jessel, M.R. in Taylor v. Taylor (1875-6) 1 Ch. D. 426 at page 431, where the Master of the Rolls said in relation to section 16 of the Leases and Sales of Settled Estates Act, 1856,

"The 16th section says: 'Any person entitled to the possession or to the receipt of the rents and profits of any settled estates for a term of years determinable on his death, or for an estate for life, or any greater estate, may apply to the Court by petition in a summary way to exercise the powers confirmed by this Act'. The 17th section provides that, subject to the exception contained in the next section, every application must be made with the concurrence of certain persons. It appears to me that the 16th section, though in form merely enabling, is in fact the only enabling part which entitles the Court to set the Act in motion. When a statutory power is conferred for the first time upon a Court, and the mode of exercising it is pointed out, it means that no other mode is to be adopted. For instance, the 16th section says that the proceeding is to be by petition. It is enabling, I know, in form, that the application may be by petition; but no other process can be adopted".

20. I was also referred to a passage in the judgment of Briggs C.J. in NG Chun-kwan v. C.I.R. H.K. Tax Cases (16.1.76) p.636 where, at page 637 the Chief Justice states,

"The point at issue is of a very small compass - section 75 of the Inland Revenue Ordinance lays down the method by which tax is recoverable by the Commissioner. Jurisdiction is given to the District Court; and the tax is recoverable 'as a civil debt due to the Crown'".

21. I do not think I can read from that passage that the learned Chief Justice was deciding the District Court was the only forum. However I am satisfied that such is the case and for this conclusion I adopt the observations made by Lord Jessel M.R. in Taylor v. Taylor.

22. I therefore go back to the wording of para. 2(a) of the First Schedule to the Small Claims Tribunal Ordinance and ask myself: is it expressly provided in the Inland Revenue Ordinance that arrears of tax shall be recoverable in the District Court only?

23. The Inland Revenue Ordinance lays down a code of procedure for the recovery of tax due. No other procedure is provided. It is the sole express provision for the recovery of tax under the Ordinance and I consider, in the words of Lord Jessel, M.R., that "no other mode is to be adopted for the recovery of tax". I treat the enactment of section 75(2) as an express enactment that the demand is recoverable in the District Court only.

24. For these reasons the application by the Commissioner of Inland Revenue for judgment under Rule 22(2) of the District Court Civil Procedure (General) Rules, Cap. 336 is allowed and under Rule 22(4) I enter judgment in this case for the arrears of tax claimed together with the endorsed costs.

25. A similar order will be made in Civil Action 5483/76 of this Court. The Crown, and in my opinion quite properly, has not asked for the costs of this application.

Representation: