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The Commissioner of Inland Revenue v. International Wood Products Ltd

Read the full judgment text of HCIA 2/1971 on BabelCite. This HCIA judgment.

1. This is an appeal by way of case stated under s.69 of the Inland Revenue Ordinance from a decision of a Board of Review annulling an assessment which had been confirmed by the Commissioner of Inland Revenue (hereinafter referred to as "the Commissioner") against International Wood Products Ltd. (hereinafter referred to as "the taxpayer").

Case No.HCIA 2/1971
Court
HCIA
Date—
Judge—
Case Document
100%Judiciary

HCIA000002/1971

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

INLAND REVENUE APPEAL NO. 2 OF 1971

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BETWEEN
THE COMMISSIONER OF INLAND REVENUE Appellant
and
INTERNATIONAL WOOD PRODUCTS LTD. Respondent

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Coram: Blair-Kerr, Acting C.J. in Court

Date of Judgment: 16th July, 1971.

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JUDGMENT

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1. This is an appeal by way of case stated under s.69 of the Inland Revenue Ordinance from a decision of a Board of Review annulling an assessment which had been confirmed by the Commissioner of Inland Revenue (hereinafter referred to as "the Commissioner") against International Wood Products Ltd. (hereinafter referred to as "the taxpayer").

2. The primary facts are not in dispute. Paper Industries Corporation of the Philippines (hereinafter referred to as "PICOP") and Bislig Bay Lumber Company Inc. (hereinafter referred to as "BISLIG") are companies incorporated in the Philippines, the latter being a wholly-owned subsidiary of the former. They operate forest concessions in the Philippines and sell timber to purchasers in various parts of the world.

3. The taxpayer was incorporated in Hong Kong on 28th February, 1968. Three directors of PICOP are directors of the taxpayer.

4. On 22nd March, 1968, PICOP AND BISLIG each entered into an agency agreement with the taxpayer. The two documents were executed in the Philippines. The agreements are, to all intents and purposes, in identical terms; and the PICOP agreement reads, in part, as follows:-

" Whereas (the taxpayer) has contacts with buyers for Philippine logs in the United States, Formosa, Japan and elsewhere and has the necessary facilities to promote and increase the sale of PICOP logs in the world markets;
Whereas PICOP finds it to its best interest to market through (the taxpayer) all logs available for export out of PICOP's total log production ..........
Now therefore ................. the parties ........ hereby agree ................. as follows:-
1. PICOP hereby appoints (the taxpayer) as its sole and exclusive sales agent to handle the sale of its export logs to the United States of America, Formosa, Japan, Europe, and elsewhere in the world, and (the taxpayer) hereby accepts its appointment as such sales agent of PICOP.
2. (The taxpayer) shall, at its own expense, carry out and engage in maximum sales exploitation under this agreement in conjunction with PICOP and its representatives and shall obtain maximum sales of PICOP's logs throughout the world market under contracts satisfactory to PICOP.
3. (The taxpayer) shall, likewise, at its own expense, unless otherwise provided, protect and promote the interest, good name and reputation of PICOP and shall employ such suitably qualified personnel as may be reasonably required to obtain maximum sales exploitation of PICOP's logs under this agreement.
4. (The taxpayer) shall exert its best efforts to obtain the most favourable prices for PICOP on a C and I basis, in no case lower than current market prices.
5. (The taxpayer) shall assist PICOP in its execution of existing and future contracts, both before and after delivery of logs to the customer, and shall obtain and report regularly to PICOP information, statistics and data on
(a) the log market conditions throughout the world;
(b) the general political and economic conditions throughout the world.
6. For its services hereunder PICOP will pay the taxpayer a commission based on the following schedule.
(a) Sales to any area throughout the world, except Japan:
5% based on the FOB BISLIG value.
(b) Sales to Japan : For the first 1770 cubic metres sold during any month 5% on FOB value BISLIG.
: For the second 1770 cubic metres sold during the month 4% on FOB value BISLIG.
: For any sale over 3540 cubic metres during the month, 3% on FOB value BISLIG."

5. The taxpayer appointed a number of sub-agents or distributors in respect of the sales of logs by PICOP and BISLIG to purchasers in Taiwan, South Korea, Japan, Okinawa and the United States. The appointment of a company called Soriamont Development Co., Ltd. for Taiwan and Korea was confirmed in a letter dated 4th October, 1968 from the taxpayer to this company. It reads:-

"This is to confirm our agreement that as from March 1st, 1968, your company has been appointed sole and exclusive distributors for the sale of logs from Bislig Bay Lumber Company and Paper Industries Corporation of the Philippines to Taiwan and Korea, on the terms already agreed, viz.:

1.25% on the FOB value of logs on sales to Taiwan (same as 25% of gross commissions from BBLC and PICOP). 2.5% on FOB value of logs on sales to Korca (same as 50% of gross commission from BBLC and PICOP)."

The sub-agents in the other territories were appointed verbally and there is no evidence as to the terms of the various verbal agreements.

6. In his determination the Commissioner describes in the following terms the business procedure in regard to the sale of logs by PICOP and BISLIG:-

" (6) With the exception referred to in the next paragraph below, all transactions were effected in this manner: A buyer of logs would place his order with one of the sub-agents or distributors, who then would transmit the order directly to PICOP or BISLIG, the vendor. PICOP or BISLIG as the case may be would then accept and fulfil the order for its products. The buyer would open a letter of credit in favour of the vendor, who in turn would draw a bill of exchange on, and send its invoice to, the buyer. The logs would be sent direct from the Philippines to the buyer.
(7) The aforesaid exception refers to the sales to South Korea and Taiwan during January and February 1969. During this period back-to-back letters of credit were utilised. A buyer in these territories would open a letter of credit in favour of (the taxpayer) and (the taxpayer) would open one in favour of the supplier; the supplier would then draw a bill of exchange on and send its invoice to (the taxpayer) and (the taxpayer) would draw one on and send its invoice to the buyer, The shipment of the logs would however be made direct from the supplier to the buyer.
(8) (The taxpayer) did not bill PICOP or BISLIG for the commission due; instead PICOP and BISLIG sent the commission monthly to (the taxpayer) in Hong Kong with a covering letter supported by commission statements and copy invoices. Nor did the sub-agents or distributors bill (the taxpayer) for the commission due to them; (the taxpayer) just calculated the commission on the pre-arranged basis and remitted it to the sub-agent or distributor."

7. According to the taxpayer's profit and loss account for the year ending 28th February, 1969, the gross commission received by the taxpayer from PICOP and BISLIG in respect of that year amounted to $3,568,302. Of that amount, $2,037,004 was paid by the taxpayer to their sub-agents in Taiwan, Japan and elsewhere outside Hong Kong; and they retained for themselves the balance of $1,531,298. Assuming that the commission payable to the taxpayer under the agency agreements was calculated on the basis of 5%, it would appear that the FOB value of the shipments of logs from the Philippines during the year ending 28th February, 1969, was $71,366,040.

8. By way of further illustration of the manner in which sales of logs were effected, the Commissioner has exhibited to his determination three documents signed by the sub-agents for Taiwan and South Korea. The "letterhead" of each document is that of the taxpayer; but the documents were signed outside Hong Kong by the manager of the sub-agents "on behalf of" the taxpayer. At the top of each document appear the words "acknowledgment of order". Each document relates to a particular order for timber to be delivered to a named purchaser in Taipeh and it gives precise details of the qualities, quantities and prices of the various kinds of wood to be shipped and delivered. The documents contain details relating to the shipping space which had been reserved, the port of delivery and the estimated time of arrival of the ship at that port. They also confirm the method of payment, viz. by irrevocable letters of credit advised through the Hong Kong and Shanghai Banking Corporation, Manila.

9. The sub-agents transmitted these acknowledgments of orders to BISLIG under cover of a letter which reads:-

"We are enclosing ...... order ...... covering 5,000 cubic metres ...... logs to be shipped to Taiwan on board s.s. Dolphin V-27 ETA Bislig January 16th. We trust you wiss find the enclosed in order."

Paragraph 17 of the Commissioner's determination reads:-

"(17) Staff and office facilities for (the taxpayer) in Hong Kong during the year ended 28th February 1969 were provided by Neptunia Corporation, Ltd., an associated private company, for a fee of $1,000 per month. Neptunia Corporation, Ltd. holds 87,780 shares of $10 each in (the taxpayer) out of a total issued capital of 240,000 shares. There are 3 directors common to both companies."

10. In confirming the assessment to Corporation Profits Tax in respect of the commission received from PICOP and BISLIG, the Commissioner said:-

"(The taxpayer) is claiming that all its profits from the agency business are derived from outside Hong Kong, that is all the services it rendered under the agency agreements with BISLIG and PICOP were rendered outside Hong Kong. That is a view that I cannot accept. All the work required to be done by (the taxpayer) outside Hong Kong was done by the sub-agents of (the taxpayer). The work that needed to be done in Hong Kong was actually carried out by (the taxpayer) through the staff facilities provided by Neptunia Corporation, an associated private company. This latter company's staff, in the circumstances, knew and were able to give full effect to the directors' policies and were in a position to exercise full control over the sub-agents and representatives negotiating orders outside Hong Kong. According to the accounts the usual expenses of communication, etc. were incurred in Hong Kong, further evidencing some activity or service in Hong Kong. My problem in this case is to decide what quantum of profit to ascribe to the Hong Kong operation, and in this connection, I feel I can only take note of what the directors have done themselves. They have approved the appointment of sub-agents and decided what part of the company's commission should be paid to these sub-agents to profitably reward them for the services they provided for (the taxpayer): these were, in fact, the services that (the taxpayer) provided to BISLIG and PICOP, outside Hong Kong. As a consequence, I think they have decided the proportion of this overall commission which is to be retained in Hong Kong. I consider this share which they have located themselves in Hong Kong is the reward for the Hong Kong services provided by (the taxpayer) and it is that figure, shown as net commission carned, in the accounts .......................... (the taxpayer) is carrying on business in Hong Kong, doing in Hong Kong exactly what it was set up to do in Hong Kong for BISLIG - PICOP and it is this service that is the real source of the profits ............ In the circumstances ........ I do not think it is necessary for me to disprove the degree of the profitability the directors themselves have placed on the Hong Kong operations."

11. What the Commissioner refers to as "the usual expenses of communication ............. further evidencing some activity or service in Hongkong" appears to be an item of expense in the Profit and Loss Account which reads: "Cables and telex $3,511."

12. The tax in question is levied under s.14(1) of the Ordinance. This sub-section reads:-

"14(1) Corporation Profits Tax shall, subject to the provisions of this Ordinance, be charged for each year of assessment on every corporation carrying on trade or business in the Colony in respect of the profits of the corporation arising in or derived from the Colony from such trade or business."

13. I do not attempt to draw any distinction between the expressions "arising in .......... the Colony" and "derived from the Colony". They are virtually synonymous. As Lord Davey said in Commissioners of Taxation v. Kirk(1):-

"Their Lordships attach no special meaning to the word 'derived' which they treat as synonymous with arising or accruing."

14. In Smith v. Greenwood(2) Atkin, L.J. said:-

"The question is not whether the respondents carry on business in this country. It is whether they exercise a trade in this country so that profits accrue to them from the trade so exercised ................. the contracts in this case were made abroad. But I am not prepared to hold that this test is decisive. I can imagine cases where the contract of resale is made abroad, and yet the manufacture of the goods, some negotiations of the terms, and complete execution of the contract take place here under such circumstances that the trade was in truth exercised here. I think that the question is: where do the operations take place from which the profits in substance arise?"

15. In Rhodesia Ketals Ltd. v. Taxes Commissioner(3) the facts were briefly: The appellant company was incorporated in England. Under an agreement (also made in England) its sole business was the purchase and development of immoveable property in Rhodesia. It was assessed under a Southern Rhodesia Ordinance which provided that tax is payable on "the total amount .......... received by or accrued to .......... any person ......... from any source within the territory ....."

16. In delivering the judgment of the Privy Council, Lord Atkin quoted, with approval, a passage from a text-book on Income Tax which had been quoted, with approval, by de Villiers, J. in his dissenting judgment in the Appellate Divison of the Supreme Court of the Union of South Africa. The passage reads (p.426):-

"Source means not a legal concept but something which a practical man would regard as a real source of income ........ the ascertaining of the actual source is a practical hard matter of fact."

17. In their written decision, the Board of Review referred to the decision of this court in C.I.R. v. Karsten Larssen & Co. (H.K.) Ltd.(4) and the decision of the Full Court in C.I.R. v. The Hongkong and Whampoa Dock Co., Ltd.(5). But, in my view, the facts in both these cases differ materially from the facts in this case. In the Karsten Larssen(4) case, the ship-brokers in the out-ports had no authority to execute charter parties without authority from the Hong Kong company. Indeed the Hong Kong company was so closely associated with the whole business of chartering ships that Gould J. came to the conclusion (p.27) that there was no evidence on which the Board could reasonably have come to the conclusion that the profits in question arose and were derived "elsewhere than from the Colony".

18. In the Dock Co.(5) case, Gregg J., before whom the appeal came in the first instance, came to the conclusion that profits from the salvaging of a vessel near the Paracel Islands arose in and were derived from the Colony. He said (p.94):-

"As a practical hard matter of fact where was the real source of (the Dock Co.'s) income? They had their salvaging organisation in Hong Kong and kept all their plant and equipment here including tugs and salvage experts. Their salvaging services were set in motion by a telephone arrangement made by (the Dock Co.) with the owners of the vessel ......... in Hong Kong. It was (the Dock Co.'s) establishment or salvaging organisation in Hong Kong that made the salvage operations, and, incidentally, the salvage profits possible."

19. However, the learned judge's decision was reversed on appeal by the Full Court because the latter court took the view that the salvage operations were undertaken as a result of a subsequent contract entered into at the Paracels after the tugmaster had satisfied himself that salvaging the vessel was a practical proposition and because the whole of the work of salvaging and towing the vessel to Hong Kong (except for the vessel's passage through Hong Kong territorial waters) took place outside Hong Kong. Clearly, the facts in the Dock Co.(5) case were very different from the facts in this case; and I do not derive any assistance from the decision in that case.

20. In this case where did the operations take place from which the profits in substance prose? By clause 2 of the agency agreements, the taxpayer undertook to engage in maximum sales exploitation and to obtain maximum sales of logs. There was no evidence as to whether, and if so to what extent, the taxpayer discharged those obligations to its principals in Hong Kong. The same applies to the obligations under clauses 3, 4 and 5 of the agency contracts. There was no evidence that the taxpayer in Hong Kong did anything with a view to promoting its principals' interests, obtaining the most favourable prices for their logs, or assisting in the execution of existing and future contracts; nor was there any evidence that it obtained and reported information statistics and data concerning log market and general political and economic conditions throughout the world. Sub-agents were appointed in other territories; and unquestionably these sub-agents succeeded in building up a very considerable volume of business. But there was no evidence that, apart from the mere appointment of these sub-agents, this volume of business was the result of any particular activity on the part of the taxpayer in Hong Kong.

21. In my view, it is not enough to point to the two agency agreements and say in effect: When the vendor companies in the Philippines executed these agency agreements they thought it was "in their best interests" to market all their logs "through" the taxpayer. In fact they did nothing of the kind. The sub-agents and the vendor companies in the Philippines were in direct communication in regard to every single contract of sale. The sub-agents appear to have been given the fullest authority. They appear to have solicited and obtained all orders from purchasers, arranged for the supply of logs from the vendor companies in the Philippines, negotiated the purchase prices, made all arrangements for the shipment of the logs with the shipping companies concerned and for the payment therefor direct with a bank in Manila, (except that in a few instances in January and February 1969, payment was effected through the taxpayer. But this deviation from the normal practice makes no practical difference). So far as the evidence goes, the taxpayer took no part in negotiating the sale of any logs. Indeed, Mr. Hindmarsh, who appeared for the Commissioner, frankly admitted that the taxpayer was not even aware of the various orders for the sale of logs. It merely received from its principals in Manila a monthly statement of the commission due under the agency agreements and a copy of the invoices.

22. The Commissioner says:-

"The work that needed to be done in Hong Kong was actually carried out by (the taxpayer) through the staff facilities provided by Neptunia Corporation ................... This latter company's staff, in the circumstances, knew and were able to give full effect to the directors' policies and were in a position to exercise full control over the sub-agents and representatives negotiating orders outside Hong Kong."

All I can say is that there is no evidence that any "work" was done in Hong Kong, or that the staff of Neptunia gave full effect to any policy which may have been laid down by the directors of the taxpayer, or that they exercised any control over the sub-agents.

23. Nor is it sufficient to point to the item "Cables and telex $3,511" in the Profit and Loss Account and say that this was evidence of "some activity or service in Hong Kong". Nor is it sufficient to say that the amount of commission which the taxpayer retains for itself must be the measure of the value of the taxpayer's services - or at least what the taxpayer itself considers is the value of its services. This is begging the very question which we have to ask ourselves, viz.: Where did the operations take place from which the profits in substance arose?

24. The Board of Review expressed their conclusions in those words:-

".... it cannot be said that the commissions received by the taxpayer arose in or are derived from the Colony from its business or trade in the Colony ............ the prime cause of the profits was the orders obtained by the sub-agents ....................... the net commissions earned by the taxpayer ........ did not arise in or were derived from the Colony ............"

25. In my view the Board came to the correct conclusion. But that is irrelevant so far as this appeal is concerned. In finding that the taxpayer's net commissions did not arise in the Colony, the Board made a deduction or drew an inference from the agreed primary facts and this inference of fact was itself a finding of fact. Clearly, the legislature considers that there should be some finality as regards these tax appeals. There is no general right of appeal to this court from decisions of the Board of Review. Section 69(1) of the Ordinance, so far as relevant, reads:-

"69(1) The decision of the Board shall be final: Provided that either the appellant or the Commissioner may make an application requiring the Board to state a case on a question of law for the opinion of the Supreme Court ............"

26. Unquestionably this court has jurisdiction to correct errors of law on the part of the Board of Review. If the Board were to misinterpret a provision under which a tax is imposed or if it were to apply some wrong test to the facts before it, this court has jurisdiction to correct such errors. For example, if the Board took the view that simply because a company carried on business in Hong Kong, ipso facto this rendered it liable to corporation profits tax under s.14(1) of the Ordinance, this court would, upon an appeal by case stated, correct such an error. Again, if there was no evidence upon which the Board could reasonably have inferred that the profits in question arose in, or were derived from, Hong Kong that would be a matter of law, and such an error could be corrected upon appeal by case stated under s.69. But, the mere fact that a party is dissatisfied with the Board's conclusion does not give that party a right of appeal to this court.

27. What then are the "questions of law" on which I have been asked to express an opinion? These are set out in paragraph 5 of the case stated. This paragraph commences thus:-

"5. ............ whether the Board of Review correctly interpreted and applied s.14(1) of the Inland Revenue Ordinance to the facts of this case."

28. I have no idea what that means. The Board had before it the judgments in the Karsten Larssen(4) case and the Dock Co.(5) case and the authorities cited in those two judgments. There is nothing in the case stated which leads me to think that the Board misinterpreted s.14(1) or that it applied any wrong principle to the facts before it.

29. However, paragraph 5 proceeds to give particular examples of what, it is considered, may amount to "misinterpretation" and/or "misapplication". It says:-

"............ and in particular -

(a) whether the Board was correct in finding that, even though (the taxpayer) has at all material times been carrying on a trade or business in the Colony, all the operations producing the profits which were assessed to tax took place outside the Colony."

I have no idea what is the significance of the words "even though (the taxpayer) has at all material times been carrying on a trade or business in the Colony". They have no bearing whatsoever on any question which might conceivably arise out of the decision of the Board. Sub-paragraph (a) therefore should read:-

"(a) whether the Board was correct in finding that all the operations producing the profits which were assessed to tax took place outside the Colony."

But this is a pure question of fact. I am being asked to put myself in the position of the Board of Review and make a finding de novo. The Ordinance does not give me jurisdiction to do so. As I have said, I agree with the Board's conclusion. But, the mere fact that this court might have come to a different conclusion, does not give it jurisdiction to interfere with the decision of the Board.

30. I might add that on the hearing of the appeal, Mr. Hindmarsh did not argue on the lines of paragraph 5(a) of the case stated. He very properly conceded that the question which I should ask myself is: Are there facts on which the Board could properly have come to the conclusion that all the operations producing the profits were performed outside the Colony?

31. Sub-paragraph (b)(i) of paragraph 5 reads:-

"whether the Board placed undue reliance upon the location of the two agency contracts and the individual sale and purchase contracts between the principals and the purchasers in determining that none of the profits from the commissions earned were Hong Kong profits."

32. Again, I am unable to discern from this sub-paragraph what is the question of law upon which I am being asked to express an opinion. I do not think that the Board did place "undue reliance" on particular facts. But even if they did, I am quite unable to understand why, in a proceeding of this nature, I am being asked to express a view on such a matter.

33. Sub-paragraph (b)(ii) of paragraph 5 reads:-

"Was the Board correct in finding in paragraph 10 of its decision that the appointment of sub-agents by (the taxpayer) was a matter which was dealt with outside the Colony?"

34. What the Board said as regards that in paragraph 10 of their decision was:-

"the taxpayer was able to earn its profits because of

(a) ......
(b) ......
(c) its appointment of sub-agents who were able to obtain orders for the principal companies, which were all matters dealt with outside the Colony."

35. The "appointment" of the sub-agents may or may not have been dealt with outside the Colony. But clearly the Board were not placing reliance on the fact that the appointments may have been dealt with outside the Colony. The Board were simply referring to the fact that the orders for logs were dealt with by the subagents outside the Colony. But, in any event, how could this conceivably be a question of law upon which I should be asked to express an opinion under s.69 of the Ordinance?

36. Sub-paragraph (c) of paragraph 5 of the case stated reads:-

"(c) whether in the circumstances of this case an apportionment of the profits should be made upon a territorial basis and whether a proportion of such profits should be attributed to the services provided by (the taxpayer) whilst carrying on its trade or business in the Colony."

37. The Board found that the profits arose from operations which took place outside the Colony. I agree with this conclusion. There was no evidence that the taxpayer provided any services, much less that the profits were attributable, in part at least, to services provided by the taxpayer. But even if the Board had found that the profits arose partly from operations which took place outside the Colony and partly from operations which took place in the Colony, applying the Smith v. Greenwood(2) test to the facts in this case, there can be no doubt at all that the profits in substance arose from operations which took place outside the Colony.

38. In the Dock Co.(5) case, the profits arose partly from operations in the Colony and partly from operations outside the Colony. Gregg J. was of the opinion that the profits were taxable because it was the Dock Co.'s salvaging organisation based in Hong Kong which made the salvage operations at the Paracels possible. The Full Court took the opposite view, holding that the profits in substance arose from operations which took place outside the Colony. But, in giving the leading judgment of the Full Court, Reece J. considered the question of apportionment and he cited a passage from the judgment of Dixon J. in Commissioner of Taxation (New South Wales) v. Hillsdon Watts Ltd.(6). Of course, in New South Wales the legislature has made provision for apportionment. Section 28(1) of the Income Tax Management Act reads:-

"Whenever ............ the source of any income is not exclusively in the State, that income shall be apportioned between its source in the State and its source outside the State in such manner as shall be determined by the commissioner."

At p.51 Dixon J. said:-

"In the absence of such a provision, when a single profit is recovered as a result of operations which extend beyond the political boundary of the taxing State, the profit must be considered as arising on one side of the boundary rather than another. If it is possible to ascertain how much of the profit is obtained although in an unrealised form at successive stages of the operations, the sum realised may be dissected and separate parts of it attributed accordingly to the places where the respective stages of the operations are completed. If this cannot be done and the total profit recovered is an inseparable whole obtained as the indiscriminate result of the entirety of the operations, the locality where it arises must be determined by considerations which fasten upon the acts more immediately responsible for the receipt of the profit."

Reece J. said (p.194):-

"This is of the utmost significance in the case before us where part of the services rendered were performed within the territorial waters of Hong Kong, but where, unlike New South Wales, we have our income tax legislation which makes no provision for apportionment of income."

39. Paragraph 5(d) of the case stated reads:-

"Whether the Board was correct in finding that the profits from the transactions conducted by means of back-to-back letters of credit were not derived from the Colony."

40. The fact that back-to-back letters of credit were used in respect of a few transactions in January and February 1969 makes no material difference. By the time the letters of credit were opened the sales had already been concluded by the sub-agents. The operations from which the profits arose had substantially taken place outside Hong Kong. The use of back-to-back letters of credit was merely a method of payment.

41. Clearly these so-called "questions of law" are, for the most part, nothing more than grounds of appeal. My answers to the questions are, I trust, clear; and the result is that the Board's determination annulling the assessment is confirmed.

42. I trust that, in future, Boards of Review will carefully scrutinize every application for a case stated in order to ensure that what this court is being asked to express its opinion on is truly a question of law.

(W.A. Blair-Kerr)
Acting Chief Justice

16th July, 1971.

Representation:

Hindmarsh and Haldant, C.C., for Appellant.

H. Litton, Q.C. and D. Chang (Messrs. Johnson, Stokes & Master) for Respondent.

(1) (1900) A.C. p.588

(2) (1921) 3 K.B.D. p.583 at p.593

(3) (1940) 3 A.E.R. p.422

(4) H.K. Tax Cases p.11

(5) H.K. Tax Cases p.85; (1960) H.K.L.R. p.166

(5) H.K. Tax Cases p.85

(2) (1921) 3 K.B.D. p.583

(6) 57 C.L.R. p.36 at p.51.