To Yuk Wai v. Director of Lands

LDGA 349 OF 2003

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

GOVERNMENT RENT APPEAL NO. 349 OF 2003

(On Review)

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Coram: H. H. Judge Yung, Presiding Officer of the Lands Tribunal

Date of Hearing: 15 March 2004 and 10 May 2004

Date of Judgment: 20 May 2004

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J U D G M E N T

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1.The Appellant is an indigenous villager. On 19 December 2003, I allowed his appeal and ruled that he was entitled to exemption of Government rent in respect of half of his interest in the subject lots. The Government is now seeking a review of my judgment.

2.The ground for review concerns purely a question of law, namely the interpretation of the Government Rent (Assessment and Collection) Ordinance Cap 515. ( "the Ordinance" ) Mr. Mok, counsel for the Government, submitted a thorough analysis of the Ordinance. For his analysis I am grateful. His analysis is not restricted to the narrow ground I relied on when allowing the appeal but also covered all other grounds which could conceivably have been raised by the Appellant at the hearing of appeal. The Appellant was not held to the concession made at the previous appeal hearing. As a result the review was conducted along the line of a complete re-hearing of the appeal.

3.The history of transaction of the subject lot must be looked at to see if the Appellant is entitled to exemption from liability to pay Government rent. For this purpose, it is convenient to classify the lots into three categories as both counsels did in their argument.

4.Categories I consists of Lot 201A in DD 82 and Lot 10 in DD 82. The Appellant previously owned a half undivided share in these lots. The Appellant has acquired the other half interest from the To Chiu Kiu, the co-owner as a result of an inter-vivo conveyance exercise and the Appellant now owns the whole of the interest in these lots.

Necessary conditions for exemption of the whole interest

5.The Ordinance exempted holders of an interest in an applicable lease from paying Government rent. The specific section is Section 4. One of the necessary but not sufficient conditions for exemption is that all holders are indigenous villager, a Tso or Tong or any combination of them. In the case of indigenous villager, another necessary condition is that the holders either have held the interest on the material date, namely, 30 June 1984, or that the interest can be traced back to such an interest so held. The tracing back is governed by the provisions in various subsections.

6.The first rule for tracing back is continuity (section 4(1)(i) and (ii)). Section 4(1)(i) requires that there has never been any change of identity of the holders of the exempted interest since its first day of exemption. If this requirement is not met, the requirement provided in paragraphs (A) and (B) in section 4 (1)(ii) has to be met in order for the interest to qualify for exemption. The combined effect of these paragraphs is that each and every one of the holders in the line of devolvement of the interest must be a lawful successor in the male line of the indigenous villager who first qualified for exemption.

Exemption for the whole interest of Category I

7.The Appellant argued that he owned half of the interest at all times. This half must be entitled to exemption. Furthermore the other half of interest was conveyed to him by To Chiu Kiu, his brother and therefore this other half also satisfies the requirement in both paragraphs (A)and (B). This is so, the Appellant argued, because the Appellant could become a lawful successor of his brother. I accepted that an inter-vios transfer to a would-be lawful successor is permissible under paragraph (A) but paragraph (B) requires that the transferee must be of the male line descendent of the original holder. Brothers cannot be descendents of each other by any stretch of the meaning of the word descendent. For this reason the Appellant is not entitled to have the whole lot of Category I exempted from Government rent.

Exemption for half of the interest

8.Section 4(5) disqualifies generally an interest for exemption unless all other interests are exempted. The exception to this general rule the Appellant is relying on is provided in Section 4 (3) of the Ordinance. The same necessary condition as in the case of whole interest applied. However not all partial interest of any nature is entitled to exemption. The partial interest must be either a section or an undivided share in the land within the definition and meaning of the Ordinance.

9.I accept Mr. Mok's submission. The words section and undivided share do not simply mean notional share in co-ownership of the land as argued by the Appellant. The system of collecting and assessing Government rent is closely related to that of rates. Bearing that in mind the definition of the two terms, 'section' and 'undivided' share, as provided in the Ordinance should be clear. The word 'section' does not simply mean part of a whole. It must carry with it a concept of physical division in the sense that the holder of that section of land had a right as against the other interest holders to exclusive possession of certain part of the land or tenement. As to the meaning of an undivided share, the provision in Section (13) cannot be clearer. Such undivided share must not only be contained in document, the document must be registered in the Land Registry.

Exemption for half of the interest of Category I

10.As the other half interest which was conveyed to the Appellant by To Chiu Kiu was not exempted, by section 4(5) the half interest of the Appellant is not entitled to exemption unless he can pray in aid of section 4(3). The Appellant and To Chiu Kiu were mere co-owners. Therefore the Appellant did not hold a section or an undivided share within the meaning of the Ordinance before he acquired the other half interest. For this reason the Appellant is not entitled to exemption in respect of the half share he held originally. That being the case, I need not deal with the additional argument raised by Mr. Mok that the original half share ceased to exist once it merged with the other half to become the whole interest.

Category II of lots of land

11.Lots 294 and 267B in DD 82 and 59A in DD87 were each divided into sections. The interests of the Appellant and To Chiu Kiu were rearranged with the end result that the Appellant has become the sole owner Lot 294RP, a splinter lot from Lot 294, Lot 267B/RP, a splinter lot from Lot 267B, and Lot 59A/1 and Lot 59A/2, splinter lots from Lot 59A.

12.The Appellant claims all these splinter lots of which he now owns the whole interest qualify for exemption. Before the conveyance exercise the interests in these lots were jointly held by the Appellant and To Chiu Kiu. They do not continue to hold such interest, nor the conditions mentioned in section 4(1)(A) and (B) are satisfied as the Appellant is not the male line descendent of To Kiu Chiu. The rule of continuity for the whole interest has been broken and therefore is not qualified for exemption.

13.The fall back position of the Appellant is that his half interest in these lots should be exempted. Again for the same reasons given for Category I lots, his original half interest, or his half interest at any stage of the partition and conveyance exercise, in these lots does not fall within the meaning of section or undivided share as provided in the Ordinance. For similar reasons given for Category I lots, he is not entitled to any exemption for the Category II lots.

14.There is no distinction between Category II and Category III lots. Therefore for the same reasons Category III lots are not exempted from Government rent. As for Category I, when dealing with Category II and III it is not necessary to deal with the argument by Mr. Mok that the original interest ceased to exist upon merger when the Appellant acquired the other half interest

15.In these circumstances, I review my previous order, set it aside, and now order that the appeal be dismissed. I also make an order nisi for costs in favour of the Respondent, both for the appeal and the review, with certificate for two counsels on High Court Scale.

Representation:

The Applicant: Mr. C. Wong instructed by M/S Alan Ho & Co.

The Respondent: Mr. Johnny Mok, S. C. instructed by the Department of Justice