Commissioner of Inland Revenue v. Nam Tai Trading Co Ltd
Read the full judgment text of DCTC 4250/2008 on BabelCite. This DCTC judgment.
1. The Commissioner of Inland Revenue (“ CIR ”) seeks to recover HK$23,682,221.00 being profits tax for four years of assessment from 1997/ 1998 to 2000/2001 (“ Assessments ”) which the Defendant has defaulted to pay.
Cites 15 cases
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DCTC4250/2008 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION TAX CLAIM NO. 4250 OF 2008 ---------------------- BETWEEN
---------------------- Before: H H District Judge Marlene Ng in Chambers (open to the public) Date of Hearing: 29th October and 8th and 9th December, 2008 Date of Handing Down Judgment: 3rd February, 2009 ------------------------ JUDGMENT ------------------------ I. Introduction 1.The Commissioner of Inland Revenue (“CIR”) seeks to recover HK$23,682,221.00 being profits tax for four years of assessment from 1997/ 1998 to 2000/2001 (“Assessments”) which the Defendant has defaulted to pay. 2.For ease of reference in this judgment, unless otherwise stated, “sections” refer to sections in the Inland Revenue Ordinance Cap.112 (“IRO”), “BL” refers to the Basic Law, and “BORO” refers to the Bill of Rights Ordinance Cap.383. 3.The Defendant opposes the CIR’s claim by the following pleas in its Defence :
II. Striking out application 4.By an amended summons issued pursuant to Order 18 rule 19 of the Rules of the District Court (“RDC”), the CIR applies (a) to strike out the Defence for disclosing no reasonable defence and (b) to enter judgment against the Defendant for the sum claimed with interest thereon at judgment rate from 9th May 2008 until full payment (“Application”). III. Application for adjournment 5.On 24th October 2008, Mr Wong, counsel for the CIR, lodged his submissions/authorities in support of the Application. On 27th October 2008, Sir John Swaine SC leading Mr Swaine, counsel for the Defendant, lodged theirs. On the following day (ie the eve of the hearing before me), Mr Wong lodged his supplemental submissions/authorities. 6.Sir John Swaine SC and Mr Swaine complain they have not been able to properly respond to Mr Wong’s late supplemental submissions/authorities, which difficulty they say has been compounded by Mr Wong’s failure to expose the fullness of his arguments on the Constitutionality Defence until his supplemental submissions. They therefore apply for an adjournment to consider Mr Wong’s supplemental submissions/authorities. 7.Mr Wong opposes any adjournment, and submits that his initial submissions have already referred to the nub of his arguments and to his key authorities on the Constitutionality Defence, so his supplemental submissions/ authorities are merely an elaboration and not a new line of argument. 8.Fortunately, the parties have come to a pragmatic solution by (a) Mr Wong proceeding with his oral submissions at the hearing on 29th October 2008, (b) the court adjourning the part-heard hearing to 8th December 2008, and (c) Sir John Swaine SC and Mr Swaine lodging their supplemental submissions/ authorities during the adjournment. IV. Application for leave to file affidavit evidence 9.On 20th August 2008, Registrar S T Poon directed that no affirmation be filed without leave of the court. But Sir John Swaine SC and Mr John Swaine rounded off their additional written submissions for the application for adjournment(see paragraph 6 above) with a request for “leave for the Defendant to file affidavit evidence, if so advised”. 10.In support of such request, Mr Swaine argues that the Constitutionality Defence and the Plaintiff’s counter-arguments thereto raise difficult points of law, which include inter alia(a) whether the Board of Review (“Board”) is a “court” within the meaning of Art 35, BL, (b) whether Art 35, BL achieves no more than Art 10, BORO (and the latter being similar to article 6(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms (“Art 6(1)” and “Convention”)), (c)whether the availability of appeal from the Board to the Court of First Instance (“CFI”) by case stated will make good the deficiencies of the Board as a quasi-judicial body only, (d) whether the case stated requirements for appeals under section 69 are themselves unconstitutional for breach of Art 35, BL and/or Art 10, BORO, (e) whether Art 35, BL permits designation to some body other than a “court” in which the majority or all of those on the panel are not “judges” as the only arbiter of fact in challenges to acts of “executive authorities”, and (f) whether the imposition of the current tax regime (whereby a greater part of the District Court’s jurisdiction is ousted in tax recovery cases) is a proportionate response to a legitimate aim. 11.Mr Swaine further submits that the Constitutionality Defence is sub judice in a pendingapplication for judicial review by another taxpayer in HCAL4/2008 to be heard on 12th March 2009 by A Cheung J. Mr Swaine reveals that he is counsel for the taxpayer in HCAL4/2008, and further argues that affidavit evidence as to the factual details of the stated case therein will help illustrate the deficiencies of the tax appeal procedure under section 69. He claims the Defendant has not been able to apply for leave to adduce such affidavit evidence at an earlier stage because the relevant information relates to another case. 12.But the application for leave to adduce affidavit evidence has not been accompanied by any draft affidavit. Indeed, apart from the above assertions made in oral and written submissions, there is little information on other particulars of HCAL4/2008 (eg the tax issues, the questions of law as formulated for the case stated, the result of the appeal by case stated, etc) and/or the relevancy or materiality of the proposed affidavit evidence. Further, although it has been suggested in the additional written submissions of Sir John Swaine SC and Mr Swaine that “any argument by this court [in the present proceedings] will be overtaken by that other court’s decision [in HCAL4/2008]”, Mr Swaine agrees that a ruling in HCAL4/2008 on whether the case stated procedure is a sufficient avenueof appeal will not ipso facto overrule any decision on the Application herein. 13.More importantly, since the Application is premised on Order 18 rule 19(1)(a), RDC,Order 18 rule 19(2) prescribes that no evidence shall be admissible. The rationale for such prohibition is set out in paragraph 18/19/3 at pp.349-350 of Hong Kong Civil Procedure 2009 Vol.1 as follows :
I find this to be a sufficient answer to the Defendant’s application. 14.But even without theexpress prohibition in Order 18 rule 19(2), RDC, I still would not have exercised my discretion to allowthe Defendant to adduce affidavit evidence in opposition. First, as discussed above, there is paucity of information as to the materiality of the suggested affidavit evidence, and no draft affidavit is available. In my view, it behoves a party making late application for leave to adduce additional evidence to provide to the court and the other party full information, preferably on affidavit, on the reasons why such application has not been made earlier and on the relevance of the proposedadditional evidence to the issues before the court, so the court can properly exercise its discretion and deal with possible objection from the other party. 15.Secondly, it is unclear whether the Defendant will actually file any affidavit evidence in opposition even if leave is granted. The additional written submissions of Sir John Swaine SC and Mr Swaine merely say affidavit evidence will be filed “if so advised”. In my view, it is not fair or just to adjourn the substantive hearing of the Application at the eleventh hour to let the Defendant (ie the party who raised the Constitutionality Defence) to consider the advisability or otherwise of adducing evidence in support of such defence contention. 16.For all the above reasons, I have at the hearing on 29th October 2008 declined to grant leave to the Defendant to file and serve affidavit evidence in opposition. V. Legal principles on striking out 17.The principles governing a striking out application are well established. Para.18/19/4 of Hong Kong Civil Procedure 2009 Vol.1 at p.350 provides inter alia as follows :
18.Sir John Swaine SC submits that by no stretch of imagination can the ultimate issue here be described as “quite simple”. He argues that since the CIRhas asked this court to decide explicitly that the constitutional guarantee in Art 35, BLis sufficiently honoured by pre-1997 legislative provisions, which issue has not been considered in context by the higher courts, the complexity arising from such untested question renders it inappropriate for decision on a striking out application. 19.However, I note that questions of law can be determined in a striking out application provided they are crucial, and the court has all the relevant facts before it and these facts are certain (per Ma J (as he then was) in Chuang Yue Chien Eugene v Ho Yau Kwong Kevin [2002] 4 HKC 245, 254-255). Although it is arguable whether in such circumstances an application should be made for determination of the point of law as a preliminary issue under Order 33, RDC, following the procedure under Order 18 rule 19, RDC to strike out the defence is not so inherently defective as will require the court not to proceed, and since the effect of the court deciding against the defendant is to conclude the action, the court is entitled to entertain the application and strike out the offending pleading (see Hong Kong Civil Procedure 2009 Vol.1 para.18/19/4 at p.351). 20.Further, the fact that in a particular case the question of law appears difficult or obscure does not preclude the court from striking out pleadings if it is satisfied it has all the necessary information to decide the question, and has come to the conclusion after full argument in the face of all relevant information that the case is plainly and obviously one for striking out. According to Hong Kong Civil Procedure 2009 Vol.1 para.18/19/4 at p.351, in such circumstances the court “should not decline to do so on the ground that the issues are difficult or complicated (Byjoy Ltd v. Thorogood Estates Ltd [1985] 2 H.K.C. 746)”. VI. Ultra Vires and Assessment Defences (a) Taxpayer’s liability to pay tax 21.The primary liability to pay tax is set out in section 71 which provides inter alia as follows :
(b) Nature of the Ultra Vires and Assessment Defences 22.In my view, the Ultra Vires and Assessment Defences amount to assertions that the tax charged under the Assessments is incorrect or excessive. 23.The Ultra Vires Defence pleads that the Assessments and/or purported exercise of any power to assess were/are ultra vires and of no legal effect. In Ng Chun-kwan v The Commissioner of Inland Revenue [1976] HKLR 94, 97, Briggs CJ said that : “…… [to] plead that [the CIR] acted ultra vires when the “assessment” was made is merely saying that there was a wrong or incorrect assessment.” 24.In the first limb of the Ultra Vires Defence (see paragraph 3(a)(i) above), the Defendant pleads inter alia that the assessors of the CIR did not form any opinion such as to engage the power of assessment under sections 59 and/or 60. 25.There is no dispute that the assessors did issuethe Assessments. In my view, the formation of opinion by the assessors so as to engage the power of assessment under sections 59 and/or 60 must have been an integral part of making such Assessments. In discussing such powers of assessment, Mills-Owns J in Mok Tsze Fung v The Commissioner of Inland Revenue [1962] HKLR 258, 279 said that : “…… [so] long as the assessor, or [the CIR], does not act capriciously or dishonestly, his assessment, being made according to his judgment, cannot be disturbed except upon the taxpayer bearing and discharging the onus of proof ……” (my emphasis). In Ng Chun-kwan,Huggins J went on to say at p.103 that : “…… unless it can be shown that the amount was excessive or incorrect it is difficult to see how the Appellant could establish here that the assessment was arbitrary or capricious …… it is not enough to plead that an assessment was arbitrary or capricious without pleading also the primary facts from which the arbitrariness or capriciousness may be inferred. ……” 26.The Ultra Vires Defence as pleaded does not contain any plea that the assessors have acted arbitrarily or capriciously in making the Assessments. Further, no or no sufficient material facts/particulars have been given in relation tosuch plea. Even if the pleaded facts for the Assessment Defence amount to primary facts from which arbitrariness or capriciousness may be inferred, they only suggest that the tax charged under the Assessments is incorrect or excessive. 27.In the first limb of the Ultra Vires Defence (see paragraph 3(a)(i) above), the Defendant further/alternatively pleads that no Assessor properly directed could reasonably have formed opinion that engaged the power of assessment under sections 59 and/or 60 resulting in the Assessments. In my view, the Defendant is in effect saying the assessors have been incorrect, unreasonable and/or improper in theirtax assessments. Such possibilities essentially amount to suggestions that the tax charged is incorrect or excessive. 28.In Ng Chun-kwan, the appellant pleaded inter alia that the additional assessments were not arrived at by the exercise of the assessor’s judgment and were arbitrary or capricious. Briggs CJ held that it is in effect a plea that the tax assessed is incorrect or excessive. Huggins J at pp.100-101 said as follows :
29.In the second limb of the Ultra Vires Defence (see paragraph 3(a)(ii) above), it is averred that section 61A was not engaged in that it would/could not be concluded that the person or one of the persons who entered into or carried out any transaction bearing on the Assessments did so for the sole/dominant purpose of enabling the Defendant either alone or in conjunction with other persons to obtain a tax benefit. Such plea is plainly an averment that the tax charged is incorrect or excessive. Even if the pleaded facts for the Assessment Defence amount to primary facts from which such plea may be inferred, they again merely suggest that the tax charged under the Assessments is incorrect or excessive. 30.Next, the Assessment Defence refers to specific matters that bear on how the Assessments should have been drawn up. In other words, they go to the contention that the tax charged thereunder is incorrect or excessive. The Defendant claims that none of the Assessments was/is justified. But even if it is averred that there is no liability for tax or that the Assessments are nullities, such averments still only amount to pleas that the tax charged is incorrect or excessive. Pickering DJ in Commissioner of Inland Revenue v Au Yuk-Shuet (1966) 1 HKTC 489, 493-494 said : “…… I would be disposed to hold that the argument that no liability whatever attached to the defendant for this property tax is merely another way of saying the tax is “excessive or incorrect” ……” (see also Ng Chun-kwan discussed in paragraph 28 above). (c) Non-Preclusion Defence 31.The next question is whether this court can entertain the Ultra Vires and Assessment Defences in the present tax recovery proceedings. The CIR argues on the strength of section 75(4) that such defences are unsustainable. The Non-Preclusion Defence suggests otherwise. Nevertheless, Sir John Swaine SC in his oral submissions explains that the Defendant is not saying the Ultra Vires and Assessment Defences can stand in face of section 75(4) aside from the Constitutionality Defence. Rather, he submits that the Constitutionality Defence opens the way for such defences to be made. But the Non-Preclusion Defence has not been formally abandoned, so I still proceed to consider the same and separately deal with the Constitutionality Defence below. 32.A useful starting point is section 75(4) itself, which provides inter alia as follows :
(d) Overview of the statutory scheme 33.To consider section 75(4) in its proper context, it is necessary to give a brief overview of the statutory scheme (a) for objection/appeal against tax assessment under Part XI, IRO and (b) for recovery of tax under Part XII, IRO. 34.Tax objection/appeal A dissatisfied taxpayer may lodge an objection to the tax assessment stating precisely the grounds of objection (section 64(1)). The CIR is then required to determine the objection within a reasonable time (section 64(2)). In determining the objection, the CIR has the power to call and hear evidence, and she can confirm, reduce, increase or annul the assessment objected to. If the CIR agrees with the taxpayer as to the amount at which the taxpayer is liable to be assessed, she makes necessary adjustment of the tax assessment (section 64(3)). If the CIR does not agree with the taxpayer, she shall transmit in writing to the taxpayer the determination together with the reasons therefor and a statement of the facts upon which the determination was arrived at (section 64(4)). 35.A dissatisfied taxpayer can appeal against the CIR’s determination to the Board (section 66) or alternatively, if both parties consent, to the CFI (section 67). The procedure before the Board is set out in section 68. Save with the consent of the Board and on such terms as the Board may determine, the taxpayer may not at the appeal hearing rely on any grounds of appeal other than those contained in his statement of grounds of appeal (section 66(3)). The Board shall have the power to summon a person whom it may consider able to give evidence in respect of the appeal to attend the hearing and examine him on oath or otherwise (section 68(6)). At the hearing of the appeal the Board may, subject to section 66(3), admit or reject evidence adduced, whether oral or documentary, and the provisions of the Evidence Ordinance Cap.8 relating to the admissibility of evidence shall not apply (section 68(7)). 36.In hearing an appeal to the Board or the CFI, the onus of proving that the assessment appealed against is excessive or incorrect is on the taxpayer (sections 67(5)(d) and 68(4)). The Board or the CFI will hear the appeal on its merits, and may confirm, reduce, increase or annul the assessment or (a) in the case of the CFI, make any assessment which the CIR was empowered to make at the time when she determined the assessment or direct the CIR to make such assessment in which case an assessment shall be made by the CIR so as to conform to those directions (section 67(7)) or (b) in the case of the Board, remit the case to the CIR with the opinion of the Board thereon in which case the CIR shall revise the assessment as the opinion of the Board may require and in accordance with such directions (if any) as the Board may give concerning the revision required in order to give effect to such opinion (section 68(8)). 37.The decision of the Board is final, but either the taxpayer or the CIR may under section 69 require the Board to state a case on a question of law for the opinion of the CFI, and a judge of the CFI shall hear and determine any question of law arising on the stated case. Section 69A alternatively enables the appellant, with leave of the Court of Appeal (“CA”), to appeal directly to the CA against the decision of the Board. 38.The stated case shall set forth the facts and the decision of the Board, and the party requiring it shall transmit the case, when stated and signed, to the CFI (section 69(2)) and shall send notice in writing of the fact that the case has been stated on his application to the other party and supply him with a copy of the stated case (section 69(3)).Such provisions also apply in relation to a direct appeal to the CA (section 69A(3)). 39.On appeal to the CFI or the CA, the CFI or the CA shall determine such question of law and may confirm, reduce, increase or annul the assessment determined by the Board, or may remit the case to the Board with the opinion of the court thereon for revision of the assessment in accordance with the opinion of the court (sections 69(5) and 69A(3)). Appeals from decisions of the CFI under section 69 shall be governed by the High Court Ordinance Cap.4 (“HCO”), the Rules of the High Court (“RHC”) and rules governing appeals to the Court of Final Appeal (“CFA”). 40.Tax recovery Sections 75(1) and (2) provide that tax due and payable under theIRO shall be recoverable by the CIR as a civil debt due to the Government by action in the District Court. In such proceedings, the production of a certificate signed by the CIR stating the name and last known postal address of the defaulter and particulars of the tax due by him shall be sufficient evidence of the amount so due, and sufficient authority for the District Court to give judgment for such amount (section 75(3)). (e) Effect of section 75(4) 41.In my view, a plain reading of section 75(4) supported by a long and consistent line of authorities show that in tax recovery proceedings a taxpayer is not entitled to dispute the tax assessment on the basis that it is excessive or incorrect, or what essentially amounts to such contention albeit phrased in a different way. Such complaints should be raised by way of objection/appeal in the manner described in paragraphs 34-39 above. 42.In Au Yuk-Shuet, Pickering DJ said as follows at p.493 :
43.In Ng Chun-kwan, Briggs CJ explained as follows at pp.97-98 :
44.Similar conclusions were reached in Commissioner of Inland Revenue v Choy Sau Kam & anor (1983) HKTC 10 and Commissioner of Inland Revenue v Eekon Enterprises Ltd (1995) 5 HKPLR 322. In the latter case, Judge B Kwan (as she then was) concluded that whilst section 75(4) prevents the District Court from entertaining a plea that the assessment to tax is incorrect, it does not have the effect of ousting the jurisdiction of the courts as a whole nor is the taxpayer left with no redress. The taxpayer may pursue his objection by way of the procedure laid down in Part XI,IRO. 45.In Commissioner of Inland Revenue v Lai Yin Ha formerly trading as China Skin Specialist Clinic (1988) 2 HKTC 374, the taxpayer entered a defence disputing the amount of tax assessed. Fuad VP citing Ng Chun-kwan and Choy Sau Kam said as follows at pp.380-381 :
46.In Commissioner of Inland Revenue v Lau Chi-sing DCCJ12121/2000 (unreported, 26th April 2001), H H Judge Lam (as he then was) relied on Ng Chun-kwan and held that matters raised by the defendant in his pleadings alleged in substance that the assessment was incorrect,which allegation fell within the operation of the section 75(4). The learned judge went on to say as follows :
47.In The Commissioner of Inland Revenue v Ewig Industries Co Ltd DCTC7883/2005 (unreported, 14th December 2006), H H Judge Lok referred to Ng Chun-kwan, Choy Sau Kam and Lau Chi-sing,and at para.10 said as follows :
48.In light of the above authorities, the Non-Preclusion Defence of itself cannot stand. Consequently, theDefendant is precluded from raising the Ultra Viresand Assessment Defences (which should be raised by way of objection/appeal under Part XI, IRO) in the present tax recovery proceedings. In my view, aside from the Constitutionality Defence which I shall discuss below, the Ultra Vires, Assessment and Non-Preclusion Defences disclose no reasonable defence and are liable to be struck out. 49.I now turn to consider the Constitutionality Defence. VII. Constitutionality Defence (a) Relevant provisions 50.The Constitutionality Defence turns on Art 35, BL and Art 10, BORO. Art 35, BL provides inter alia as follows :
Art 10, BORO provides inter alia as follows :
(b) Constitutional guarantee of access to court 51.There is no dispute that the constitutional guarantee of access to court is enshrined in both Art 35, BL and Art 10, BORO. For Art 35, BL, it is expressly provided in Art 35 First Limb that Hong Kong residents shall have the right of access to the courts and in Art 35 Second Limb that Hong Kong residents shall have the right to institute legal proceedings in the courts against the acts of the executive authorities and their personnel. 52.Art 10, BORO adopts the wording of article 14(1) (“Art 14(1)”) of the International Covenant on Civil and Political Rights (“ICCPR”). Sir John Swaine SC and Mr Swaine in their additional written submissions accept that Art 10, BORO is similar to Art 6(1), Convention (see also Commissioner of Inland Revenue v Lee Lai-ping, the administratrix of the estate of the late Lui Kim-kei, formerly trading as Leung Lee Seafood Wholesale (1993) 3 HKPLR 141, 147). Art 6(1), Convention provides inter alia as follows :
53.There is no express guarantee of access to court in Art 6(1), Convention or Art 10, BORO. But in Golder v United Kingdom (1975) 1 EHRR 524, the European Court of Human Rights (“ECt HR”) decided that such right is inherent in the subject and purpose of Art 6(1), Convention. Art 6(1), Convention is not just about the conduct of proceedings once they have been commenced, but includes the right to institute proceedings in the first place. The ECt HR said as follows at p.536 :
54.Woo VP adopted such interpretation for Art 10, BORO in Solicitor (301/2002) v Law Society of Hong Kong [2006] 2 HKC 40, 63 as follows : “…… it is pertinent to mention that the right of access to the courts is inherent to the right to a fair hearing protected by [Art 10, BORO]: Golder v United Kingdom (1975) 1 ECHR 524, at 536”. 55.There is also a constitutional right of access to court at common law. In R v Lord Chancellor, ex parte Witham [1998] QB 575, 585-586, Laws J observed that such common law right is no less extensive than “might be vindicated in Strasbourg” (ie the right of access to a court under the Art 6(1), Convention). In Solicitor (301/2002), Woo VP at p.58 recognised such common law right, and added it is unnecessary to decide whether the right of access to court is protected by Art 35, BL, Art 10, BORO, Art 14(1), ICCPR or the common law. However, Sir John Swaine SC and/or Mr Swaine have not sought to rely on such common law right in their submissions. (c) Tax matters 56.Mr Wong in his supplemental written submissions contends that tax matters are not “civil matters” within the meaning of “civil rights and obligations” in Art 6(1), Convention (see Ferrazzini v Italy (2001) 34 EHRR 1068 and Lee Lai-ping at pp.148-151). The CIR therefore reserves her position as to whether Art 35, BL and/or Art 10, BORO extend to tax cases. But for the purpose of the Application, Mr Wong concedes that Art 35, BL and Art 10, BORO are engaged. (d) Approach to interpretation of the BL and the BORO 57.The interpretation of Art 35, BL and Art 10, BORO underlies the Constitutionality Defence, but counsel has not referred to the relevant principles. 58.BL As a constitutional document and a “living instrument” intended to meet changing needs and circumstances, the BL must be construed purposively. As said in Ng Ka Ling & ors v Director of Immigration (1999) 2 HKCFAR 4, 28, a purposive approach is necessary because a constitution states general principles and expresses purposes without condescending to particularity and definition of terms. 59.The court’s role in interpreting the BL is to construe the language used in order to ascertain the legislative intent as expressed in the language (see Director of Immigration v Chong Fung Yuen [2001] 2 HKLRD 533, 546). In ascertaining the true meaning of the BL and its provisions, the language is to be considered in light of its context and purpose. The courts must avoid a literal, technical, narrow or rigid approach, but they cannot give the language a meaning which the language cannot bear. 60.Further, the fundamental rights in Chapter III of the BL (of which Art 35, BL is one) should be given a generous interpretation in order to give Hong Kong residents the full measure of fundamental rights and freedoms so constitutionally guaranteed (see Ng Ka Ling at pp.28-29). 61.BORO Litton VP (as he then was) in Kwan Kong Co Ltd v Town Planning Board (1996) 6 HKPLR 237, 253 adopted a similar approach to the interpretation of the BORO as follows :
62.Due to the similarity in language and/or substance of the provisions in the BORO, the ICCPR and the Convention, local courts have held that the European/Strasbourg jurisprudence on the Convention is relevant and persuasive (see Real Estate Developers Association v Town Planning Board (1996) 6 HKPLR 179, 210-211 and Tse Wai Chun Paul v Solicitors Disciplinary Tribunal & anor [2002] 4 HKC 1, 6, where Le Pichon JA held that European jurisprudence on Art 6(1), Convention is pertinent for interpreting Art 10, BORO). Indeed, Judge Cheung (as he then was) in Lee Lai-ping at p.152 said as follows :
63.With the above principles in mind, I now turn to Art 35, BL and Art 10, BORO. (e) Nature/scope of the right of access to court 64.Defendant’s case Although the Defendant relies on the right of access to court afforded by both Art 35, BL and Art 10, BORO, Sir John Swaine SC and Mr Swaine place particular emphasis on Art 35 Second Limb. They argue that since the CIR is an “executive authority” and the Assessments are “acts” of such authority, the Defendant as a Hong Kong company (ie a “Hong Kong resident”) being dissatisfied with such “acts” is entitled to access to the “courts” (and the relevant court is the District Court where the CIR has issued the present tax recovery proceedings) to have such “acts” ruled illegal. 65.Sir John Swaine SC accepts that Art 35 First Limb and Art 10, BORO closely resemble each other in that the inherent right of access to court in Art 10, BORO is reflected in the express provision for “access to the courts” in Art 35 First Limb. He submits these two provisions guarantee the right of access to court in private inter-citizen disputes whilst Art 35 Second Limb guarantees the right of Hong Kong residents to institute legal proceedings in the courts against the acts of the executive authorities and their personnel (ie disputes between private individuals and the Government). He further contends that by so mandating that private individuals can challenge the acts of the executive authorities (ie the Government) in the courts, Art 35 Second Limb with its distinctly different language is “more stringent” than and is not covered by Art 35 First Limb and/or Art 10, BORO. 66.Sir John Swaine SC traces the history of the BORO (which is part of the pre-1997 legislation) and the BL (which came into effect on 1st July 1997) in support of such construction. On the one hand he argues that Art 35 First Limb, which makes explicit what is inherent in Art 10, BORO, was enacted to prevent a hiatus in the law upon the 1997 handover, but on the other hand he submits that article 39, BL (“Art 39”) by perpetuating the application of the ICCPR enables the inherent right of access to court in Art 10, BORO to survive the 1997 handover. Sir John Swaine SC claims that section 75(4) being a vestige of colonial Hong Kong not only has no place in the post-1997 Hong Kong Special Administrative Region (“HKSAR”) it also cannot restrict the right of access to court guaranteed by the BL and/or the BORO. 67.CIR’s case Mr Wong submits that Art 35, BL and Art 10, BORO guarantee the same right of access to court, which includes the right by private individuals to institute legal proceedings in the courts against the Government (ie the executive authorities) or any person acting on its behalf in respect of the acts by the executive authorities (ie the Government) and their personnel. Mr Wong contends that Sir John Swaine SC’s arguments are merely belated (and inadequate) attempts to counter his submissions/authorities. Mr Wong points out that the focus of the initial written submissions of Sir John Swaine SC and Mr Swaine is on the right of “access to court” under Art 35, BL (which is in line with the inherent right of access to court in Art 10, BORO and Art 6(1), Convention), and the new twist of a “more stringent” right under Art 35 Second Limb only appears in their supplemental written submissions lodged after sight of Mr Wong’s written submissions/authorities which clearly demonstrate that section 75(4) does not violate the constitutional right of access to court. 68.In my view, it is not fruitful to investigate why Sir John Swaine SC has made such argument. The fact remains that such argument has been made, and I propose to deal with the same. 69.Enactment history To place Sir John Swaine SC’s arguments in context, it is necessary to consider the enactment history of the BL and the BORO. Although the BL came into effect on 1st July 1997, it was in fact adopted on 4th April 1990 at the Third Session of the Seventh National People’s Congress (see Byrnes and Chan, Public Law and Human Rights A Hong Kong Sourcebook (1993), pp.81-82). The BORO came into effect on 8th June 1991, and in essence it enacts as part of Hong Kong’s domestic law most of the provisions of the ICCPR as applicable to Hong Kong. For example, Art 10, BORO is almost identical to the corresponding provision in Art 14(1), ICCPR. 70.The BORO is buttressed by Article VII(5) of the Letters Patent. Article VII(5) of the Letters Patent, which is modelled closely on Art 39, BL, provides that “[no] law of Hong Kong shall be made after [8th June 1991] that restricts the rights and freedoms enjoyed in Hong Kong in a manner which is inconsistent with [the ICCPR] as applied to Hong Kong”. The Letters Patent ceased to have effect and the BL came into effect on 1st July 1997. Art 39, BL provides inter alia that :
Art 39, BL therefore ensures the entrenched status of the ICPRR as applied to Hong Kong (see Ng Ka Ling at pp.39-40) and gives constitutional force to the articles in the BORO (see Koon Wing Yee v Insider Dealing Tribunal & anor [2008] 3 HKLRD 372, 384). 71.But the BORO as an ordinary law of Hong Kong does not of itself enjoy any entrenched status, as once Art VII(5) of the Letters Patent or Art 39, BL is removed, it can be repealed in the same way as any other ordinance (see The Annotated Ordinances of Hong Kong : Hong Kong Bill of Rights Ordinance (Cap.383) 2007 reissue pp.2-3). In fact, the BORO continues in force after the 1997 handover by virtue of articles 8 and 18, BL (“Arts 8 and 18”) (which proposition Sir John Swaine SC accepted on the third day of the hearing). Art 8, BL provides inter alia as follows :
Art 18, BL provides inter alia as follows :
72.Given the above legislative history, I am not persuaded that Art 35 First Limb adopted before the BORO came into effect was enacted to make explicit what has been provided for in Art 10, BORO and/or to prevent a hiatus in the law upon the 1997 handover. By virtue of Arts 8 and 18, BL which came into effect on 1st July 1997, Art 10, BORO continues in force and there is simply no hiatus in the law upon the 1997 handover. These arguments do not lend any weight to Sir John Swaine SC’s interpretation of Art 35, BL. 73.Additional right? In my view, there is no merit to the suggestion that Art 35 Second Limb gives Hong Kong residents an additional constitutional right of access to court in disputes between the executive authorities (ie the Government) and private individuals not covered by Art 35 First Limb and/or Art 10, BORO on the basis that Art 35 First Limb and/or Art 10, BORO only concern access to court in inter-citizen disputes. 74.In making such submission, Sir John Swaine SC has not referred to section 7, BORO which provides as follows :
75.In Tam Hing-yee v Wu Tai-wai [1992] 1 HKLR 185, the CA held that the BORO has no application to disputes between private individuals by virtue of section 7, BORO. 76.But irrespective of whether it can be argued that the BORO extends to inter-citizen litigation (per Cheung JA in Solicitor (301/2002) at pp.89-92), section 7, BORO makes it abundantly clear that the right of access to court in Art 10, BORO applies to disputes between the Government and private individuals, which necessarily include disputes between such parties over acts of the executive authorities (ie the Government) and their personnel. Thus, the right of access to court covered by Art 10, BORO and Art 35 Second Limb is co-extensive in this respect, and Sir John Swaine SC’s contrary contention cannot be supported. His argument also does not form any sound basis for limiting persuasive European/Strasbourg jurisprudence on Art 6(1), Convention to facilitate interpretation of Art 35 First Limb and/or Art 10, BORO and not Art 35 Second Limb. 77.I am unable to discern any basis for limiting the express right of “access to the courts” in Art 35 First Limb to inter-citizen disputes under a broad and generous approach to interpretation of the BL. Further, as explained in paragraph 65 above, Sir John Swaine SC accepts that the inherent right of “access to court” in Art 10, BORO (see paragraph 54 above) is reflected in the express requirement of “access to the courts” in Art 35 First Limb. In the circumstances, I have no hesitation in concluding that in line with Art 10, BORO the right of “access to the courts” in Art 35 First Limb also includes a right of access to court in disputes between private individuals and the Government over the acts of the Government (ie the executive authorities) and their personnel. Even if I am wrong, such right is expressly articulated in Art 35 Second Limb. 78.Having thus considered the language of the BL and the BORO in light of its context and purpose with the assistance of persuasive overseas authority (ie Golder) and relying on the logic of the above analysis, it is plain that Art 35 Second Limb is not “more stringent” than Art 35 First Limb and/or Art 10, BORO. At best, Art 35 Second Limb makes clear for the BL (as section 7, BORO makes clear for the BORO) the availability of the right of access to court in the context of disputes between the Government and private individuals. So in this respect, the right of access to court guaranteed by Art 35, BL and Art 10, BORO is co-extensive. (f) “Greater includes lesser” 79.Sir John Swaine SC argues that since “the greater includes the lesser”, the constitutional guarantee in Art 35, BL and/or Art 10, BORO includes not only the right to institute legal proceedings against the executive authorities (ie the Government) and their personnel but also the right to defend legal claims issued by these parties. However, I note that the language of Art 35 Second Limb is confined to “the right to institute legal proceedings in the courts” without express reference to any right to defend legal claims in the courts. The question is whether the latter is inherent in Art 35, BL and/or Art 10, BORO. 80.Sir John Swaine SC has not cited any authority in support of his proposition, which he assumes to be trite. However, I am not beguiled by the simplicity of his approach. I start by revisiting the rationale for the right of access to court as explained in Golder (and affirmed in Jedamski and Jedamska v Poland (2007) 45 EHRR 47, a case cited by Mr Swaine, at para.58). It was held that Art 6(1), Convention embodies the right to a court, of which the right of access, “that is the right to institute legal proceedings before courts in civil matters”, constitutes one aspect only (see paragraph 53 above); but, in my view, it is an aspect that makes it possible to benefit from the further procedural guarantees concerning fairness, publicity, expeditiousness and legal representation laid down in Art 6(1), Convention. These procedural safeguards will be of no value if there is no protection of the pre-condition of access to court for enjoyment of such guarantees. Hence Golder described the inherent right of access to court as “the right to institute legal proceedings before the courts in civil matters” (my emphasis), and in my view it is this proactive “greater” right of instituting legal proceedings (rather than the reactive “lesser” right of defending legal claims) that gives the true meaning of the right of access to court for Art 6(1), Convention, and, a fortiori, for Art 10, BORO, and such proactive right is the same as the express “right to institute legal proceedings in the courts” (my emphasis) in Art 35 Second Limb. 81.In my view, such right is a right of effective access to court to seek remedy or redress, which is not an end in itself but rather an element/aspect of the right to have one’s rights and obligations determined by a fair hearing. If Sir John Swaine SC’s proposition in fact refers to a right to a fair hearing with appropriate procedural safeguards and full opportunity for the Defendant to present any and all challenges to the correctness and/or validity of the Assessments, Mr Wong does not appear to have any quarrel with such proposition. Where they do part is over how such requirement for a fair hearing (of which right of access to a court is an aspect) is to be satisfied, and this is the crux of contention between the parties in respect of the Constitutionality Defence. 82.Sir John Swaine SC insists that notwithstanding the Defendant’s proactive right to challenge the Assessments on the merits pursuant to the tax objection/appeal procedure under Part XI, IRO, the Defendant is constitutionally entitled to raise such challenges in defence in the present tax recovery proceedings, so in purporting to prevent the Defendant from doing so section 75(4) infringes Art 35, BL and/or Art 10, BORO. On the other hand, Mr Wong submits that the right of access to court is satisfied pursuant to the “Bryan principle” (see paragraph 88 below) by the Defendant exercising its proactive right (which right is not in any way restricted by section 75(4)) to challenge the Assessments on the merits pursuant to the tax objection/appeal procedure under Part XI, IRO, and given such avenue of objection/appeal the fact that such challenges cannot be raised by way of reactive defence in the present tax recovery proceedings cannot be said to shut out the Defendant from the courts orto infringe Art 35, BL and/or Art 10, BORO. But more of this later. (g) Limitations to the right of access to court 83.The right of access to court is not absolute and may be subject to limitations. The relevant principles are set out in Fayed v United Kingdom (1994) 18 EHRR 393 (“Fayed principles”) as follows :
The Fayed principles have been applied in Tolstoy Miloslavsky v United Kingdom (1995) 20 EHRR 442, 475 and Jedamski and Jedamska at para.58. 84.Here, Sir John Swaine SC and Mr Swaine submit that the Defendant’s access to court is restricted by the operation of section 75(4) (see paragraph 82 above), which not only impairs the essence of the right but also does not pursue a legitimate aim. They further submit there is no reasonable relationship of proportionality between the means employed and the aim sought to be achieved. On the other hand, Mr Wong submits that the issues of legitimate aim and proportionality will only arise if Art 35, BL and/or Art 10, BORO are infringed. He argues that the operation of section 75(4) is compatible with the constitutional guaranteeof access to court (see paragraph 82 above), so there is no question of restricting such right. In such circumstances, Mr Wong does not seek to argue issues arising from the Fayed principles for the purpose of the Application, but reserves the CIR’s right to contend that section 75(4) conforms with suchprinciples in any future proceedings should this arise. Again, more of this later. 85.Before I turn to consider the parties’ respective stance on the Constitutionality Defence (which I have tried to outline in a nutshell in paragraph 82 above), I need to consider the meaning of “court” in Art 35, BL and Art 10, BORO. (h) Meaning of “court” 86.There is no dispute that members of the Board are not judges of the courts of law.For the purpose of the Application, Mr Wong concedes that the Board is not a court within the meaning of Art 35, BL but only a quasi-judicial body. Although the CIR reserves her position to argue otherwise in any future proceedings should this arise, her concession appears to be justified. I have referred the parties to Stock Exchange of Hong Kong Ltd v New World Development Co Ltd & ors (2006) 9 HKCFAR 234 where the CFA held that Art 35, BL applies to courts of law, ie courts entrusted with the exercise of independent judicial power in the HKSAR, so when Art 35, BL refers to “the courts” it means the judiciary and nothing else. 87.I also have no doubt that when Art 10, BORO refers to “courts and tribunals”, the Board is not “a court of law of the classic kind integrated within the standard judicial machinery” as described by Le Pichon JA in Tse Wai Chun Paul at p.11. However, Mr Wong submits that the CIR should not be taken to accept that the Board is not compliant with Art 10, BORO (which is similar to Art 6(1), Convention) and, a fortiori, Art 35, BL. In fact, Judge Cheung (as he then was) in Lee Lai-ping accepted the Board is compliant. I will discuss this further in paragraphs 109 and 114 below. (i) Overview of the CIR’s arguments 88.Mr Wong submits that Bryan v United Kingdom (1995) 21 EHRR 342 decided that where a decision determinative of civil rights or obligations is taken by the executive or an adjudicatory body not complying with Art 6(1), Convention, such article requires (in accordance with the right of access to a court) that there be a right to challenge the decision before a judicial body with full jurisdiction providing the guarantees of such article, and if such appeal or review is provided there will be no violation of such article (“Bryan principle”). 89.In line with the Bryan principle but depending on the circumstances and features of the appeal system, the constitutional protection of access to court is not necessarily infringed by instituting an objection/appeal to an administrative body or specialised quasi-judicial body (even if that body does not comply with Art 6(1), Convention) that deals with the rights and obligations of the aggrieved party with an appeal to a court of law limited to questions of law or otherwise not in the full sense of being able to deal with every challenge possible. Such system is a common feature in many jurisdictions, and is regarded as compliant with Art 6(1), Convention and, a fortiori, Art 35, BL and/or Art 10, BORO. 90.Turning to the statutory scheme for tax objection/appeal under the IRO, which has been held to come within and is therefore authorised by article 108, BL (“Art 108”) (see Weson Investment Ltd v Commissioner of Inland Revenue [2007] 2 HKLRD 567, 585), any dissatisfied taxpayer, including the Defendant, can have access to court to ventilate any and all of his objections to the tax assessment for being incorrect/excessive and to have his tax liability determined by following the tax objection/appeal procedure under Part XI, IRO of instituting an appeal to the Board pursuant to sections 64 and 66 and, where necessary, a further appeal to the CFI or the CA on point of law by case stated pursuant to section 69 or 69A. Such right is wholly unaffected by the tax recovery provisions and section 75(4) in the IRO. Given the right of appeal from the Board to the CFI or the CA, it does not matter under the Bryan principle that the Board is not a court within the meaning of Art 35, BL. Mr Wong therefore submits that section 75(4) does not oust the jurisdiction of the courts as a whole or infringe the constitutional guarantee of access to court under Art 35, BL and/or under Art 10, BORO. (j) Overview of the Defendant’s case 91.The Defendant’s primary stance is that it should have access to the District Court (being the court with jurisdiction to entertain the CIR’s application to collect tax as a civil debt and to give judgment for tax due and payable) to defend the CIR’s tax recovery claim. The operation of section 75(4) (a) by restricting any challenge to the CIR’s determination of the Defendant’s objection to a statutory appeal to the Board which is not a court within the meaning of Art 35, BL and/or Art 10, BORO and (b) by ousting the jurisdiction of the District Court to entertain substantive defences to the Assessments (eg the Ultra Vires and Assessment Defences) or any plea that the Assessments are subject to objection/appeal infringes the constitutional guarantee of access to court. 92.However, in the course of his oral submissions, Sir John Swaine SC accepts that the European/Strasbourg jurisprudence cited by Mr Wong on Art 6(1), Convention (which provision has been re-rendered as Art 35 First Limb and Art 10, BORO even though the language is not identical) shows that the Bryan principle is applicable to Art 35 First Limb and/or Art 10, BORO. Nevertheless, Sir John Swaine SC argues that deficiencies as to the constitution/operation of the Board, the nature of an appeal from the Board to the CFI or the CA on point of law by case stated, and the “disconnect” between the tax recovery and tax appeal apparatus as a result of the operation of section 75(4) (collectively, “Alleged Deficiencies”) constitute restrictions that fail to satisfy the Bryan principle and/or the Fayed principles and are therefore incompatible with the constitutional right of access to court under Art 35 First Limb and/or Art 10, BORO. 93.Sir John Swaine SC argues that the European/Strasbourg jurisprudence cited by Mr Wong has no bearing on Art 35 Second Limb which is uniquely aimed at actions by and against executive authorities, and hence the constitutional guarantee of access to court thereunder can only be satisfied by appeal against the CIR’s determination of the taxpayer’s objection directly to a court of law and not to the Board which is not a court within the meaning of Art 35, BL. But even if the Bryan principle is applicable, Sir John Swaine SC submits that the dissatisfied taxpayer is entitled to appeal against the Board’s decision to a court of law in the same wide manner as in a civil appeal from the CFI to the CA, and should not be restricted to an appeal on point of law or, worse still, to an appeal on point of law by case stated, which is not good enough to meet the requirements of the Bryan principle. The Alleged Deficiencies also constitute restrictions that infringe the Bryan principle and/or the Fayed principles and violate the guarantee in Art 35 Second Limb. 94.Given my conclusion as to the co-extensive nature/scope of Art 35, BL and Art 10, BORO in respect of disputes between the Government and private individuals, I am not persuaded that a different approach should be adopted for Art 35 First Limb and/or Art 10, BORO and for Art 35 Second Limb. But I am prepared to consider the Defendant’s stance drawn to its highest as follows :
(k) Bryan principle 95.Mr Wong relies on a trilogy of cases to explain the Bryan principle : (a) Bryan; (b) R (Alconbury Developments Ltd & ors) v Secretary of State for the Environment, Transport and the Regions [2003] 2 AC 295; and (c) Runa Begum v Tower Hamlets London Borough Council [2003] 2 AC 430. 96.In Bryan, Mr Bryan appealed to the Secretary against an enforcement notice. Although the inspector who determined the appeal and upheld the notice was not an independent and impartial tribunal that satisfied the requirements of Art 6(1), Convention, there had been a fair hearing before him. Mr Bryan’s further appeal to the High Court on point of law was dismissed. At p.359, the Commission cited with approval the proposition in Albert and Le Compte v Belgium (1983) 5 EHRR 533 that even where an adjudicatory body determining disputes over civil rights and obligations does not comply with Art 6(1), Convention in some respect, there is no violation of the Convention if the proceedings before that body are “subject to subsequent control by a judicial body that has full jurisdiction and does provide the guarantees of [Art 6(1), Convention]”. It is clear from the concurring opinion of Mr Bratza at p.354 that “full jurisdiction” does not mean jurisdiction to decide all issues of law and fact :
The Commission concluded that the scope of review by the High Court with full range of grounds upon which judicial review might be granted complied with Art 6(1), Convention even though it was only on points of law and did not embrace all aspects of the inspector’s decision, and the court could not substitute its own decision on the merits. 97.At pp.360-361 the Commission said as follows :
98.Bryan was considered and applied in Alconbury Developments Ltd which concerned planning decisions. Although the minister was not an independent tribunal and there was no review on the merits, the decision-making process offered a number of procedural safeguards, such as an inspector’s inquiry and an opportunity for interested parties to be heard, and these safeguards together with the availability of judicial review were sufficient to ensure compliance with Art 6(1), Convention. 99.The House of Lords held that in case of administrative decision-making that involves considerations of administrative policy and public interest, it is acceptable or even desirable that they be made by an administrative body answerable to the legislature and ultimately to the electorate for the merits of such policy, and the reviewing body is not required to have full power to re-determine the merits of the decision. There is sufficient review of the legality of the decision and of the procedures followed by judicial review to prevent and control abuse, so the whole decision-making process is compatible with Art 6(1), Convention. At p.325 Lord Hoffmann explained as follows :
100.At p.336 Lord Hoffmann noted the difference between decision-making by administrative bodies as aforesaid and fact-finding by specialised quasi-judicial tribunals, but considered full review on the merits by a judicial body unnecessary in either case :
Lord Hoffmann referred to Bryan and discussed Mr Bryan’s grounds of appeal (a) (ie that planning permission should be granted) and (b) (ie that there had been no breach of planning control). The inspector rejected ground (a) because the buildings did not enhance or preserve the appearance of the conservation area. Since this involved “a panoply of policy matters”, the limited jurisdiction of judicial review was regarded as sufficient. In respect of ground (b), which was eventually not pursued, Mr Bryan and the planning authority disagreed as to the design purpose of the buildings, and the inspector eventually decided that the planning authority’s view was correct. If ground (b) were pursued, the procedural safeguards attending the procedure before the inspector (who was required to deal with the appeal in a quasi-judicial, independent and impartial as well as fair manner) together with the power of the High Court to satisfy itself that the inspector’s findings of fact or inferences based on them were neither perverse nor irrational were sufficient to satisfy Art 6(1), Convention. 101.Lord Slynn said at p.318 that the question whether there is sufficient jurisdictional control by a judicial body which has full jurisdiction is not a mechanical one and it depends on all the circumstances. At p.330 Lord Hoffmann endorsed the passage from Albert and Le Compte referred to in paragraph 96 above and went on to say that subsequent control by a judicial body that has full jurisdiction does not mean a court with full decision-making power but rather full jurisdiction to deal with the case as the nature of the decision requires. Lord Hoffmann emphasised Mr Bratza’s opinion in Bryanthat in assessing the sufficiency of the review on appeal to the High Court it is necessary to have regard to the matters such as the subject matter of the decision appealed against, the manner in which that decision was arrived at, and the content of the dispute, including the desired and actual grounds of appeal (p.337). 102.A relevant starting point is the procedural safeguards that exist in the decision-making process to ensure fairness. Lord Hoffmann at p.338 said as follows :
103.Lord Hutton at p.362 also said that it is in relation to fact-finding that Bryan refers to the safeguards attaching to the procedure before the inspector, and “…… I consider that the Strasbourg jurisprudence recognises that, where an administrative decision to be taken in the public interest constitutes a determination of a civil right within the meaning of [Art 6(1), Convention], a review of the decision by a court is sufficient to comply with [Art 6(1), Convention] notwithstanding that the review does not extend to the merits of the decision. Because it is a common feature of the judicial systems of the democratic member states of the Council of Europe that a court does not decide whether an administrative decision was well founded in substance, the Commission and [the ECt HR] have held that [Art 6(1), Convention] does not guarantee a right to a full review by a court of the merits of every administrative decision affecting private rights, but that there is compliance with the article where there is a right to judicial review of such a decision of the nature exercised by the High Court in England”. 104.Lord Nolan at p.323 compared the nature of judicial control exercised upon judicial review and upon appeal to a judicial body with no power to review the decision on the merits :
105.In Runa Begum, a homeless person refused social housing offered by the local authority, but on review the local authority found the offer to be quite suitable. The House of Lords applied Bryan and held there was no breach of Art 6(1), Convention. The local authority was not an independent tribunal, but the requirements of Art 6(1), Convention were satisfied as measures were in placed to safeguard the fairness of the proceedings and the decision was subject to ultimate judicial control by a court with jurisdiction to deal with the case as the nature required. 106.Lord Bingham at pp.441-442 noted that Bryan gives compelling support for the conclusion that the absence of a full fact-finding jurisdiction in the appellate tribunal on appeal from an administrative decision-making body does not disqualify that tribunal for the purpose of Art 6(1), Convention. Lord Hoffmann also recognised that extension of Art 6(1), Convention to administrative decision-making requires “substantial modification of the full judicial mode” (p.446). He pointed out that the Strasbourg jurisprudence approaches the matter on the basis that (a) if the administrator is not independent it is permissible to consider whether the composite procedure of administrative decision together with a right of appeal to a court is sufficient, (b) it will be sufficient if the appellate (or reviewing) court has “full jurisdiction” over the administrator’s decision, and (c) “full jurisdiction” does not necessarily mean jurisdiction to re-examine the merits of the case but jurisdiction to deal with the case as the nature of the decision required. 107.At p.452 Lord Hoffmann reiterated that a limited right of review on questions of fact can reasonably be expected in specialised areas of the law particularly where the facts have already been established in the course of quasi-judicial procedure governed by many of the safeguards required by Art 6(1), Convention. He went on to say at p.453 that : “…… The notion of a specialised area of the law should not be taken too literally. …… It seems to me that what the court had in mind was those areas of the law …… in which decision-making is customarily entrusted to administrators ……” which do not require a mechanism for independent findings of fact. In the absence of such mechanism or a full appeal, the overall procedure has to be fair and lawful to satisfy Art 6(1), Convention. 108.Lord Millett at pp.463-464 also said :
109.In my view, the Bryan principle as refined in the above trilogy of cases is clearly applicable to Art 10, BORO. I note that Judge Cheung (as he then was) in Lee Lai-ping adopted the Albert and Le Compte interpretation of Art 6(1), Convention, and held that Art 10, BORO requires an administrative act to be subject to control by an independent and impartial body that has full jurisdiction to deal with the merits of the matter (p.142). H H Judge B Kwan (as she then was) in Eekon Enterprises Ltd applied Lee Lai-ping and held that “[as the CIR’s] acts are subject to judicial review, there is access to the courts by way of judicial review, and in this manner the provisions of [Art 10, BORO] are satisfied” (p.326). In my view, these are clearly local restatements of the Bryan principle. 110.I have also referred counsel to Three Weekly Ltd v Obscene Articles Tribunal [2007] 3 HKLRD 673. In that case, the Obscene Articles Tribunal affirmed on review its interim decision to classify as obscene a feature article published by a magazine. In ascertaining whether there has been breach of Art 10, BORO and/or Art 35, BL, Ma CJHC (with whom Stock JA and Burrell J agreed) held that “the fundamental question to be answered is whether the applicant had in the present case been given a fair hearing by a competent, independent and impartial tribunal with an adequate appellate procedure” (p.698), which effectively is the Bryan principle. 111.Further, the Bryan principle is no different from the “Tehrani principle” as applied by the CA in the context of Art 10, BORO in Tse Wai Chun Paul and by the CFA when it declined to grant further leave to appeal (see FAMV46/2002 (unreported, 13th February 2003)). 112.Given the similarity of language amongst Art 6(1), Convention, Art 35, BL and Art 10, BORO and the co-extensive nature of the right of access to court in respect of Government-citizen disputes under Art 35, BL and Art 10, BORO as discussed above, I am firmly of the view that the Bryan principle is also applicable to Art 35, BL. 113.More importantly, it was held in Tse Wai Chun Paul that there is no violation of the BL or the BORO if the adjudicating tribunal’s decision is subject to subsequent control by a court that has full jurisdiction and itself complies with the requirements. In other words, the right of appeal to a court of full jurisdiction does not purge a breach of the BL or the BORO, but prevents the breach from occurring in the first place. This lends weight to Mr Wong’s arguments in paragraph 84 above. So if the presently impugned tax objection/appeal procedure and/or section 75(4) comply with the Bryan principle, there will be no restriction that attracts consideration of the Fayed principles. (l) Board 114.As discussed in paragraphs 87 and 109 above, Lee Lai-ping held that it is open to a dissatisfied taxpayer to challenge the tax assessment by “a review on the merits” by the Board under the appeal procedures laid down in the IRO, which procedures satisfy the requirements of Art 10, BORO, and section 75(4) is not inconsistent therewith. Lee Lai-Ping has been followed by H H Judge B Kwan (as she then was) in Eekon Enterprises Ltd and by H H Judge H C Wong in The Commissioner of Inland Revenue v Chapman Development Limited DCTC4466/2007 (unreported, 14th March 2008). 115.In my view, the Board (although not a court) is an impartial and independent body. The appointment of the Board’s members (who are independent members and not civil servants) and their term of office show that the Board is independent of the CIR. Section 65 provides inter alia as follows :
116.Further, it does not matter that members of the Board are not judges. By analogy, in determining whether the Obscene Articles Tribunal is a competent, independent and impartial tribunal, Ma CHJC in Three Weekly Ltd said that it is difficult to see why members should be required to take a judicial oath or be treated as judges in the discharge of the classification function when “any tribunal and its members are required by the rule of natural justice anyway to be independent and impartial, and the absence of an oath does not …… detract from these requirements” (p.698). 117.Here, there is no suggestion at all of any bias or perceived bias on the part of the members of the Board or of any external influence as to the outcome of any appeal to the Board. There is also no dispute that in light of the Board’s function in determining appeals under section 66 pursuant to the procedure in section 68, it can deal with any and all arguments on tax assessment/liability that may be raised by the taxpayer (see paragraphs 42-47 above and paragraph 182 below). It is an impartial and independent adjudicatory body in that it has to find facts and then apply legal rules to them in the course of quasi-judicial process attended by many of the procedural safeguards of openness, fairness and rationality in Art 35, BL and/or Art 10, BORO. For example, the taxpayer is entitled to know the case he has to meet, to present his case, to examine and/or cross-examine witnesses, and to know the reasoning underlying the decision of the Board, and the Board has to hear and evaluate evidence, consider the appeal on its merits, find/evaluate facts, draw inferences from the facts as found, exercise independent judgment, and give a reasoned decision. In short, the rules of natural justice apply to proceedings before the Board, and Mr Swaine does not seek to suggest otherwise. 118.The other issue is whether the Board in determining an appeal under sections 66 and 68 concerns “a specialised area of the law” or is itself a specialised tribunal. 119.Mr Swaine submits that with no “specialist” criteria laid down in the IRO and unlike English and Australian tax tribunals that comprise full-time jurists, the Board (comprising part-time members none of whom necessarily has any specialised skills in the key work to be done of hearing evidence, making findings of fact and applying tax law or general civil law to the facts, and only the chairman and deputy chairmen are required to legally qualified but who may be out-voted by other non-legally qualified members) cannot be described as a specialised tribunal. 120.Mr Swaine submits that Bokhary PJ in ING Baring Securities (Hong Kong) Ltd v Commissioner of Inland Revenue [2008] 1 HKLRD 412, 418 regarded the constitution of the Board unsatisfactory. The CFA found the given Board was overwhelmed by the mass of detail with which it sought to digest, and it considered matters that had no relevance to the narrow tax question it had to decide. Mr Swaine submits that the given Board was criticised for focusing on the wrong issues and for failing to make the findings it needed to make. Bokhary PJ (with whom Chan PJ, Ribeiro PJ and Nazareth NPJ agreed) at p.418 said as follows :
Mr Swaine submits this is a scathing criticism of the composition of the Board, which is not equipped to deal with complex and time-consuming tax appeals. He further submits that it is disproportionate for tax appeals to be determined by the Board comprising of part-timers when experienced judges of courts of law deal with appeals on fact and law in other civil matters. Given the nature of the decision that the Board has to make, Mr Swaine argues that an appeal to the Board is insufficient access to the courts. 121.To deal with these arguments, it is necessary to look briefly into the history of statutory tribunals. Wade & Forsyth, Administrative Law 9th ed at pp.906 and 908 states that it has long been recognised that statutory tribunals are an integral part of the machinery of justice that offers speedier, cheaper and more accessible justice, and there is a close relationship between tribunals and courts because tribunals are subject to control by the courts and in the majority of cases there is a right of appeal from the tribunals to the courts on any question of law. This observationhas been regarded as “helpful to a significant extent in understanding the tribunal system in Hong Kong which, before 1997, was naturally based on the UK model” (see Luk Ka Cheung v The Market Misconduct Tribunal & anor HCAL49/2008, Hartmann JA and A Cheung J (unreported, 18th November 2008), a case not cited by counsel, at paras.34-35 and 68). 122.An accompanying advantage of such statutory tribunals is that they can deal more expertly and quickly with special classes of case of which taxation is an example (per Lord Hoffmann in Alconbury Developments Ltd at p.325 in paragraph 99 above and per Lord Millett in Runa Begum at pp.463-464 in paragraph 108 above). I accept that likewise in Hong Kong the Board, which was established on the English model, is a specialised tribunal that has or gains knowledge/experience in decision-making in “a specialised area of the law”. 123.I agree with Mr Wong that a specialised tax tribunal does not necessarily mean a body that comprises expert jurists learned in tax law. Lord Hoffmann in Runa Begum admonished that the notion of specialised area of the law should not be taken too literally (see paragraph 107 above). Lord Millett further reminded it does not mean areas of specialised law but areas which call for some specialised knowledge or experience on the part of the decision-maker (see paragraph 108 above). In my view, a specialised tax tribunal is constituted by members hearing tax cases only (thereby accumulating experience and learning) and applying procedural safeguards in the exercise of its quasi-judicial function as a fact-finding adjudicatory body. In coming to this view, I draw comfort from Wade & Forsyth, Administrative Law 9th ed at p.908 which states that “[even] without technical expertise, a specialised tribunal quickly builds up expertise in its own field. Where there is a continuous flow of claims of a particular class, there is every advantage in a specialised jurisdiction” (see also Luk Ka Cheung at para.35). 124.Here, the chairman or deputy chairman of any given Board is legally qualified, and by hearing only tax appeals the Board develops experience and expertise in the area of tax law. In my view, the Board is a specialised tribunal as explained in the above trilogy of cases, and Mr Swaine’s criticisms in paragraphs 119-120 above reflect a misunderstanding of the true meaning of a specialised tribunal. 125.Indeed, as seen in Jauffur v The Commissioner of Income Tax [2006] UKPC 32 (21st June 2006), the Mauritius tax appeal tribunal comprises 2 barristers of at least ten years’ standing and other members as may be appointed by the minister (ie neither judges nor full-time members or tax experts). The relevant statutes provide that (a) a determination of the tribunal shall be final and binding on the parties, (b) any party who is dissatisfied with the determination of the tribunal being erroneous on point of law may appeal by case stated to the Supreme Court, and (c) the burden of proof that any assessment is incorrect falls on the taxpayer. Such statutory tax appeal apparatus, which is also modelled on the English system, is closely similar to that in Hong Kong under the IRO. In Jauffur, the Privy Council advised that the Mauritius tax tribunal is a specialised tribunal (but not a court) that performs a fact-finding function relevant to a matter within their special expertise, ie tax matter (see paragraphs 146 and 168 below). I respectfully agree and adopt such observations for the Board in Hong Kong. 126.Mr Wong suggests that Mr Swaine has misread what Bokhary PJ said in ING Baring Securities (Hong Kong) Ltd. He submits that Bokhary PJ did not condemn the organisation of the Board or demand that its members be full-time experts in tax law. He argues that Bokhary PJ merely questioned whether it is fair to require present members of the Board with the current level of resources deal with complex and time-consuming tax appeals, and it was in light of such query that he urged for consideration to be given for having full-time members or otherwise overhauling the constitution and resources of the Board. Mr Wong reminds that Bokhary PJ emphasised “[this] involves no criticism of those willing to take time out of their busy schedules to serve on the Board”. 127.I accept that Bokhary PJ did consider in the public interest that the tax appeal procedure can be improved or reformed, but that is not the real issue here. The real question is whether the statutory tax appeal system as it now stands infringes the constitutional guarantee of right of access to court under Art 35, BL and/or Art 10, BORO. The fact that a given Board in a particular case, such as the Board in ING Baring Securities (Hong Kong) Ltd (see paragraph 120 above), has fallen into error is neither here nor there, and does not derogate from the clear and unambiguous nature of the Board as a specialised quasi-judicial tribunal under the IRO. The fallacy of focusing too narrowly on any given Board is highlighted by fact that it is just as likely that any other given Board may attract praise from the appellate courts. Indeed, Kaplan J in Commissioner of Inland Revenue v Aspiration Land Investment Limited [1991] 1 HKLR 409, 420 praised the Board in that case by saying that “[the] legislature has entrusted [tax appeals] to [a Board] made up of people with considerable experience in matters of taxation. The Chairman in this case is both experienced and distinguished ……” 128.Upon considering the constitution and operation of the Board as described above, and the nature of the decisions it has to make in relation to tax appeals under sections 66 and 68 in the context of the Bryan principle, I am of the view that the Board is undoubtedly an independent and impartial specialised fact-finding tax tribunal with procedural safeguards as to fairness and rationality in respect of its quasi-judicial decision-making process. 129.Having reached such conclusion, I draw comfort from the observations of A Cheung J in Luk Ka Cheung that statutory tribunals already have an important role to play in Hong Kong even before the BL came into effect, so given the historical context and the theme of continuity which cannot be ignored, a flexible and sensitive approach to interpretation of the BL must be adopted (see para.59), and “it would be very surprising if the effect of [the BL], upon its proper interpretation, were to outlaw these administrative tribunals and bodies for ousting the jurisdiction or usurping the judicial functions of the courts of judicature of the HKSAR. Or put in another way, [the BL] should be interpreted in such a way as to enable, so far as violence is not done to the principle of separation of powers as understood in the tradition of English common law, the continued existence and development of administrative tribunals and bodies” (see paras.36 and 40). (m) Overview of the Defendant’s criticisms of appeal from the Board on point of law by case stated 130.The Board is a fact-finding tribunal whose decisions are intended to be final, subject only to review upon an alleged error of law by appeal to the CFI or the CA by case stated. Mr Swaine at first submits that since the Board is not a specialised tribunal there is no good reason for holding the Board’s findings of fact to be sacrosanct and for restricting appeals to the CFI or the CA to questions of law. But it is unnecessary to consider this argument given my conclusion above that the Board is in fact a specialised quasi-judicial body. 131.Mr Swaine next argues that even if the Board is a specialised tribunal, the Bryan principle does not apply because an appeal (which in fact is only a review) from the Board to the CFI or the CA on point of law by case stated is constitutionally flawed, and only a proper appeal on both questions of fact and law in the same wide manner as an appeal from a first instance court to the CA in civil matters (“Civil Appeal”) can satisfy the constitutional right of access to court under Art 35, BL and/or Art 10, BORO. 132.Mr Swaine submits that for Civil Appeals the CA has all the authority and jurisdiction of the court or tribunal from which the appeal was brought (see section 13(4), HCO) and power to draw inferences of fact and to give any judgment and make any order which ought to have been given or made and to make such further or other order as the case may require (see Order 59 rule 10(3), RHC). He argues there is no justifiable reason why the Board should be the sole arbiter of fact and why the dissatisfied taxpayer should be confined to appeals on questions of law when Art 35, BL and/or Art 10, BORO are enacted to prevent ouster of the court’s full jurisdiction. 133.Mr Swaine submits that as a result of deficiencies of the case stated procedure, eg the appellate court is not allowed to review the primary evidence or transcript of the proceedings before the Board or to draw inferences (see Lee Yee Shing v Commissioner of Inland Revenue [2008] 3 HKLRD 51, 68-69 per McHugh NPJ), an appeal on point of law by case stated is even more restrictive that an appeal on point of law simpliciter. But where a Civil Appeal involves a question of fact, the evidence taken in the court below bearing on the question shall be brought before the CA by inter alia a copy of so much of the transcript of the proceedings below as is relevant (see Order 59 rule 12, RHC), and the documents lodged for such appeal shall include a transcript of the judgment/ order and such parts of the evidence given in and such documents/exhibits as were in evidence in the court below as are relevant to any question at issue on the appeal (see Order 59 rule 9(1)(f)-(i), RHC). Mr Swaine submits that the farcical situation of constraining the dissatisfied taxpayer to argue the tax appeal to the CFI or the CA without referring to any primary material from which conclusions/inferences of fact have been drawn is precisely why McHugh NPJ (with whom Power NPJ and Ribeiro PJ agreed) in Lee Yee Shing at pp.94-95 criticised the case stated procedure as an anachronism that is not a conducive means to justice. 134.In order to deal with Mr Swaine’s arguments, it is necessary to understand the scope for disturbing facts as found by the Board as fact-finding tribunal and/or inferences drawn from such facts as found in an appeal on point of law by case stated. (n) Disturbing facts as found on appeal on point of law 135.Mr Swaine submits that restricting the appeal to the CFI or the CA to questions of law whilst leaving the findings of fact of the Board sacrosanct impose a severe limitation on the scope of the tax appeal. He refers to ING Baring Securities Ltd where Lord Millett NPJ at p.464 said that “[appeals] from decisions of [the Board] are by way of Case Stated. Appeals are on law only; it is the Board’s function to find the facts. The role of the Court is limited”. 136.On the other hand, Mr Wong submits that such appeal is not as narrow as it sounds, and in fact the court can review the factual determination to see if there is any justifiable basis for the decision. 137.Indeed, in the above passage from ING Baring Securities Ltd at pp.464-465 Lord Millett NPJ continued to say that the court will set aside the Board’s decision “where there is no evidence to support a particular finding of fact, or where the only reasonable conclusion on the facts which the Board has found contradicts its determination”. In Bryan, it was said that the tribunal’s decision can be quashed on appeal if it has been made by reference to irrelevant factors or without regard to relevant factors or if the evidence relied on is not capable of supporting a finding of fact (see paragraph 97 above). Lord Nolan in Alconbury Developments Ltd and Lord Millett LJ in Runa Begum both adopted a broad and generous approach in interpreting the court’s powers to review questions of law (see discussion in Kwong Mile Services Ltd v Commissioner of Inland Revenue (2004) 7 HKCFAR 275 in the paragraph below). I also refer to the discussion in Mauritius Breweries Ltd v Commissioner of Inland Tax [1997] MR 1 in paragraph 170 below. 138.In Kwong Mile Services Ltd, the Board allowed the taxpayer’s appeal, but the CFI and the CA disagreed, so the taxpayer appealed to the CFA. Bokhary PJ at pp.287-289 explained the basis of intervention on errors of law buried beneath conclusions of fact in an appeal on point of law by case stated :
139.Such approach or the grounds of such approach (“Edwards v Bairstow approach or grounds”) to determining the scope of the challenge on law (and of disturbing facts) in relation to appeals on questions of law by case stated is also pertinent for judicial reviews or appeals on error of law simpliciter. For judicial reviews, Alconbury Developments Ltd said the Edwards v Bairstow approach describes the power of the administrative court in judicial review proceedings to review the legality of administrative decisions (see paragraphs 103-104 above and also Bryan at paragraph 96 above). For appeals on error of law simpliciter, I need go no further than Guido Ferrando v Hua Dao Shipping (Far East) Limited HCLA44/2007 (unreported, 31st October 2008) where Deputy High Court Judge To said at para.21 that the Edwards v Bairstow approach adopted in Runa Begum and Kwong Mile Services Ltd “…… apply equally to appeals against the determination of the Labour Tribunal ……” on error of law. (o) Disturbing inferences of fact on appeal on point of law 140.In my view, inferences drawn from facts as found can also be disturbed on Edwards v Bairstow grounds on an appeal on point of law by case stated. In Bryan, it was said that the inferior tribunal’s decision can be quashed on appeal if the decision is based on an inference from the facts which is perverse or irrational in that no tribunal properly directing itself will have drawn such an inference (see paragraph 97 above). 141.In Commissioner of Inland Revenue v Inland Revenue Board of Review and Aspiration Land Investment Ltd HCMP1504/1988 (unreported, 23rd December 1988), Barnett J said at paras.59-60 as follows :
142.In Commissioner of Inland Revenue v Chinachem Finance Co Ltd [1993] HKLR 136, a case not cited by counsel, Fuad VP at pp.149-150 said as follows :
143.Further, at pp.68-69 in Lee Yee Shing, citing The Queen v Rigby (1956) 100 CLR 146, it was said that in the absence of explicit statement of facts including inferences, the court engaged in dealing with the case stated may perhaps gather the necessary facts from construction of the case itself as stated in the way expounded by Lord Atkinson in Usher’s Wiltshire Brewery Ltd v Bruce [1915] AC 433, 449-450. In other words, it is for the courts to construe the stated case as a written document in the same way as, say, “such Courts have to construe a correspondence between parties litigant to determine whether their letters in the aggregate contain a concluded contract in writing. In doing this the tribunal of law does not usurp the jurisdiction of the tribunal of fact, and from the facts found by the latter draw a further inference of fact. It merely discharges its proper and exclusive function of construing written documents” (see Lee Yee Shing at p.69). McHugh NPJ at p.92 said that such principles in Usher’s Wiltshire Brewery Ltd in fact extend the scope given to the appellate court to determine what the paragraphs in the stated case truly disclose. (p) Judicial control by appellate court of “full jurisdiction” 144.Mr Swaine has not cited any authority for his proposition that an appeal from an inferior fact-finding tribunal to a court of law limited to questions of law necessarily infringes the constitutional guarantee of access to court under Art 6(1), Convention, Art 35, BL and/or Art 10, BORO. 145.Under the Bryan principle, where the specialised fact-finding tribunal is independent and impartial and adopts quasi-judicial procedures, the scope of review by a court of law does not have to embrace all aspects of the tribunal’s decision even if such court cannot substitute its own decision on the merits (see Bryan at paragraphs 96-97 above, Alconbury Developments Ltd at paragraphs 98 and 100-104 above and Runa Begum at paragraphs 105-108 above). Plainly, subsequent control by a court of law with “full jurisdiction” is sufficient to satisfy Art 6(1), Convention, and, in my view, also Art 35, BL and/or Art 10, BORO. “Full jurisdiction” means full jurisdiction to deal with the case as the nature of the decision requires, which will be affected by such matters as the subject matter of the decision appealed against, the manner in which it is arrived at, and the content of the dispute including the desired and actual grounds of appeal (see Bryan at paragraph 97 above and Alconbury Developments Ltd at paragraph 101 above). As Bryan warned, the requirement that the appellate court have full jurisdiction cannot be mechanically applied to mean “full power to substitute its own findings of fact, and its own inferences from those facts ……” (see paragraph 96 above). 146.As evident from the Strasbourg/European jurisprudence, such approach is a common feature throughout the Council of Europe member states (see Bryan at paragraph 97 above and Alconbury Developments Ltd in paragraph 103 above). The Bryan principle has also been adopted locally in Lee Lai-ping, Eekon Enterprises Ltd , Three Weekly Ltd and Tse Wai Chun Paul (see paragraphs 109-111 above). Indeed, Lord Walker in dealing with the Mauritius tax appeal procedure which is closely similar to that in Hong Kong (see paragraph 125 above) said in Jauffur as follows at para.1 :
147.If such approach were incompatible with Art 6(1), Convention (and, a fortiori, with Art 35, BL and/or Art 10, BORO), it has escaped the attention of (a) the Strasbourg, English and local courts when the Bryan principle was approved and followed, (b) Lord Walker in Jauffur (see paragraphs 146 above and 168 below) and (c) Wade as cited in Mauritius Breweries Ltd (see paragraph 170 below). 148.In my view, Mr Swaine’s criticisms in this respect cannot be supported. In line with the Bryan principle, there is nothing objectionable about the Board acting as it does provided that its decision is subject to control by a judicial body that has full jurisdiction. Upon considering the whole process of the tax appeal procedure under the IRO, including the powers of review by the CFI or the CA under section 69 or 69A, I find that in all the circumstances the CFI or the CA has jurisdiction to deal with the case as the nature of the decision requires. Here, the Board’s decision that is appealed against and the contents of the dispute on appeal are matters of tax assessment/liability. The legislature under the ambit of Art 108, BL (see Weson at paragraph 90 above) has charged the Board with the express function of deciding appeals by dissatisfied taxpayers in respect of the CIR’s determinations of their objections to tax assessments, and the decisions of the Board are the exercise of such function. Since I have concluded that (a) the Board is an independent and impartial specialised fact-finding tribunal, (b) the statutory process before the Board is quasi-judicial in character and contains procedural safeguards of the kind required by Art 35, BL and/or Art 10, BORO, and (c) the appellate court on appeal from the Board can determine any question of law on Edwards v Bairstow grounds or any shortcoming in relation to the procedural safeguards attending the process before the Board, I see no reason why an appellant on appeal from a decision of the Board is entitled to insist on an appeal akin to a Civil Appeal and/or why the Bryan principle (which is applicable) is not satisfied by an appeal limited to questions of law. In my view, there is plainly no justifiable basis for requiring a mechanism for independent fact-finding or for full review on all issues of law and fact by the appellate court. 149.In the circumstances, it is obvious that the CFI or the CA in exercising its powers under section 69 or 69A on appeal on question of law by case stated on Edwards v Bairstow grounds is a court of “full jurisdiction”, and I find the decision-making process under the tax objection/appeal procedure under Part XI, IRO as a whole satisfies the constitutional guarantee of access to court under Art 35, BL and/or Art 10, BORO. (q) Case stated an anachronism? 150.Mr Swaine submits that an appeal on point of law by case stated is even more restrictive than an appeal on point of law simpliciter and is, in the words of McHugh NPJ in Lee Yee Shing at pp.94-95, an anachronism in the modern era :
151.As an initial observation, McHugh NPJ’s reference to the option of an appeal limited to questions of law do not lend any support for Mr Swaine’s primary proposition (which also flies against the Bryan principle) that only full review on both fact and law by an appellate court can satisfy the constitutional right of access to court in Art 35, BL and/or Art 10, BORO. The CFA in Lee Yee Shing did not even begin to hint that an appeal on both fact and law is necessary for the administration of justice. 152.Transcript of the proceedings before the Board Mr Swaine suggests that McHugh NPJ’s observations in paragraph 150 above highlight a major deficiency of the case stated procedure, ie non-availability of the transcript of the proceedings before the Board for the appellate court to review the evidence. 153.To consider Mr Swaine’s submissions, one needs to start with an understanding of the function/purpose of a case stated. Lord Millett NPJ in ING Baring Securities (Hong Kong) Ltd at p.465 explained how to state a case :
Thus, a case stated requires the inferior tribunal to set out for the benefit of the appellate court the facts it has found, the inferences it has drawn from the facts as found, and the points of law to which they give rise. This leads to early concentration on the issues under appeal, but at the expense and additional effort of formulating the case. Indeed, in Chinachem Investment Co Ltd v Commissioner of Inland Revenue (1987) 2 HKTC 261, 303-304, Huggins VP said that “…… [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”. 154.With the findings of fact and the inferences drawn from the facts as found by the inferior tribunal clearly set out in the stated case, it is obviously generally unnecessary to include a transcript of the proceedings before the inferior tribunal. But there is no absolute bar. Even in the context of the case stated procedure under section 69 or 69A, it has been recognised that in appropriate cases (though rare) a complete transcript of the evidence and the documents produced before the Board can be attached to the stated case (per Barnett J in Aspiration Land Investment Ltd HCMP1504/1988 para.61). In Chinachem Investment Co Ltd (1987) 2 HKTC 261, 304, Huggins VP said as follows :
155.Against such background, even taking the observations of McHugh NPJ in paragraph 150 above to the highest, they merely suggest that with the modern availability of transcripts, an appeal on question of law simpliciter with lodgment of such part of the transcript relevant to the question of law at issue on the appeal may lead to efficiency and thereby further the administration of justice by avoiding the time/cost of stating the case and disputing over its contents. But McHugh NPJ also acknowledged that in adopting such approach there is the additional effort/cost of providing a transcript and of the appellate court spending time to determine what facts have been found by the inferior tribunal. I am unable to discern from his observations any condemnation of the case stated procedure or criticism of lack of transcript of the proceedings before the Board for a section 69 or 69A appeal amounting to unacceptable restriction of effective access to court. In describing the case stated procedure as an anachronism, McHugh NPJ was in fact drawing attention to a possible need to move with the times (ie from early days when the case stated procedure evolved as a useful means to enable inferior tribunals to seek guidance from the courts on questions of law when there was seldom access to transcripts to the present time when transcripts of proceedings are readily available) rather than criticising the nature of appeals limited to point of law simpliciter or by case stated. 156.Even though McHugh NPJ urged for consideration of possible reform of the case stated procedure under section 69 or 69A, it is not the same as saying that an appeal on question of law by case stated as part of the whole tax appeal process is incompatible with the constitutional guarantee in Art 35, BL and/or Art 10, BORO. Whether a given stated case has gone wrong in a particular case and/or whether the case stated procedure should be overhauled or improved is not the question that needs to be addressed here. The true issue here is whether the tax appeal apparatus under the IRO as it stands that includes supervisory control of the Board’s decision-making by the CFI or the CA on appeal on point of law by case stated satisfies the constitutional guarantee of access to court when the whole process is considered in all the circumstances. Taking into account the subject matter of the decision of the Board appealed against (ie the validity/correctness of the tax assessment), the manner by which the Board arrived at such decision (ie the procedural safeguards that ensures the legality of the decision), and the content of the dispute on appeal (ie challenges on law (and perhaps even disturbances on fact) on Edwards v Bairstow grounds as to tax assessment/liability), and bearing in mind the Mauritius tax cases (see paragraphs 167-172 below), I am persuaded that an appeal to the CFI or the CA on point of law by case stated under section 69 or 69A is clearly compatible with Art 35, BL and/or Art 10, BORO. 157.Lee Yee Shing But Mr Swaine submits that the unconstitutionality lies in the actual operation of the case stated procedure, and that Lee Yee Shing is an example. In that case, the taxpayer claimed on appeal that the true and only reasonable conclusion open to the court was that he was carrying on business in his securities and futures dealing activities so his losses arose from a trade or business. Mr Swaine, who was counsel for the appellant, submits that the Board made no findings concerning the more important pieces of evidence. At pp.91-92 McHugh NPJ said that if the recital of the evidence in the reasons for decision “had been accepted as constituting facts and contained in the Case Stated, [he] would have thought that the only reasonable conclusion was that those facts and the other facts accepted in this appeal as found by the Board established that [the taxpayer] was carrying on the business of a share trader” (my emphasis), and if he “had been the tribunal of fact in this case, [he has] little doubt that [he] would find on the whole of the evidence, if [he] had accepted it, that the [taxpayer] carried on the business of share dealing” (my emphasis). Mr Swaine submits that since the taxpayer carried the onus of proof and the Board made no findings of fact concerning certain relevant evidence, McHugh NPJ reluctantly concluded that the appeal must be dismissed. 158.Mr Swaine submits that the failure of the given Board in Lee Yee Shing to foresee how much further the CFA would articulate the relevant tax law, and its consequent failure to make findings of fact on certain evidence which the law subsequently articulated by the CFA required reflect deficiencies of the case stated procedure which constrained the CFA to dismiss rather than allow the appeal. 159.Mr Wong disagrees and notes that McHugh NPJ only suggested he would have found for the taxpayer if he had been the tribunal of fact and if he had accepted the evidence. But there is no telling that McHugh NPJ would necessarily have accepted the evidence as the taxpayer was found to be an evasive and unreliable witness. Bokhary and Chan PJJ at p.66 said as follows :
160.In my view, it is not fruitful to speculate whether the CFA in Lee Yee Shing would have come to the conclusion that the taxpayer in that case carried on a trade and business in share dealings if there had been an appeal on both law and fact instead of an appeal on point of law by case stated. But even assuming, as Mr Swaine contends, that the stated case in Lee Yee Shing was deficient, it is in my view nothing more sinister than an illustration of a given stated case that fails to meet the requirements properly expected of a stated case. It is certainly not a criticism of the case stated procedure as a whole or of any stated case properly formulated in the manner suggested by Lord Millett (see paragraph 153 above). 161.Further, the CFI or the CA may in an appropriate case cause a stated case to be remitted to the Board for amendment pursuant to the principles in Consolidated Goldfields plc v Inland Revenue Commissioners [1990] 2 All ER 398, 402 (see Lee Yee Shing at p.57), ie where the desired or additional findings are (a) material to some tenable argument, (b) at least reasonably open on the evidence that has been adduced, and (c) not inconsistent with the finding(s) that have already been made. Indeed, in Chinachem Investment Co Ltd (1987) 2 HKTC 261, 304 (see paragraph 154 above), it was said that “it would be the duty of the parties to apply for any necessary amendment”. 162.Aspiration Land Investment Ltd Mr Swaine disagrees and cites the further example of Aspiration Land Investment Ltd HCMP1504/1988. In that case, the Board annulled the tax assessment, and the CIR applied to the Board to state a case. The so-called questions of law formulated by the CIR admittedly challenged the facts found and inferences drawn by the Board, and the draft case prepared by the CIR included a transcript of the evidence before the Board. The CIR contended it was unnecessary to particularise the individual matters impugned, and it was proper to place the whole of the evidence before the Board to see whether the court could come to a different conclusion. The Board declined to state a case on such basis, and the CIR applied by judicial review to quash the Board’s refusal and to seek an order of mandamus directing the Board to state a case. 163.Barnett J refused the relief sought, and held that until a satisfactory question of law has been identified to trigger the preparation of the case it is not permissible for any intended appellant to simply say there must be a point of law which will arise for consideration by the High Court. He set out the following principles :
Barnett J therefore concluded that unless the CIR identified findings of fact for which there was no evidence or inferences which were wholly unsupportable and thus wrong in law, the so-called questions of law were untenable, and the CIR could not “go beating about the evidential undergrowth in the hope of flushing out some useful pieces of evidence that support his view” (see para.64). 164.The CIR appealed, but withdrew the appeal on terms before the hearing. The Board prepared a draft case, but refused to endorse some amendments proposed by the CIR. The CIR applied to amend the stated case. In Aspiration Land Investment Limited [1991] 1 HKLR 409, 412 Kaplan J noted the Board was prepared to state a case which raised a proper question of law, but not one which raised the question as to whether on the whole of the evidence the Board’s decision was correct. If the CIR could show that no reasonable tribunal could have come to the Board’s conclusion on the facts found by the Board (ie the decision was Edwards v Bairstow unreasonable) the CIR would succeed, but the CIR should identify the finding so challenged and not just go through the evidence pointing to other factors going the other way and thereby usurp the Board’s fact-finding role. Kaplan J at pp.420-421 said as follows :
165.I am unable to accept Mr Swaine’s submission that the CIR’s complaint in Aspiration Land Investment Ltd is a classic point of law. Plainly, both Barnett J and Kaplan J rejected the CIR’s complaint as a naked attack on the facts found by the Board. Mr Swaine then seizes on Kaplan J’s observation that he might have come to a different conclusion had the matter been before him on a first instance basis to say the case stated procedure is deficient. But the fundamental problem with the CIR’s stance in Aspiration Land Investment Ltd is the lack of any identifiable question of law and not any deficiency of the case stated procedure. In my view, if it is only a matter of fact and degree, to ask the appellate court to consider the whole of the evidence before the inferior tribunal to see if it will come to a different factual conclusion is not permissible for an appeal on point of law simpliciter or even for a Civil Appeal (see paragraphs 173-174 below). 166.More importantly, it does not follow from Kaplan J’s observations that the circumstances of that case would necessarily have infringed the constitutional right of access to court. If it is said (as Mr Swaine seems to suggest) that the Edwards v Bairstow approach on appeal on point of law simiplicter or on appeal on point of law by case stated restricts effective access to court, I cannot agree for reasons explained above. 167.Mauritius cases Having dealt with Mr Swaine’s arguments, I now turn to the CIR’s case. Because of the close similarity of the tax appeal apparatus in Mauritius (as explained in paragraph 125 above) and that in Hong Kong, Mr Wong cites two cases from the Mauritius jurisdiction to support his contention that judicial control of the Board’s decision-making by appeal to the CFI or the CA on point of law by case stated is sufficient to satisfy the constitutional guarantee of access to court. 168.In Jauffur, Lord Walker delivered the advice of the Privy Council and upheld the Mauritius tax appeal procedure as constitutionally valid and compliant with Art 6(1), Convention :
169.In Mauritius Breweries Ltd at pp.3-4, the forth and sixth questions to be resolved by the Supreme Court are as follows :
170.On the fourth question, the Mauritius Supreme Court at p.7 said as follows :
171.On the sixth question, the Mauritius Supreme Court at p.9 said as follows :
172.Given the applicability of the Bryan principle and the close resemblance between the Mauritius and Hong Kong statutory tax appeal procedures, I respectfully agree with the above observations in Jauffur and Mauritius Breweries Ltd, which are applicable mutatis mutandis to the tax appeal scheme in Hong Kong. They also give strength to the view that the tax objection/appeal procedure under Part XI, IRO (ie objection to the CIR, appeal to the Board and appeal on point of law by case stated to the CFI or the CA) is compliant with the constitutional guarantee of access to court under Art 35, BL and Art 10, BORO. 173.I further agree that on the question of constitutionality of the tax appeal procedure in Mauritius and, a fortiori, in Hong Kong, there is no practical difference between an unrestricted right of appeal and an appeal on point of law only with the latter “clearly intended to be a wide and beneficial remedy”. Although an appellant in a Civil Appeal is entitled to appeal against any finding of the trial judge, whether a finding of law, a finding of fact or a finding involving both law and fact, the finding of primary fact is still the function of the trial judge and the appellate court will not usurp such function. The CA will not disturb any finding of fact by the court below unless it is satisfied that such finding is manifestly wrong (eg where the finding is without any evidential basis or where the trial judge has misdirected himself as to the effect of certain evidence which he understood to support his conclusion) after having regard to the broad and subtle advantages enjoyed by the trial judge who received the evidence first hand that led to a conclusion about the reliability/credibility of the witnesses, and if not so satisfied the CA will defer to the trial judge’s conclusion even if in some doubt as to its correctness (see Ting Kwok Keung v Tam Dick Yuen[2002] 3 HKLRD 1, 13-14). 174.Further, in Tang Kwok Ming v Daxprofit Scaffolding Ltd [1999] 1 HKC 657, 663, Godfrey JA said as follows :
175.In my view, the aforesaid challenge on fact is, practically speaking, not too far different from the Edwards v Bairstow approach, but more importantly (and quite similar to an appeal on point of law) there is neither mechanism for independent fact-finding by the appellate court nor full review of the facts as found by the subordinate court. Even if I am wrong and there is substantial and material difference between a Civil Appeal and an appeal on point of law for the purpose of determining whether the constitutional guarantee of access to court is satisfied, the Bryan principle makes clear that an unrestricted or full right of appeal from a decision of the Board is not required. (r) Board refuses to state a case 176.It is the Board who decides if there is a proper question of law for stating a case, and if it is of the view that the point of law is not proper, it can decline to state a case. Sir John Swaine SC submits that if the Board refuses to state a case, the intended appellant is placed in a compromised position of having to apply for judicial review in some court other than the one in which the tax recovery proceedings are brought (see Aspiration Land Investment Ltd HCMP1504/1988 in paragraph 162 above), but such additional step only resolves whether there is a point of law to be stated and not the merits of the appeal. Sir John Swaine SC says this erodes the guarantee of access to court under Art 35, BL and/or Art 10, BORO. 177.But section 69 “requires” the Board to state a case on a question of law for the opinion of the CFI, and a judge of the CFI shall hear and determine “any” question of law arising on the stated case. Thus the Board has a statutory duty to state a case where there is a proper question of law (per Barnett J in Aspiration Land Investment Ltd HCMP1504/1988 at para.61). If the Board refuses to do so, it is always open to the appellant (and the proper course for him is) to seek judicial review of the Board’s refusal and apply for an order that the Board carries out its duty. Here, the taxpayer is not concerned with the substantive merits of the appeal but with the legality of the Board’s decision, and I do not see why judicial review is not an appropriate remedy that gives sufficient access to court to the aggrieved intended appellant. I disagree the taxpayer is left without effective remedy if the Board refuses to state a case. 178.Sir John Swaine SC complains that judicial review is an exceptional and discretionary remedy, and the applicant has to first exhaust his other remedies (see Hong Kong Civil Procedure 2009 Vol.1 para.53/14/22 at p.853) with the consequence of prolonging and multiplying litigation. But the aforesaid passage in Hong Kong Civil Procedure 2009 goes on to say as follows :
When a Board refuses to state a case, there is no other statutory remedy that has to be exhausted before bringing judicial review against such refusal. Further, the exercise of discretion involved in deciding whether to grant such discretionary remedy must be on established principles, and intended appellants have been successful in pursuing such remedy in, say, Commissioner of Inland Revenue v Board of Review (Inland Revenue Ordinance) and Lam Chi Kwong HCAL66/2003, Burrell J (unreported, 10th September 2004) and Commissioner of Inland Revenue v Board of Review & anor [2006] 2 HKLRD 26. There is no question of shutting out any aggrieved intended appellant from the courts. (s) Premature tax recovery claim? 179.At the hearing before me, Sir John Swaine SC submits that since the Defendant has appealed against the Assessments and the decision of the Board is pending (ie it is unknown whether the Board will reduce/annul the Assessments), the present tax recovery proceedings are premature under the IRO statutory framework. But in light of sections 71(2) and 75(4) and Tak Wing Investment Company Limited (now known as Samland Investment Company Limited) v The Commissioner of Inland Revenue CACV167/2001 (unreported, 20th March 2001), Sir John Swaine SC no longer pursues such argument other than to reserve the Defendant’s position in case of appeal. 180.Sir John Swaine SC next argues as part of the Constitutionality Defence that because of the “disconnect” between the tax objection/appeal procedure and the tax recovery procedure under the IRO, the CIR should have waited to see whether the Board will reduce or annul the Assessments before commencing the present tax recovery proceedings. He also complains that as a result of the operation of section 75(4) this court cannot take into account any tax objection/appeal and/or grant any stay of the present tax recovery proceedings pending decision by the Board, and this constitutes ouster of the court’s jurisdiction and hence infringement of Art 35, BL and/or Art 10, BORO. 181.A few days after the hearing before me, the Board dismissed the Defendant’s tax appeal. But the Defendant’s solicitors have been instructed to require the Board to state a case on a question of law for the opinion of the CFI pursuant to section 69(1). In light of the Defendant’s stance and for completeness, I still proceed to consider the argument outlined in the above paragraph. 182.I have concluded that the tax appeal system under the IRO satisfies the constitutional guarantee of access to court under Art 35, BL and/or Art 10, BORO, and there is no ouster of any right of judicial redress that may be sought by the taxpayer. The taxpayer can proactively initiate objection to the CIR, appeal to the Board and then appeal to the CFI or the CA, and such objection/appeal process in the proper forum is wide enough to cover every situation in which an assessment may be challenged, including the Ultra Vires and Assessment Defences. Indeed, Lord Jauncey of Tullichettle said as follows in Harley Development Inc & anor v Commissioner of Inland Revenue [1996] 2 HKLR 147, 150-151 :
183.Any tax recovery proceedings in the District Court do not restrict such right of access to the courts. As Briggs CJ said at p.97 in Ng Chun-kwan in respect of the pre-1997 tax appeal apparatus under the IRO which is currently still in use today, “there is no question of shutting out the appellant from the Court” and section 75 does not limit “the jurisdiction of the courts as a whole”. At p.15 in Choy Sau Kam it is said that the prohibition in section 75(4) against entertaining a plea that the tax is incorrect in tax recovery proceedings “does not mean that the taxpayer has no means of redress. He has the procedure laid down by sections 64, 68 and 69, whereby he can raise all the matters which he would have wished to raise by way of Defence” (see also Eekon Enterprises Ltd at paragraph 44 above). H H Judge Cheung (as he then was) in Lee Lai-ping held that section 75(4) is not inconsistent with the provisions of Art 10, BORO (see paragraph 114 above). H H Judge H C Wong in Chapman Development Limited said as follows :
In my view, it is plain that section 75(4) does not pose any ouster of the taxpayer from the courts, and with access to court under the tax objection/appeal procedure under Part XI, IRO the so-called “disconnect” does not infringe Art 35, BL and/or Art 10, BORO. (t) Reduction or annulment of the tax assessment 184.Sir John Swaine SC submits that as a result of the “disconnect” between the statutory tax appeal and tax recovery procedures by reason of the operation of section 75(4), it is possible that the CIR may obtain judgment for tax as assessed before, say, any reduction or annulment of the tax assessment by the Board. He argues this cannot be right especially when the Board’s reduction or annulment of the tax assessment has no impact on any judgment obtained by the CIR for tax as assessed. Even though as a matter of practice the CIR will on request refund excess tax upon reduction/annulment of the assessment (see Weson as an example), Sir John Swaine SC submits that in theory the CIR can refuse to do so on the strength of the judgment obtained and the taxpayer will have to commence legal proceedings for refund. He claims that such “pay first argue later” approach poses a high risk of stifling legitimate appeals because the CIR can take steps to bankrupt or wind up any taxpayer who is unable to satisfy the judgment debt. 185.Subject to holding over governed by section 71(2) (see paragraph 21 above), tax charged under the provisions of the IRO is payable as specified in the notice of assessment (see section 71(1) in paragraph 21 above). In Weson, the dissatisfied taxpayer lodged objection against the tax assessment to the CIR. Shortly before the due date for payment of tax charged under the tax assessment, the CIR made an order under section 71(2) to hold over the tax pending the determination of the objection on condition that a tax reserve certificate be purchased. The taxpayer did not purchase such certificate. The CIR commenced tax recovery proceedings in the District Court for recovery of the outstanding tax together with 5% surcharge, and obtained default judgment against the taxpayer. Subsequently the taxpayer made payment. Thereafter, the CIR determined the objection against the taxpayer. On the taxpayer’s appeal, the Board set aside the tax assessment. The CIR repaid the tax charged and 5% surcharge together with interest and fixed costs paid by the taxpayer. The CA held that payment required by the CIR under the default judgment obtained in the tax recovery proceedings pending resolution of the objection/appeal to the tax assessment constitutes payment of tax covered under Art 108, BL even though such payment may turn out not to have been payable because of successful objection/appeal (see pp.576 and 585-586). In such circumstances, the Defendant cannot complain against the CIR for requiring it to pay the tax charged under the Assessments whether by tax recovery proceedings or otherwise before decision by the Board. 186.On the matter of refund of any excess tax paid, section 79(1) gives a statutory right to refund :
Sir John Swaine SC says (and for the purpose of the Application I accept) such provision does not assist the Defendant because the Assessments fall outside the six-year ambit of section 79(1). 187.However, section 69(1) provides that a decision of the Board shall be “final”. Sir John Swaine SC submits that the word “final” is used in the procedural sense in the context of appeals, but has no bearing on any judgment granted in favour of the CIR in tax recovery proceedings. I disagree. If procedurally there is no further appeal from the Board’s decision, the final determination of the Board reached after adversarial contest between the CIR and the taxpayer on the correctness of the assessment must take substantive effect. Any other contention leads to absurdity for if it were otherwise the whole exercise of appeal to the Board under sections 66 and 68 will become futile and it also flies in the face of the authorities discussed in paragraphs 42-47 and 182 above. 188.A decision of the Board can be a compromise endorsed by the Board or a determination after contest. In respect of a settlement submitted to and endorsed by the Board, section 68(1C) provides that any necessary adjustment of the assessment shall be made and such assessment shall be final and conclusive for all purposes of the IRO as regards the amount of relevant assessable income or profits or net assessable value. In respect of a reduction or annulment of the tax assessment pursuant to a decision of the Board (even if it is outside the ambit of section 79), it is a substantive decision on the correctness of the tax assessment which section 69(1) has decreed to be final. In my view, the CIR cannot hide behind any judgment obtained in tax recovery proceedings and refuse to refund any excess tax paid. Sir John Swaine SC has not been able to cite any authority that shows a formal claim for refund has been necessary. 189.In fact, Sir John Swaine SC’s arguments have already been addressed in Chapman Development Limited. In that case, the taxpayer argued that all tax recovery proceedings should be stayed pending determination of its objection by the CIR and/or of its appeal to the Board if any. H H Judge H C Wong refused to stay the proceedings and struck out the defence for failing to disclose any reasonable defence as follows :
190.Mr Swaine complains that the power in section 71(2) given to the CIR to permit holding over of tax (see paragraph 21 above) is discretionary and not mandatory. But in Weson, Tang VP said at pp.584-585 that :
Clearly, the CIR must exercise its discretion properly, reasonably, and not capriciously, failing which such administrative act is subject to remedy by way of judicial review. I am not persuaded by Sir John Swaine SC’s argument that legitimate tax appeals will be stifled. (u) Fayed principles 191.Since I have found there is no infringement of the Bryan principle and section 75(4) as well as the tax appeal system under the IRO do not pose any restriction of the constitutional guarantee of access to court under Art 35, BL and/or Art 10, BORO, there is no need to consider the Fayed principles (see paragraphs 84 and 113 above). (v) Natural justice and fair hearing 192.Mr Swaine submits that the “disconnect” caused by the operation of section 75(4) which prevents the Defendant from raising the Ultra Vires and Assessment Defences in the present tax recovery proceedings amounts to a denial of the Defendant’s common law right of natural justice to defend himself in legal proceedings. 193.Mr Swaine cites Attorney-General v Thomas D’Arcy Ryan [1980] AC 718 in support of his proposition. In that case, as permitted by statute, the minister refused an application for registration as a citizen without giving any reason. The relevant statute also provided that his decision shall not be subject to appeal or review in any court. The Privy Council distinguished between the appeal function (ie appellate re-examination on both fact and law) and review function (ie appellate re-examination on conclusions of law only), and held that the minister’s decision to refuse the application was ultra vires and a nullity because he failed to give the applicant for citizenship a reasonable opportunity of answering the case against granting the application under the principles of natural justice. The statutory ouster provision therefore did not prevent the court from inquiring into the validity of the minister’s decision. 194.Here, nothing turns on whether the appeal from the Board to the CFI or the CA should be labelled as an “appeal” or a “review”. As pointed out by Mr Wong, sections 69 and 69A adopt the label of “appeal”. In any event, the Bryan principle discussed above shows that even a “review” by the CFI or the CA is sufficient to satisfy the constitutional guarantee of access to court. Moreover, as explained in paragraphs 182-183 above, there is no ouster of the court’s jurisdiction. The dissatisfied taxpayer is entitled to raise any and all substantive defences in his appeal to the Board, and there is no suggestion that the principles of natural justice or audi alteram partem do not apply to proceedings before the Board, the CFI or the CA. In my view, unlike the blanket ouster provision in Thomas D’Arcy Ryan which may be seen as an attempt to protect abuse of power granted to the minister, there should not be any judicial resistance (and the authorities discussed above show there is none) to section 75(4) which does not restrict any aspect of the tax objection/appeal procedure. 195.Mr Swaine next refers to O’Reilly & ors v Mackman & ors [1983] 2 AC 237 not for its ratio but for what Lord Diplock said at p.276, ie “the requirement that a person who is charged with having done something which, if proved to the satisfaction of a statutory tribunal, has consequences that will, or may, affect him adversely, should be given a fair opportunity of hearing what is alleged against him and of presenting his own case, is so fundamental to any civilized legal system that it is to be presumed that Parliament intended that a failure to observe it should render null and void any decision reached in breach of this requirement”. 196.But, as explained above, there is no question that the principles of natural justice (ie “equality of arms”, audi alteram partum, etc) apply to proceedings before the Board being the relevant statutory tribunal here, and section 75(4) does not restrict any arguments that the taxpayer may wish to raise with the Board in relation to the tax assessment. I am not persuaded there is any breach of the common law principles of natural justice or fair hearing. In any event, it has not been suggested that such common law principles are any more extensive than the constitutional protection of a fair hearing in Art 10, BORO, and I have found that appeal to the Board and then to the CFI or the CA under Part XI, IRO is compliant with the constitutional requirements (see also Lee Lai-ping, Eekon Enterprises Ltd and Chapman Development Limited). VIII. Conclusion 197.In the circumstances, despite the volume of case law cited and the detail canvassed in counsel’s submissions, the ultimate issue is quite simple. I am persuaded it is plain and obvious that there is no merit to the Constitutionality Defence, which is unarguably bad. I find that taxpayers, including the Defendant, plainly have right of access to a quasi-judicial body (ie the Board) to take any points whatsoever in challenging the correctness of tax charged under the tax assessments backed by appeal to the CFI or the CA under a statutory tax system fully authorised by Art 108, BL and compliant with Art 35, BL and/or Art 10, BORO. Section 75(4) does not deprive the taxpayers of their constitutional right of access to court to challenge the tax assessments under IRO. Consequently, the door is closed to the Ultra Vires, Assessment and Non-Preclusion Defences in the present tax recovery proceedings, and the Defence ought to be struck out for disclosing no reasonable defence. For the sake of completeness, I disagree there is any factual dimension that is deserving of a contrary conclusion. 198.After reaching the above conclusion, I am further comforted by a similar opinion expressed by H H Judge Chow in his decision in The Commissioner of Inland Revenue v Ngai Lik Electronics Limited DCTC6110/2007 (unreported, 17th December 2008) handed down after the hearing before me :
199.I therefore order that the Defence be struck out, and I further grant judgment against the Defendant for the sum of HK$23,683,221.00 with interest thereon at judgment rate from 9th May 2008 until full payment. 200.There is no reason why costs should not follow event. I also grant a costs order nisi that the Defendant do pay the Plaintiff costs of the Application and of the action (including all costs reserved if any) to be taxed if not agreed with certificate for counsel. 201.It remains for me to thank counsel for the assistance rendered to the court by their submissions and research.
Mr Stewart Wong instructed by the Department of Justice for the Plaintiff. Sir John Swaine SC and Mr John Swaine instructed by Messrs Wilkinson & Grist for the Defendant. |
Cases cited in this judgment
Further hearings and rulings under DCTC 4250/2008