World Gain Ltd v. The Collector of Stamp Revenue

DCSA 1/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

STAMP DUTY APPEAL NO.1 OF 2008

____________

BETWEEN

____________

Coram: His Hon Judge Leung in chambers (open to public)

Date of hearing: 20 May 2010

Date of decision: 20 May 2010

Date of handing down reasons: 27 May 2010

REASONS FOR DECISION

1.Before this court were 2 summonses: (1) the Collector (the Respondent)’s summons to strike out the appeal against stamp duty assessment lodged by World Gain (the Appellant); and  (2) World Gain’s summons for directions for extension of time for setting the case down as well as further directions for the further proceedings in the appeal.

2.There was no dispute that if the Collector’s summons was allowed so that the appeal was struck out, World Gain’s summons had to be dismissed consequentially.  This was indeed my decision at the end of the hearing.  I now give my reasons.

Background

3.On 15 January 2008, the Collector of Stamp Revenue made an assessment of stamp duty in respect of the sale and purchase of the property, namely, House No.5, Nos.27-29 Consort Rise, Hong Kong by an agreement dated 18 August 2004.

4.World Gain was legally represented.  On 14 February 2008, World Gain filed the notice of appeal against the assessment and required the Collector to state and to sign a case as to whether the assessment is correct or not under the Stamp Duty Ordinance (“the Ordinance”).

5.World Gain then applied to postpone payment of the stamp duty pending the appeal.  On 28 February 2008, Deputy Judge W Lam ordered that the whole sum of stamp duty assessed be paid into court in lieu of payment to the Collector.  World Gain did that on 26 March 2008.

6.Section 14(2) of the Ordinance provides that:

“The Collector shall upon being required to state and sign a case under subsection (1) state and sign the case and deliver the same to the person by whom it is required and the case may, within 7 days thereafter and after service thereof upon the Secretary for Justice, be set down by such person for hearing.”

7.The Stamp Office prepared the draft case stated.  Parties engaged in correspondence regarding the issues to be included the draft case stated for the appeal.  The case stated was eventually delivered on 29 January 2010.

8.The appeal was not set down within 7 days from 29 January 2010.  The Collector took out its summons to strike out the appeal.  World Gain resisted the application.  For this purpose, I gave directions for the filing of affidavits in March 2010.

The arguments

9.The Collector’s argument was straightforward.  Section 14(2) requires that the case can only be set down for hearing by the appellant within 7 days of its delivery.  The court has no jurisdiction to extend such time and therefore World Gain’s appeal cannot be proceeded with and ought to be struck out.

10.By his affirmation in opposition, World Gain’s solicitors sought to explain the lapse of time since the Collector’s written enquiry in late September 2009.  They admitted receipt of service of the case stated on 29 January 2010.  They delivered the signed case stated to the Secretary for Justice on 4 February 2010.  On the same day, they sought to set down the case for hearing but was allegedly refused by the clerk to the Master here on the ground that the case had been inactive for more than a year.  On 19 February 2010, World Gain’s solicitors filed a notice of intention to proceed.

11.World Gain’s solicitors took the view that the time stipulation under section 14(2) for setting down the appeal is permissive, not mandatory.  Therefore the court has jurisdiction and discretion to extend such time.

12.In court, Mr Kwan for World Gain fairly accepted that the above construction of section 14(2) by those instructing him could not stand, in the light of the case of The Bangkok Capital Antique Co Ltd v The Collector of Stamp Revenue (1984) 2 HKTC 83.  The court of appeal in that case made clear (at pp.86-87) that pursuant to section 14(2) of the Ordinance, the appeal must be set down within 7 days of its delivery.  The court has no inherent jurisdiction to extend a period of time limited by statute for doing an act unless the statute provides so.  The time extension power in section 72 of the Interpretation and General Clauses Ordinance does not assist.  Nor does Order 3, rule 5 of the rules of the court apply to a time limited by statute.

13.I was not referred to any decided case where the court of appeal’s construction of section 14(2) has been departed from.  Instead, by analogy, I drew parties’ attention to the case of Diamond Dragon Finance Company v The Collector of Stamp Revenue, DCSA 4/2004 (2 April 2004).  In that case, the Bangkok Capital Antique Co Ltd case was referred to.  The strict approach towards the time limit stipulated under the section [14(1) and (5)] and the non-applicability of O.3, r.5 of the Rules of the District Court were reiterated and accepted by the court (see paras.5-9; 14).

14.Mr Kwan’s submissions focused on 2 points: the amendment of the Ordinance in 1998; and the introduction of new rules of the court after the Civil Justice Reform.  He submitted that these events have, or ought to have, implication on the construction or application of section 14(2).

15.By the 1998 amendment, the court is conferred with the jurisdiction to extend, on specified grounds, the 1-month time limit for lodging the stamp duty appeal.  There is however no similar provision conferring jurisdiction on the court to extend the 7-day time for setting down the appeal for hearing.  Both exist in the same section.  Mr Kwan submitted that this creates absurdity.  Mr Li for the Collector disagreed.

16.Mr Li submitted that this is strong suggestion that the legislature intended different treatment of the time limit in the appeal process.  I agree.  Had the legislative intent been to confer on the court a jurisdiction to extend the time for setting down an appeal, this could and would have been introduced as part of the amendment to this section as well.

17.It cannot be said that for a jurisdiction to extend the time for lodging the appeal under section 14(1) to co-exist with the lack of jurisdiction to extend the time for setting down the appeal for hearing under section 14(2) is per se absurd.  Even assuming that there were the alleged absurdity, I do not think that it is for the court to take the matter into its own hands under the disguise of purposive or pragmatic construction of statutory provisions.

18.Mr Kwan also argued that the court now has the power to extend the time limit under section 14(2) as a result of the new rules of the court.  He relied on O.1B, r.1(2)(a) of the Rules of the District Court which provides:

“Except where these rules provide otherwise, the Court may by order-

(a)    extend or shorten the time for compliance with any rule, court order or practice direction (even if an application for extension is made after the time for compliance has expired);

……”

19.Mr Kwan submitted that whilst the power of the court under O.3, r.5 of the Rules applies only to the extension of the time limit under ‘these rules’, O.1B, r.1(2)(a) applies to the extension of time limit under ‘any rule’.  He argued that ‘any rule’ under O.1B, r.2(a) includes any enactment other than the Rules of the District Court.  As setting down the appeal is a procedural matter, the time limit stipulation, he argued, was in substance a rule though embodied in the Ordinance.  He further submitted that such construction is also in line with one of the objectives of case management under O.1A, namely, to ensure fairness and to avoid absurdity and injustice.

20.Besides O.1B, r.1(2), the following provisions of the Rules, I think, should also be read together:

O.1A, r.2(1)

“The Court shall seek to give effect to the underlying objectives of these rules when it –

(a) exercises any of its powers (whether under its inherent jurisdiction or given to it by these rules or otherwise) or

(b) interprets any of these rules or a practice direction.”

O.1B, r.1(1)

“The list of powers in this rule is in addition to and not in substitution for any powers given to the Court by any other rule or practice direction or by any other enactment or any powers it may otherwise have.”

21.The Final Report on the Civil Justice Reform has this to say (as quoted in Hong Kong Civil Procedure 2010 at 1A/0/3)

“It would be wise to avoid suggesting that any such rule has an ‘overriding’ character, to avoid encouraging over-elaborate and misguided reliance being placed on it.  It should be made clear that such a rule merely makes explicit what are implicit objectives which ‘underlie’ specific rules of the RHC, supporting the internal logic of such rules.  Such specific rules should accordingly continue to demand intelligent application informed, but not overridden, by the underlying principles.”

22.Jurisdiction of this level of court is conferred by statute.  Properly construed together, O.1A, r.2(1), O.1B, r.1(1) suggest that the new rules of the court regulate the exercise of the powers given to the court by any enactment or rules, but the new rules do not have the effect of overriding or substituting such powers of the court under any enactment or rules.  Clearly, the express objectives of the new rules of the court do not override any enactment or rules.

23.Therefore, the new O.1B, r.1(2)(a) cannot be read to have the effect of conferring on the court the power to extend the time limit under section 14(2) that was not given to the court despite the amendment of that section in 1998.  Mr Kwan’s argument may also suggest that the new rules of the court have effectively caused a consequential amendment to section 14(2).  This is difficult to accept.

24.It seems to me that this appeal has by no means been proceeded with expeditiously.  The appeal was lodged in February 2008.  The first draft of the case stated was sent to the appellant in June 2009.  Correspondence regarding the draft came to a halt since the end of November 2009.  The signed case stated was delivered in 2010.

25.The solicitors for World Gain complained that their failure to set down the appeal for hearing, when it was still within time, was attributable to the refusal of the clerk of the Master to accept their filing.  This sounds odd.  Mr Li submitted that even assuming that that happened, the solicitors could have sought direction from the Practice Master, in view of the statutory time limit.  But the fact was that even for the filing of the notice of intention to proceed afterwards, they have taken 15 days.

26.In the circumstances, if the court has jurisdiction and does consider whether discretion should be exercised in favour of the extension of time, it would appear that the underlying objectives of the Civil Justice Reform only operate against World Gain.

Order

27.For the above reasons, I made the following orders:

(1) World Gain’s summons is dismissed with costs of and occasioned by the summons to the Collector summarily assessed at HK$5,062.  As requested and not objected to, I ordered that World Gain shall pay the costs in 1 month

(2) In line with the Collector’s summons, the appeal is struck out.  The security paid into court on 26 March 2008 by World Gain in the sum of HK$1,012,500.00 (as mentioned above) be released to the Collector in satisfaction of the stamp duty under appeal.  Costs of and incidental to this summons be the Collector which is summarily assessed at HK$13,565 also payable by World Gain within 1 month.

(3) Subject to the above costs orders, costs of and incidental to this Appeal (including the costs of and incidental to the preparation of the case stated served on 29 January 2010) be to the Collector, to be taxed, if not agreed.

Mr Jasper KWAN instructed by Messrs K Y Lo & Co for the Appellant

Mr Sunny LI, Government Counsel of the Department of Justice for the Respondent