Harley Development Inc. and Another v Commissioner of Inland Revenue (Hong Kong)
| Jurisdiction | UK Non-devolved |
| Judgment Date | 14 March 1996 |
| Date | 14 March 1996 |
| Court | Privy Council |
Judicial Review - Alternative remedy - Whether judicial review appropriate appeals procedure against assessments - Whether ultra vires assessment challengeable under statutory procedure - Whether application for judicial review to be entertained -
In 1981 T. Ltd., which owned a leasehold interest in part of a building, sought exemption under section 5(2)(a) of the Inland Revenue OrdinanceF1 from the property tax chargeable under section 5(1) in respect of the rental income which it received from letting those premises to a bank, on the basis that it would be entitled under section 25 to set off such property tax against the profits tax payable under section 14. T. Ltd. was granted exemption with effect from the year of assessment 1982–1983. In 1985 the Crown lease of another part of the building was assigned to H. Inc. and both H. Inc. and T. Ltd. granted the bank an underlease for 30 years in return for a premium. The entire share capital of T. Ltd. was acquired by another company in the same group as H. Inc. and thereafter T. Ltd. became dormant. A property tax return form for the year 1985–1986 was sent to H. Inc., and it applied for exemption from property tax but the revenue made no reply. Although further property tax return forms were sent to both companies, H. Inc. stated that it was exempt, and T. Ltd. relied on the exemption which it had been granted but failed to notify the revenue of the change in circumstances affecting its original exemption as required by section 5(2)(c). Both companies completed profits tax returns, but at the material time they had no assessable profits and so they paid no profits tax. Pursuant to section 59(1) and (3) the assessor raised assessments to property tax on the premiums for the years 1985–1986 to 1988–1989 inclusive. Instead of pursuing the procedure laid down in sections 64 to 68 for objection to the commissioner and appeal from his decision to the board of review, the companies applied to the High Court for judicial review of the assessor's decisions to raise the assessments on the ground that they were ultra vires. The judge dismissed the application and that decision was upheld by the Court of Appeal.
On appeal to the Judicial Committee: —
Held, dismissing the appeal, that where an assessment was alleged by a taxpayer to be a nullity judicial review was not the only means of redress since the statutory objection and appeals procedure entitled the commissioner and the board of review to consider whether an assessment had been made ultra vires and, if appropriate, to annul it under sections 64(2) and 68(8); that where a statute laid down a comprehensive appeals procedure for administrative decisions, and such a decision had not been appealed, the courts would only entertain an application for judicial review in exceptional circumstances, typically where an abuse of power was alleged; that, since the assessments involved no unfairness and therefore no abuse of power, judicial review proceedings were inappropriate; and that, in any event, since the commissioner had an arguable case that the companies were not exempt from property tax, they had failed to establish that the assessor had exceeded his jurisdiction in making the assessments thereby causing them to be a nullity (post, pp. 732B–E, G–H, 735E, 736B–C).
Per curiam. The rights conferred on a taxpayer by section 25 are unaffected by section 5(2)(a), which is purely administrative. A taxpayer entitled to a reduction in profits tax in any year to the extent that it has paid property tax will receive it whether or not it has been granted exemption under section 5(2)(a), which simply saves the taxpayer making returns for both property tax and profits tax with consequential adjustments. The grant of exemption has no effect on the gross amount of tax payable (post, p. 731C–E).
Quaere. Whether in section 25 of the Inland Revenue Ordinance “profits” means commercial profits so that their existence is sufficient to satisfy the requirements of proviso (a) to section 25, or whether it means assessable profits so that section 25 would not apply where a taxpayer has no assessable profits and such a corporation would not be entitled to exemption from property tax (post, p. 732E–G).
The following cases are referred to in the judgment of their Lordships:
Inland Revenue Commissioners v. Aken [
Reg. v. Inland Revenue Commissioners, Ex parte Preston [
The following additional cases were cited in argument:
Anisminic Ltd. v. Foreign Compensation Commission [
Argosy Co. Ltd. v. Inland Revenue Commissioner [
Aspin v. Estill (
Bye v. Coren [
Chief Constable of the North Wales Police v. Evans [
Greenwood v. Martins Bank Ltd. [
Hossack v. Inland Revenue Commissioners (
Kidston v. Aspinall (
Kwong v. Commissioner of Inland Revenue [
Racal Communications Ltd., In re [
Reg. v. Inland Revenue Commissioners, Ex parte M.F.K. Underwriting Agents Ltd. [
Reg. v. Inland Revenue Commissioners, Ex parte S.G. Warburg & Co. Ltd. [
Reg. v. Inland Revenue Commissioners, Ex parte Unilever Plc. [
Reg. v. Secretary of State for Health, Ex parte United States Tobacco International Inc. [
Reg. v. Secretary of State for the Home Department, Ex parte Brind [
Rex v. Fulham, Hammersmith and Kensington Rent Tribunal, Ex parte Philippe [
Tai Hing Cotton Mill Ltd. v. Liu Chong Hing Bank Ltd. [
APPEAL (No. 54 of 1995) with leave of the Court of Appeal of Hong Kong by the applicants, Harley Development Inc. and Trillium Investment Ltd., from the judgment of the Court of Appeal of Hong Kong (Penlington, Nazareth and Mortimer JJ.A.) given on 29 April 1994 dismissing their appeal from the judgment of Mayo J. delivered on 19 January 1993 in the High Court of Hong Kong, whereby he had dismissed their application for judicial review of the decisions of an assessor on behalf of the respondent, Commissioner of Inland Revenue, on 5 March 1992 to raise property tax assessments against the applicants for the years of assessment 1985–1986 to 1988–1989 inclusive.
The facts are stated in the judgment of their Lordships.
John Gardiner Q.C. and Jonathan Peacock for the applicants.
David Goldberg Q.C. for the commissioner.
14 March. The judgment of their Lordships was delivered by LORD JAUNCEY OF TULLICHETTLE.
This appeal arises out of an application for judicial review of decisions of an assessor of Inland Revenue to raise property tax assessments on two companies owning buildings in Hong Kong for four years of assessment.
The applicant companies, Harley Development Inc. (“Harley”) and Trillium Investment Ltd...
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