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DCSA 45/2016
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[2018] HKDC 503 C
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IN THE DISTRICT COURT OF THE
E HONG KONG SPECIAL ADMINISTRATIVE REGION E
STAMP APPEAL NO 45 OF 2016
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and
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THE COLLECTOR OF STAMP REVENUE Respondent
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Before: His Honour Judge MK Liu in Chambers (Open to public)
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Date of Hearing: 7 May 2018
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Date of Judgment: 10 May 2018 O
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JUDGMENT Q
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S INTRODUCTION S
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1. Stamp Duty Ordinance (“SDO”) s 10(2) provides:-
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G THE FACTS G
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3. I would first set out the facts in the case stated prepared by the
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Collector of Stamp Revenue (“the Collector”) which are not in dispute. I
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4. This is an appeal brought by Mr So Kam Shing (“KS”) and
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Mr So Kam Wai (“KW”) under SDO s 14 against a stamp duty assessment
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by the Collector issued on 6 May 2016 (“the Assessment”) in respect of a L
Deed of Family Arrangement (“DFA”) and a Deed of Assent (“the Assent”)
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both dated 6 August 2013 (together “the Deeds”).
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5. Mr So Yim Nam (“the Deceased”) passed away on 2
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September 2011. At the time of his death, the Deceased was the sole owner
P of a property known as Shop No 7 on G/F, Tin On House, Nos 78-84 & P
88-96 Shek Yam Road, Kwai Chung, New Territories (“the Property”).
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KS, KW and Ms So Kam Yee (‘the Sister”) are the lawful and natural
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children of the Deceased and the only persons entitled to have shares in the
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Deceased’s estate. C
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8. By entering into the DFA, KS, KW and the Sister agreed that
executed the Assent to vest the Property in KS in his personal capacity and
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KW as tenants-in-common in equal shares.
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12. The Property was then valued by the Commissioner of Rating
O and Valuation (“the Commissioner”) at HK$17,800,000 as at the date of O
the Deeds.
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chargeable with ad valorem stamp duty (“AVD”) under SDO s 27. The
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computation of the Excess Entitlement and the AVD chargeable are as
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follows:- C
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Beneficiaries Entitlement under Distribution Increase/
E Intestates’ Estates according to the Decease E
Ordinance (Cap.73) Deeds in entitlement
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HK$ HK$ HK$ G
st
1 Appellant (1/3) 5,933,334 (1/2) 8,900,000 +2,966,666
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2nd Appellant (1/3) 5,933,333 (1/2) 8,900,000 +2,966,667
17,800,000 17,800,000
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Beneficiaries Entitlement under Distribution Increase/
C IEO according to the Decease C
Deeds in entitlement
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HK$ HK$ HK$
E 1st Appellant (1/3) 5,340,000 (1/2) 8,010,000 +2,670,000 E
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16. In a letter from KS and KW dated 21 January 2016 to the K
Collector, KS and KW did not take issue with the revised valuation.
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However, KS and KW asserted that the effect of the Deeds was to transfer
M the entire entitlement of the Sister in the Property under intestacy of the M
Deceased to the two of them in equal shares and the stamp duty in respect
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of the Deeds should therefore be computed as follows:-
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Q 17. The Collector maintained the view that the Deeds were Q
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HK$
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AVD chargeable ($5,340,000 x 6%) C
under Scale 1(g) of head 1(1) in the First Schedule 320,400
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to SDO
the Assessment.
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I THE QUESTIONS I
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20. The questions submitted for the opinion of the Court in this
K appeal are as follows:- K
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(a) whether the Deeds are chargeable with stamp duty; and
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O QUESTION 1 O
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21. KS and KW are not saying that the Deeds are not chargeable
Q with stamp duty. They are merely disputing the amount of stamp duty Q
the question.
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22. The starting point is to look at the following definitions in the
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SDO:- C
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(a) S 2 contains a definition of “conveyance”, which is as
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“conveyance ( 轉 易 契 ) means every instrument
(including a surrender) and every decree or order of any
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court whereby any immovable property is transferred to
or vested in any person.”
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23. By the operation of the DFA and the Assent, KS and KW have
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inherited a share in the Deceased’s estate which is in excess of the interest
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that they may inherit under the intestacy law. By the definitions in the
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aforesaid statutory provisions, the Deeds are deemed to be a conveyance C
or transfer operating as a voluntary disposition inter vivos under SDO
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s 27(4). The Deeds are therefore chargeable with ad valorem stamp duty.
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24. In Baker & anor v Inland Revenue Commissioners [1924] AC
G 270, the House of Lords has considered section 74(5) of the Finance Act G
assent in that case is chargeable with ad valorem stamp duty under section
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16 of the Singapore Stamp Duties Act. That provision is identical to SDO
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s 27. C
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26. For the reasons above, it is clear that the Deeds are chargeable
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QUESTION 2
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27. The parties agree that if KS and KW are right, the amount of
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stamp duty chargeable would be the one stated in paragraph 16 above. On
I the other hand, if the Collector is right, the amount of stamp duty would be I
K 28. KS and KW rely upon SDO s 10(2) and argue that the Sister K
has transferred half of her interest in the Property to each of them. KS and
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KW argue that there are 2 transfers, and each transfer is a distinct matter.
M They say that in accordance with SDO s 10(2), the stamp duty should be M
computed in the way as set out in paragraph 16 above. They further argue
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that the Collector’s computation as mentioned in paragraph 15 above
O would only be correct if the Sister transfers her entire interest in the O
Property to only one of them. This is not the case. The Collector’s
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computation therefore is not correct.
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29. As a matter of law, the Sister has never had any proprietary
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interest in the Property. It is trite that beneficiaries of the estate of a
S deceased do not have any proprietary interest in any particular asset in the S
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The position has been succinctly summarized in Williams, Mortimer &
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Sunnucks (20th Edition), §81-03:- C
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“Until assent or conveyance, a person interested under the will
or intestacy has an inchoate right transmissible to his own
E representatives. It is a chose in action capable of itself being E
settled or transmitted …”
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See also Commissioner of Stamp Duties (Queensland) v Livingston [1965]
G AC 694, 707-708. G
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30. Accordingly, it is not the Sister transferring her 1/3
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proprietary interest in the Property to KS and KW in equal shares, but the
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administrator with the Sister’s consent indicated in the DFA transferring J
the 1/3 proprietary interest in the Property to KS and KW by executing the
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Assent. The crux is whether that transfer is one matter or two separate
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distinct matters. L
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31. Mr Suen for the Collector refers me to Ansell v
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“It one turns to s.4 the distinct matters there must be distinct
matters for the purposes of the Stamp Act. If two different
R classes of property are being transferred by the same words of R
assignment in the same document, and those two different
classes of property in the same document are different from the
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point of view of the Stamp Act and taxation, it seems to me in
common sense that they must be distinct matters.” (Emphasis
T added) T
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32. Mr Suen submits that in the light of Ansell, “distinct matters”
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in SDO s 10(2) should be different classes of property being transferred in C
one instrument. In the present case, the Excessive Entitlement vested in
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KS and KW by way of voluntary disposition is simply the same kind of
KW’s argument, with respect, their argument cannot be right. If they were
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right, SDO s 10(2) would have been invoked in each and every case where
I the conveyance is transferring a property to two or more persons holding I
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34. The Collector’s computation of Stamp Duty as set out in
O paragraph 15 above is therefore correct and the amount of stamp duty O
Q DISPOSITION Q
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35. For the reasons above, I dismiss the appeal.
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reserved, if any) be paid by KS and KW to the Collector, with a certificate
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for counsel, to be taxed if not agreed. C
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37. I further direct that upon KS and KW’s request, this judgment
G 38. Lastly, it remains for me to thank the parties for the assistance G
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K ( MK Liu ) K
District Judge
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