Cliches are bad because
they are products of lazy, careless thinking. At worst, cliches are culpable for the horrible linguistic crime of inaccurate
expression.
I smelled, with respect,
such a crime in a Big-4 accounting firm's commentary on the Chinese
government's then newly-issued legislation (State Administration of
Taxation of China (“SAT”) Announcement [2012] No.30):
“It
is encouraging to see that [the Chinese tax authority] suggest to the
local tax authorities that they should not narrowly focus on certain
individual factors in determining the beneficial ownership of
dividends; instead they should take a “totality of facts”
approach on a case-by-case basis”1 (emphasis mine)
The blunt employment of
the expression “totality of facts” stemming from the English
common law in an article about the Chinese law reminds me of a beginner of English trying to impress his teacher with some fancy
hard words in an otherwise typo-riddled, grammatically unsound essay.
As its effect of trying to
impress backfired, the expression is also wrongly adopted. Let's
first look at what “totality of facts” really means.
What “totality of facts” means
In the Hong Kong salaries tax case
CIR v George Andrew Goepfert, Macdougall J explained the term as
follows:
“There
can be no doubt therefore that in deciding the crucial issue, the
Commissioner may need to look further than the external or
superficial features of the employment. Appearance may be deceptive.
He may need to examine other factors that point to the real locus of
the source of income, the employment.
It occurs to me
that sometimes when reference is made to the so called ‘totality
of facts’ test it may be that what is meant is this very
process. If that is what it means then it is not an enquiry of a
nature different from that to which the English cases refer, but is
descriptive of the process adopted to ascertain the true answer to
the question that arises under section 8(1).” (page 237) (emphasis mine)
In the Hong Kong profits tax case
CIR
v Magna Industrial Company Limited,
Litton V-P approved the “totality of facts” approach by the lower
court as follows:
“This
was, in essence, the Board of Review's approach. At para 7.23 of the
stated case the Board said:
'This
is a case of a trading profit and the purchase and the sale are the
important factors. We place on record that we have included in our
deliberations all of the relevant facts and not just the purchase and
sale of the products. Clearly everything must be weighed by a Board
when reaching its factual decision as to the true source of the
profit. We must look at the totality of
the facts and find out what the
Taxpayer did to earn the profit.' (emphasis mine)
No
criticism can be made of this approach. Nor has it been
suggested that the findings of fact made by the Board were not based
upon evidence adduced before it. If the Commissioner's appeal on
point of law were to succeed it must be because the Board had
misunderstood the law in some relevant particular or because, on the
facts found, the only reasonable conclusion was that the profits in
question arose outside Hong Kong: Edwards v. Bairstow [1956] AC 14.”
In a nutshell, the
“totality of facts” approach describes an enquiry process to take
into consideration all relevant facts and factors to find the true
answer to a question, not to be deceived by appearance.
What the Chinese tax authority meant
But is this the same
approach the Chinese tax authority intended to employ? I refer to
the original Chinese law (Article 1 of SAT Announcement [2012] No.30,
or “Announcement 30”):
“When
ascertaining the status of beneficial ownership of a resident of a
contracting jurisdiction, comprehensive regards should be had to
every factor listed in [an article of a previous law] ...” 2 (emphasis mine)
On the one hand, the
“Announcement 30” approach is similar to the English “totality
of facts” approach in HK tax cases in that both describe an enquiry
process to grasp the substance of individual cases, not to be fooled
by its form.
On the other hand, the
“Announcement 30” approach is different in its methodology, in that the “factors”
have already been fixed in black and white in the relevant law (that
is, the 6 “adverse factors”). In the HK tax cases I cites
earlier, however, the relevant factors will turn on the facts of each
individual case and therefore have not been
ascertained.
As a result, as the
factors in the “Announcement 30” approach have been fixed and
limited, it is in theory more lenient than the original English
“totality of facts” approach.
Differences in methodologies aside, linguistically the word "facts" connotes a much wider scope than "factors", contrary to what the SAT's intention as expressed in Announcement 30. In that sense the common sensical, linguistic scope of "factors" is commensurate with the legal scope of those two approaches.
This leads to my suggested alternative:
“totality of factors”.
Footnotes:
