Grey areas in the regulations governing multi-purpose tax planning for wealthy families were cleared up in a High Court judgment delivered yesterday. The judgment granted a declaration that no estate duty should be paid on the sale of certain assets from a deceased person to an offshore trust controlled by the deceased's offspring within three years before the death. Pong Ten Un sold shares in private companies in Hong Kong and two pieces of land to Shiu Wing, a Manx company controlled by his widow and their seven children, between January and October 1990, less than three years before his death on January 23, 1993. The sale was effected through a complicated web of transactions involving some loans provided by Mr Pong to his offspring to pay for the deal. Mr Pong made a will on January 25, 1990, in which he waived the repayment of the loans. Under the Estate Duty Ordinance, estate duty is payable on the value of all property passing on the death if the transfer is made within three years before the death. The Commissioner of Estate Duty established his case of charging the Pong family $40 million in estate duty on the assumption the web of transactions effecting the sale was intentionally constructed for the sole purpose of tax avoidance. Mr Justice James Findlay said in his judgment some elements in the web of transactions effecting the sale were designed for a variety of purposes, with tax avoidance being one of them, and therefore overruled the commissioner's case. The Pong family's lawyer said in his submission that in fact some transactions effecting the sale were designed for reasons relating to the uncertainty of the future of the family's business and the future of Hong Kong. Mr Justice Findlay said it should be the job of the lawmaker but not the court to decide whether estate duty should be paid in such circumstances. 'My conclusion is based on the law as I see it,' he concluded. Ernst & Young partner Teresa Tong said the judgment clarified some grey areas in law which auditors often came across in their multi-purpose tax planning for high net-worth individuals in Hong Kong. She said this did not necessarily mean auditors were given greater room within existing laws to construct steps in tax planning because the Government could appeal or propose to change such laws.