Bailey v Chief Commissioner of State Revenue

[2007] NSWADT 19

CITATION:	Bailey v Chief Commissioner of State Revenue [2007] NSWADT 19
DIVISION:	Revenue Division
PARTIES:	APPLICANT Stephen Bruce Bailey RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	066023
HEARING DATES:	20/11/2006 & 19/12/2006
SUBMISSIONS CLOSED:	19 December 2006
DATE OF DECISION:	17 January 2007
BEFORE:	Verick A - Judicial Member
CATCHWORDS:	Duties Act - First Home Plus Scheme - residence requirement - First Home Owners grant - reversal of original decision
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Duties Act 1997 First Home Owner Grant Act 2000
CASES CITED:	Chief Commissioner of State Revenue v Ferrington [2004] NSWADTAP 41 Zakariya v Chief Commissioner of State Revenue [2003] NSWADT 26
REPRESENTATION:	APPLICANT In person RESPONDENT S Benjamin, agent
ORDERS:	The decision by the respondent to recall the grant and revoke the FPH concession is affirmed

REASONS FOR DECISION

1 The applicant purchased a unit situated at Wanniassa Street, Queanbeyan (“the property”) by contract dated 21 November 2002. On 18 February 2003 the applicant applied for a grant under the provisions of the First Home Owner Grant Act 2000 (the “FHOG Act”) to assist him, in part, to purchase the property and, on 6 March 2003, a grant of $7,000 was paid to the applicant. Subsequently, the respondent recalled the grant and the decision to recall the grant is the subject of this application for review. In addition, the applicant seeks a review of the decision made by the respondent to revoke the duty exemption granted to the applicant to purchase the property in accordance with the First Home Plus Scheme (“the FHP Concession”) under the Duties Act 1997 (the “Duties Act”). The applicant is required to pay a dutiable amount of $802.

2 The two issues for determination are as follows:

(a) in relation to the Grant, whether the applicant satisfied the principal place of residence requirement as set out in eligibility criterion 5 in s 12 of the FHOG Act, and

(b) in relation to the FHP Concession, whether the applicant satisfied the residence requirement set out in s 76 of the Duties Act.

3 At the time the applicant purchased the property there was a tenant under a tenancy arrangement with the former owner of the property. In his application for the grant, the applicant indicated that he would occupy the property by 1 September 2003. As it happened, on that date, the tenant was still occupying the property. The applicant claims that, with a great deal of effort, he managed to get vacant possession of the property on 18 November 2003.

4 The applicant claims that he occupied the property from the end of November 2003 for a period of about 1 week. He further claims that because he could not get electricity connected to the property and because he had both financial and family difficulties he decided to move out of the property. The property was put on the market and sold at a fairly good profit.

Evidence

5 When this matter came up for hearing on 20 November 2006, the applicant made a very unusual submission that, if the Tribunal found against him, he would appeal and produce evidence to show that the Tribunal reached the wrong conclusion. The Tribunal sought a full explanation in relation to this submission. The applicant was under the impression that he could produce his evidence at a later stage of his review rights. The applicant was informed that he had the burden of proving that he occupied the property as his principal place of residence under s 28(3) of the FHOG Act. In order to discharge the onus placed on him, the applicant was advised to produce all his evidence before the Tribunal. After some discussion, the applicant indicated that he could produce at least five witnesses to support his case. The Tribunal allowed him an adjournment on the grounds that he obtain statements from them and ensure that the witnesses attend before the Tribunal at the adjourned hearing of this matter.

6 On 19 December 2006, at the adjourned hearing, the applicant produced three witnesses. The first witness, Steve Harriden, a former neighbour, testified that he has known the applicant for 50 years and that the applicant came to his residence 2-3 years ago and informed him that he was living in a unit in Queanbeyan but did not visit the applicant at his unit. The second witness, Des Lilley, a consulting land surveyor who has, on some occasions, employed the applicant to assist him in his work, testified that he had, on a couple of occasions, picked up the applicant from his unit in Queanbeyan to go with him and carry out work activities during the month of November 2003. The third witness, Margaret Dow, the applicant’s former wife and mother of his children, testified that she visited the unit on two occasions, once when it was still occupied by the tenant, and the other when the applicant had moved in. She was not able to provide details of what kind of furniture or fittings were in the unit but remembered seeing a mattress.

7 The representative of the respondent cross-examined the three witnesses, but very little turns on the cross-examination.

8 The applicant also gave evidence at the hearing of this matter. In addition to saying he was an honest person, he maintained that he had occupied the property for at least a week in November 2003 with the intention of making it his principal place of residence but that, due to the problems he had in getting the electricity connected and his family and financial difficulties, he moved out and sold the unit. In cross-examination, he accepted that he had sworn a statutory declaration, which he furnished to the respondent, confirming that he had occupied the property for a few days in November 2003. In addition, he was shown and admitted as evidence, a copy of a letter from the electricity authority, which set out in a chronology the reasons why the electricity was not connected. He accepted the statement as being correct. The applicant, also in cross-examination, accepted that he did not cook any meals at the property during his short stay at the property and relied on takeaways.

9 The statement from the electricity authority stated that, on 19 November 2003, an account was created for the applicant and an invoice in the amount of $180 for a security deposit was raised and sent to his property address. On the 4 December 2003, a reminder was sent due to non-payment of the security deposit and, on 17 December 2003, a disconnection warning was sent due to non-payment of the security deposit. On 28 January 2004, an unsuccessful attempt was made by the electricity authority to contact the applicant. However, on 2 February 2004, the applicant’s account was finalised and the security deposit waived but no account was issued as no usage was recorded on the meter.

10 The documents lodged by the respondent under s 58 of the Administrative Decisions Tribunal Act 1997 (the “ADT Act”) were also admitted at the hearing.

Relevant Legislative Provisions

11 The FHOG Act was introduced to encourage and assist home ownership and contains a complete scheme dealing with government financial grants to enable applicants to purchase or build their first homes. The grants are also paid to offset, in part, the effects of the Goods and Services Tax on the acquisition of a first home.

12 Part 2 of Division 2 of the FHOG Act requires 5 Eligibility Criteria that an applicant needs to satisfy to obtain a grant. This matter relates only to Criterion 5, the “Residence Requirement”, which is set out in s 12 of the FHOG Act. Section 12 as it then was (the terms have been since amended to ensure that the criterion is not easily circumvented by applicants) provided as follows:

“(1) An application for a first home owner grant must occupy the home to which the application relates as the applicant’s principal place of residence within 12 months after completion of the eligible transaction or a longer period approved by the Commissioner.

(2) If an application is made by joint applicants and at least one (but not all) of the applicants complies with the residence requirement, the non-complying applicant or applicants are exempted from compliance with the residence requirement.”

13 The term “residence requirement” at the relevant time was defined in s 3 of the FHOG Act in the following terms:

“ residence requirement means the requirement that an applicant for the first home grant must occupy the home to which the application relates as the applicant’s principal place of residence within 12 months after the completion of the eligible transaction or a longer period approved by the Chief Commissioner.”

14 Section 13 of the FHOG Act sets out what an “eligible transaction” is for purposes of s 12. There is no dispute the purchase of the unit was an “eligible transaction” for purposes of s 12 of the FHOG Act. The respondent, in recalling the grant, has taken the view that the applicant has only failed to satisfy the “residence test” set out in s 12 of the FHOG Act.

15 The respondent has exercised his power under s 45 of the FHOG Act, which allows the respondent to recover a grant where the applicant fails to satisfy one or more of the eligibility requirements set out in the law.

16 At the relevant time, when the applicant purchased the property, the Duties Act also provided for a scheme “to help people who are acquiring their first home”. The acquisition and any mortgage given to assist the financing of the acquisition of the first home was subject to a concession or exemption from duty under s 74 of the Duties Act. To be entitled to the concession, an applicant had to comply with s 76 of the Duties Act, which, at the relevant time, provided as follows:

“ 76 Residence requirement

(1) The home must be occupied or intended to be occupied by the person or persons who are acquiring it on or before settlement, or within 12 months after settlement, as the principal place of residence.

(2) This section does not apply to a person who acquires an interest in the property concerned solely for the purpose of assisting the other purchaser or purchasers in financing the acquisition (as referred to in section 73 (5)).”

17 The principles that the Tribunal needs to consider in order to establish whether an applicant has occupied premises as his or her principal place of residence under the FHOG Act have been usefully set out by the Appeal Panel of this Tribunal in Chief Commissioner of State Revenue v Ferrington [2004] NSWADTAP 41 as follows:

‘42 First, the words “principal place of residence” should be given their ordinary meaning in the context in which they appear: … Secondly, consideration of whether a person has been residing or occupying premises as their principal place of residence is to be assessed objectively, in the light of the circumstances relating to the actual occupation of the dwelling: … Thirdly, the intention of the person concerned, gauged objectively, is relevant but not determinative of the issue: … Fourthly, to occupy a home as his or her principal place of residence a person’s occupation must have a degree of permanence to it: a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor is occupation for some other purpose: … Fifthly, the short length of a person’s residence, while relevant, is not determinative of the issue: … This is so since a recipient’s occupation of a home, while short, may have the requisite degree of permanence to it. But that will not happen if, when considered objectively, the occupation was transient, temporary, contingent or of a passing nature, or for some other purpose. One may occupy premises for a short time on a transient, temporary, or contingent basis, but one can also occupy for a short time as one’s principal place of residence. It is the nature of that occupation which provides the element of permanence. The fact that a period of actual occupation is short, as in the present case, will in practice make it harder for a recipient to show that the occupation was as his or her principal place of residence, but it will not make it impossible, … Sixthly, the reasons for a person’s departure from the home must be both reasonable and adequately explained when considered objectively in the light of their circumstances: …’ (Authorities cited to support each principle have been omitted.)

18 In addition, as observed by the Tribunal in Zakariya v Chief Commissioner of State Revenue [2003] NSWADT 26, the subjective intention of an applicant at the date of purchase to occupy the premises will not bring the applicant within the eligibility criteria.

Consideration of Issues and Decision

19 In this matter the applicant relies on one very brief period of occupancy of the property to satisfy the residence requirement set out in s 12(1). In a statutory declaration made by the applicant on 16 August 2004 in response to a request from the respondent, the applicant declared that the residence commenced “around end of November 2003” and “however, definitely not December for a period of 1 week”. In addition, there is some supporting evidence from his three witnesses that the applicant did spend a few days at the property.

20 But the real issue before the Tribunal in relation to the short period of occupation of the property is whether the occupation had the degree of permanence to establish the occupation of the property as his principal place of residence. This is essentially a question of fact and must be determined objectively.

21 At the relevant time, the FHOG Act did not require a minimum period of residence, merely a period of one year in which the occupation had to take place.

22 The applicant claimed that he moved out of the property because of the difficulty in getting electricity connected and for financial and family problems.

23 The failure to connect electricity to the property was due, to a large extent, to his failure to pay the security deposit as requested by the electricity authority. In any case, he had managed to sort out his differences with the authority, which was willing, in February 2003, to connect the electricity to the property without the deposit of any security amount. The applicant made no attempt to return to the property to occupy it as his principal place of residence. He instead chose to sell the property.

24 The applicant was required to establish that the occupation of the property was as his principal place of residence. In Ferrington, the Appeal Panel recognised that, in some cases occupation of a property, while short, may have the requisite degree of permanence to it. Generally speaking, it would be necessary for an applicant to produce strong objective evidence to support any claim made that a short stay of a few days at a particular premises was as his or her principal place of residence. And, as the Appeal Panel noted in Ferrington, it is “harder” for an applicant to establish that a short “occupation was his or her principal place of residence”.

25 In this matter the applicant has, unfortunately, failed to establish that the short period of occupation of the property had the “requisite degree of permanence” necessary to establish that the occupation of the property for a week was as his principal place of residence. No independent evidence was produced to support his claim that he had occupied the property as his principal place of residence. Mere occupation of the property for a few days did not satisfy the requirements of s 12 of the FHOG Act. The subsequent conduct of the applicant also fails to support his claim.

26 The applicant’s reasons for leaving the property, after staying there for a few days, were perhaps the circumstances as to why he did not establish his principal place of residence at the property.

27 The applicant also failed to adequately explain how his financial and family difficulties were circumstances that required him to terminate his stay at the property. The applicant may have had a subjective intention to use the property as his principal place of residence, but that intention never came to fruition.

28 This is not a case like Ferrington. In Ferrington, the applicant occupied the property by moving items necessary to establish a home and she occupied it for almost a month. She connected all utilities and used the utilities. It was also not contested that she occupied the property in order to live there and, in leaving her parents’ home, she did so with the intention that her property was her principal place of residence. In the present matter, the only evidence before the Tribunal is that the applicant occupied the property for a few days. There is no objective evidence that he had established the property as his principal place of residence during the very short stay. In the absence of any such objective evidence, a short temporary stay, unfortunately, is not sufficient to establish the required degree of permanence. As observed by the Appeal Panel in Ferrington, “a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor is occupation for some other purpose”.

29 Prior to the purchase of the property, the applicant lived in a “ 2 bed transportable” unit in a caravan park in Canberra and he continues to live there. This is a factual matter that would be relevant to be taken into account under s 63 of the ADT to arrive at the correct and preferable decision in this matter. It is important to note that in “determining an application for a review of a reviewable decision, the Tribunal”, under s 63 of the ADT Act, “is to decide what the correct and preferable decision is having regard to the material then before it”, including any factual material and any applicable written or unwritten law. (Emphasis added) Accordingly, subsequent conduct of an applicant is relevant in determining objectively, for example, the intention of the applicant to occupy a property as his or her principal place of residence or the reasons for the acquisition of a property.

30 When all facts and circumstances of this matter are carefully taken into account, the only conclusion that the Tribunal can reach is that the occupation for a few days of the property was merely transient or temporary and not as the applicant’s principal place of residence, as required by the conditions of the grant. The applicant’s former wife’s evidence was that she only remembers seeing one or two items in the unit, which she thought included a mattress. Her evidence would in part support the conclusion reached by the Tribunal that the occupation of the property for a few days was “transient or temporary” and insufficient to satisfy the residence requirement.

31 The property was rented out for the majority of the time of the applicant’s ownership and would, when all the facts are taken into account, fit in the category of an investment property.

32 The applicant has accordingly failed to discharge the onus placed on him under s 28(3) of the FOGH Act to establish that he occupied the property as his principal place of residence as required by the “residence requirement” set out in s 12 of the FOGH Act.

33 The matter, which remains is that of the FPH concession given to the applicant under the Duties Act. As the Tribunal has found that the occupation of the property did not constitute occupation of the property as his principal place of residence and, in the absence of any objective evidence that the applicant had any real intention to occupy the property as his principal place of residence, there is no reason to interfere with the respondent’s decision to revoke the concession.

34 The decision by the respondent to recall the grant and revoke the FPH concession is affirmed.