BENZION and COMMISSIONER OF STATE REVENUE
[2013] WASAT 1
•1 JANUARY 2013
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: COMMERCIAL & CIVIL
ACT: FIRST HOME OWNER GRANT ACT 2000 (WA)
CITATION: BENZION and COMMISSIONER OF STATE REVENUE [2013] WASAT 1
MEMBER: JUDGE T SHARP (DEPUTY PRESIDENT)
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 1 JANUARY 2013
FILE NO/S: CC 831 of 2012
BETWEEN: LAURA BENZION
Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords:
First home owner grant Eligibility criteria Coownership of property Right to immediate occupation
Legislation:
First Home Owner Grant Act 2000 (WA), s 5, s 6, s 6(1)(a), s 6(2)(a), s 8, s 9, s 14AA(2)(a), s 16, s 31
First Home Owner Grant Regulations 2000 (WA), reg 7(2), reg 7(3)
Result:
The application is allowed
Summary of Tribunal's decision:
The applicant, Ms Laura Benzion, purchased a home in Tuart Hill and applied to the Commissioner for a first home owner grant. The Commissioner refused her application because she had purchased the property jointly with a company named Australian Property Investment Exchange Pty Ltd. The Commissioner said that because the property was to be jointly owned, both owners needed to apply for the grant. The Commissioner considered that, as one of them was a company, both she and the company were therefore ineligible for the grant.
The applicant objected, saying that she had purchased the property jointly with the company in order to raise the money to acquire a home. The company had entered into an agreement with her that it would never occupy the property and would instead receive occupation payments, together with a share of the sale proceeds if the property was ultimately sold. Ms Benzion therefore argued that the company was not required under the First Home Owner Grant Act 2000 (WA) to be an applicant and that the application in her name only should be approved.
The Commissioner dismissed her objection and she applied to the Tribunal for a review of that decision.
The Tribunal considered the Commissioner's arguments that the company was not only an owner but also had a right to occupy the property upon completion of the purchase. For this reason, the Commissioner said, the company was therefore required to be an applicant and was ineligible for the grant. The Tribunal also considered the Commissioner's contention that it was not the intention of the Act that a purchaser of a home using this type of funding would be entitled to a first home owner grant. The Commissioner considered that the only eligible 'shared equity purchases' were those involving the State Housing Commission.
The Tribunal found that the company did not have a right to immediate occupation of the property and therefore did not need to be an applicant for the grant. Accordingly, the Tribunal ordered that the application for the grant could be made by Ms Benzion alone.
Category: B
Representation:
Counsel:
Applicant: Mr M Sandman
Respondent: Ms K Dodd
Solicitors:
Applicant: Sandman Legal
Respondent: State Solicitor's Office
Case(s) referred to in decision(s):
Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635
Thrift v Thrift (1975) 10 ALR 332
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
In these reasons I will refer to the applicant as Ms Benzion, in order to avoid confusion with the word 'applicant' as it is used in the First Home Owner Grant Act 2000 (WA) (FHOG Act).
On 13 December 2011, Ms Benzion and a proprietary company called Australian Property Investment Exchange Pty Ltd (APIE) entered into a contract by way of offer and acceptance with a third party vendor to purchase a residential property at 1/324 Hector Street, Tuart Hill (Property) as tenants in common in equal shares.
On 23 December 2011 Ms Benzion and APIE entered into an agreement called a 'Co-operation Agreement' (Cooperation Agreement). I will refer to this document in more detail later in these reasons, but at this stage I note that the Cooperation Agreement expressly provides at clause 3.12 that APIE 'shall never have the right to occupy the [Property]'.
On 23 December 2011, Ms Benzion applied for a first home owner grant under the FHOG Act as a sole applicant.
Settlement of the purchase of the Property took place on 18 January 2012 and the relevant Transfer of Land was registered on the same date.
The Commissioner of State Revenue (Commissioner) in a letter dated 10 February 2012 advised Ms Benzion that she was ineligible for the grant. The Commissioner summarised his reasons for refusing the grant application as follows:
•Section 16(1) of the FHOG Act provides that all interested persons must be an applicant for the grant, unless such person is excluded from the operation of that subsection by the regulations. An interested person is a person who is, or will be upon completion of an eligible transaction, an owner of the relevant home.
•The Commissioner considered that APIE was an interested person for the purposes of s 16(1) of the FHOG Act and therefore must be a joint applicant for the grant.
•One of the eligibility criteria under the FHOG Act provides that to qualify for the grant an applicant must be a natural person.
•The Commissioner therefore concluded that because APIE is not a natural person, then Ms Benzion and APIE are ineligible for the first home owner grant.
Ms Benzion, through her solicitor, in a letter dated 29 February 2012 objected to the Commissioner's decision to disallow the application. Ms Benzion's reasons for objecting to the Commissioner's decision were set out as follows:
•under the Cooperation Agreement, APIE has no right to occupy the Property;
•consequently APIE is not an interested person as required by s 16(2) of the FHOG Act as it does not have a right to immediate occupation of the Property and therefore does not have a 'relevant interest' in the Property; and
•accordingly, APIE is not required to be an applicant for the grant.
The Commissioner disallowed the Ms Benzion's objection by letter dated 8 May 2012. The Commissioner's letter set out the Commissioner's reasons for disallowing Ms Benzion's objection, which were stated to be as follows:
•Ms Benzion and APIE became legally entitled to possession of the Property on 18 January 2012 when each party acquired an estate in fee simple as tenants in common. Because the land was not purchased subject to a lease, the right to immediate occupation of the Property was inherent in their estate in fee simple.
•The fact that under the Cooperation Agreement APIE forfeits the right to immediate occupation supports the view that it possessed this right to begin with.
•The Cooperation Agreement merely provides for the relevant parties to cooperate. It is not a lease, because before APIE can legally grant a lease, it must first acquire an interest in fee simple in the land.
Under s 31 of the FHOG Act, Ms Benzion seeks a review by the Tribunal of the Commissioner's decision to disallow her objection.
The relevant statutory provisions
Section 8(1) of the FHOG Act provides as follows:
A first home owner grant is payable on an application under this Act if
(a)the applicant or, if there are 2 or more of them, each of the applicants complies with the eligibility criteria; and
(b)the transaction for which the grant is sought
(i)is an eligible transaction; and
(ii)has been completed.
One of the eligibility criteria is that an applicant must be a natural person; s 9 of the FHOG Act.
Section 16 of the FHOG Act provides:
(1)All interested persons must be applicants, unless such a person is excluded from the operation of this subsection by the regulations.
(2)An applicant must be an interested person.
(3)In this section
interested person, in relation to an application for a first home owner grant, means a person who is, or will be, on completion of the transaction to which the application relates, an owner of the relevant home.
Section 5 of the FHOG Act provides that an 'owner' of the relevant home is a person who 'has a relevant interest in land'.
Section 6(1)(a) of the FHOG Act defines a relevant interest in land to include an estate in fee simple in land. However, under s 6(2)(a) of the FHOG Act, an interest in land is not a relevant interest unless the holder has, or will have within 12 months, a right to immediate occupation of the land.
Regulation 7(2) of the First Home Owner Grant Regulations 2000 (WA) (FHOG Regulations) provides that:
A person who is an interested person because the person is a relevant owner of land is excluded from the operation of section 16(1) of the Act if
(a)the home in relation to which the relevant application for a first home owner grant is made is on that land; and
(b)the person does not have, and will not acquire on the completion of the eligible transaction to which the application relates, the right to occupy that home.
Regulation 7(3) of the FHOG Regulations provides that if the State Housing Authority is an interested person, it is excluded from the operation of s 16(1) of the FHOG Act.
A transaction is regarded as completed when the purchaser becomes entitled to possession of the home under the contract and all the necessary steps to obtain registration of the home have been taken; s 14AA(2)(a) of the FHOG Act.
The agreed issue
The parties have agreed that the issue for determination by the Tribunal is whether APIE is an 'interested person' as defined in s 16(3) of the FHOG Act.
Put another way, did APIE upon the date of completion of the purchase of the Property (Completion Date) have a right to immediate occupation of the Property? If not, then at that date APIE did not have a relevant interest in the Property and was therefore not an 'owner' of the Property. In that case, APIE is not therefore an interested person and therefore is not required to be an applicant for the grant.
That would leave Ms Benzion as the sole applicant for the grant. It is not in dispute between the parties that Ms Benzion complies with the eligibility criteria or that the purchase of the Property is an eligible transaction.
Further issue
I agree that this issue is one to be addressed. However, if APIE is not required to be an applicant for the grant, it is also necessary to consider whether, under s 8(1)(b)(ii), the transaction for which the grant is sought has been completed.
The word 'completed' is defined in s 14AA(2) of the FHOG Act. It means, in the case of a contract for the purchase of a home, when the purchaser becomes entitled to possession of the home under the contract.
Cooperation Agreement
The Cooperation Agreement provides for, amongst other things, rights of occupation of the Property on and following the Completion Date. It is necessary to examine the provisions of the Cooperation Agreement in more detail.
I should say at this point that the Co-operation Agreement was most likely drafted by APIE itself. A casual reader of the document, without any knowledge of the factual background or the document's purpose, would be somewhat perplexed as to its nature and effect.
The parties to the Co-operation Agreement are APIE as 'Property Manager and Investor' and Ms Benzion, who is referred to as the 'OwnerOccupier as an investor and tenant'. Ms Benzion's husband, Shahar Benzion, is described as 'Tenant'.
The Co-operation Agreement makes no specific mention of the Property but refers to 'property', which is defined as the 'coowned investment'. I have no reason to believe that the Co-operation Agreement does not in fact relate to the Property.
The Co-operation Agreement provides, at clause 3.1, that a rental agreement will be entered into between Ms Benzion, Mr Benzion and APIE as 'part of the Property Ownership Agreement'. I am unaware of whether the rental agreement has in fact been entered into. The Property Ownership Agreement mentioned in that clause is defined as 'a contract between parties who own property together as "Tenants in Common"'. Again, I am unaware of whether such an agreement has been entered into or whether the Cooperation Agreement is in fact the Property Ownership Agreement.
Because no additional documents have been submitted to the Tribunal, I will proceed on the basis that the Cooperation Agreement is the only agreement between Ms Benzion and APIE.
Clauses 3.6, 3.7 and 3.8 deal with payment of rates, major maintenance, minor maintenance, insurance of the property and general repairs. These are all the responsibility of Ms Benzion and her husband except 'Capital Improvements' which are 'split pro rata between all owners'.
The Co-operation Agreement includes provisions for a valuation of the Property to be carried out at specified intervals and for various options which may be exercised regarding the sale of the Property. It is unnecessary to go into detail about these provisions and, indeed, would be difficult to do so with any confidence. It is sufficient to say that APIE's return from the Property seems to arise from the 'rent' payable by Ms Benzion and her husband, from any capital appreciation of the value of the Property and from an ongoing fee structure.
Clause 3.12 of the Coownership Agreement is as follows:
[APIE] shall never have a right to occupy the property.
The document also provides that if Ms Benzion and her husband default in any payment under the Cooperation Agreement, the effect is that they must vacate the Property and APIE can either:
a)sell Ms Benzion's share (APIE 'will be automatically granted Power of Attorney' for this purpose); or
b)the whole of the Property may be sold.
In this situation, various fees are to be paid to APIE from Ms Benzion's share of the sale proceeds.
The parties' submissions
Ms Benzion submits that she is eligible for a first home owner grant in relation to the Property and that APIE cannot be an applicant for the grant.
Ms Benzion argues that APIE does not have a relevant interest in land because it does not have a right to immediate occupation of the Property as required by subsection 6(2)(a) of the FHOG Act.
Ms Benzion points out that clause 3.12 of the Cooperation Agreement expressly provides that APIE does not have and never had a right to occupy the Property. She submits that because the Cooperation Agreement, dated 23 December 2011, predates the Completion Date, APIE had forfeited its right to occupy the Property before the Completion Date.
Ms Benzion ultimately argues that she meets the requirements of eligibility for the first home owner grant under the FHOG Act and that she will never again be eligible for this grant. Ms Benzion contends that the Commissioner's refusal to pay the grant is contrary to the intention of the FHOG Act, which was intended to benefit applicants in her situation.
The Commissioner considers that APIE has a relevant interest in the Property and is an interested person for the purposes of s 16 of the FHOG Act. APIE is therefore required to be an applicant for the grant and the correct decision was to refuse Ms Benzion and APIE the grant, because APIE is not a natural person.
The Commissioner has three grounds for finding that APIE has a relevant interest in the Property.
First, the Commissioner argues that clause 3.12 of the Cooperation Agreement, which provides that APIE shall never have the right to occupy the Property, is void because it is inconsistent with other provisions of the Cooperation Agreement.
Second, the Commissioner submits that even if clause 3.12 were valid, APIE could not pass the right of occupancy to Ms Benzion unless it first obtained that right upon settlement. Accordingly, in the Commissioner's submission, APIE must have acquired a right to immediate occupation of the Property before surrendering it under the Cooperation Agreement.
Third, the Commissioner submits that it was the intention of the Western Australian Parliament that an entity such as APIE must be included as an applicant in accordance with s 16 of the FHOG Act.
The Tribunal's findings
Clause 3.12 of the Cooperation Agreement
The Commissioner points out that, although clause 3.12 of the Cooperation Agreement states that APIE shall never have the right to occupy the Property, clause 3.11 provides that if Ms Benzion is in rent arrears, then APIE has the right to terminate 'the Lease'. The Commissioner argues that, in circumstances where the occupancy right is terminated, APIE will then have a right to immediate occupation of the Property.
The Commissioner submits that clause 3.12 of the Cooperation Agreement is therefore void because it is inconsistent with clause 3.11.
I do not accept that clauses 3.11 and 3.12 of the Cooperation Agreement are inconsistent. The effect of a default under the Cooperation Agreement is that under clause 3.11 the Property may be sold. Nothing in the Cooperation Agreement provides, expressly or impliedly, that a default leads to APIE obtaining a right to occupancy of the Property.
In any event, the relevant inquiry under s 16(3) of the FHOG Act is whether APIE would have had a right to immediate occupation upon completion of the purchase of the Property. The fact that APIE may occupy the Property in the future is not relevant to the question of a right to immediate occupation.
Did APIE, by virtue of the purchase, acquire a right to occupy the Property immediately upon completion of the purchase?
The Commissioner submits that, even if clause 3.12 of the Cooperation Agreement is not void for inconsistency, APIE must have acquired a right to immediate occupation of the Property upon settlement, so that the right could be transferred to Ms Benzion.
The Commissioner contends that Ms Benzion and APIE only became entitled to occupation of the Property on 18 January 2012, which is the date that the transaction settled and the title to the Property registered. Prior to settlement, neither APIE nor Ms Benzion were entitled to occupation of the Property. Accordingly, the Commissioner submits that at the time that the Cooperation Agreement was made on 23 December 2011, the Cooperation Agreement could not have passed rights of occupancy to Ms Benzion, because of the rule of nemo dat quod non habet (one cannot give an interest that one does not have).
The Commissioner submits that, under the contract for the acquisition of the Property, APIE acquired a bundle of rights associated with freehold ownership of land, including the right to immediate occupation. Those rights, the Commissioner says, cannot be abrogated by an agreement between APIE and Ms Benzion. Although the Commissioner concedes that APIE never entered into actual occupation, the Commissioner submits that the legal effect was that, at least for a brief moment in time, APIE had a right to immediate occupation (Commissioner's emphasis). The test is not whether a person practically occupies the land but, rather, that a person has a right to occupy the land.
Therefore, the Commissioner concludes that APIE had a right of immediate occupation of the Property, having acquired it on completion of the purchase. APIE then surrendered that right to Ms Benzion. Thus, the Commissioner argues, APIE is an interested person as defined in s 16(3) of the FHOG Act.
For the reasons which follow, I disagree with the Commissioner.
As has already been noted, Ms Benzion and APIE hold the Property as tenants in common. In Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635, at 643 Brennan J made these observations about the nature of a tenancy in common:
The share or interest which a tenant in common has in land is an 'undivided' share, that is to say, 'a distinct share in property which has not yet been divided among the co-tenants'. A division of the property is repugnant to the nature of a tenancy in common, for it is an essential characteristic of a tenancy in common that each of the tenants has the right to occupy the whole of the property in common with the others. … Each tenant in common has a separate and individual title to the property, limited according to the estate or term granted to or acquired by the tenant. (Citations omitted)
That right of each coowner to occupy the whole property may, of course, be subject to whatever is agreed between the coowners. The occupier may invite others, in this case Ms Benzion's husband, to occupy the premises also; Thrift v Thrift (1975) 10 ALR 332.
Thus, despite the use in the Cooperation Agreement of words such as 'tenant' and 'lease', the Cooperation Agreement is not a lease. It is, amongst other things, an agreement by APIE that APIE will not occupy the Property, thus leaving Ms Benzion (and her husband) as the sole occupiers.
Agreements between tenants in common concerning the occupation of a property are not unusual. They may provide for payment by the occupier of an occupation rent or fee to the coowner that does not occupy the property. I see no reason why such an agreement, if it exists on the date when the purchase of the property concerned is settled, cannot take effect immediately upon the acquisition of that property.
The coowner who elects not to occupy the Property is not granting any right of occupation to the other coowner that coowner already has that right. Accordingly, the rule of nemo dat, usually found in the context of the sale of goods, is not applicable.
APIE has entered into an agreement with Ms Benzion that APIE will never occupy the Property. I consider that this agreement is binding. I therefore find that APIE had no right to immediate occupation of the Property for the purpose of s 6(2)(a) of the FHOG Act on the date of completion of the purchase of the Property.
The purpose of s 16 of the FHOG Act
The Commissioner contends that its decision that APIE is an 'interested person' and therefore should be an applicant for the grant, is consistent with the intention of s 16 of the FHOG Act. The Commissioner produced an extract from the explanatory memorandum for the First Home Owner Grant Bill 2000. This provides that the intention of cl 16 of the Bill, (now s 16 of the FHOG Act) is to prevent the grant being paid in circumstances where an eligible applicant applied for the grant, but a noneligible applicant did not.
I do not consider the provisions of s 16 to be ambiguous or obscure so that extrinsic material is required to assist in ascertaining the meaning of that section. The section states clearly that an 'interested person' must be an applicant for the grant. A finding that APIE is not an 'interested person' cannot thwart the intention that all interested persons must be applicants.
Interestingly, the explanatory memorandum goes on to provide that it is intended to prescribe two specific exclusions to 'cover situations involving ''purple titles'', and also shared equity purchases where the Ministry of Housing or State Housing Commission are involved in the transaction'. The expression 'purple titles' is, of course, a reference to titles to land issued to each tenant in common, coloured purple as opposed to the usual green, to further signify that it relates to an undivided share only.
Regulation 7(2) of the FHOG Regulations was subsequently made. I have set out the provisions of that regulation in full earlier in these reasons and I have also referred to reg 7(3).
Regulation 7 of the FHOG Regulations
The Commissioner submits that reg 7(2) provides that a person who is an interested person because the person is a relevant owner of land, is excluded from the operation of s 16(1) of the FHOG Act if the relevant home is on that land and the person does not have the right to occupy that home (Commissioner's emphasis). In other words, the Commissioner says, reg 7(2) was intended to apply to a situation in which an owner of land (but not the home) has a right to immediate occupation of the land (but not the home). The purpose of this regulation, in the Commissioner's submission, is to allow for a grant to be payable in circumstances where one title covers multiple homes. In those situations, the Commissioner goes on, the owners of the other homes on the title are also prima facie 'interested persons' under s 16 of the FHOG Act. Section 6(2)(a) of the FHOG Act does not apply, because they do have a right to immediately occupy 'the land', as opposed to the home. This, the Commissioner concludes, means that APIE would not fall within reg 7(2), because APIE does have an immediate right to occupy the home.
The Commissioner says that reg 7(3) supports this view because the 'shared equity purchase' model adopted by the State Housing Commission is substantially similar to the property ownership structure adopted by Ms Benzion and APIE. The Commissioner says that if APIE is not an interested person because of reg 7(2) then neither is the State Housing Commission, and therefore reg 7(3) would be unnecessary. The fact that the State Housing Commission has been expressly excluded as an interested person means, in the Commissioner's view, that it was not intended that other entities adopting the same model would be excluded.
I disagree. It may well be that the intention of reg 7(2) was to deal with the situation of coownership of land upon which is erected a building containing multiple dwellings. However, there is nothing in that regulation to suggest that it is limited to those circumstances. The regulation applies equally to joint ownership of a single dwelling on a piece of land. If the Parliament did not consider that the State Housing Commission's 'shared equity purchase' was also based on coownership of the land in question, then that would explain why the State Housing Commission was expressly excluded by reg 7(3) as an 'interested person'. However, whether there is a single dwelling or multiple dwellings on the land in question, the fact remains that the coowners all have a right to occupy the whole of the property. Those rights of occupation can then be (and often are) regulated by an agreement between the coowners. I consider that reg 7(2) applies to APIE and it would apply also to the State Housing Commission in the same circumstances. I can only conclude that reg 7(3) was included as an express assurance to persons buying a first home with the assistance of the State Housing Commission that they would not be precluded from applying for a first home owner grant.
Conclusion - the agreed issue
I have found that APIE had no right to immediate occupation of the Property for the purpose of s 6(2)(a) of the FHOG Act on the date of completion of the purchase of the Property. Therefore I conclude that APIE was not at the relevant time an interested person as defined in s 16(3) of the FHOG Act. I therefore find that APIE is not required to be an applicant for the grant.
Has the transaction been completed?
Under s 8(1)(b) of the FHOG Act, the applicant must also show that the transaction has been completed.
Under s 14AA(2)(a) of the FHOG Act, a transaction for the purchase of the home is only complete once the purchaser becomes entitled to possession. The purchaser in this case is Ms Benzion and APIE.
I have, of course, already concluded that on completion of the purchase APIE did not have any right to occupy the Property. However, possession and occupation are different concepts and the parties appear to agree that Ms Benzion and APIE have become entitled to possession of the Property and that all necessary steps to obtain registration of the Property have been taken.
I find that the transaction for which the grant is sought has been completed.
Orders
1.The applicant's application is upheld.
2.The decision of the Commissioner of State Revenue that Australian Property Investment Exchange Pty Ltd is an 'interested person' within the meaning of the First Home Owner Grant Act 2000 (WA) and therefore must be a joint applicant for the first home owner grant is set aside.
I certify that this and the preceding [69] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUDGE T SHARP, DEPUTY PRESIDENT
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