Daniell v Commissioner for ACT Revenue
[2008] ACTAAT 1
•18 January 2008
AUSTRALIAN CAPITAL TERRITORY
ADMINISTRATIVE APPEALS TRIBUNAL
CITATION:DANIELL AND COMMISSIONER FOR ACT REVENUE [2008] ACTAAT 1 (18 JANUARY 2008)
AT07/48
Catchwords: First Home Owner Grant – failure to comply with condition of grant that applicant occupy property as principal place of residence for continuous period of six months within one year of completion of purchase – discretion to approve shorter period or grant exemption only exercisable prior to expiration of period required for occupation – potential for lack of flexibility in exercise of discretion to operate unfairly.
Administrative Appeals Tribunal Act 1989, ss 37, 44
First Home Owner Grant Act 2000, ss 12, 20, 23, 25, 31, 47, 48
First Home Owner Grant Act 2000 (NSW), ss 12, 20, 45
First Home Owner Grant Amendment Act 2003
First Home Owner Grant Amendment Bill 2003, Explanatory Statement
Alexopoulos v Commissioner of State Revenue [2006] VCAT 806
Basonovic v Chief Commissioner of State Revenue [2006] NSWADT 236
Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 2 ALD 1
Comcare v Burton (1998) 50 ALD 846
Commonwealth Bank Officers’ Superannuation Corporation Pty Ltd v Commissioner of Taxation (2005) 89 ALD 1
Cullen v Chief Commissioner of State Revenue [2005] NSWADT 207
Fletcher v Federal Commissioner of Taxation (1988) 84 ALR 295
Hare v Commissioner of State Revenue [2006] VCAT 1054
Huertas v Chief Commissioner of State Revenue [2007] NSWADT 28
Johnston and Commissioner for ACT Revenue [2007] ACTAAT 18
Lawrence & Anor v Chief Commissioner of State Revenue [2002] NSWADT 104
Mawad v Chief Commissioner of State Revenue [2005] NSWADT 207
McKenzie v Chief Commissioner of State Revenue [2005] NSWADT 214
Re Donald and ASIC (2001) 64 ALD 717
Scurry v Chief Commissioner of State Revenue [2006] NSWADT 28
Taylor v Chief Commissioner of State Revenue [2004] NSWADT 36
UH v Chief Commissioner of State Revenue [2005] NSWADT 284
WH v Chief Commissioner of State Revenue [2006] NSWADT 199
Tribunal:Mr M H Peedom, President
Date:18 January 2008
AUSTRALIAN CAPITAL TERRITORY )
ADMINISTRATIVE APPEALS TRIBUNAL ) NO: AT07/48
GENERAL DIVISION )
RE: PAUL DANIELL
Applicant
AND: COMMISSIONER
FOR ACT REVENUE
Respondent
DECISION
Tribunal : Mr M H Peedom, President
Date : 18 January 2008
Decision :
The decision to impose interest in the sum of $636.31 is varied by specifying $1,008.14 as the amount of interest payable by the applicant.
Otherwise, the decision under review is affirmed.
…………………………
President
AUSTRALIAN CAPITAL TERRITORY )
ADMINISTRATIVE APPEALS TRIBUNAL ) NO: AT07/48
GENERAL DIVISION )
RE: PAUL DANIELL
Applicant
AND: COMMISSIONER
FOR ACT REVENUE
Respondent
REASONS FOR DECISION
18 January 2008 Mr M H Peedom, President
The facts
The significant facts of this matter are not in dispute. They are as follows.
2. On 22 January 2004 the applicant executed a contract to buy Unit 12, Wantirna, 57 Torrens Street, Braddon, ACT (“the property”). At the time of the application the applicant was a Commonwealth officer employed in the Department of Foreign Affairs and Trade (“DFAT”). On 28 January 2004 the respondent received from the applicant an application for a grant under the First Home Owner Grant Act 2000 (“the Act”) in respect of the property. In the application the applicant answered “yes” to the question: “Will all applicants be occupying the established home as their principal place of residence within 12 months of either settlement or completion of construction?”. On 2 February 2004 the respondent approved the application and paid $7,000 to the applicant. On 3 February 2004 the applicant and the seller settled the transfer of the property to the applicant.
3. On 12 February 2004 DFAT advertised a vacancy in the position of First Secretary (Policy) in the Australian Mission to the United Nations in New York (“the UN position”). In the material given to applicants for the UN position advice was given that the posting was notionally of 3 years’ duration. On 18 February 2004 the applicant applied for the UN position. On 20 February 2004 the Posting and Placements Committee of DFAT recommended that the applicant be posted to the UN position. On 23 March 2004 the applicant’s posting to the UN position was formally notified in an administrative circular. As part of the briefing process for successful applicants for overseas postings of this type, the applicant was advised by officers of DFAT that the posting would be notionally of 3 years but could be terminated earlier at the discretion of the government. As part of the same briefing process, the applicant was also advised to bear this in mind when entering any personal, financial or other commitments. On 10 May 2004 the applicant commenced duties in the UN position in New York and continued to occupy the position until 26 June 2006. On 4 July 2006, at the request of his employer, the applicant commenced duties with the Department of Defence based in Victoria.
4. During the period of his absence from Canberra the property was rented by the applicant to a tenant, initially for a period of 6 months and thereafter on a monthly basis until 21 December 2007 following which the applicant returned to employment in Canberra and resumed occupation of the property.
5. By letter dated 1 November 2006 addressed to the applicant to be forwarded to him in New York an inspector of the Revenue Office advised the applicant that an investigation by that office had indicated that the applicant may not have met the requirement of the Act to occupy the property as his principal place of residence for a continuous period of 6 months commencing within 6 months of the date of settlement of the purchase of the property. He was asked to provide a statutory declaration within 14 days confirming the commencement date of his residence of the property and the period of time that he had lived in it together with documentary evidence of his occupancy. Alternatively, he was asked to advise the reason for not meeting the residency requirement. Written reminders requesting a response were sent to him on 16 and 29 November 2006.
6. On 4 December 2006 the applicant wrote to the inspector advising that he had been posted to Victoria and did not receive the letter from the inspector dated 1 November 2006 until 30 November 2006. He said that he moved into the property shortly after purchase with the intention of residing there for some time. He had moved out in May 2004 when posted to the UN position. He said that he had been unaware of the prospect of the posting at the time he moved into the property and that he understood from reading the website of the Revenue Office that the posting by an employer of a grant applicant overseas may be a sufficient ground to waive the residence requirement.
7. By letter dated 11 December 2006 a delegate of the respondent wrote to the applicant advising that the decision to make the grant had been reversed pursuant to section 23 of the Act. The reasons given were that the grant had been made on condition that the residence requirement under the Act would be satisfied; that the applicant had signed a declaration agreeing that he had read and understood the conditions of eligibility for the grant and accepted that if the conditions were not met, he may not be entitled to receive or retain the grant; and that there were no provisions in the Act to allow an extension of time for compliance with the residence requirement once the period for compliance had expired.
8. In a letter dated 8 January 2007 objecting to the decision the applicant stated that he did not reside in the property for the required period because he was required by his employer to relocate overseas and he understood that this would be grounds for the respondent to exercise his discretion to waive or reduce the residence requirement. He requested waiver of the requirement.
9. In a letter to the applicant dated 3 September 2007 the delegate advised that the objection had been disallowed. The delegate stated that the respondent did not have the power to approve a shorter period of residence or an exemption from the residence requirement outside the 12 month period commencing from the date of settlement. The letter required repayment of the grant and interest. The decision reflected in the letter is the subject of the application for review of decision in this case.
The legislation
10. Of particular significance to the issues in this appeal are sections 12 and 20 of the Act. They provide:
12 Criterion 5—Residence requirements
(1)An applicant for a first home owner grant must occupy the home to which the application relates as the applicant’s principal place of residence for a continuous period of at least 6 months.
(2)However, if the commissioner is satisfied there are good reasons to do so, the commissioner may—
(a) approve a shorter period; or
(b)exempt the applicant from the requirement to comply with subsection (1).
(3)The period of occupation required under subsection (1), or the shorter period approved under subsection (2) (a), must start within 1 year after completion of the eligible transaction to which the application relates or a longer period approved by the commissioner.
(4)The commissioner may exempt the applicant (the noncomplying applicant) from the requirement to comply with subsection (3) if—
(a)the applicant is 1 of 2 or more joint applicants for a first home owner grant; and
(b) at least 1 of the applicants complies with the requirement; and
(c)there are, in the commissioner’s opinion, good reasons to exempt the noncomplying applicant from the requirement.
20 Payment in anticipation of compliance with residence
requirements
(1)The commissioner may authorise payment of a first home owner grant in anticipation of compliance with the residence requirements if the commissioner is satisfied that each applicant intends to comply with the residence requirements.
(2)If a first home owner grant is paid in anticipation of compliance with the residence requirements, the payment is made on condition that, if the residence requirements are not complied with, the applicant must within 14 days after the relevant date—
(a) give written notice of that fact to the commissioner; and
(b) repay the amount of the grant.
(3) The relevant date is the earlier of the following:
(a)the end of the period allowed for compliance with the residence requirements;
(b)the date it first becomes apparent that the residence requirements will not be complied with during the period allowed for compliance.
(4)If a first home owner grant is paid to a person on the condition mentioned in subsection (2), the person must comply with the condition.
Maximum penalty: 50 penalty units.
(5) An offence against this section is a strict liability offence.
Submissions and conclusions
11. In submissions made on behalf of the respondent, it was noted that in circumstances where there had been a failure to meet the condition of the grant imposed by section 20(2) of the Act, as happened in the circumstances of this case, section 20(4) required the grant to be repaid without any further decision being taken by the respondent thereby making unnecessary any decision to reverse the decision approving payment of the grant. The fact remains, however, that the respondent purported to make a decision pursuant to section 23 of the Act which authorises the respondent to vary or reverse a decision in relation to an application for a grant if “later satisfied (independently of an objection under the Act) that the decision is incorrect …..”. The decision of the Federal Court of Australia in Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 2 ALD 1 makes it clear that the Tribunal has jurisdiction to review a decision made in “purported exercise” of powers conferred by an enactment even if the decision would have been determined by a court to be a nullity. The jurisdiction of the Tribunal exists more clearly when the decision in question is merely regarded as arguably unnecessary.
12. I note further that the jurisdiction of the Tribunal is to review decisions of the respondent made in respect of objections with which the applicant is dissatisfied (see section 31 of the Act) and that an objection can be made by an applicant “if dissatisfied with the (respondent’s) decision in any way” (emphasis added) (see section 25(1) of the Act). The words underlined appear to confer a broad scope for appeal to the Tribunal against decisions of the respondent beyond those which relate to refusal to approve an application for a grant, for example.
13. For the purpose of reviewing a decision the Tribunal is conferred by section 44 of the Administrative Appeals Tribunal Act 1989 (“the AAT Act”) with “all the powers and discretions that are given by any relevant enactment on the person who made the decision …..”. Section 44 is not, itself, a source of jurisdiction (see Comcare v Burton (1998) 50 ALD 846) but the Tribunal is empowered to exercise not only the power or discretion conferred on the decision-maker (in this case, the power contained in section 23 of the Act), but also any power or discretion conferred on the decision-maker by the Act provided that it is relevant to the decision under review (Fletcher v Federal Commissioner of Taxation (1988) 84 ALR 295 at 305-306). So long as the exercise of the powers and discretions by the Tribunal is for the purpose of reviewing a decision, all of the powers and discretions conferred by any relevant enactment on the decision-maker who made the decision, can be exercised by the Tribunal (see Commonwealth Bank Officers’ Superannuation Corporation Pty Ltd v Commissioner of Taxation (2005) 89 ALD 1). There is no requirement that the powers and discretions exercised pursuant to section 44 of the AAT Act must lead to a decision that would itself be reviewable by the Tribunal had it been made by the decision-maker in the first instance and an application for review lodged in the Tribunal (see Re Donald and ASIC (2001) 64 ALD 717 at 728).
14. The powers conferred on the respondent by section 12(2) of the Act to approve a shorter period than that specified in section 12(1) or to grant an exemption from that requirement are clearly expressed as powers that may be exercised for the purpose of determining compliance with section 12(1). The applicant’s letters dated 4 December 2006 and 8 January 2007 clearly called for consideration by the respondent as to whether the discretion conferred by section 12(2) should be exercised and the original decision of the delegate of the respondent and the decision on objection and now under review, both addressed that issue.
15. In arriving at its decision in relation to the decision under review, I therefore conclude, subject to what follows, that in determining whether a decision made pursuant to section 23 of the Act to reverse a decision approving a grant is the correct or preferable decision, the Tribunal is able to consider whether the discretion conferred on the respondent by section 12(2) of the Act should be exercised.
16. In support of his submission that the residence requirement should be waived (that is, that he be exempted from that requirement, the applicant drew attention to the Explanatory Statement to the First Home Owner Grant Amendment Bill 2003 which introduced the 6 month residence period in section 12(1) of the Act which applicants must satisfy for entitlement to the grant and the discretion of the respondent to accept a lesser period or waive the requirement. The Explanatory Statement cited as one of two examples of good reasons for the exercise of the discretion:
a requirement of an applicant’s employer that the applicant relocate out of the ACT.
17. The respondent submitted that, irrespective as to any justification for exercising the discretion conferred by section 12(2) of the Act, that discretion could only be exercised within the 12 month period specified for compliance by section 12(3) and the 14 day period for notification of non-compliance and repayment of the grant specified in section 20(2). In support of that submission a number of decisions of the NSW Administrative Decisions Tribunal (“the ADT”) and the Victorian Civil and Administrative Tribunal (“ the VCAT”) in relation to the equivalent provisions of the Act in their jurisdictions were relied upon.
18. According to authorities to which the Tribunal was referred by the respondent’s counsel, the ADT has, with some exceptions, taken the view that the equivalent provisions of the First Home Owner Grant Act 2000 (NSW) to those under consideration in this case only permit a delay of 12 months or such extended period as has been permitted ahead of the expiry of that period (plus 14 days) (see Taylor v Chief Commissioner of State Revenue [2004] NSWADT 36; McKenzie v Chief Commissioner of State Revenue [2005] NSWADT 214; UH v Chief Commissioner of State Revenue [2005] NSWADT 284; WH v Chief Commissioner of State Revenue [2006] NSWADT 199; Scurry v Chief Commissioner of State Revenue [2006] NSWADT 28; Basonovic v Chief Commissioner of State Revenue [2006] NSWADT 236; and Huertas v Chief Commissioner of State Revenue [2007] NSWADT 28).
19. The exceptions to this otherwise consistent approach are where the Tribunal decided that any “longer period allowed by the Chief Commissioner” (the phrase used in section 20(1)(b) of the NSW First Home Owner Grant Act at that time) referred to a longer period allowed prior to the Chief Commissioner authorising payment of the grant: Mawad v Chief Commissioner of State Revenue [2005] NSWADT 207 and Cullen v Chief Commissioner of State Revenue [2005] NSWADT 207.
20. In Mawad’s case the ADT received a submission from the Commissioner that the Commissioner had formed an opinion, contrary to his previous position and previous ADT authority, that he had the power during the relevant period to extend time for compliance with the residence requirement even after the 12 months and 14 days had passed. According to the reasons for decision in the UH case the Commissioner later recanted and returned to his previous position that there was no such power.
21. In his reasons for decision in UH the President stated that, given that there was no substantive explanation by the ADT for its ruling in Mawad (it having uncritically accepted the Commissioner’s decision), the ADT should continue to apply the considered views that had been expressed in its earlier decisions.
22. In Cullen’s case the ADT addressed the issue in the context of an amendment to the NSW First Home Owner Grant Act that expressly permitted an approval or exemption under section 12 to be given at any time, even if the 12 month period after completion of the eligible transaction had already expired or the applicant’s occupation of the home as a principal place of residence had already ceased. Although the amendment did not apply to the facts of Cullen’s case, (the relevant transitional provisions making it apply only to applications for a first home owner grant made after a date that followed the grant application in that case) the judicial member who decided the case concluded that, because section 20(3), section 20(4) and section 45 (equivalents of section 20(3); section 20(4) and section 47 of the Act) had not been amended and because in the Second Reading Speech to the amending legislation reference had been made to the amendments “clarifying” and “confirming” the NSW First Home Owner Grant Act, sections 20(3), 20(4) and 45 must be and always have been intended to be, subservient to the power(s) of the Commissioner under section 12. It followed, in his view, that the discretions of the Commissioner under section 12 prior to the amendment were not restricted as to time and were capable of exercise by the Commissioner at any time.
23. The approach taken in the UH case, and those to similar effect, has been followed by the VCAT in Alexopoulos v Commissioner of State Revenue [2006] VCAT 806 and Hare v Commissioner of State Revenue [2006] VCAT 1054. In Hare’s case Deputy President Macnamara noted that Judge O’Connor P in McKenzie’s case had regretted the inflexibility which he perceived in the position he concluded reflected the correct interpretation of the NSW First Home Owner Grant Act and said that he shared His Honour’s regret but, with some hesitation, felt constrained to adopt the same construction as Judge O’Connor.
24. For the same reasons as those adopted by the VCAT in Hare’s case, I consider that the Tribunal should take the same approach as that taken in the UH case. It is not open, in my view, for the discretionary powers provided for by section 12 of the Act to be exercised contrary to the specific statutory constraint contained in section 12(3) of the Act. I note also that the amendment that was made to the NSW First Home Owner Grant Act has not been made in the Territory and the Second Reading Speech to the amending legislation and which was influential in the decision arrived at in Cullen’s case has no application in the Territory.
Conclusion
25. I therefore conclude that the Tribunal is not empowered to exercise the discretions provided for by section 12(2) of the Act in the circumstances of this case and that the correct decision for the Tribunal to make is to affirm the decision under review to the extent to which it requires repayment of the grant but to vary the decision so as to update the amount of interest payable by the applicant pursuant to section 48(1) of the Act.
Further comment
26. As I have noted above (see paragraph 23) both the ADT and the VCAT have expressed reservations as to the inflexibility imposed by the operation of the provisions of the Act in its current form. As I have also noted, the NSW First Home Owner Grant Act has been amended to allow greater flexibility than is open under section 12 of the Act. The circumstances of this case demonstrate the potential for the absence of flexibility in the discretion of the respondent to operate in a manner which may produce an outcome that offends ordinary notions of fairness.
27. In his statement of facts and contentions the applicant drew attention to the apparent omission from the documents lodged by the respondent with the Tribunal pursuant to section 37 of the AAT Act of all of the pages of the applicant’s application for the grant including any page of the standard form of application which bore the applicant’s signature. The respondent’s counsel informed the Tribunal that a search of the respondent’s records had failed to locate the complete application or any other documents that may have been provided to the applicant in connection with his application.
28. A copy of the standard form of application in use at the time of the applicant’s application and a two page guide for its completion were provided to the Tribunal. The declaration contained an acknowledgement that the applicant had read and understood the information prepared by the Revenue Office relating to the conditions of eligibility and an acceptance that if the conditions were not met the applicant may not be entitled to receive or retain the grant. In relation to conditions of eligibility, the guide merely contained the advice that all decisions relating to eligibility were made by the Revenue Office and any further information required should be directed to that office. It was otherwise uninformative of the requirements for eligibility for a grant under the Act. The applicant advised the Tribunal that he was prepared to accept that he would have signed the standard form of declaration but had no recollection of being provided with any other material by the respondent.
29. On the basis of the evidence before the Tribunal, the information given by the respondent to the applicant as to his eligibility for the grant was deficient. Further, the question (Question 6) which he was asked to answer in the standard form of application regarding his occupation of the property as his principal place of residence (see paragraph 2 above) gave no indication that a minimum 6 months’ occupation was a condition of eligibility despite the fact that the Act had been amended with effect from 1 January 2004 to include such a requirement. Prior to the amendment of the Act by the First Home Owner Grant Amendment Act 2003 no minimum period of occupation of the relevant property as the applicant’s principal place of residence was specified in the Act. Clearly, question 6 was drafted to reflect the pre-amendment requirements of section 12(1) of the Act. It had the potential to mislead applicants for a grant particularly as decisions of the ADT had decided that, depending upon the circumstances of each particular case, periods of occupancy from one week to one month were sufficient to meet the requirements of section 12 (see cases referred to in Johnston and Commissioner for ACT Revenue [2007] ACTAAT 18).
30. The failure of the respondent to clearly explain to the applicant the conditions for eligibility for a grant and the circumstances in which it might be required to be repaid is a matter that would have been relevant to the exercise of the decision-maker’s discretion if called upon to be exercised within the time limit found by this decision and other decisions of the ADT and the VCAT to exist. Unless appraised of those conditions and circumstances a person given a grant may be effectively denied the means of knowledge necessary to call for the exercise of the respondent’s discretion.
31. In the circumstances of this case the Tribunal would also have been required to take into account favourably to the applicant the fact that he provided all information required of him by the respondent honestly and without unexplained delay as well as the fact that he did, in fact, occupy the property as his principal place of residence for about 3 months and ceased that occupation in consequence of being posted in his employment for a period of time away from his usual place of residence.
32. For reasons already given, however, these factors do not arise for consideration.
FORM 33
PUBLICATION DETAILS
TO BE PUBLISHED
To be completed by Member's Staff
________________________________________________________________________
PART A FILE NO: AT07/48
APPLICANT: PAUL DANIELL
RESPONDENT: COMMISSIONER FOR ACT REVENUE
PARTY JOINED: N/A
COUNSEL APPEARING: APPLICANT:
RESPONDENT: MS C BESEMERES
PARTY JOINED:
SOLICITORS: APPLICANT:
RESPONDENT: ACT GOVERNMENT
SOLICITOR
PARTY JOINED:
OTHER:APPLICANT: SELF
RESPONDENT:
PARTY JOINED:
TRIBUNAL MEMBER/S: MR M H PEEDOM, PRESIDENT
DATE/S OF HEARING: 15 JANUARY 2008 PLACE: CANBERRA
DATE OF DECISION: 18 JANUARY 2008 PLACE: CANBERRA
______________________________________________________________________
PART B
RECOMMENDATION:
FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION (X)
COMMENT:
4
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