Hajinakitas v Chief Commissioner of State Revenue
[2009] NSWADT 280
•9 November 2009
CITATION: Hajinakitas v Chief Commissioner of State Revenue [2009] NSWADT 280 DIVISION: Revenue Division PARTIES: APPLICANTS
RESPONDENT
John and Mary Hajinakitas
Chief Commissioner of State RevenueFILE NUMBER: 096062 HEARING DATES: 8 October 2009 SUBMISSIONS CLOSED: 8 October 2009
DATE OF DECISION:
9 November 2009BEFORE: Hole M - Judicial Member CATCHWORDS: Principal place of residence - land tax exemption - test in Ryan’s case LEGISLATION CITED: Land Tax Management Act 1956 CASES CITED: Ryan & anor v Commissioner of Land Tax [1982] 1 NSWLR 305
Chief Commissioner of State Revenue v Sacco [2008] NSWADTAP 61
Triguboff v Valuer General [2009] NSWLEC 9; (2009) 166 LGERA 128
Gessner v Chief Commissioner of State Revenue [2006] NSWADT 26
Hall v Chief Commissioner of State Revenue [2009] NSWADT 19
Pharmacare Laboratories Pty Ltd v Chief Commissioner of State Revenue [2009] NSWADT 128
Hyde Page v Chief Commissioner of State Revenue [2009] NSWADT 229REPRESENTATION: APPLICANT
RESPONDENT
A Ketas, barrister
D H Mitchell, barristerORDERS: (i)The Chief Commissioner’s decision for the 2009 tax year is affirmed
(ii)Leave to appeal from the decision of the Chief Commissioner in relation to the 2007 and 2008 tax years is refused.
REASONS FOR DECISION
1 John and Mary Hajinakitas (“the applicants”) have filed an application for a review of a decision made by the respondent in respect of a property at Brooklyn (“the subject property”). The application is lodged in respect of the land tax years 2007 and 2008 and land tax year 2009. Decisions made by the respondent were made in respect of the land tax years 2007 and 2008 on 15 January 2008. The decision of the respondent in respect of the land tax year 2009 was made on 28 January 2009.
2 There is an initial issue which must be considered in that the application was filed more than 60 days after the decision of the respondent in respect of the 2007 and 2008 land tax years.
Facts
3 Prior to February 2006 the applicants were the owners and remained the owners of a property at Brooklyn (“3A”) being their principal place of residence. 3A immediately joins the subject property for part of a common boundary on the eastern side of 3A being the part of the western boundary of the subject property.
4 The applicants submitted that they had bought the subject property with a view to building a new home on that property which would become their principal place of residence and to sell 3A.
5 During the period between July 2006 and January 2008 the applicants undertook the design of a new home, submitted it to the Council, engaged in legal action with the Council concerning the plans and continued to take action to the point whereby in January 2008 they were awaiting new plans to be prepared to be submitted to the Council.
6 The applicants submitted that both the subject property and 3A are used exclusively by them as their principal place of residence and that the property is not used for any other purpose.
7 John Hajinakitas gave evidence at the hearing and his evidence disclosed the various uses that the subject property is put to as part of what he and his wife believe is their principal place of residence. He attested to the use of the property in various ways which will be referred to later.
8 The applicants have undertaken various construction works on the northern boundary of the subject property which now is partly under water in view of the definition of mean high water mark as disclosed on various plans produced to the Tribunal for consideration.
9 The subject property and 3A share a common boundary being 27.58 in length, this boundary is shown on a plan prepared by a firm of surveyors dated 29 August 2000 for the purposes of showing a recently erected stone retaining wall and the position of mean high water mark prior to construction of that retaining wall adjacent to the northern boundary of the subject property. This plan discloses that the “north western boundary of Lot 2 does not represent mean high water mark & consequently Lot 2 does not front Hawkesbury River”. The reference to Lot 2 is to the land being 3A.
10 A letter from the District Manager for the Department of Land and Water Conservation Sydney (as it was in the year 2000) dated 14 November 2000 discloses that “Although the sea wall encroaches upon Crown foreshore land, it has been agreed not to oppose its present location nor is it intended to pursue the issue of a licence to occupy the affected Crown Land, at this time”. This letter is in respect of 3A being the adjoining property upon which is constructed the principal place of residence of the applicants.
11 A copy of a further plan was provided to the Tribunal in respect of 3A which discloses that the common boundary between the subject property and 3A extends into an area north of the mean high water mark and thus into an area which would be submerged at mean high water mark at the time of a high tide. John Hajinakitas in his evidence to the Tribunal drew attention to the indication on the plan of 3A undertaken prior to the construction in 2000 previously referred to of the sea wall that there was a distance of 3.93 metres from the northern boundary along the eastern boundary of 3A and that after the construction of the sea wall undertaken in the year 2000 that this distance had been maintained.
12 The Tribunal was not provided with a recent plan a survey disclosing the accurate dimension available between a fence constructed on the common boundary of the subject property and 3A and the area of sandstone constructed as part of the sea wall or an addition to the sea wall constructed in the year 2000.
13 The applicants supplied various photographs which showed that there was an area of sandstone paving between the corner of the fence and the edge of the sea wall which was used for access from the subject property to 3A and over which various building equipment was taken and over which the applicants and their family traversed between the two lots to allow use of the subject property.
14 The applicants supplied a copy of a plan which had been prepared in May 1999 by the same firm of surveyors referred to in paragraph 9 above prior to the new sea wall being built in the year 2000 which showed at that time there was a fence along the common boundary between the subject property and 3A. This fence appears to end close to 3.93 metres from the northern boundary of the two lots.
15 On 14 February 2008 the applicants lodged with the respondent an objection to the decision made by the respondent on 15 January 2008, this was lodged on 14 February 2008. This objection relied on four grounds to support the contention that an exemption for land tax in respect of the subject property should be granted being:
1. that there had been a previous grant of exemption in respect of the subject property;
2. that the subject property was the intended principal place of residence of the applicants;
3. that the concession to permit the sale of principal place of residence at 3A … should be granted; and/or
4. the land at 3A and 7 … are contiguous blocks and not divided by a physical separation use, occupation or title.
Legislation
16 The exemption sought is pursuant to Section 10(1)(r) of Land Tax Management Act 1956 (“LTMA”) which provides an exemption for the principal place of residence under Schedule 1A. For the 2007, 2008 and 2009 tax years Schedule 1A provides:
“ Clause 2 Principal place of residence exemptions
(1) Land used and occupied by the owner as the principal place of residence of the owner of the land, and for no other reason, is exempt from taxation under this Act, in respect of the year commencing 1 January 2005 or any succeeding year, if the land is:
Clause 3 Residential land - meaning(2) Land is not used and occupied as the principal place of residence of a person unless:
(a) a parcel of residential land, or …
(5) The principal place of residence exemption is subject to the restrictions set out in Part 4.
(a) the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes since 1 July in the year preceding the tax year in which land tax is levied, or
(b) in any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the person’s principal place of residence. …(1) In this Schedule, residential land means land that is used and occupied for residential purposes and for no other purpose, that use and occupation being use and occupation of a building or buildings designed, constructed or adapted for residential purposes … ”
17 For the 2009 tax year Clause 13 of Part 4 provides:
“ Application of exemption to residence comprised of 2 or more lots (other than strata lots)
(1) The principal place of residence exemption does not extend to a parcel of residential land that is comprised of 2 or more lots of land, and that is used and occupied by the owner of the lots (or by one of them) as a principal place of residence, unless:
(b) the lots are owned by the same person or, if any of the lots are jointly owned, the lots are all jointly owned by the same persons, and
(2) For the purposes of this clause:
(c) the lots are the site of a single residence (excluding any additional residential occupancy that may be disregarded under clause 4).(a) separate lots are not to be regarded as adjoining merely because one lot has a single corner point on its boundary that is common to the boundary of another lot, and
(b) separate buildings erected on separate lots are not to be regarded as a single residence if the buildings are separately occupied or capable of being used for separate occupation. … ”
Applicants’ submissions
18 The applicants’ representative submitted that the exemption available pursuant to Schedule 1A Clauses 6 and 7 could have been sought if the original plans of the applicants ‘to build on the subject land and sell 3A’ had eventuated. That 3A was listed for sale and further that the subject property had been bought for the purposes of building on and thus there was an exemption available for the period from the date of purchase (July 2006) of the subject land. These plans had been frustrated due to the issues referred to in paragraph 5 above.
19 The applicants’ representative submitted that on the basis of the survey plan which was undertaken on 4 May 1999 prior to the construction of the new sea wall that there was a distance of 3.93 metres available which was not fenced. A calculation of this distance relative to the full distance of the common boundary being 27.58 metres was calculated and provided a 14% gap over the whole of the common boundary between the subject property and 3A.
20 Under examination John Hajinakitas disclosed that the further survey was undertaken in the year 2000 after completion of the building of the sea wall which disclosed that the rock wall had been built across the boundary into Crown Land and that this construction had been acceptable for the Department of Conservation and Land Management in the year 2000 and that no action was necessary to remove the encroachment.
21 The applicants’ representative drew attention to this application being based on the use of the subject property together with 3A as the principal place of residence of the applicants in that they used the subject property as part of the principal place of residence. The respondent noted that the four unities of title as referred to in Ryan & anor v Commissioner of Land Tax [1982] 1 NSWLR 305 (“Ryan”) being physical separation, use, occupation or title have been complied with. That there is a segment of the common boundary between the subject property and 3A that is unobstructed that being the 3.93 metres; that the subject property was used and occupied by the applicants together with 3A; and thus as the two properties were in the same ownership then each of the four requirements had been satisfied.
22 John Hajinakitas provided evidence under examination by the applicants’ representative that when the subject property was purchased the pontoon was in poor condition and that he and his family had intended to improve the pontoon’s condition to allow him to moor his boat there. That whilst they were repairing the pontoon it was necessary for them to cross frequently between 3A and the subject property for the purposes of taking goods and materials for that repair work. He attested that he mowed the subject property and kept it in good condition and this was disclosed in various photographs provided to the Tribunal. That he had placed poles in the mud adjacent to the northern boundary of the subject property for the purposes of refurbishing the old pontoon and that he had constructed ladders for that purpose also, this was supported by various photographs showing John Hajinakitas attending to these various works.
23 John Hajinakitas further attested that his grandchildren when visiting, which they did frequently, often play on the subject property and enter onto the subject property but always in the company of adults as once they are on the subject property there is no impediment to them falling into the water and due to the age of the grandchildren this is dangerous. He also attested to dogs of the family playing on the subject property, the last dog having died in April 2007. Photographs indicating children on the subject property and dogs on the subject property were also provided to the Tribunal.
24 John Hajinakitas was cross examined in relation to the existence of building materials shown on part of the subject property to the south of the common boundary of the subject property with 3A. He attested that this material was placed there by a neighbour with his consent as the neighbour had purchased a large amount of scaffolding and asked whether he could store it there temporarily and that if the applicants did not own the subject property then they would have allowed the neighbour to store the scaffolding on part of 3A.
25 John Hajinakitas under cross examination also noted that the fencing between the subject property and 3A was retained as a safety measure as the grandchildren played in an area of 3A when they were there and unsupervised being an area which was totally enclosed by fencing for safety reasons. Further that the fencing goes as far as it possibly can to the north due to the natural conditions of the ground and the rocks and the position of the mean high water mark. John Hajinakitas further gave evidence that it is possible to moor a boat adjacent to the subject property and also at 3A. The boats variously shown in the photographs supplied to the Tribunal were those of the applicants and the son-in-law of the applicants.
26 The written submissions provided by the applicants’ representative drew attention to the facts concerning the subject property and 3A particularly in respect of the extent of the common boundary between those 2 lots and the possibility of the pathway created by the applicants providing easy access from one property to the other.
27 The applicants’ representative submitted that the second reading speech made on 25 June 2008 in support of the State Revenue Legislation Amendment Bill 2008 did not clarify the principles adopted in Ryan.
28 That the Chief Commissioner of State Revenue v Sacco [2008] NSWADTAP 61 (“Sacco”) discussed by the respondent’s representative predates Triguboff v Valuer General [2009] NSWLEC 9; (2009) 166 LGERA 128 (“Triguboff”) and therefore the Tribunal is bound by Triguboff.
29 That in response to the respondent’s submissions that there had always been an opening between the subject property and 3A prior to the purchase by the applicants and that since the applicants had not used that in any different way to the previous owner that no evidence had been established that the subject property was used as part of the principal place of residence. That the applicants had provided evidence of the regular use after purchase and for the mooring of the boat.
30 The suggestion that the situation in Triguboff could be distinguished from this case is erroneous as the boundary wall dividing the lots in Triguboff had been removed by the taxpayers and that there was a significant area available in Triguboff by way of percentage to cross the boundary. That having regard to the means of the applicants they had taken the necessary steps to join the two properties in a way that suits their use.
31 The applicants’ representative made written submissions in relation to the application being out of time in relation to the 2007 and 2008 tax years that the extension of time should be granted. That an extension of time would not impose hardship on the respondent. There was no explanation as to the reason for delay in lodging the application relating to the decision of the respondent.
Respondent’s submissions
32 The respondent’s representative submitted that the respondent did not consent to nor oppose the application for extension of the time to the decision made on 15 January 2008.
33 The respondent’s representative submitted that the subject property is separated from 3A by a fence and that there is a gap in the fence, that the only useable access to the subject property is from the road and to get to the subject property from 3A the applicants must proceed to the road by way of the driveway on 3A, walk to the front of the subject property, unlock the padlock for the gate for the subject property and then enter the subject property.
34 The four requirements set out by Hunt J in Ryan at 310 were recently considered in Hyde Page v Chief Commissioner of State Revenue [2009] NSWADT 229 (“Hyde Page”) by J M Perrignon wherein the Member provided the following summary of the interpretation of the words parcel of residential land in Clause 2(1)(a) of Schedule 1A:
“ [10] In Ryan & anor v Commissioner of Land Tax [1982] 1 NSWLR 305 at 310, Hunt J approved a test formulated by the Chief Commissioner for determining whether two adjacent blocks of land should be considered one “parcel of residential land” for the purposes of section 10(1)(r)(ii) of the Act, which was later replaced by clause 2(1)(a) of Schedule 1A. He said at 310: ‘[I] my view … contiguous blocks of land can comprise a ‘parcel of residential land’ within s 10(1)(r)(ii) only where they are undivided not only by physical separation but also in use, occupation and title.’ … ”
35 The respondent’s representative submitted that the second reading speech which inserted Clause 13 into Schedule 1A of the Act made it clear that the principles adopted in Ryan were spelt out and defined.
36 That the subject property and 3A are not undivided by physical separation, that the fencing between the two lots divides the two lots. That in accordance with the comment in Sacco the Appeal Panel commented at 39 that:
“ ‘Undivided by physical separation’ must, at least, bear the connotation ‘significantly’ or substantially’ undivided. An opening sufficient to allow a car to pass through on a long otherwise divided boundary does not in our view fit with the ordinary meaning of the phrase ‘undivided by physical separation’. … (emphasis added). ”
37 In the instant case the gap that appears to be available is part of the boundary shown on plans as 3.93 metres where the majority of that 3.93 metres is part of land below mean high water mark. The applicants did not provide an accurate measurement of the actual width of the strip used to cross to the subject property across the corner from 3A. The photographs provided apparently disclose a strip much less than 3.93 metres.
38 The respondent’s representative submitted that the applicants had not established the unity of use and occupation of the subject property with 3A relying on the evidence given by John Hajinakitas, photographs of children and dogs present on the subject property and a boat moored at the frontage of the subject property.
39 The applicants had previously claimed that the subject property was unoccupied land and it was intended to be used as the applicant’s place of residence following completion of a dwelling on the subject property. This claim had been made in the previous return by the applicants dated 28 September 2007.
40 The respondent’s representative submitted that the present case is distinguishable from the circumstances set out in Triguboff as the boundary wall dividing the two lots in Triguboff had been removed by the taxpayers and that notwithstanding a retaining wall covered 60% of the boundary whereas the fence between the subject property and 3A covers a substantially greater amount than 60% of that boundary.
41 The respondent’s representative drew attention to the onus of providing sufficient evidence to show that the four unities have been satisfied including the use and occupation of the two properties together and sufficient evidence to disclose the common access between the two lots was borne by the applicants and that the onus had not been discharged.
42 The respondent’s representative submitted that the relevant considerations in relation to considering an application out of time are as set out in Gessner v Chief Commissioner of State Revenue [2006] NSWADT 26 (“Gessner”) at paragraph 13 and that these considerations were recently adopted in Hall v Chief Commissioner of State Revenue [2009] NSWADT 19 (“Hall”) at paragraphs 23 and 24. That leave had been granted in Pharmacare Laboratories Pty Ltd v Chief Commissioner of State Revenue [2009] NSWADT 128 (“Pharmacare”) where the circumstances were such that the applicant’s legal representative had been responsible for the delay.
43 The representatives of the applicants and the respondent provided comprehensive written submissions to the Tribunal.
Reasons for Decision
44 The applicants have not supplied sufficient evidence to the Tribunal to disclose a significant access between the two lots. The photograph identified by John Hajinakitas in cross examination as taken by him and being of his wife standing in front of the northern extent of the fence between 3A and the subject property did not identify the distance available to cross on the “path” of stones created by the top of the rock wall. This distance is considerably less than 3.93 metres and cannot be determined from the evidence provided. The evidence supplied supports the view of the respondent that the subject property and 3A are divided by physical separation in that the suggested access is over narrow and difficult stepping stones which will allow limited access between the two lots.
45 The evidence disclosed that the applicants had used the limited access across the corner of the subject property for the purposes of repairing the pontoon and that when their boat was moored at that pontoon to access the boat. This is insufficient to draw a conclusion that the lots are significantly or substantially undivided.
46 The applicants have not provided evidence of the use and occupation of the two lots together. The evidence provided was of activities permitted to the grandchildren, when visiting the applicants, under supervision to proceed onto the subject property and for dogs to also do so. The applicants would be required under Council regulations to keep the subject property mown and cleared of debris.
47 The delay in objecting to the assessment in relation to the 2007 and 2008 tax years has not been explained and there is no evidence provided by the applicants as to why they should be given the benefit of leave to appeal the decision of the Chief Commission in respect of those tax years.
48 In any event for the same reasons as provided above and in respect of the 2009 tax year the applicants have not discharged the onus of proving their case
ORDERS
1. The Chief Commissioner’s decision for the 2009 tax year is affirmed.
2. Leave to appeal from the decision of the Chief Commissioner in relation to the 2007 and 2008 tax years is refused.
I HEREBY CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF THE ADMINISTRATIVE DECISIONS TRIBUNAL.
REGISTRAR
20 November 2009
Amendments :
paragraph 26 text included
paragraph 18 inclusion of words ‘had eventuated’ in line 3
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