Hall v Chief Commissioner of State Revenue

[2009] NSWADT 194

CITATION:	Hall v Chief Commissioner of State Revenue [2009] NSWADT 194
DIVISION:	Revenue Division
PARTIES:	APPLICANT Edward Blomfield Hall RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	086033
HEARING DATES:	14 July 2009
SUBMISSIONS CLOSED:	14 July 2009
DATE OF DECISION:	24 July 2009
BEFORE:	Handley R - Deputy President
CATCHWORDS:	Land tax exemptions – principal place of residence – conservation agreement – multiple occupancy
LEGISLATION CITED:	Land Tax Management Act 1956 Taxation Administration Act 1996 Conveyancing Act 1919 Administrative Decisions Tribunal Act 1997 National Parks and Wildlife Act 1974 State Revenue Legislation (Further Amendment) Act 1994 Threatened Species Conservation Amendment Act 2002 National Parks and Wildlife (Conservation Agreements) Amendment Act 1987 Land Tax Management Act (Further Amendment) Act 1986 Environmental Planning and Assessment Act 1979
CASES CITED:	BBLT v Chief Commissioner of the Office for State Revenue [2003] NSWSC 1003 Gessner v Chief Commissioner of State Revenue [2006] NSWADT 26 Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 Chief Commissioner of State Revenue v Aldridge & Anor [2003] NSWADTAP 50 Aronstan v Chief Commissioner of State Revenue [2008] NSWADT 8 Chief Commissioner of Taxation v Ferrington [2004] NSWADTAP 41
REPRESENTATION:	APPLICANT In person RESPONDENT A Gerard, solicitor
ORDERS:	The Land Tax assessments under review are confirmed.

1 Edward Hall (also referred to as ‘the Applicant’) has filed an application with the Tribunal for the review of a decision of the Chief Commissioner of State Revenue (‘the Respondent’), disallowing Mr Hall’s objection to a notice assessing him as being liable for the payment of Land Tax on his property in Woodhill (‘the Woodhill property’).

The Facts

2 Mr Hall and his then wife purchased property at Woodhill Mountain Road, Woodhill, near Berry, in four lots between 1979 and 1981. These lots were consolidated into one lot at the direction of Shoalhaven City Council, which, on 17 June 1981 granted approval for the construction of a house on the land. A condition of this development consent prohibited the removal of “any healthy trees exceeding 4 metres in height from the areas shown ... unless such trees have been inspected by a Council officer and written approval has been given for their removal”.

3 Prior to granting the development consent, the Council also required Mr and Mrs Hall to sign an instrument granting four easements over the land, pursuant to section 88B of the Conveyancing Act 1919, including an easement numbered 2:

“That no sound healthy trees exceeding four (4) metres in height shall be removed from the area denoted “Restriction as to user 20 wide, 25 wide and variable width” on the plan unless such trees have been inspected by a Council Officer and written approval has been given for their removal.”

4 At that time, Mr Hall was an officer in the Royal Australian Navy (‘RAN’), who had at various times served at HMAS Albatross on the outskirts of Nowra. Approximately 12 months after being posted back to HMAS Albatross in April 1981, the construction of a house at the Woodhill property having been completed, Mr Hall and his family moved into the house, where they lived until 1985. Mr Hall retired from the RAN in January 1985 and took up civilian employment locally. In May 1985, Mr Hall and his wife separated and Mr Hall remained living in the property with their child until October 1985. The property was subsequently transferred into his sole name, Mr Hall remarried, and he commenced employment in Sydney. In February 1986, he rented out the Woodhill property for a period of two years, returning to live there with his family in mid 1988.

5 In May 1997, Mr Hall commenced working in Brisbane, but he and his family continued to spend some of their time at the Woodhill property. On 7 August 1998, Mr Hall settled the purchase of a property in Gleneagle Street, Kenmore (‘the Kenmore property’). Kenmore is a suburb to the west of the centre of Brisbane. An annotation on the Deed of Transfer indicates that Mr Hall claimed a principal place of residence concession in respect of the payment of stamp duty for the Kenmore property.

6 The Woodhill property was again rented out in late 1999, but in 2002 Mr Hall planned to return there to take up a civilian position at HMAS Albatross. Ultimately, this did not eventuate and Mr Hall continued working in Brisbane. The property continued to be rented out. Mr Hall planned to return to the Woodhill property in 2007 but it was only on 24 December 2007 that the tenants finally vacated the property, after being threatened with eviction. Mr Hall and his wife visited Melbourne for two weeks over Christmas 2007, and it was not until 3 January 2008 that they returned to the Woodhill property. However, as the agent had intimated, the property proved to be uninhabitable, and required extensive cleaning and repairs to be undertaken, which took some time to complete. It was not until some weeks later that Mr and Mrs Hall were able to move back into the property. During this period, Mr Hall continued working in Brisbane, spending some of his time there and some at the Woodhill property.

7 Mr Hall states that having been advised by the OSR that he would be liable for Land Tax for the property for the 2009 Land Tax year, Mr Hall sold the property on 19 September 2008.

The Background to these proceedings

8 On 3 August 2007, the Office of State Revenue (‘OSR’) issued Mr Hall with a Land Tax notice of assessment in respect of the Woodhill property for the 2003 to 2007 Land Tax years totalling $14,595.65. On 7 September 2007, Mr Hall signed an objection to this assessment, stating that he did not object to the assessment for the 2003 and 2007 Land Tax years but did object to the assessment for the 2004, 2005 and 2006 Land Tax years.

9 On 23 January 2008, the OSR issued Mr Hall with a Land Tax notice of assessment for the property for the 2008 Land Tax year totalling $4,212.00 (which he paid in full on 18 August 2008). On 30 January 2008, Mr Hall responded, claiming an exemption from Land Tax on the basis that the property was his principal place of residence (‘PPR’). The OSR treated Mr Hall’s letter as an objection to the assessment for 2008 and, on 19 February 2008, wrote to Mr Hall disallowing the objection. On 16 April 2008, Mr Hall filed an application for a review of that decision by the Tribunal.

10 The Tribunal conducted Directions Hearings with the parties on seven occasions between 21 May 2008 and 29 April 2009. On 13 August 2008, the Tribunal agreed to Mr Hall filing an amended application, which he filed on 16 October 2008, requesting a review of the Land Tax levied on the Woodhill property for the 2003 to 2008 Land Tax years on the ground that it was subject to an environmental planning instrument. Following a Directions Hearing on 4 February 2009, Mr Hall filed a variation of this amended application, the Respondent having identified some omissions.

The Relevant Legislation

11 Pursuant to section 100(3) of the Taxation Administration Act 1996 (‘the TAA’), an applicant for review bears the onus of proving his/her case in the Tribunal.

12 During the relevant period, pursuant to sections 7, 8 and 9 of the Land Tax Management Act 1956 (‘the LTM Act’), Land Tax was chargeable on the taxable value of land that was not exempt based on the ownership of the land as at midnight on the 31 December of each preceding year for which Land Tax was to be levied. Thus, Mr Hall, being the registered owner of the Woodhill property, was presumed to be liable for Land Tax on that land for the 2003 to 2008 Land Tax years based on his ownership of the land on 31 December of each preceding year, unless the land was exempt from tax.

13 Section 10(1) of the LTM Act provides, relevantly, that except where otherwise provided in the Act, certain lands shall be exempted from taxation under the Act, including:

(p1) land that is the subject of a conservation agreement under the National Parks and Wildlife Act 1974 , or a trust agreement registered as referred to in section 36 of the Nature Conservation Trust Act 2001 , being in either case an agreement that remains in force in perpetuity,

...

(r) land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1,

(r1) with respect to taxation leviable or payable in respect of the year commencing on 1 January 1987 or any succeeding year, land approved for multiple occupancy, and occupied, in accordance with an environmental planning instrument within the meaning of the Environmental Planning and Assessment Act 1979,

...

14 ‘Principal place of residence’ is defined in section 3(1):

" principal place of residence " of a person means the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the principal place of residence of the person.

15 Schedule 1A of the LTM Act provides relevantly:

2 Principal place of residence exemption

(1) Land used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose, is exempt from taxation under this Act, in respect of the year commencing 1 January 2005 or any succeeding year, if the land is:


(a) a parcel of residential land, or

(b) a strata lot or, subject to this Schedule, land comprised of 2 or more strata lots.




(2) Land is not used and occupied as the principal place of residence of a person unless:


(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.




(3) ...

(4) The exemption conferred by this clause is referred to as the "principal place of residence exemption".

(5) ...

Jurisdictional Issues

16 Mr Gerard submitted that the Tribunal does not have jurisdiction to determine Mr Hall’s application for review in respect of the 2003 and 2007 Land Tax years because Mr Hall did not lodge an objection in respect of those years. Moreover, in respect of the 2004, 2005 and 2006 Land Tax years, Mr Hall’s application to the Tribunal is out of time and will require leave of the Tribunal.

2003 and 2007 Land Tax years

17 In relation to the 2003 and 2007 Land Tax years, Mr Gerard noted that in the objection lodged by Mr Hall in September 2007, he specifically stated that he did not object to the Land Tax assessment for those years. Thus, pursuant to section 96(1) of the TAA, his right to seek a review for those years has not been enlivened: BBLT v Chief Commissioner of the Office for State Revenue [2003] NSWSC 1003 (‘BBLT’), at [36] to [37].

18 Mr Hall said he did not object to the 2003 and 2007 assessments because the Land Tax system operates on a calendar year basis and he was not previously aware that the Woodhill property was subject to Land Tax, not having been aware of the revaluation of the land until 2007.

19 Having considered these submissions, I agree with the Respondent that the Tribunal does not have jurisdiction in relation to the 2003 and 2007 Land Tax years. A right of review by the Tribunal under section 96(1) of the TAA is dependent upon an applicant having first objected to an assessment and being dissatisfied with the determination of that objection. In BBLT, at [37], Gzell J held that a similar right of review by the Supreme Court was “limited to those decisions against which objections have been raised that receive adverse determinations from the Chief Commissioner”.

2004, 2005 and 2006 Land Tax years

20 The OSR determined Mr Hall’s objection to the 2004, 2005 and 2006 Land tax years on 3 October 2007. Pursuant to section 99(1) of the TAA:

(1) An application for review following a determination by the Chief Commissioner of an objection must be made not later than 60 days after the date of issue of the notice of the Chief Commissioner’s determination of the objection. The court or tribunal to which the application is to be made may allow a person to apply for a review after that 60-day period.

21 Mr Gerard submitted that because Mr Hall’s application to the Tribunal for a review in respect of these years was first filed on 16 October 2008, he is about 10 months out of time in making this application. Leave of the Tribunal is therefore required. Mr Gerard noted that section 57(1) of the Administrative Decisions Tribunal Act 1997 permits the Tribunal to extend the time for the making of an application for review “if the Tribunal is of the opinion that the person has provided a reasonable explanation for the delay in making the application”. Section 57(1A) requires that such an application “must be in writing unless the Tribunal dispenses with the requirement”.

22 Mr Hall said he was late in making his application for review because he was communicating with the OSR. He submitted the variation to his original application for review on the advice of the Tribunal at a Directions Hearing. He had previously been unaware of the existence of the exemptions from Land Tax under section 10(1)(p1) and (r1) of the LTMA and of the implications of this for his Land Tax liability.

23 Mr Gerard referred to the decision in Gessner v Chief Commissioner of State Revenue [2006] NSWADT 26, at [13], where Judicial Member Block referred to the matters relevant to the issue of extending the time for the making an application identified by Wilcox J in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344, at [18]ff:

“18. (a) ... Special circumstances need not be shown [by an applicant for an extension of time] but the Court will not grant the application unless positively satisfied that it is proper so to do ... Indeed it is the prima facie rule that proceedings commenced outside that period will not be entertained ( Lucic v Nolan (1982) 45 ALR 411 at p 416) It is a pre-condition to the exercise of discretion in his favour that the applicant for extension show an "acceptable explanation of the delay" and that it is "fair and equitable in the circumstances" to extend time ...

19. (b) Action taken by the applicant, other than by making an application for review under the Act, is relevant to the consideration of the question whether an acceptable explanation for the delay has been furnished. A distinction is to be made between the case of a person who, by non-curial means, has continued to make the decision maker aware that he contests the finality of the decision (who has not "rested on his rights": per Fisher J in Doyle v Chief of Staff (1982) 42 ALR 283 at p 287) and a case where the decision maker was allowed to believe that the matter was finally concluded ... The reasons for this distinction are not only the "need for finality in disputes" (see Lucic at p 410) but also the "fading from memory" problem referred to in Wedesweiller v Cole (1983) 47 ALR 528.

20. (c) Any prejudice to the respondent including any prejudice in defending the proceedings occasioned by the delay is a material factor militating against the grant of an extension ...

21. (d) However, the mere absence of prejudice is not enough to justify the grant of an extension ... In this context, public considerations often intrude (Lucic, Hickey). A delay which may result, if the application is successful, in the unsettling of other people (Ralkon p 550, Becerra pp 12-13) or of established practices (Douglas p 19) is likely to prove fatal to the application.

22. (e) The merits of the substantial application are properly to be taken into account in considering whether an extension of time should be granted: Lucic p 417, Chapman p 6.

23. (f) Considerations of fairness as between the applicants and other persons otherwise in a like position are relevant to the manner of exercise of the Court's discretion: Wedesweiller at pp 534-535.”

24 I agree that the factors identified by Justice Wilcox are relevant to the issue of whether leave should be granted to extend the time for the making of an application. I note Mr Hall is not legally represented. He states the reason for the delay was that he was previously unaware of the exemptions he now claims under section 10(1)(p1) and (r1) and was communicating with the OSR. I am not satisfied that there is any prejudice to the Respondent by reason of the delay, Mr Hall having paid the Land Tax for which he was assessed as being liable, and there do not appear to be any public considerations or considerations of fairness in issue, except in so far as a party should be able to rely on the finality of a decision once the time for the filing of an appeal has passed. A review of the merits of Mr Hall’s case in relation to the exemptions under section 10(1)(p1) and (r1) that he now claims, his having conceded that he can only support a claim for the PPR exemption in respect of the 2008 Land Tax year, requires an examination of those exemptions and of the facts of this case.

The section 10(1)(p1) exemption claimed

25 The section 10(1)(p1) exemption is in respect of:

(p1) land that is the subject of a conservation agreement under the National Parks and Wildlife Act 1974 , or a trust agreement registered as referred to in section 36 of the Nature Conservation Trust Act 2001 , being in either case an agreement that remains in force in perpetuity,

26 A ‘conservation agreement’ is defined in section 5 of the National Parks and Wildlife Act 1974 (‘NPWA’) as meaning “an agreement entered into under Division 12 of Part 4”. Division 12 deals with conservation agreements and section 69B(1) states, “The Minister may enter into a conservation agreement relating to land with the owner of the land.” I am not satisfied that there is such a conservation agreement in relation to the Woodhill property. Mr Hall referred to section 69KA(1), which states that for the purposes of section 28 of the Environmental Planning and Assessment Act 1979 (‘EPAA’), “a conservation agreement is taken to be a regulatory instrument”, and contended that the instrument that he and his wife signed and which was approved by Shoalhaven City Council in relation to the property in 1981, by which four easements were created, including the easement as to clearance of trees quoted in paragraph 3 above, is such an instrument.

27 Mr Gerard noted that the section 10(1)(p1) exemption did not exist in the original version of the LTMA and was only inserted by legislative amendment with effect from 1 January 1995: State Revenue Legislation (Further Amendment) Act 1994, Schedule 2(2). Moreover, there was no reference to conservation agreements in this exemption as originally inserted at that time. The inclusion of conservation agreements was effected by the Threatened Species Conservation Amendment Act 2002, Schedule 2, clause 2.4 on 31 January 2003. Further, provision for the making of a conservation agreement in the NPWA was not inserted into that Act until 18 November 1987 (when the National Parks and Wildlife (Conservation Agreements) Amendment Act 1987 took effect), after the Council granted Mr Hall the development consent for the Woodhill property in 1981.

28 Mr Gerard said a search of the title of the Woodhill property shows that there is no notation of any such conservation agreement for the property. An easement created pursuant to the Conveyancing Act 1919 is not a conservation agreement.

29 In my view, the Respondent’s submissions on this issue are correct, and the instrument that Mr Hall relies on is not a conservation agreement within the meaning of the NPWA. Rather, it is an instrument creating easements over the property signed by Mr and Mrs Hall and approved by the Council. Thus, I am not satisfied there is merit to Mr Hall’s submission on this issue.

The section 10(1)(r1) exemption claimed

30 The section 10(1)(r1) exemption also claimed by Mr Hall is:

(r1) with respect to taxation leviable or payable in respect of the year commencing on 1 January 1987 or any succeeding year, land approved for multiple occupancy, and occupied, in accordance with an environmental planning instrument within the meaning of the Environmental Planning and Assessment Act 1979

31 In section 4(1) of the EPAA, ‘environmental planning instrument’ is defined as meaning “an environmental planning instrument (including a SEPP or LEP but not including a DCP) made, or taken to have been made, under Part 3 and in force”. A SEPP is a State environmental planning policy, a LEP is a local environmental plan and a DCP is a development control plan. Part 3 of the EPAA deals with environmental planning instruments.

32 Mr Hall contended that the Woodhill property was approved for multiple occupancy by the Council and is the subject of an environmental planning instrument in perpetuity entered into in 1981. Mr Hall referred to the “agreement” that he and his then wife entered into with the Council on 26 May 1981 setting out the terms of the easements and restrictions as to user to be created pursuant to section 88B of the Conveyancing Act 1919. He contended that this is an ‘environmental planning instrument’ to which section 10(1)(r1) applies.

33 Mr Gerard noted that section 10(1)(r1) was inserted in the LTMA by the Land Tax Management Act (Further Amendment) Act 1986, with effect from 31 December 1986, to recognise the growing number of communal developments on a single parcel of land. (See also Revenue Ruling LT 10 Exemption of Land ‘Approved for Multiple Occupancy’, which refers to the growing number of communal developments where groups of people have built a number of houses on a single parcel of rural land.) SEPP No 15, ‘Multiple Occupancy of Rural Land’, published on 22 January 1988, Schedule 1, listed the areas where the SEPP applied. It did not include Woodhill. Mr Gerard submitted that the Woodhill property is not a multiple occupancy property, and is not land approved for multiple occupancy in accordance with an environmental planning instrument.

34 Having reviewed the evidence and legislation, I am not satisfied that the Woodhill property is approved for multiple occupancy. Moreover, with regard to the definition of an environmental planning instrument in the EPAA, I am also not satisfied that an instrument creating an easement pursuant to section 88B Conveyancing Act 1919 is such an instrument. In my view, for the reasons advanced by the Respondent, Mr Hall’s submissions on this issue are without merit.

35 In conclusion, I am not satisfied as to the merit of Mr Hall’s application in respect of the 2004, 2005 and 2006 Land Tax years, and weighing up the other factors referred to by Justice Wilcox, I am not satisfied that there are sufficient grounds to justify exercising the Tribunal’s discretion to extend the time for the making of an application for review. Leave to extend the time for making of an application for review is therefore refused. I note here that even if I had granted leave, in my view Mr Hall has not established that he is entitled to the exemptions in section 10(1)(p1) and (r1) for the 2004, 2005 and 2006 Land Tax years.

The 2008 Land Tax Year

36 Mr Hall claims he is entitled to an exemption from Land Tax for the Woodhill property in respect of the 2008 Land Tax year on the ground that it was his PPR. There is no dispute that the Woodhill property is a parcel of residential land (Schedule 1, clause 2(1)(a)). There is also no dispute that the land had not been continuously used and occupied by Mr Hall for residential purposes since July 1 in the preceding tax year, relevantly 1 July 2007, since it was tenanted until 24 December 2007 (Schedule 1, clause 2(2)(a)). Thus, at issue, is whether clause 2(2)(b) of Schedule 2 is satisfied. Clause 2(2)(b) requires that the Chief Commissioner is satisfied that the land is used and occupied by the person as the person’s principal place of residence.

37 Mr Hall submitted that given the circumstances of his absence from the Woodhill property and his demonstrated intention to use and occupy the property as his PPR, the discretion should be exercised in his favour.

38 The evidence is that Mr Hall did not take possession of the property until 3 January 2008 when he and his wife arrived after a two week holiday in Melbourne. They found the house to be uninhabitable and required extensive cleaning and repairs to be undertaken. This was not completed for some weeks. Mr Hall continued to work in Brisbane and, after moving into the Woodhill property, was spending some of his time there and some of his time in the property he has owned at Kenmore in Queensland since 1998. This is a property for which he claimed a PPR exemption in respect of stamp duty payable on the transfer in 1998.

39 I accept Mr Hall’s evidence that after renting out the Woodhill property in 1999, he had always intended to return to live in the Woodhill property, thinking of it as the place to which he would return while still working part-time, and where, ultimately, he would retire. He obviously invested time and money in the property, lived in and worked on the property over many years and had an affinity for it. However, Mr Hall’s work as a consulting engineer took him away from the property and, it seems, over the years, he was increasingly engaged in working in Brisbane.

40 Mr Gerard submitted that the discretion in clause 2(2)(b) is a very limited one. In Chief Commissioner of State Revenue v Aldridge & Anor [2003] NSWADTAP 50 (‘Aldridge’), at [26], the Appeal Panel, referring to the former section 3(3)(b) of the LTMA, which is in almost identical terms to clause 2(2)(b), said:

“Section 3(3)(b) of the Act does not confer a true discretion on the Chief Commissioner. If the factual circumstances supports that a particular parcel of land or a flat is used and occupied by a person as the person’s principal place of residence (as defined in section 3(1) of the Act) as at midnight on 31 December in a particular year, the Chief Commissioner must be “satisfied” of that fact. If the factual circumstances do not support that a particular parcel of land or a flat is used and occupied by a person as the person’s principal place of residence as at midnight on 31 December in a particular year, the Chief Commissioner cannot be “satisfied” of that fact.”

41 Moreover, as the Appeal Panel stated at [14], “[a] subjective intention to occupy is not alone sufficient to bring a property within section 10(1)(r)”. The requirement for the land to be ‘occupied’ by the person means actual occupation and not merely an intention to occupy.

42 The evidence is that Mr Hall was not occupying the Woodhill property as his PPR on 31 December 2007. Thus, as the Respondent has correctly submitted, the clause 2(2)(b) discretion was not available to Mr Hall.

43 Mr Gerard referred to the section 3(1) definition of PPR (see above) and to a person only having one PPR among his or her one or more places of residence. It matters not where those places residence are located – whether in NSW, Queensland or overseas: Aronstan v Chief Commissioner of State Revenue [2008] NSWADT 8, at [36]. The Respondent also submits that for the purposes of the 2008 Land Tax year, the Kenmore property was Mr Hall’s PPR, referring to the principles used in determining whether a person has used land as their principal place of residence discussed in Chief Commissioner of Taxation v Ferrington [2004] NSWADTAP 41, at [42], and noting that Mr Hall had lived at the Kenmore property for some years.

44 In my view, the fact that Mr Hall was not in occupation of the Woodhill property on 31 December 2007 is sufficient to determine the matter. As was stated in Aldridge, the clause 2(2)(b) discretion is a very limited one and not open to a person where the person was not in actual occupation of the land as at the 31 December in issue. It is unnecessary for me to make a finding about whether the Kenmore property continued to be Mr Hall’s PPR for the purposes of the 2008 Land Tax year, and since this has not been addressed by Mr Hall I decline to do so.

45 In conclusion, I am not satisfied that Mr Hall has established that he occupied the Woodhill property as his PPR on 31 December 2007. Thus, the PPR exemption did not apply to exempt him from liability from Land Tax for the 2008 Land Tax year.

Decision

46 The Land Tax assessments under review are confirmed.