Hayward v Chief Commissioner of State Revenue
[2010] NSWADT 117
•19 May 2010
CITATION: Hayward v Chief Commissioner of State Revenue [2010] NSWADT 117 DIVISION: Revenue Division PARTIES: APPLICANT
RESPONDENT
Brian Hayward and Rochelle De Marco
Chief Commissioner of State RevenueFILE NUMBER: 096045 HEARING DATES: 21 October 2009, 4 May 2010 SUBMISSIONS CLOSED: 4 May 2010
DATE OF DECISION:
19 May 2010BEFORE: Hole M - Judicial Member CATCHWORDS: Extension of time to build - events beyond control of taxpayer LEGISLATION CITED: Land Tax Management Act 1956 CASES CITED: Sagovac v Chief Commissioner of State Revenue (2005) NSWADT 91
Chapman v Chief Commissioner of State Revenue (2009) NSWADT 207
Creamer v Chief Commissioner of State Revenue [2006] NSWADT 272
Reuman v Chief Commissioner of State Revenue [2004] NSWADT 96REPRESENTATION: APPLICANT
RESPONDENT
R De Marco, in person/agent
C Burnett, barristerORDERS: 1.The time for lodgement of the application is extended
2. The decision of the Chief Commissioner dated 12 November 2008 is confirmed
3. The imposition of market rate interest is confirmed.
REASONS FOR DECISION
1 This application is brought by the applicants in relation to a decision of the respondent to disallow the objection of the applicants in respect of an assessment issued on 12 November 2008 assessing land tax for the years 2004, 2005, 2006, 2007 and 2008 in respect of the subject property. The application was filed two weeks out of time.
Facts
2 The applicants purchased the property subject (“the subject property”) of the assessment on 5 August 1999 and development approval was given for the construction of a small timber dwelling on the subject property on 1 September 1999 on a particular site on the subject property.
3 The applicants decided to attempt to build on a different site on the subject property which would require a new application to the Local Council and, due to the topography, an extensive driveway both in length and construction.
4 A new application was made to the Local Council for approval to build the dwelling on the alternate building site. This application was made on 6 April 2000 and the Local Council granted that application on 9 October 2001. This approval was for “erection of a dwelling for use as a dwelling house and a bitumen driveway and associated retaining walls”. The applicants sought a further amendment which was consented to on 8 April 2002. This further amendment was deemed necessary by the Local Council for the provision of extended environmental statements.
5 The applicants resided on the subject property from the time that they purchased the property until December 2002, initially a mobile home was rented and placed on the property followed by the purchase of a caravan. All services were available to the property although not connected.
6 In December 2002 bushfires destroyed the caravan and the applicants were not able to continue to live on the subject property and it was necessary for them to obtain rental property elsewhere.
7 A driveway was being constructed on the subject property and a massive storm event which occurred in October 2003 caused damage to the property and in particular to the driveway construction works.
8 A neighbour commenced legal proceedings on 20 July 2005 and as a result the prolonged and costly legal proceedings which resulted in a verdict against the neighbours also caused serious and unexpected delays to the completion of the residence.
9 The applicants sold their previous family home, which they had lived in for five years, to establish themselves within the district of the subject property and their child attended the local preschool for the kindergarten intake of 2003.
10 Following the massive storm event in October 2003, which caused severe damage to the surfacing of the drive and to the property, the Local Council issued a “post storm cleanup notice” to the applicants. This notice was dated 27 October 2003. A further notice was issued which was then withdrawn and further requirements imposed on the applicants by way of a “sediment stabilisation plan”. Prior to the massive storm event the applicants had provided for the cost of building the dwelling and constructing the driveway.
11 Following the litigation commenced by the neighbour the cost of the litigation caused the applicants financial hardship. The compliance with the Local Council requirements also imposed financial hardship.
12 The applicants sought to sell the property in April 2005 and they appointed a real estate agent. This was not successful and was due to the Local Council notice and the litigation continuing between the applicants and the neighbour in the opinion of the applicants.
13 The driveway was approved in April 2006 by the Local Council and by 19 July 2006 the driveway was sprayed with bitumen.
14 The litigation commenced by the Local Council against the applicants was finalised on 23 August 2006 resulting in a verdict for the applicants.
15 The applicants have not resided at the property since December 2002.
16 The applicants were forwarded a questionnaire by the respondent which was completed and returned to the respondent on 26 August 2008. The applicants claimed an exemption from land tax in that questionnaire on the basis that the land was intended to be used as the applicants’ principal place of residence.
17 The respondent issued a Land Tax Notice of Assessment on 12 November 2008 in respect of land tax years from 2004 to 2008 inclusive and it is from that assessment that this application is brought.
18 The assessment issued on 12 November 2008 also included an imposition of interest which was remitted to being market rate interest only on 12 January 2009.
19 The applicants have claimed that pursuant to Clause 6 Schedule 1A Land Tax Management Act 1956 (“LTMA”) on the basis that they are entitled a concession for unoccupied land intended to be the owners principal place of residence.
20 Clause 6 Schedule 1A LTMA as it was as at 31 December 2003 and 31 December 2004 was amended to a different form applicable as at 31 December 2005, 31 December 2006 and 31 December 2007.
21 From shortly after the date of purchase of the subject property, 5 August 1999, the applicants commenced living in a mobile home on the subject property until October 2000 when the mobile home was moved. They then lived elsewhere between October 2000 and January 2001 when another mobile home was placed on the subject property and they lived there until May 2001. In May 2001 a caravan was placed on the subject property and they lived in that until it was destroyed by bushfire in December 2002.
Applicant’s evidence
22 The applicants relied on the submissions made by the applicants’ representative and the evidence given by her under oath.
23 Ms De Marco was cross examined and she impressed the Tribunal as a forthright and honest person.
24 The applicants’ representative filed documents in the Tribunal which included the following:
Copy of Development approval 1707/99 dated 1.9.1999
Copy of Plan endorsed as at 6 April 2000
Copy of Development amended approval dated 9.10.2001
Copy of Development approval/amendment 8.4.2002
Copy of media material of bushfires December 2002
Copy of media material of storm event/flooding October 2003
Copy of Statement of Claim from neighbour July 2005
Copy of Letter from neighbour to Council 19.8.1999 referring to DA 1707/99
Copy of Driveway plans and photo of new site
Copy of Requests for further environmental statements by letter from Council
Copy of photos of sediment fencing
Copy of photos of site
Copy of quote for cost of dwelling by letter dated 16.12.2002
Copy of photos of driveway works before storm event
Copy of photos of sediment fence at watercourse
Copy of letter from Council after flooding dated 27.10.2003
Copy of letter from Council after flooding dated 29.10.2003
Copy of letter to council requesting re-issue of correspondence undated
Copy from Council sediment stabilisation plan letter dated 24.9.2004
Copy Affidavit by Michael Nash dated 21 July 2006 in Local Court Proceedings ats Modde
Photographs of local sediment deposits
Copy Structural integrity report letter dated 28 April 2004
Copy quote re power poles dated 6.12.2004
Copy of documents relating to costs incurred in dispute with neighbour
Copy letter certifying completion of works to drive
Copy of letters and documents relating to delayed legal proceedings with Modde
Copy documents relating to proceedings with Modde
Copy sales real estate agents brochure for subject property and agency agreement dated 11.4.2005
Copies of rate notice dated 15.12.2000 and of other account notices dated prior to 31.12.2000 forwarded to subject property address
25 The applicants’ representative drew attention to statements signed, unsworn, provided by Brian Daviel Hayward, Eddy DeMarco, Valerie Gwendoline DeMarco, Rosemary Hayward and filed in the Tribunal.
Respondent’s evidence
26 The Respondent filed documents in accordance with Section 58 Administrative Decisions Tribunal Act 1997 which included copies of:
land tax questionnaire forwarded to the applicants on 8 August 2008
completed questionnaire signed on 26.08.2008
letter dated 3.10.2008 from the applicants’ representative
letter dated 12.11.2008 from the respondent to the applicant disallowing the claim sought for exemption
letter dated 8.1.2009 from the applicants’ representative
Attention was drawn to the paragraph in the letter from the applicants’ representative to the respondent dated 8 January 2008 and the comment therein:
”We are not property investors: all we have done is buy land on which we intend to build a modest home when we could afford it”
27 The respondent’s representative cross examined Ms De Marco. During the course of the cross examination Ms De Marco agreed that the Development Application sought in 1999 was not opposed, that they did not take any steps to build in accordance with the approval given as they had changed their minds where they would build. They preferred a more private site on the subject property where it was away from the neighbours. The amendment to the development approval took 18 months. The new proposal was more ambitious and required construction of a long and difficult driveway over steep terrain. Ms De Marco agreed that a deposit had been paid for the framework for the house although there were no contracts entered into with the necessary tradespeople such as a plumber, electrician or carpenter.
Relevant legislation
28 Section 10T Land Tax Management Act 1956 (LTMA), now repealed, was replaced by Clause 6 Schedule 1A LTMA. This Clause provides a concession for unoccupied land intended to be the owner’s principal place of residence in respect of the period from date of purchase:
“Clause 6 Schedule 1A LTMA:
(1) An owner of unoccupied land is entitled to claim the land as his or her principal place of residence , if the owner intends to use and occupy the land solely as his or her principal place of residence . In such a case, the owner is taken, for the purpose of the principal place of residence exemption, to use and occupy the unoccupied land as his or her principal place of residence .
(2) This clause does not apply unless:
(a) the land is unoccupied because the owner intends to carry out, or is carrying out, building or other works necessary to facilitate his or her intended use and occupation of the land as a principal place of residence , and
(b) if those building or other works have physically commenced on the land, no income has been derived from the use and occupation of the land since that commencement, and
(c) the intended use and occupation of the land is not unlawful.(3) This clause applies in respect of the assessment of a person ’s ownership of land only in the period of:
(a) 2 tax years immediately following the year in which the person became owner of the land, or
(b) if the land is used and occupied for residential purposes by a person other than the owner at any time after the person became owner , 2 tax years immediately following the tax year in which the building or other works necessary to facilitate the owner ’s intended use and occupation of the land are physically commenced on the land.(4) The Chief Commissioner may extend the period in which this clause applies if the owner of the unoccupied land demonstrates that:
(a) there is a delay in the completion or, in a case referred to in subclause (3) (b), the commencement of the building or other works necessary to facilitate the owner ’s intended use and occupation of the land, and
(b) the delay is due primarily to reasons beyond the control of the owner .(5) If the principal place of residence exemption applies by operation of this clause to land not actually used and occupied by a person as his or her principal place of residence on a taxing date, that exemption is revoked if the person fails to actually use and occupy the land as his or her principal place of residence by the end of the period in which this clause applies in respect of the assessment of the person ’s ownership of the land and to continue to so use and occupy the land for at least 6 months.
(6) The effect of the revocation is that the principal place of residence exemption is taken not to have applied to the land in respect of any tax year to which, but for the revocation, it would have applied. Land tax liability is to be assessed or reassessed accordingly.
(8) For the purposes of this clause :(7) …..
"unoccupied land" means land that is not being used or occupied for any purpose.”
29 The provisions of Clause 8 Schedule 1A LTMA are also relevant:
“8 Concession for absences from former residence
(1) If the Chief Commissioner is satisfied that:
(a) a person is the owner of land ( "the former residence") that has been used and occupied by the person as his or her principal place of residence for a continuous period of at least 6 months, and
(b) the person uses and occupies other land (whether or not in New South Wales), that is not owned by the person , as his or her principal place of residence ,
the person is taken, for the purpose of the principal place of residence exemption, to continue to use and occupy the former residence as his or her principal place of residence .(3) If the principal place of residence exemption applies to the former residence of a person by operation of this clause , the exemption ceases to have effect if the person is the owner of the former residence at the end of the 6-year period referred to in subclause (2) and fails:(2) The maximum period for which a person may be taken, under this clause , to continue to use and occupy a former residence as a principal place of residence is 6 years starting at the end of the last period (of at least 6 months) during which the former residence was used and occupied by the person as a principal place of residence (not including any period for which the person may be taken, under clause 7 or this clause , to have used and occupied the former residence as a principal place of residence ).
(a) to resume actual use and occupation of the residence as a principal place of residence by the end of that period, and
(b) to continue that use and occupation for at least 6 months.
(4) Any period during which a person is in full time care is not to be counted toward the maximum period referred to in subclause (2). Accordingly, a person who is in full time care may continue to be taken to use and occupy his or her former residence as his or her principal place of residence during any period in which he or she is in full time care.
….”
Applicants’ submissions
30 The applicants’ representative submitted that the circumstances of the delay in building the house on the subject property were beyond the control of the applicants. These circumstances included the fire in 2002, the flood in 2003, the litigation commenced by the Council in 2003 and the litigation commenced by the neighbour in 2005.
31 The applicants’ representative submitted that they had undertaken work towards the building of the home as quickly as possible and that this was delayed by the financial strain of complying with the building of the drive and the continuing litigation.
32 The applicants’ representative submitted that the delay was primarily outside the applicants’ control. That the driveway had been completed in 2006 and that they had confidence that the house would be commenced and completed by December 2010.
Respondent’s submissions
33 The respondent’s representative submitted that in order that a concession may be granted pursuant to the provisions of Clause 6 Schedule 1A LTMA for the Land Tax years 2004 to 2008 inclusive the applicants must intended building to facilitate the intended use and occupation of the subject property as their principal place of residence, that the delay had occurred and was beyond the control of the applicants and that the extension of time was reasonable in the circumstances.
34 The respondents’ representative submitted that viewed objectively the applicants did not intend to use and occupy the subject property as their principal place of residence, there was uncertainty as to what they intended. The delay was not beyond their control as they had obtained Development Approval to build shortly after purchase and then had changed their minds which required a further development Approval. The facts disclose that it was this change of plans that caused the delay beyond the initial 2 years period and then to the time of the first event which was beyond their control being the bushfires of December 2002, being three years and 3 months after purchase.
35 The primary reason for the delay being the decision in early 2000 to move the site of the dwelling. This was a matter of choice of the applicants which had the effect of causing considerable delay even prior to the bushfires, flood and litigation actions which were unfortunate.
36 Where Clause 6(5) Schedule 1A LTMA applies in that the applicants failed to actually use and occupy the subject land prior to the end of the concessional period then the concession is taken to not to have applied to the subject land as set out in Clause 6(6) Schedule1A LTMA.
37 The respondent’s representative referred to Sagovac v Chief Commissioner of State Revenue (2005) NSWADT 91 (“Sagovac”) where the land was purchased in 1999 and the building was not completed as at 2004. The term “beyond the control of” the owner was considered at paragraph 25 and the conclusion drawn that: “there was not a person (other than them) who, or an authority which, had control of the delaying event. “.
38 The history of Section 10T LTMA and Schedule 1A LTMA is set out in Chapman v Chief Commissioner of State Revenue (2009) NSWADT 207 (“Chapman”). Perrignon R JM referred at Paragraph 93 to the requirement for the Applicants to demonstrate that “the delay [was} due primarily to reasons beyond the control of the owner”.
39 The delay identified in Creamer v Chief Commissioner of State Revenue[2006] NSWADT 272 (“Creamer”) was due to the applicant’s personal decision to live with his mother. The applicants in this matter made a personal decision to move the site of the house which required a new development application.
40 The imposition of a market rate of interest is fair in the circumstances as the respondent has not contributed to or caused the default and there are no exceptional circumstances to justify any further remission.
41 In order that the provisions of Clause 8 Schedule 1A apply they must satisfy the Chief Commissioner that the subject property has been used and occupied as their principal place of residence. Attention was drawn to Reuman v Chief Commissioner of State Revenue [2004] NSWADT 96 (“Reuman”) where an exemption was sought in respect of a structure that had not been approved by Council nor had approval been sought. Particularly paragraph 20:
“…To be a residence it must be capable of being resided in, that is a person must be able to live there. To be able to live in the structures, it would be necessary to satisfy the requests of the State and local governments in respect of a structure that is to be lived in as a residence….”
Approval of the local council to the structure, as one capable of being lived in, is required to enable a person to reside in the structure. The Council had not given approval to the two mobile homes or caravan to be used an occupied as a residence on the subject property.
Reasons for decision
42 The applicants purchased the subject property in August 1999 with the intention to construct a dwelling on the land and live there as their principal place of residence. They obtained Council’s consent to construct a dwelling on the subject property on 1 September 1999 on a particular site on the subject property.
43 The applicants chose to seek approval to construct a dwelling on an alternate site on the subject property and applied to the Council for consent to do so. Council’s consent was given on 9 October 2001. This consent was subject to various conditions including particular conditions as to the construction of an extensive driveway.
44 The applicants resided on the subject property from shortly after the time of purchase initially in a rented ‘mobile home’ placed on the subject property followed by a caravan and subsequently in another mobile home. There was no evidence of Council’s approval to the applicants living on the subject property in the mobile homes or caravan. Services were available to the subject property, there is no evidence of connection to those services.
45 A series of disasters then affected the subject property with serious consequences for the applicants. A bushfire raged through the subject property in December 2002 and the caravan that they were living in at that time was destroyed. In October 2003 a massive storm event occurred in the locale of the subject property which damaged the subject property and the driveway construction works.
46 The Council initiated a prosecution against the applicants in 2003 requiring a clean up of the storm damage. This litigation was finalised in 2006 resulting in a verdict for the applicants.
47 A neighbour launched a legal claim against the applicants in 2005 concerning alleged damage resulting from flow off from the storm in 2003 onto that neighbours property. The applicants successfully defended this action at considerable cost and incurring delay to proceeding with construction work. This litigation was finalised in 2006.
48 After the fire in 2002 the applicants lived elsewhere, sometimes in the vicinity of the subject property and at other times further away. In 2005 they attempted to sell the subject property, however the property was not sold and the applicants believe that this was on account of the ongoing litigation.
49 The respondent has, by notice dated 12 November 2008, assessed land tax on the subject property for the years 2004 to 2008 inclusive and it is from that decision that this application is made.
50 The application was filed out of time by a short period. The respondent has not opposed nor consented to the application to extend the time in which to apply for a review.
51 The evidence discloses that the applicants were living on the property without formal consent from the Council up to December 2002. After that time they have not lived on the property.
52 At the time of purchase in August 1999 they had intended to use the subject land as their principal place of residence following carrying out of building works to facilitate their intended use and occupation. There was Council approval to the building of a dwelling obtained shortly thereafter. The applicants then decided to seek a different approval which was subject to conditions that were onerous. This second approval was obtained on 9 October 2001.
53 The residence has not been built at the date of the hearing.
54 Initially the applicants sought an exemption relying on Clause 6 Schedule 1A LTMA, and an extension of the time limit in Clause 6(3) Schedule 1A LTMA due to the overwhelming events referred to. Following the part hearing on 21 October 2009 the applicants sought to include reliance on the provisions of Clause 6(8) Schedule 1A LTMA for exemption from assessment.
55 The evidence discloses that the applicants were affected by circumstances beyond their control during December 2002 and then in October 2003.
56 The exemption from land tax assessment provided in Section 10T LTMA available up to August 2001, being 2 years after the date of purchase of the unoccupied land, had expired long before the circumstances of December 2002 and October 2003. Like wise the financial hardship created by the litigation with the neighbour and the Council commenced in 2005 and 2003 occurred after the expiry of the 2 years.
57 The delay after August 2001 was caused by the applicants’ decision to move the site for the house which then required a new development application to be made to the council. This was a decision entirely within the control of the applicants and was the cause of the delay.
58 The mobile homes and caravan were not approved by the Council to be used and occupied as a residence and accordingly Clause 8 Schedule 1A does not apply for the purposes of residing in.
59 The rate of interest applied by the respondent should not be varied as the respondent did not contribute to the default and there are no exceptional circumstances that would warrant it.
Orders
1. The time for lodgement of the application is extended.
2. The decision of the Chief Commissioner dated 12 November 2008 is confirmed.
3. The imposition of market rate interest is confirmed.
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