HOMISAN and COMMISSIONER OF STATE REVENUE - [2011] WASAT 22

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: FIRST HOME OWNER GRANT ACT 2000 (WA)

CITATION: HOMISAN and COMMISSIONER OF STATE REVENUE [2011] WASAT 22

MEMBER: JUSTICE J A CHANEY (PRESIDENT)

HEARD: DETERMINED ON THE DOCUMENTS

DELIVERED : 7 FEBRUARY 2011

FILE NO/S: CC 2006 of 2009

BETWEEN: MARTIN HOMISAN
BIBIANA HOMISAN
Applicants
AND
COMMISSIONER OF STATE REVENUE
Respondent

Catchwords:

First home owner grant - Residence requirement - Meaning of expression 'principal place of residence - Whether house occupied as principal place of residence

Legislation:

First Home Owner Grant Act 2000 (WA), s 8, s 8(1), s 13, s 13(1), s 14(1)(b), s 14(6)(b), s 21, s 21(5), s 29(2), s 51, s 51(1)(b)
Social Security Act 1947 (Cth)
Stamp Act 1894 (Qld)

Result:

The application is dismissed

Category: B

Representation:

Counsel:

Applicants: Self-represented
Respondent: Ms K Dodd

Solicitors:

Applicants: N/A
Respondent: State Solicitor's Office

Case(s) referred to in decision(s):

Bates v Chief Commissioner of State Revenue [2004] NSWADT 13 (19 February 2004)
Calcaro and Chief Commissioner of State Revenue, [2004] 56 ATR 560; [2004] NSWADT 158
Deane v Commissioner of Stamp Duties [1996] 2 Qld R 557
Guthrie and Commissioner of State Revenue, Re (2004) 57 ATR 389; [2004] VCAT 2009
Hafza v Director-General of Social Security [1985] 60 ALR 674

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The applicants sought to set aside a decision of the Commissioner of State Revenue requiring them to repay first home owner grant of $10,000 together with a penalty of $2,000. The repayment was based upon the Commissioner's contention that Mr and Mrs Homisan had failed to fulfil the residency requirements contained in the First Home Owner Grant Act 2000 (WA) at the relevant time. The requirement was that the applicant must occupy the home to which the application relates as the applicant's principal place of residence within 12 months after completion of the eligible transaction. The Commissioner acknowledged that Mr and Mrs Homisan had briefly occupied the home, but contended they had not done so as their principal place of residence.
The Tribunal examined the meaning of the expression 'principal place of residence', and the evidence as to the nature of the applicant's occupation of the home. It concluded that Mr and Mrs Homisan had not occupied the house as their principal place of residence, and accordingly affirmed the decision of the Commissioner to require repayment of the grant and the penalty.

The issue

On 3 March 2006, the Commissioner of State Revenue (Commissioner) gave notice to Mr Martin Homisan and Ms Bibiana Homisan pursuant to s 51(1)(b) of the First Home Owner Grant Act 2000 (WA) (FHOG Act) requiring them to repay a grant of $10,000 and pay a penalty of $2,000 which had been imposed under s 21(5) of the FHOG Act. At the relevant time, the FHOG Act imposed a residence requirement on applicants for first home owner's grant by s 13(1) which read:
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 within 12 months after completion of the eligible transaction or a longer period approved by the Commissioner.
The notice under s 51 given by the Commissioner was based on the Commissioner's contention that Mrs Homisan had not occupied the home, which was the subject of a grant to them, as their principal place of residence within 12 months after completion of the building contract which constituted the relevant eligible transaction.
Mr and Mrs Homisan disputed that conclusion, and contended that they did occupy the home as their principal place of residence for a period of approximately three weeks in mid2003, after they took possession of the home from the builder.
The issue for determination in this case is whether or not Mr and Mrs Homisan did occupy the home as their principal place of residence as they assert.

Background facts

On 24 February 2000, the applicants entered into a contract to purchase (Lot 324), Summerville Drive, College Grove, Bunbury (Bunbury property). At that stage the land was vacant. On 1 March 2000, they became the registered proprietors of the Bunbury property.
On 5 December 2001, Mr Homisan was notified of his appointment as a business development officer for the central and north Burnett district of the Bundaberg region in Queensland. His starting date was specified as early January 2002, and the appointment for an initial period of 12 months with possible extension based on successful performance and continued funding support. He and Mrs Homisan moved to Queensland to take up that appointment. Mr Homisan's employment was extended for a further 12 month period in January 2003 and records of the Australian Taxation Office indicate that he remained employed by the same organisation until at least the financial year 2006. That is contrary to an assertion made by Mr Homisan in a letter to the Commissioner dated 28 January 2010 in which he says that the Queensland government undertook significant changes to the scheme under which he was employed in Queensland, and as a result his job, principally funded by the Queensland government, had been terminated. He does not, in that letter, say when his job was terminated, but the other documents submitted to the Tribunal suggest, and I find, that his employment continued until at least the end of 2003 which, for present purposes, is the relevant period.
After moving to Queensland in early 2002, Mr and Mrs Homisan entered into a residential lease of a property at 43 Elizabeth Street, Mundubbera, Queensland (Queensland property) for an initial period of 10 months commencing 16 February 2002 (Queensland property).
On 24 June 2002, the applicants entered into a contract to build a home on the Bunbury property. A short time later on 4 July 2002, they applied for a first home owner grant in relation to the property, and the grant was approved and paid to the applicants on 12 August 2002. In the meantime, on 2 August 2002, construction of a home pursuant to the construction contract commenced.
On 16 December 2002, the initial term of the applicant's lease of the Queensland property expired. A letter from the then owner of the Queensland property obtained by the Commissioner states that after the expiry of the initial fixed term, Mr and Mrs Homisan continued to occupy the property on the basis that the tenancy could be terminated on two weeks notice by either party. It is not clear from the papers before the Tribunal precisely how long that arrangement continued. According to the Commissioner's statement of issues facts and contentions, the applicants continued to occupy the Queensland property under a periodic tenancy until May or June 2004. A number of documents are referred to to support that proposition. The only document dated May or June 2004 is a bond lodgement form in relation to a tenancy of a property at 11 Elizabeth Street, Munduberra which suggests that, at least by 23 May 2004, Mr and Mrs Homisan had taken a tenancy of a different property. Whether they had remained at the Queensland property up until that time is not, however, apparent. Mr and Mrs Homisan do not specifically respond to the facts asserted in the statement of issues facts and contentions, and notably, they do not deny the Commissioner's assertion.
One of the documents relied upon by the Commissioner in relation to the period of the Queensland property tenancy is an application to Australia Post, apparently signed by Mrs Homisan and lodged with Australia Post on 15 July 2003 seeking to readdress any mail addressed to the property to the Queensland Property for a three month period from 21 July 2003 to 21 October 2003.
In a statutory declaration signed by Mr Homisan in August 2005 he says:
Immediately prior and after residing in Bunbury, we lived in 43 Elizabeth Street, Mundubbera.
Having regard to all of the material before the Tribunal, and in the absence of any contrary assertions by the applicants in any of the documents, I am satisfied that the tenancy of the Queensland Property by the applicants extended from 16 February 2002 until at least the end of October 2003.
According to a facsimile from Mr Homisan to the Office of State Revenue dated 11 April 2005, Mr and Mrs Homisan encountered problems with their builder in the period from August to December 2002. There were substantial delays in completion of the building. In March 2003, Mrs Homisan travelled overseas for family reasons. At the beginning of May 2003, the builders sought to hand over the property. However, Mr Homisan declined to take possession whilst his wife was overseas. Mrs Homisan returned in June 2003, and Mr Homisan said in his facsimile on 27 June 2003:
We were forced to sign handover documentation despite our reservations and the fact that the house had numerous defects and deviations from agreed design. That made us highly emotionally unstable because our first house project in our lives was a complete failure.
It is not in dispute that, following the handover of the Bunbury property by the builder, Mr and Mrs Homisan and their son stayed in the newly constructed house for a few weeks. Precisely how long is not entirely clear. What is clear is that, on 14 July 2003, Mr and Mrs Homisan signed a listing authorisation with a real estate agent for the sale of the Bunbury property. Under the heading 'Viewing Arrangements' the form notes the property as 'Vacant'. A comment on the listing authority is 'Brand New Home'.
The mail redirection request to Australia Post seeks redirection of all mail addressed to Mr or Mrs Homisan or their son as from 21 July 2003. The request was lodged on 15 July 2003. It is reasonable to conclude that Mr and Mrs Homisan vacated the property no later than 21 July 2003.
On 6 August 2003, an offer for purchase of the property was received and accepted by Mr and Mrs Homisan. According to enquiries made by the Commissioner's investigators, the owner who purchased the property considered that he was purchasing a new home which had not previously been lived in. Settlement of the sale occurred on 15 September 2003.
It is apparent that, in the period between 27 June 2003 up until possibly as long as 21 July 2003, Mr and Mrs Homisan lived in the property and carried out certain works on it. They also purchased some items of furniture. Those activities are relied upon by Mr and Mrs Homisan as demonstrating that they occupied the property as their principal place of residence during that period.
The documents produced by Mr and Mrs Homisan show that, on 30 June 2003 they made a domestic refuse bin application to the City of Bunbury for the property. They had obtained a certificate of insurance for the property on 20 June 2003, although the certificate was addressed to a post office box number in Munduberra, Queensland. A Water Corporation account issued in August 2003 was directed to Mr and Mrs Homisan at the property address, as was an invoice for delivery of fill sand dated 10 July 2003, an invoice for paving bricks which was undated, and a quotation for supply and laying of carpet at the address dated 3 July 2003. Mr and Mrs Homisan produced an invoice for the purchase of a folder bed and two pillows from a store in Bunbury on 28 June 2003, other hardware store invoices for a letter box and numerals, a trestle table and a garden shovel, an invoice for a camp mattress airbed, a portable stove and three folding chairs, dated 3 July 2003, an invoice dated 30 June 2003 for a foam mattress and a sleeping bag, and an invoice for a card table and various laundry items dated 28 June 2003.
In addition, the applicants produced their driving licences showing expiry dates in early 2005 in each case showing the Bunbury property as their address.

Relevant provisions of the FHOG Act

The FHOG Act sets out certain criteria for eligibility for a first home owner grant. A grant is payable on an application if each of the applicants complies with the eligibility criteria and the transaction for which the grant is sought is an eligible transaction that has been completed: s 8(1).
The only eligibility criterion in issue in this case is that provided for by s 13, being criterion 5 residence requirements. The residence requirement (at the relevant time) is set out above.
An eligible transaction includes a comprehensive building contract made on or after 1 July 2000 by the owner of the land: s 14(1)(b). The commencement date of an eligible transaction is, in the case of a building contract, the date when the laying of foundations for the home begins. The eligible transaction is completed when the building is ready for occupation as a place of residence: s 14(6)(b).
The Commissioner may authorise payment of a grant in anticipation of compliance with the residence requirement: s 21(1). In that event, payment is made on condition that, if the residence requirement is not complied with, the applicant must within 14 days after the relevant date give notice of that fact to the Commissioner and repay the amount of the grant: s 21(2). The relevant date means the earlier of the dates on which the period allowed for compliance with the residence requirement ends, or the date upon which it first becomes apparent to the applicant that the residence requirement will not be complied with within that period: s 21(3).
Pursuant to s 21(5), the Commissioner is empowered to impose a penalty if an applicant does not repay a grant as required under s 21(2). The penalty must be not more than the amount the applicant is required to pay.

Occupying as principal place of residence

Section 13 did not, at the relevant time, specify a minimum period for which the home must be occupied to satisfy the residence requirement. That position has subsequently been changed by amendment to s 13 to impose a required residence period of at least six months or a shorter period if approved by the Commissioner if, in his opinion, there are good reasons why the six month period cannot be complied with. That amendment was made after the events relevant to this application, and thus can be ignored for present purposes.
The Commissioner concedes that the applicants resided in the property for a short period of time and therefore 'occupied' the property. The issue is whether they did so as their principal place of residence. The expression 'principal place of residence' is not defined by the FHOG Act. It is therefore necessary to establish the meaning of that expression.
The concept of residence has been the subject of a number of decisions in various contexts. In Hafza v Director-General of Social Security [1985] 60 ALR 674 Wilcox J considered the expression 'usual place of residence' in the context of the Social Security Act 1947 (Cth). In relation to the concept of residence, he said:
As a general concept residence includes two elements: physical presence in a particular place and the intention to treat that place as home; at least for the time being, not necessarily forever. The concept was explained in a taxation case, Koitaki Para Rubber Estates Ltd v FC of T (1941) 64 CLR 241 at 249, by Williams J: "The place of residence of an individual is determined, not by the situation of some business or property which he is carrying on or owns, but by reference to where he eats and sleeps and has his settled or usual abode. If he maintains a home or homes he resides in the locality or localities where it or they are situate, but he may also reside where he habitually lives even if this is in hotels or on a yacht or some other abode."
Physical presence and intention will coincide for most of the time. But few people are always at home. Once a person has established a home in a particular place, even involuntarily (see Inland Revenue Commissioners v Lysaght [1928] AC 234 at 248 and Keil v Keil [1947] VLR 383) a person does not necessarily cease to be resident there because he or she is physically absent. The test is whether the person has retained a continuity of association with the place (Levene v Inland Revenue Commissioners [1928] AC 217 at 225 and Judd v Judd (1957) 75 WN (NSW) 147 at 149) together with an intention to return to that place and an attitude that that place remains "home" (see Norman v Norman (1969) 16 FLR 231 at 236). It is important to observe, firstly, that a person may simultaneously be a resident in more than one place see the facts of Lysaght and the reference by Williams J to "a home or homes" and, secondly, that the application of the general concept of residence to any particular case must depend upon the wording, and underlying purposes, of the particular statute in relation to which the question arises. But, where the general concept is applicable, it is obvious that, as residence of a place in which a person is not physically present depends upon an intention to return and to continue to treat that place as "home", a change of intention may be decisive of the question whether residence in a particular place has been maintained.
The applicants drew attention in their submissions to Wilcox J's observations that a person may reside in more than one place and the fact that the person does not necessarily cease to be resident in a place because he or she is physically absent. Those observations must, of course, be read in the context that Wilcox J was discussing, namely in the context of the concept of residence. He went on however, to consider whether, the context of the Social Security Act 1947 (Commonwealth), the phrase 'usual place of residence', should be construed as synonymous with 'resident' in the sense he had referred to. He concluded that the expression 'usual place of residence' would be interpreted differently from the word 'resident' in the cases to which he had made reference and that:
Moreover, the reference is to "his usual place" of residence, the suggestion being that there is only one place which answers that description in relation to any particular endowee. So interpreted the paragraph is more restrictive than the general legal concept of residence, which concept encompasses the possibility that a person may be resident simultaneously in more than one place.
The expression used in the FHOG Act is 'principal place of residence'. The use of the word 'principal' more strongly suggests, in my view, that the expression should be interpreted as being restricted to only one place of residence. The ordinary meaning of principal when used as an adjective is 'most important; main' (Compact Oxford English Dictionary, (3^rd ed.)) or 'first or highest in rank, importance, value etc.: chief; foremost' (Macquarie Dictionary (4th ed.)). Principal place of residence is thus the main or most important residence of the grantee.
In the context of first home owner grant legislation in New South Wales and Victoria, the expression 'principal place of residence' has been the subject of discussion in decisions of the Administrative Disputes Tribunal in New South Wales, and the Victorian Civil and Administrative Tribunal in Victoria.
In Bates v Chief Commissioner of State Revenue [2004] NSWADT 13 (19 February 2004), (Bates) the Tribunal referred with approval to observations by Fryberg J in Deane v Commissioner of Stamp Duties[1996] 2 Qld R 557 a case concerning relief from the imposition of stamp duty under the Stamp Act 1894 (Qld) in respect of a person's principal place of residence. Fryberg J considered that:
… the word "principal" in the definition allows a wide range of factors to be taken into account, and also implies an objective test of what is the principal place of residence. That is not to say that the intention of the person acquiring the residence is not relevant. Indeed, Mr Logan for the Commissioner conceded that intention could be taken into account as a factor in the assessment. It seems to me that intention is relevant, but not dominant.
…

At [39] the Tribunal said:
Although the legislative provisions considered in the abovementioned cases differ to that which is contained in the Act that is the subject of this application, the following principles of general application also apply in this application:
(a) The terms "occupy" and "principal place of residence" should be given their ordinary meaning having regard to the objects and purposes of the Act. That purpose being similar to the abovementioned tax rating cases in that the legislative scheme of the Act is to provide first home owners some relief towards the cost of purchasing their first home. Accordingly, in the context of this Act, in my opinion, "occupy" means to reside in the property. However, that residence must also be such that it is the person's "principal" place of residence or to use the terms of the title of the legislation, the persons "home". This is my opinion, requires the occupation to be ongoing and involves an element of permanence;
(b) Whether an applicant has "occupied" the property as his/her "principal place of residence", as prescribed under the Act, is a question of fact that is to be assessed objectively having regard to all the circumstances. The intention of the applicant is relevant but it is not determinative of the issue. Nor is the fact that the applicant resided in the property for a short period of time during the relevant period. These matters, if established, must be considered in light of all the evidence including, where the applicant resided otherwise during the relevant period, the reasons given by the applicant for not residing or continuing to reside at the property, whether the reasons for not residing at the property were as a result of matters entirely out of the control of the applicant and the nature of the applicant's residence at the property. This list is by no means exhaustive as each case must be considered in the context of its own particular facts.
In my view, the approach described by the Tribunal in Bates correctly states the proper approach to the test to be applied for the purposes of the FHOG Act. That approach has been consistently adopted in subsequent decisions of the New South Wales Administrative Disputes Tribunal, see (Calcaro and Chief Commissioner of State Revenue, [2004] 56 ATR 560; [2004] NSWADT 158) and the Victorian Civil and Administrative Tribunal, see (Guthrie and Commissioner of State Revenue, Re (2004) 57 ATR 389; [2004] VCAT 2009).

Onus of proof

Section 29(2) of the FHOG Act provides that the onus of establishing that the decision on an objection was incorrect lies on the objector. In a review by this Tribunal of the decision on the objection, the same onus applies. Thus the burden lies on the applicants to establish by evidence that they occupied the Bunbury property as the principal place of residence.

Mr and Mrs Homisan's principal place of residence

In my view, the evidence does not support the conclusion that, during the brief period that they occupied the property, Mr and Mrs Homisan did so as their principal place of residence. It is not in dispute that they occupied the Queensland property immediately before and immediately after the period of occupation of the property. There is no suggestion that they did not maintain their tenancy, nor their right of occupation of the Queensland property throughout the time that they occupied the Bunbury property. At the time, Mr Homisan was the sole breadwinner of the family and his employment in Queensland, which required his presence in Queensland, continued throughout 2003.
It is thus apparent that, when Mr and Mrs Homisan came to Perth to take possession of the property, they took no significant steps to cut their ties with Queensland. Mention is made in the papers of a garage sale being held prior to Mr Homisan's travelling to Bunbury, but there is no detail as to the nature of that sale. In the absence of evidence to the contrary, it must be inferred that the Queensland property was retained with its furnishings during Mr and Mrs Homisan's brief time in Bunbury. It was, in my view, their principal place of residence at the time, even though they were temporarily absent from it.
The various items purchased by Mr and Mrs Homisan during the time that they were in Bunbury do not suggest any element of permanence associated with their occupation of the property. To the extent that work was done on the property such as paving, that work was equally consistent with simply finishing off the construction of the property which would enhance its ultimate sale.
The fact that, at some point which is not entirely clear, Mr and Mrs Homisan had driver's licences showing the property as their residential address does not take that as much further. It is a factor which might be relevant to a determination of where Mr and Mrs Homisan's principal place of residence was, but it is certainly not determinative of the question. The question is to be determined having regard to all of the aspects of their occupation of the home, as a matter of fact. The fact that the property was given as the address in Western Australia for the purpose of Western Australian driving licences does not, of itself, prove anything as to the location in fact of their principal place of residence.
The evidence suggests that Mr and Mrs Homisan took possession of the property from the builder reluctantly. They moved in briefly and did some work on the property. They purchased a few items of furniture such as a folding bed, card table and folding chairs, but it appears that the property was otherwise unfurnished. Those furnishings do not suggest an intention to remain in the property as a principal place of residence. Within three weeks of taking possession, authority had been given to an agent to sell the property (as a vacant, brand new house), and within a week of that, Mr and Mrs Homisan returned to Queensland to the house they had occupied for some 18 months and where Mr Homisan had his employment.
Mr and Mrs Homisan said in documents before the Tribunal that during their time in Bunbury, they had made enquiries as to the schooling in Bunbury for their child. No particulars of the extent or timing of those enquiries are given. Mr Homisan also asserts that he made enquiries as to possible employment in Bunbury. Accepting those assertions as correct, they do not, in my view, lead to a conclusion that the Bunbury property was the principal place of residence of Mr and Mrs Homisan during the time that they occupied it. It might well be that, at the time they entered the occupation of the Bunbury property, they were actively considering the possibility of relocating to Bunbury and making the Bunbury property their principal place of residence. Mr Homisan's suggestion that he placed the Bunbury property on the market simply to see what might happen is consistent with the possibility that they may have elected to make Bunbury their home if the property had not sold. However, when an offer was received within three weeks of the property being marketed, Mr Homisan said 'we grabbed this offer with both hands' (see facsimile from Mr Homisan to Office of State Revenue dated 11 April 2005).
In those circumstances, while the possibility that the property may have become their principal place of residence may have been in Mr and Mrs Homisan's mind in early July 2003, in all the circumstances they were not occupying the house on that basis in the period from 27 June 2003 to 21 July 2003.
It follows that Mr and Mrs Homisan were liable to give notice to the Commissioner upon signing the contract for sale of the property that the residence requirement had not been met, and to repay the amount of the grant. The decision of the Commissioner to require that repayment should thus be affirmed, and the application for review of that decision dismissed.

Penalty

The respondent imposed a penalty pursuant to s 21(5) which empowers the Commissioner to charge a penalty that does not exceed the amount that the applicant is required to repay. In this case, the amount required to be repaid is $10,000.
The applicant's submission does not seek specifically to challenge the imposition of a penalty, but rather focused upon whether repayment should be required at all. The penalty has been imposed in accordance with the respondent's internal policy in relation to penalties associated with first home owner grant matters. The existence of an internal policy is desirable for the purpose of administrative consistency. The policy is expressly flexible to take into account exceptional or unusual circumstances. There is nothing suggested in the material before the Tribunal to depart from the usual penalty in cases where there is no evidence of intentional or deliberate misleading of the Commissioner. Accordingly the Commissioner's decision to impose a penalty of 20% should be affirmed.

Orders

1.The application is dismissed.

I certify that this and the preceding [46] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
JUSTICE J A CHANEY, PRESIDENT