JOHNSTON AND COMMISSIONER FOR ACT REVENUE
[2007] ACTAAT 18
•20 August 2007
AUSTRALIAN CAPITAL TERRITORY
ADMINISTRATIVE APPEALS TRIBUNAL
CITATION:JOHNSTON AND COMMISSIONER FOR ACT REVENUE [2007] ACTAAT 18 (20 AUGUST 2007)
AT07/14
Catchwords: First Home Owner Grant – failure to comply with condition that applicant occupy property as principal place of residence within one year after completion of purchase – principles to be applied in determining whether applicant satisfied residence requirements – considerations relevant to determination of penalty.
Administrative Appeals Tribunal Act 1989, s 37
First Home Owner Grant Act 2000, ss 12, 13, 20, 23, 25, 26, 31, 47, 48
First Home Owner Grant Amendment Act 2003 (repealed), s 12
First Home Owner Grant Act 2000 (NSW)
Bartholomeusz and ACT Gambling & Racing Commission [2007] ACTAAT 17 (13 August 2007)
Bates v Chief Commissioner of State Revenue [2004] NSWADT 13
Calcaro v Commissioner for State Revenue [2004] NSWADT 158
Chief Commissioner of State Revenue v Ferrington [2004] NSWADT AP 41 (24 September 2004)
Gaines and Secretary, Department of Health, Housing and Community Services (unreported, AAT, 30 June 1992, No. W91/5)
Goon v Chief Commissioner of State Revenue [2007] NSWADT 17
Greig v Chief Commissioner of State Revenue [2006] NSWADT 146
McKellar v Chief Commissioner of State Revenue [2005] NSWADT 116 (26 May 2005)
Taskovski and Commissioner for ACT Revenue [2007] ACTAAT 11 (25 May 2007)
Tomasian v Chief Commissioner of State Revenue [2004] NSWADT 37
Tribunal:Mr M H Peedom, President
Date:20 August 2007
AUSTRALIAN CAPITAL TERRITORY )
ADMINISTRATIVE APPEALS TRIBUNAL ) NO: AT07/14
GENERAL DIVISION )
RE: HAYDEN JOHNSTON
ApplicantAND: COMMISSIONER FOR
ACT REVENUE
Respondent
DECISION
Tribunal : Mr M H Peedom, President
Date : 20 August 2007
Decision :
The decision under review is varied as follows:
(i)the decision to impose interest in the sum of $2,002.08 is varied by specifying “interest calculated in accordance with section 48(3)(a) and section 48(4) of the First Home Owner Grant Act 2000” as the amount of interest which the applicant is liable to pay and by adopting the date referred to in section 20(3)(a) as the “relevant date”; and
(ii)by deleting $5,250 and substituting the sum of $700 as the amount of penalty payable by the applicant.
…………………………..
President
AUSTRALIAN CAPITAL TERRITORY )
ADMINISTRATIVE APPEALS TRIBUNAL ) NO: AT07/14
GENERAL DIVISION )
RE: HAYDEN JOHNSTON
ApplicantAND: COMMISSIONER FOR
ACT REVENUE
Respondent
REASONS FOR DECISION
20 August 2007 Mr M H Peedom, President
The decision under review
This appeal was made against decisions of a delegate of the respondent, the Commissioner for ACT Revenue, given on 22 September 2006 pursuant to provisions of the First Home Owner Grant Act 2000 (“the Act”). One of the decisions, made pursuant to section 23 of the Act, was to reverse a decision to approve an application by the applicant for a grant of $7,000 under the Act. The delegate also made decisions, pursuant to section 47 of the Act, to require the applicant to repay the grant and to pay a penalty of $5,250 and, pursuant to section 48 of the Act, to pay interest of $2,002.08.
Background
2. The following is a chronology of the undisputed facts in relation to the matter.
3. On 17 July 2003 the applicant exchanged contracts to purchase a residential apartment property at 6/99 Canberra Avenue, Griffith (“the property”). He was then aged 18 years. On 15 August 2003 the applicant’s purchase of the property settled and title was transferred to his name.
4. The property was purchased subject to an existing tenancy. On 27 October 2003 the applicant advised the ACT Revenue Office that the property was tenanted. The applicant allowed the tenancy to run its course until 5 April 2004 when the applicant wrote to the agent managing the property, Maloney’s, and advised them of his intention to occupy the property upon its expiry on 7 May 2004.
5. On 8 May 2004 Maloney’s wrote to the applicant and advised him that they had given the tenant 4 weeks’ notice to vacate and that the tenant’s final day of occupation would be 6 June 2004.
6. On 18 May 2004 the applicant applied for a grant under the Act and, in the application, stated that he would be occupying the property as his principal place of residence within 12 months of either settlement or completion of construction. His intended date of occupancy of the property was stated as 8 June 2004. The applicant nominated his parents’ home at 25 Kater Close, Macarthur, ACT as his then residential address for the purposes of his application.
7. On 19 May 2004 the application was approved and the grant of $7,000 was paid into the applicant’s nominated account.
8. On 8 June 2004 the applicant obtained the keys from Maloney’s and connected the electricity at the property in his name at that address.
9. On 19, 23 and 26 June 2004 the property was advertised for rental in ‘The Canberra Times’ newspaper. On 26 June 2004 one of the persons who responded to the advertisements in ‘The Canberra Times’ filed a bond lodgement form with the Office of Rental Bonds and identified 26 June 2004 as the date of commencement of his tenancy of the property. The tenant had the electricity connected at the property in his name on 29 June 2004.
10. The applicant took a vacation at Perisher Valley, New South Wales, from 23 to 26 June 2004. On his return from the vacation on 26 June 2004 the applicant moved out of the property and back into his parents’ home.
11. By letter dated 3 November 2005 the respondent advised the applicant that it was intended to conduct a review of the approval of the grant and requested him to complete a statutory declaration providing details of his occupation of the property.
12. On 16 November 2005 the applicant made a statutory declaration as requested and forwarded it to the respondent. In it he stated that he had occupied the property as his principal place of residence from 8 June 2004 and departed on 26 June 2004. On 24 November 2005 the respondent wrote again to the applicant stating that a statutory declaration had not been received. On 30 November 2005 an officer of the respondent telephoned the applicant regarding his response and was informed he had forwarded the statutory declaration to the respondent. On 1 December 2005 the applicant made another statutory declaration and forwarded it to the respondent. He stated in it that he took up residence in the property on 8 June 2004 and vacated it on 25 June 2004 due to financial difficulties.
13. On 22 September 2006 the delegate of the respondent decided that the applicant was to repay the grant, as he did not satisfy criterion 5 of the eligibility criteria in Division 2.2 of the Act (set out below). The decision also imposed a penalty of 75% of the amount of the grant ($5,250.00) and required interest of $2,002.08 to be paid. The total amount, due and payable by 22 October 2006, was $14,252.08. On the applicant’s instructions, an objection was lodged with the respondent on 16 November 2006. On 27 March 2007 the applicant was advised that his objection was unsuccessful and the reasons on which the respondent’s decision was based.
14. On 26 April 2007 the applicant lodged with the Tribunal his notice of application for review of decision.
The hearing
15. At the hearing of the appeal the applicant was represented by Ms R Nicholas, a legal practitioner, and the respondent was represented by Ms L Donohue, of counsel. Evidence was given by the applicant and on his behalf by Mr Ian Johnston and Ms L Hadfield. A written statement of Mr G Bustamante was admitted in evidence on behalf of the respondent. The Tribunal had before it documents tendered in evidence on behalf of the parties and the documents lodged with the Tribunal by the respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1989 (“the T documents”).
16. The applicant gave evidence that in about March 2003 he started looking to purchase a property as a means of saving money. He was then aged 17 years and earning a salary of $40-45,000. He approached a mortgage broker and was advised that if he got a property that was already rented he could get a loan. He believed he could afford to purchase a property up to a purchase price of around $230,000 as it had been indicated to him that his contract of employment would be renewed and his salary increased as he gained more experience in the industry. He understood the need for a tenant to obtain the loan initially but was not concerned about paying the repayments himself once the tenancy came to an end. The terms of the loan he obtained required that he pay as a deposit 10% of the purchase price of $228,000. He paid the deposit from funds received on the sale of a number of assets, a gift from his parents and personal savings. He said that he used the First Home Owners Grant to pay for the stamp duty on the property.
17. At the time of settlement of the purchase he was residing with his parents at their home. He moved into the property on 8 June 2004 but had not inspected it since the purchase as it was tenanted. When he moved into the property he noticed that a gas leak which had been reported to him had become worse, the floor in the kitchen and laundry were dirty and some painting work was required. He notified Elgas about the gas leak from the stove. It took Elgas five days to turn off the gas. The problem was determined to arise from a crack in the connection at the wall to the stove.
18. When he moved into the property he took a few items including a kettle, a radio, an electric heater and a cupboard for clothes. He had no fridge to begin with so kept no perishables and ate out all the time. He did not intend to cook in any event. He had no bed and slept on the carpet in a sleeping bag. He wanted to take time to buy the furniture that he wanted.
19. Before he left for a 4 day pre-planned holiday at Perisher, he started work on the lino by removing the tiles to enable his father to lay new lino. When he returned from his holiday his father started work on laying the tiles and he purchased a new stove. The stove could not be delivered for some time as it was LPG and not natural gas and was on back order at the store with a specialist supplier.
20. During the time he was in occupation of the property he had people over a few times over for drinks. He usually offered them a few drinks and pizza or whatever else was going.
21. His parents had told him that they did not think he was ready for the property and would not be able to afford to live in it without someone sharing the expenses. He talked to his mates and asked them to share the unit with him but no-one was ready to move out of home at that time. He knew it would be a struggle and he would not enjoy his youth if he was worrying about money. He had been discussing setting up his own computer business with his friend, Lisa. By June 2004 their plans had become well advanced and they decided to quit their jobs in December 2004 to work in their family business full-time. He was aware that if he stayed in the unit it would have curtailed his lifestyle a lot and he liked to go out regularly.
22. The applicant’s mother had advised that she was advertising for a tenant for the property through ‘The Canberra Times’. He did not have much say in the matter. He accepted her view. When she found a tenant he accepted that he should move back into his parents’ home. He still wanted to live in the property but, after setting up his business, he would not have much income for the first two years and it would have been difficult for him to pay the mortgage without renting the unit out.
23. The applicant said he bought the property with the intention of occupying it longer than the First Home Owner Grant specified. He had specifically chosen it due to its location, fixtures and affordability at the time. At the time his parents were planning to move away from Canberra but as both their parents were frail they did not end up moving. He was an active member of the executive body corporate of the property and took a role within the running of the complex as he intended to live there although his financial state at present did not allow him to do so without serious sacrifice. He said that he believed that he had complied with the requirements for the grant in that his intention to occupy the property was given to Maloney’s and he did, in fact, occupy the property in June 2004.
24. The applicant said that he had co-operated with the respondent’s inquiries regarding his eligibility for the grant. He had provided a statutory declaration in response to a request. It had not apparently been received and he had provided another. After he provided the second statutory declaration he received phone calls requesting more information. Eventually, on 21 December 2005, he requested the inspector to put all his requests in writing as he considered his investigation methods appeared to be open to misinterpretation. He had then received a letter dated 24 January 2006 from the inspector which requested a response within 7 days. He had received another phone call from the inspector on 27 January 2006 which he found intimidating and he had been threatened by accusations that the inspector knew he did not live at the property and he would prove that.
25. In cross-examination the applicant said that he had given careful consideration to his financial capacity to pay off the loan he had obtained to assist with the purchase of the property. He had satisfied himself that if the tenant left the property he had the financial capacity to do so. He agreed that the application which he signed to obtain the loan contained a statement advising him that it was important that he should not sign the declaration which formed part of the application unless the loan was wholly or predominantly for business or investment purposes. He said he did not read the document extensively and did not believe that the loan was for investment purposes. He agreed that it was unlikely that he would have obtained the loan unless there was a tenant living in the property.
26. The applicant agreed that he had declined to provide the inspector with the name of a friend who he said assisted him move into the property. He identified the friend but said that he had been reluctant to give his name to the inspector because he had had a falling out with the friend and did not want to involve him in the investigation. He denied that he had “stone-walled” the inspector in the investigation and said that he had advised him to make further inquiries through his solicitor on 2 March 2006 because he considered that he was badgering him.
27. He said that he contacted Elgas on numerous occasions about the gas leak and eventually they came and turned the gas off. He was surprised that Elgas had no record of a gas leak being reported to them. He did not know the amount of the rent that was paid by the tenant of the property during his occupation of it.
28. The applicant agreed that the telephone records in relation to his mobile phone showed that during the period 8-26 June 2004, 224 calls had been made from his telephone and only 29 of them were likely to have been made from the property. He said that he made most of his phone calls from his place of employment and that the telephone records did not include telephone calls that had been received by him on his mobile phone at the property.
29. The applicant’s father had arranged a loan of $100,000 to the applicant and Ms Hadfield to set up the new arm of the father’s company. The terms of the loan required that it be repaid by them working for a salary level less than they would ordinarily have received.
30. Mr I D Johnston is the applicant’s father. In a written statement admitted in evidence he said that he and his wife had been planning for retirement in early 2003 and intended moving to the Gold Coast and selling their family home at Macarthur, ACT where they lived with the applicant. The applicant indicated that he wished to stay in Canberra and was keen to buy a property to live in. He and his wife were supportive of the applicant’s intention to move out of the family home and into his own apartment. Because the property was subject to a tenancy that would run out in about 9 months from the date of purchase, the applicant delayed moving in until then. He had expressed his concerns about the applicant’s capacity in relation to the purchase of the property and had advised the applicant of the costs involved and told him they did not wish to end up subsidising him to live in the property if he could not find someone else to share payment of the rent. After the applicant had moved into the property he and his wife had been concerned about the applicant’s ability to continue to live in the property as there was no evidence of any friends moving in with him. His wife had advised the applicant that they should prepare for getting someone to rent the property because it could take many weeks to find a suitable tenant. It had been agreed that they advertise for a tenant. He and his wife had decided not to move to Queensland and this had enabled the applicant to move back into the family home. He considered that he and his wife were responsible for the applicant moving out of the property back into the family home.
31. In cross-examination, Mr Johnston said that the applicant had been discussing the prospect of establishing his own business in about April or May 2004. His family company had agreed to loan the applicant $100,000 to do so. The loan would be repaid by the applicant by working for a wage which was less than he would otherwise be paid by the company.
32. Lisa Hadfield is a friend of the applicant. She said in a statement admitted in evidence that she and another friend assisted the applicant move into the property. She often ate take-away meals in the property as the applicant had a jug but no fridge. It was not possible to do any real cooking as the stove had been removed due to a gas leak. The applicant decided to buy a new stove and have the gas reconnected. There was no heating as it ran off LPG so he used a small electric heater. She had visited the applicant in the property on many occasions and helped him paint the balcony and the entrance area on 18 June 2004. The applicant was present at the property from 8 to 23 June whenever he had free time from work and she was impressed by his commitment to the place. In about June 2004 she had discussed setting up a business with the applicant. The applicant’s employment contract was to be renewed in November 2004 but he would not receive any pay rise. He had decided that he would resign from his employment half way through January 2005 and start up their business at that time. Because they would only be getting about $440 net per week from the business for the first couple of years, the applicant was not going to be able to live off that and repay the loan. After he returned from his vacation at Perisher he had told her that he wanted to live alone in the unit but was not going to be able to afford to do that on $440 per week when they started up the business. He said it was depressing that his parents were probably right and they had found a tenant so he may as well move out.
33. Mr G Bustamante is a Revenue Accounts Assistant Manager of the ACT Revenue Office. A written statement made by him was admitted in evidence on behalf of the respondent. According to a search he had made of ACT Revenue records the only notification that the property had been rented had been signed in October 2003. There had not been any notification that the property had ceased to be rented or that the applicant was moving back to live in it for any period of time.
34. He had undertaken of the search of the records of the electricity authority which showed the following results:
Period Consumer’s Name
31-10-02 to 07-06-04 W A Hogan
08-06-04 to 29-06-04 H Johnston
29-06-04 to 29-07-05 G Oxborough
12-09-05 to current S De Kantzow
35. The respondent also relied upon the results of a search of the records of the electricity authority which showed that during the period of the applicant’s occupation from 8 to 26 June 2004, approximately $5.00 worth of electricity had been used which averaged 2.5kw usage per day. The search indicated that previous and subsequent consumers had used an average of between 6 and 15 kw per day. The search also showed that the mailing address for the provision of electricity bills during that period was the applicant’s parents’ home.
The law to be applied
36. The Act establishes a scheme to encourage and assist home ownership and to offset the effect of the GST on the acquisition of a first home by the payment of grants to first home owners.
37. To become eligible for a grant under the Act an applicant must be an individual and an Australian citizen or “permanent resident” (as defined by the Act); the applicant or his/her partner must not have received an earlier grant; the applicant or his/her partner must not have had a “relevant interest” in residential property; and the applicant must satisfy a residence requirement. The issue in this appeal relates to the residence requirement.
38. The residence requirement is expressed in section 12(1) of the Act in the following terms:
12 Criterion 5—Residence requirements
(1)An applicant for a first home owner grant must occupy the home to which the application relates as the applicant’s principal place of residence within 1 year after completion of the eligible transaction or a longer period approved by the Commissioner.
39. Section 13(4) of the Act specifies the conditions to be satisfied to determine the date for completion of the eligible transaction. It was not disputed in this case that the contract was completed on the date of settlement, that is, 15 August 2003. At the time the grant was approved, the amount of the grant that was payable to an eligible applicant was $7,000.
40. The payment of the grant in this case was made in advance of the applicant satisfying the residence requirement but in anticipation that he would do so. Provision for the payment of a grant on this basis is made by section 20 of the Act which provides:
20 Payment in anticipation of compliance with residence requirements
(1)The Commissioner may authorise payment of a first home owner grant in anticipation of compliance with the residence requirements if the Commissioner is satisfied that each applicant intends to comply with the residence requirements.
(2)If a first home owner grant is paid in anticipation of compliance with the residence requirements, the payment is made on condition that, if the residence requirements are not complied with, the applicant must within 14 days after the relevant date—
(a) give written notice of that fact to the Commissioner; and
(b) repay the amount of the grant.
(3) The relevant date is the earlier of the following:
(a)the end of the period allowed for compliance with the residence requirements;
(b)the date it first becomes apparent that the residence requirements will not be complied with during the period allowed for compliance.
(4)If a first home owner grant is paid to a person on the condition mentioned in subsection (2), the person must comply with the condition.
Maximum penalty: 50 penalty units.
(5) An offence against this section is a strict liability offence.
41. Section 23 of the Act provides:
23 Power to correct decision
(1)If the Commissioner decides an application, and is later satisfied (independently of an objection under this Act) that the decision is incorrect, the Commissioner may vary or reverse the decision.
(2)A decision cannot be varied or reversed under this section more than 5 years after it was made.
42. Section 25 of the Act provides for the making of an objection to a decision of the Commissioner. Section 26 requires the objection to be stated fully and in detail and in writing and places the burden of showing that the objection should be upheld on the applicant. The applicant therefore has the onus of proof to establish, on the balance of probabilities, those matters which he contends (see Chief Commissioner of State Revenue v Ferrington [2004] NSWADT AP 41 (24 September 2004)).
43. Section 31 of the Act provides for an appeal to be made to the Tribunal against a decision of the Commissioner made on an objection.
44. Section 47 of the Act gives the Commissioner the power to request repayment of the grant and to impose a penalty for non-compliance with such a request. Section 47 provides:
47 Power to require repayment and impose penalty
(1)The Commissioner may, by written notice, require an applicant (or former applicant) for a first home owner grant to repay an amount paid on the application if—
(a) the amount was paid in error; or
(b)the Commissioner reverses the decision under which the amount was paid for any other reason.
(2)If, because of an applicant’s dishonesty, an amount is paid by way of a first home owner grant, the Commissioner may, by the notice in which repayment is required or a separate notice, impose a penalty of not more than the amount the applicant is required to repay.
(3)If an applicant (or former applicant) for a first home owner grant fails to make a repayment required under this section or the conditions of the grant, the Commissioner may, by written notice, impose a penalty of not more than the amount the applicant is required to repay.
(4)If an amount is paid in error on an application for a first home owner grant to a third party, the Commissioner may, by written notice, require the third party to repay the amount to the Commissioner.
45. Section 48 of the Act provides that interest is payable on the amount of a grant if the amount is repayable under section 20(2)(b) or section 47.
Reasons for decision
46. The provisions of the Act that are relevant in this case are generally similar to the provisions of the First Home Owner Grant Act 2000 (NSW). The New South Wales Administrative Decisions Tribunal has had occasion in a number of cases to consider whether the residence requirements have been satisfied in circumstances where the period of occupation by the recipient of a grant in the relevant premises within one year after completion of the eligible transaction has been of short duration. In some of those cases, periods of occupation from one week to approximately one month have been found sufficient, subject to satisfaction of other criteria, to meet the residence requirement of the equivalent provision to section 12 of the Act (see for example Ferrington; McKellar v Chief Commissioner of State Revenue [2004] NSWADT 22; Gaines and Secretary, Department of Health, Housing and Community Services (unreported, AAT, 30 June 1992, No. W91/5)). In other cases involving short periods of occupancy the residence requirement has been found not to have been satisfied (see for example Bates v Chief Commissioner of State Revenue [2004] NSWADT 13; Tomasian v Chief Commissioner of State Revenue [2004] NSWADT 37; Calcaro v Chief Commissioner of State Revenue [2004] NSWADT 158; Greig v Chief Commissioner of State Revenue [2006] NSWADT 146 and Goon v Chief Commissioner of State Revenue [2007] NSWADT 17).
47. The resulting uncertainty of outcome in such cases has been addressed by the amendment of section 12 to require a period of continuous occupation of at least 6 months (see section 8, First Home Owner Grant Amendment Act 2003 (repealed)). Under transitional provisions the amendment did not apply to an eligible transaction that occurred prior to 1 January 2004 (see section 12, First Home Owner Grant Amendment Act 2003 (repealed)). The amendment has no application, therefore, to the facts of this case.
48. In Ferrington the Appeal Panel of the Administrative Decisions Tribunal identified six common principles which it considered must be taken into account in order to establish whether an applicant has occupied premises as his or her principal place of residence under the NSW First Home Owner Grant Act. Those principles now appear to have been accepted by the Administrative Decisions Tribunal as appropriate for resolution of the residence requirement of the equivalent NSW provision of section 12 of the Act (see McKellar v Chief Commissioner of State Revenue [2005] NSWADT 116 (26 May 2005)) and are appropriate, in my view, to be taken into account in resolving the issue involved in this case. The principles are:
First, the words “principal place of residence” should be given their ordinary meaning in the context in which they appear: ………..Secondly, consideration of whether a person has been residing or occupying premises as their principal place of residence is to be assessed objectively, in the light of the circumstances relating to the actual occupation of the dwelling: ………..Thirdly, the intention of the person concerned, gauged objectively, is relevant but not determinative of the issue: ……. Fourthly, to occupy a home as his or her principal place of residence a person’s occupation must have a degree of permanence to it: a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor is occupation for some other purpose: ……. Fifthly, the short length of a person’s residence, while relevant, is not determinative of the issue: ……….This is so since a recipient’s occupation of a home, while short, may have the requisite degree of permanence to it. But that will not happen if, when considered objectively, the occupation was transient, temporary, contingent or of a passing nature, or for some other purpose. One may occupy premises for a short time on a transient, temporary, or contingent basis, but one can also occupy for a short time as one’s principal place of residence. It is the nature of that occupation which provides the element of permanence. The fact that a period of actual occupation is short, as is in the present case, will in practice make it harder for a recipient to show that the occupation was as his or her principal place of residence, but it will not make it impossible, ……..Sixthly, the reasons for a person’s departure from the home must be both reasonable and adequately explained when considered objectively in the light of their circumstances: ……
(Authorities cited to support each principle have been omitted).
The first principle in Ferrington deals with the manner in which the expression “principle place of residence” should be interpreted. It does not require any finding of fact to be made by the Tribunal. The second principle requires the Tribunal to assess the nature of the occupation objectively, that is, in the light of the circumstances relating to the actual occupation of the property.
50. The third principle relates to the applicant’s intention. It was submitted on behalf of the applicant that his evidence showed that his intention was to occupy the property as a principal place of residence. It was contended on behalf of the respondent that the evidence before the Tribunal of the applicant’s intention, when gauged objectively, was consistent with an intention of the applicant to renovate the property for the purpose of letting it to a tenant and did not support a finding that the applicant had the relevant intention.
51. Some reliance was placed by Ms Donohue on the failure of the applicant to call the friend who he gave evidence had assisted him move into the property. Had he been called, the friend may have been in a position to give evidence in relation to the personal items of furniture and household equipment that the applicant moved into the property when he commenced occupation of it on 8 June 2004. Both the applicant’s father and Ms Hadfield visited the applicant in the property during his period of occupation and were in a position to give evidence of the contents of the property during the applicant’s occupation of it and to have their evidence tested. I draw no inference adverse to the applicant from the failure to call the applicant’s friend as a witness.
52. Be that as it may, neither the limited quantity of the items which the applicant gave evidence were taken by him to the property during the period of his occupation of it nor the quantity of gas and electricity consumed afford strong evidence of an intention to occupy the property as a principal place of residence. The fact that gas and electricity services were charged to an account in the applicant’s name at the address of his parents’ home does not support a finding that the applicant’s intention was to occupy the property as his principal place of residence. The fact that the applicant and Ms Hadfield had made considerably advanced plans by April or May 2005 to set up a new business venture and had to borrow $100,000 to assist them to do so, thereby reducing the applicant’s already strained financial capacity to repay the loan obtained to assist purchase the property, does not support an objective finding that by June 2004 the applicant intended to occupy the property as his principal place of residence. The fact that the applicant had been in occupation of the property for only 11 days before the first ‘to let’ notice appeared in ‘The Canberra Times’ does not provide objective support for finding the existence of the necessary intention. The fact that, in the application for the loan he obtained to assist with the purchase of the property, the applicant specified the purpose of the loan was to purchase an investment property is inconsistent with an intention that the property be used for the claimed purpose.
53. The fourth and fifth principles are related to the extent that while the occupation by the applicant is required to have a degree of permanence, the fact that the period of occupation is short does not necessarily prevent the applicant from meeting the residence requirement. As the fifth principle explains, however, if the occupation is of short duration it will be more difficult, in practice, for the recipient of the grant to satisfy the fourth principle. Generally speaking, it would be necessary for an applicant to produce strong objective evidence to support any claim made that a short stay at particular premises was as his or her principal place of residence (see Goon).
54. The period of the applicant’s occupation of the property was 17 days. The period is, therefore, short. During that period he was absent from the property for a four day period whilst on holiday. Further, I note that according to the applicant’s evidence, prior to the first ‘to let’ notice appearing in ‘The Canberra Times’ on 19 June 2004, he had had discussions with his parents about his financial capacity to make the loan repayments, spoken to friends about sharing accommodation in the property, made a decision to rent the property, determined the amount of rent to be charged and arranged for the ‘to let’ notice to be prepared and lodged with the newspaper for publication. The inference to be drawn is that a decision had been made by the applicant prior to 19 June 2004 to rent the property to a tenant.
55. In relation to the nature of the applicant’s occupation of the property, I note that during the period of it, he equipped the premises with few furnishings and other items of the kind ordinarily to be found in a person’s home. There were no cooking or clothes washing facilities. He had no television. According to Ms Hadfield’s evidence there was no refrigerator. It had no bed. Despite the financial constraints from which he said he was subject to he ate his meals out of the property apart from those occasions when he ate take-away meals. He returned on occasions to his parents’ home for meals, to drop off laundry or to have a hot shower. His father cleaned up after friends visited him at the property.
56. In my opinion, the ordinary indicia of occupation by a person of a property as his or her principal place of residence were lacking in this case. I conclude that the applicant’s occupation of the property was of a transient nature and did not meet the requirement for there to be a degree of permanence to it.
57. In relation to the sixth principle, the applicant’s evidence of the assessment which he had made of his financial capacity to repay the loan which he had obtained to assist purchase the property without the rental contribution of a tenant and the change in his financial circumstances which led to his decision to leave the property was given in general terms and lacked the detail necessary to enable a proper assessment to be made by the Tribunal of the weight that should be given to his evidence or of the reasonableness of his decision to leave the property.
58. As I have already observed, the onus is on the applicant, pursuant to section 26(2) of the Act, to establish that the principles identified have been satisfied. I conclude that the applicant has not adequately explained that his reasons for leaving the property were reasonable.
59. I therefore conclude that the correct and preferable decision for the Tribunal to make is that the applicant’s objection to the decision requiring him to repay the grant should be disallowed. As the grant is repayable pursuant to section 20(2)(b) and section 47(1)(b) of the Act, interest is payable by the applicant in accordance with section 48 of the Act.
60. In relation to the issue of the penalty, if any, to be imposed pursuant to section 47 of the Act, I consider that, while the evidence fails to establish that when the applicant occupied the property from 8 June 2004 he had an intention, objectively gauged, to occupy it as his principal place of residence, it does not establish that he did not have that intention when he applied for the grant or when it was paid to him. I am not, therefore, satisfied that dishonesty of the kind referred to in section 47(2) has been established. The dishonesty to which that subsection refers is that which caused the grant to be paid. It does not extend to conduct or to a state of mind that existed after payment of the grant.
61. The applicant is, however, liable to the imposition of a penalty pursuant to section 47(3) of the Act because of his failure to repay the grant as required by the condition contained in section 20(2)(b) of the Act.
62. The respondent submitted that the Tribunal should affirm the decision under review to impose a penalty of 75% of the amount of the grant because the applicant never had an intention to occupy the property and because he provided false and misleading evidence before and during the respondent’s investigation. The conduct identified as being false or misleading was the applicant’s failure to provide to the inspector who conducted the investigation the name of the applicant’s friend whom he identified as the person who assisted him move some of his possessions into the property when he took up occupation of it on 8 June 2004 and assisted him with renovations.
63. The T documents show that, in response to a written request by the inspector that the applicant provide the name of the person he had earlier advised was a friend who had assisted him move into the property, the applicant said in an email communication that he was seeking legal advice and that further communication with him would be passed on to his solicitor.
64. The applicant’s response needs to be considered in the context of his earlier dealings with the inspector. The applicant received an initial request from the inspector that he provide a statutory declaration confirming details of his residence of the property. The request contained advice that it formed part of an authorised investigation. The request was followed by a phone call from the inspector to the applicant in which the inspector advised the applicant that he had ascertained that electricity accounts for the property were being sent to the applicant’s parents’ address and that if the statutory declaration he had sworn was false he could face prosecution. He asked the applicant to provide further information supporting his statutory declaration. In a detailed written response the applicant expressed a preference for further communications from the inspector to be in writing to enable him to get advice from a solicitor about his position. The inspector then made a further telephone call to the applicant requesting information about the furniture and appliances the applicant had taken to the property. The applicant reiterated his request that any further inquiries be made in writing as he was concerned that he may not be able to remember the detail of their conversation and he was concerned that there should be a record of their communications. The inspector then made a written request for information and asked that it be provided within 7 days. Before the expiration of 7 days the inspector telephoned the applicant and, without providing the detail of it, stated that the evidence he had gathered did not show the applicant residing in the property. He told the applicant that he was “giving him the opportunity to come clean and tell the truth” or face large penalties.
65. The letter to the applicant advising that an authorised investigation was taking place did not explain the source of the authority or the powers that were being exercised pursuant to it. It was deficient in its failure to do so. The powers of investigation contained in Division 3.2 of the Act are extensive and provide a clear course for the proper investigation of suspected breaches of the Act. There is, in my view, some basis for the applicant’s complaint that he was badgered by the inspector who conducted the investigation and I consider that his request that future dealings with him involve his solicitor was, in the circumstances, prudent and not unreasonable. I reject the submission that any penalty should reflect the applicant’s lack of candour during the course of the investigation.
66. The considerations relevant to a determination of whether a penalty should be imposed and, if so, the quantum of it, were set out by the Tribunal in Taskovski and Commissioner for ACT Revenue [2007] ACTAAT 11 (25 May 2007) in the following terms:
40. A list of the useful factors which a court might take into account in determining the amount of a civil penalty was developed by the Australian Law Reform Commission following an analysis of considerations adopted by the courts in imposing civil penalties under the Trade Practices Act and Company Law (See Principled Regulation: Federal and Civil Administrative Penalties in Australia (2002) ALRC 95). Those factors were adopted by the New South Wales Administrative Decisions Tribunal in considering the amount of penalty to be determined under the New South Wales equivalent provision to section 47 of the Act (see Calcaro v Commissioner for State Revenue [2004] NSWADT 158). Those factors, which I accept as appropriate, included:
(a) the deterrent effect of the penalty;
(b) the nature and extent of the contravention;
(c)any loss or damage suffered, or gain made, as a result of the contravention;
(d)the circumstances in which the contravention took place including the deliberateness of the conduct and the period over which it extended;
(e)whether professional advice had been obtained in relation to the contravention, prior to the breach;
(f)whether the person has previously been found by a court to have engaged in any related or similar conduct;
(g)the degree of cooperation with the authorities; and
(h)in the case of a natural person, the attitude of the offender.
67. It is necessary to bear in mind, however, that the NSW First Home Owner Grant legislation, unlike the Act, does not contain any provision that makes repayment of a grant subject to the payment of any interest on the amount of the grant. The imposition of any penalty under the Act needs to have regard to the requirement that interest is required to be paid.
68. It is also necessary to have regard to the fact that the Act imposes a penalty of 50 penalty units for a contravention of section 20(2)(b) of the Act. It would be incongruous for a penalty imposed by the respondent to exceed the penalty able to be imposed by a court required to find the relevant contravention established according to the standard applicable in criminal proceedings (see Bartholomeusz and ACT Gambling & Racing Commission [2007] ACTAAT 17 (13 August 2007)).
69. In taking into account the factors referred to in Taskovski I note, as already observed, that the Act has been amended to impose a minimum period of occupation to meet the residence requirement. The need for a penalty to have a deterrent effect is affected by the greater certainty that exists under the Act in its current residence requirements and the reduced prospect of failure of recipients of grants to satisfy them.
70. In considering the nature of the contravention and the circumstances of it, I have not concluded on the evidence that the applicant embarked upon an application with dishonest intent. Rather, I consider, the evidence shows that he entered into occupation of the property with an inadequate understanding of the requirements necessary to meet criterion 5 of the Act.
71. It is to be accepted as a matter of common knowledge that real estate values in Canberra have increased significantly since the applicant purchased the property. There was, however, no evidence before the Tribunal to establish the extent of any increase in the property and account needs to be taken of the fact that the grant would have made a minor contribution to any capital gain achieved by the applicant. There is no basis for conclusion that the applicant made a significant gain in consequence of his contravention of the Act.
72. There was no evidence as to whether the applicant had acted on advice in relation to the contravention and no suggestion that he had previously been found by a court to have engaged in similar conduct.
73. I find that he did not fail to co-operate with the relevant authorities and find nothing in his attitude that calls for the imposition of a particular penalty to address it.
74. In all the circumstances, I consider that the penalty should be reduced to 10% of the amount of the grant.
FORM 33
PUBLICATION DETAILS
TO BE PUBLISHED
To be completed by Member's Staff
________________________________________________________________________
PART A FILE NO: AT07/14
APPLICANT: HAYDEN JOHNSTON
RESPONDENT: COMMISSIONER FOR ACT REVENUE
PARTY JOINED: N/A
COUNSEL APPEARING: APPLICANT: MS R NICHOLAS
RESPONDENT: MS L DONOHUE
PARTY JOINED:
SOLICITORS: APPLICANT: NICHOLAS DIBB SOLICITORS
RESPONDENT: ACT GOVERNMENT
SOLICITOR
PARTY JOINED:
OTHER:APPLICANT:
RESPONDENT:
PARTY JOINED:
TRIBUNAL MEMBER/S: MR M H PEEDOM, PRESIDENT
DATE/S OF HEARING: 31 JULY & 1 AUGUST 2007 PLACE: CANBERRA
DATE OF DECISION: 20 AUGUST 2007 PLACE: CANBERRA
_______________________________________________________________________
PART B
RECOMMENDATION:
FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION (X)
COMMENT:
2
9
0