Lawrence and Marion v Chief Commissioner of State Revenue

[2020] NSWCATAD 93

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Lawrence and Marion v Chief Commissioner of State Revenue [2020] NSWCATAD 93
Hearing dates:	20 March 2020
Date of orders:	02 April 2020
Decision date:	02 April 2020
Jurisdiction:	Administrative and Equal Opportunity Division
Before:	A R Boxall, Senior Member
Decision:	The decision under review is affirmed.
Legislation Cited:	Administrative Decisions Review Act 1997, ss 58, 63 Civil and Administrative Tribunal Act 2013 No 2, ss 36, 60 Duties Act 1997 Chapter 2, s 49A First Home Owner Grant (New Homes) Act 2000 ss 4, 4A, 7, 8, 9, 10, 11, 12, 13, 28, 29
Cases Cited:	B&L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481 Cornish Investments Pty Limited v Chief Commissioner of State Revenue [2013] NSWADTAP 25 Wang v Chief Commissioner of State Revenue [2016] NSWCATAD 61
Category:	Principal judgment
Parties:	Mark Alexander Lawrence (First Applicant) Audrey Marie Marion (Second Applicant) Chief Commissioner of State Revenue (Respondent)
Representation:	Counsel: Emily Graham (Respondent)   Solicitors: Applicants (Self Represented) Crown Solicitors (Respondent)
File Number(s):	2019/00358020
Publication restriction:	None

REASONS FOR DECISION

Introduction

1. In this application the Applicants seek the review of a decision (the Decision) made by the Respondent on 20 August 2019. In the decision he rejected an application by the Applicants for the payment to them of a grant under the First Home Owner Grant (New Homes) Act 2000 (the Grant Act) in connection with their purchase of a residence in Manly Vale NSW. This residence (the Property) is Lot 23 in a certain strata plan registered on 12 July 2018.

2. On 1 September 2019 the Applicants lodged with the Respondent an objection (the Objection) to the Decision.

3. On 23 October 2019 the Respondent wrote to the Applicants disallowing the Objection.

4. On 14 November 2019 the Applicant filed with the Tribunal an application under section 28 of the Grant Act seeking an administrative review of the Decision under the Administrative Decisions Review Act 1997 (ADRA).

5. There is no dispute that this application was made within the 60-day period after receipt of notice of dismissal of the Objection provided for in section 28(4)(a) of the Grant Act for the making of a review application.

6. References in these reasons to the Section 58 Documents are to the documents filed in connection with this review under section 58 of the ADRA.

The general nature of the review   

7. The provisions of section 28 of the Grant Act apply to this review. Notably:

1. sub-section 28(2) provides that neither the Applicants nor the Respondent are limited in the present application to the grounds of the Objection; and

2. sub-section 28(3) of the Grant Act provides that the Applicants have:

“… the onus of proving the applicant’s case in an application for an administrative review”.

8. The decisions of a predecessor tribunal in B&L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481 and of the Appeal Panel of this Tribunal in Cornish Investments Pty Limited v Chief Commissioner of State Revenue [2013] NSWADTAP 25 concerned a relevantly identical provision in the Taxation Administration Act 1996 (section 100(3)). They state that this is an onus which is discharged by reference to the ordinary civil standard. In Wang v Chief Commissioner of State Revenue [2016] NSWCATAD 61 a differently constituted panel of this Tribunal applied these formulations to sub-section 28(3) of the Grant Act. I respectfully agree with this approach, which I apply in undertaking this review.

9. Under section 63(1) of the ADRA, in conducting a review the Tribunal:

“..  is to decide what the correct and preferable decision is having regard to the material then before it, including the following:

(a) any relevant factual material,

(b) any applicable written or unwritten law”.

10. Moreover, under section 63(2) of the ADRA, in doing so the Tribunal:

“… may exercise all of the functions that are conferred or imposed by any relevant legislation on the administrator who made the decision”.

11. Under section 29(1) of the Grant Act, on an administrative review such as the present one the Tribunal may:

“…..(a) confirm, vary or reverse the original decision, and (b) make any further orders as to costs or otherwise as it thinks fit”.

Legislative background

12. The legislative starting point is section 7 of the Grant Act, which provides for the payment of a grant, known as a first home owner grant, to applicants if certain conditions are met. These are as follows:

1. Each applicant must comply with certain eligibility criteria, which are set out in sections 8 to 12 (inclusive) of the Grant Act;

2. The grant is payable if the transaction for which it is sought:

1. is an eligible transaction, as defined in section 13(1) of the Grant Act; and

2. has been completed; section 13(5) sets out the test for determining when a particular transaction is so completed; and

3. the total value of the transaction to which the application relates does not exceed a specified eligibility cap.

13. It is clear (and there is no controversy) that:

1. the Applicants both meet the relevant eligibility criteria referred to in section 7(1)(a) of the Grant Act;

2. the relevant transaction – namely the contract for the purchase of the Property by the Applicants – has completed for purposes of section 7(1)(b)(ii) in a way which satisfies section 13(5) of the Grant Act’s definition of completion; and

3. the total value of the relevant transaction is within the relevant eligibility cap contemplated by section 7(1)(c) of the Grant Act.

14. Similarly, it is common ground between the parties that for purposes of section 7(1)(b)(i) of the Grant Act the relevant transaction satisfies some elements at least of the definition of eligible transaction set out in section 13(1) of that Act:

1. the Property is in New South Wales, and

2. the contract for the purchase of the Property was made after 1 October 2012.

15. The controversial issue is whether that contract was for the purchase of a new home within the meaning of section 4A of the Grant Act:

1. If it was, then the contract is a transaction which satisfies section 13(1)(a) of the Grant Act. In view of the matters referred to in paragraphs [13] and [14] above, the logical consequence of the transaction satisfying that paragraph would be that it is an eligible transaction which entitles the Applicants to receive a first home owner grant.

2. However, if it was not, then it cannot be an eligible transaction since none of the other categories of eligible transaction listed in section 13(1) apply to it. The consequence would be that the Applicants are not entitled to receive a first home owner grant for the Property.

Factual background

16. The relevant contract (the Contract) was made on 21 October 2016 between the Applicants as purchaser and a company named TIAA Group Pty Limited as vendor, acting in its capacity as the trustee of a particular identified trust (TIAA). The only part of the Contract which is in evidence is its first page. This relevantly:

1. sets out the identities of the vendor and the purchasers, the sale price and the amount of the deposit,

2. provides for vacant possession on completion,

3. identifies the property to be sold both as part of a lot in a particular deposited plan, and by reference to a lot number in a draft strata plan; this latter lot number corresponds to that of the Property in the registered strata plan which relates to it, and

4. refers to a Schedule of Finishes and certain other clauses or special conditions, none of which are in evidence.

17. That the Contract completed is clear. There was provided to the Tribunal at the hearing by counsel for the Respondent, with the consent of both the Applicants, a copy of an executed transfer of the Property from TIAA to the Respondents expressed to be for the consideration of $695,000 provided for in the Contract. It bears a registration number allocated to it by the Registrar-General. The Section 58 Documents include (at page 55) a title search for the Property made on 22 October 2019, which indicates that on 14 August 2018 a transfer of the Property, bearing the same registration number as that endorsed on the transfer to the Applicants, was registered.

18. What this title search also discloses is that on that same day another transfer of the Property was also registered immediately before the registration of the transfer to the Applicants, bearing the immediately preceding sequential registration number allocated by the Registrar-General. This registration number corresponds to that which appears on a transfer of the Property to TIAA by a company called Zegna Property Group Pty Limited (Zegna), and which is included in the Section 58 Documents at page 56. This transfer is for a consideration of $600,000.

19. This is consistent with the Respondent’s internal record which is found at page 53 of the Section 58 Documents. This record indicates that stamp duty of $22,490 under the Duties Act 1997 was assessed and payable by 9 August 2018 for the account of TIAA in respect of a contract dated 29 April 2016, which had a dutiable amount of $600,000. The extended period between the date of that contract and the payment of transfer duty, coupled with the absence from the Respondent’s record of any reference to penalties for late payment, indicates that TIAA had deferred the payment of duty on that contract. This was in all likelihood pursuant to section 49A of the Duties Act 1997, which allows the deferral of duty payments on “off the plan” purchase contracts.

20. Also included in the Section 58 Documents at pages 1 and 2 is a further title search, this time in relation to the lot in the deposited plan of which the Contract describes the Property as a part. This search indicates that Zegna was the owner of that lot. It does not appear to be controversial that Zegna constructed an apartment complex on the lot comprised in the relevant deposited plan, contracted to sell those apartments on an “off the plan” basis, and then following registration of the strata plan for the complex transferred the apartments comprised in the complex – including the Property – to purchasers in exchange for payment of the purchase price. In any case the evidence is consistent with this account of matters:

1. The arrangements set out in Appendix 4 to the Applicants’ submissions dated 20 January 2020, which is an email from a firm of real estate agents confirming registration of a strata plan referrable to the Property’ street address and outlining settlement arrangements, is consistent with the completion of sales of lots in “off the plan” apartment developments.

2. So too is the letter dated 19 April 2018 which is found at page 3 of the Section 58 Documents. This is from TIAA’s solicitors to the Applicants’ solicitors, confirming that the Property “… is a new dwelling and has not been occupied”.

3. The Explanatory Note from the Applicants which formed part of their original grant application (which appears at page 35 of the Section 58 Documents) also describes the Property as having been developed by Zegna and sold ”off the plan”.

21. What follows from all this, in my view, is that two separate sale transactions concerning the Property can be identified which both completed shortly after registration of the strata plan on 12 July 2018:

1. First in time was a sale by Zegna to TIAA for a consideration of $600,000, made pursuant to a contract between Zegna and TIAA dated 29 April 2016, and

2. Second in time was a further sale, this time by TIAA to the Applicants for a consideration of $695,000, made pursuant to the Contract.

Was the Property a “new home” for purposes of the Applicants application for a first home owner grant?

22. The definition of new home in section 4A(1) of the Grant Act is relevantly as follows:

A new home is a home that has not been previously occupied or sold as a place of residence …..

23. The Property must be a home in order to be a new home. A home is defined in section 4 of the Grant Act as:

a building (affixed to land) that:

may lawfully be used as a place of residence, and

(b)  is, in the Chief Commissioner’s opinion, a suitable building for use as a place of residence.

These elements are in my view all satisfied:

1. The Property is clearly a lot within a building which is affixed to land.

2. There is no suggestion that its use, as one apartment amongst several in a residential development, is anything other than lawful:

1. While there is no evidence as to exactly when the Property became one which could lawfully be used as a place of residence in accordance with the applicable planning and development laws, it is common ground between the parties that paragraph (a) of the definition of home has been satisfied; it is moreover likely that this had occurred by 12 July 2018, when the strata plan of which the Property is a lot was registered.

2. The Respondent has at no stage claimed that the Property may not lawfully be used as a place of residence, so paragraph (b) of the definition need not be considered.

24. The next question is whether the Property was or was not “previously occupied or sold as a place of residence” for purposes of section 4A(1) before its sale to the Applicants.

25. Initially, I will make an observation about the construction of this sub-section:

1. The words “previously” and “as a place of residence” are in my view both properly read distributively, so as each to qualify each of the words “occupied” and “sold”. The consequence is that a residence cannot be a “new home” for purposes of an application if either:

1. it has previously been occupied as a place of residence, or

2. it has previously been sold as a place of residence.

2. This approach corresponds to the plain and ordinary meaning of the expression and respects its structural economy. Any other interpretation produces arbitrary and complex outcomes, depending on which element – sale or occupation – is or is not treated as qualified by a particular qualifying expression.

3. In doing so I adopt with respect the Tribunal’s approach in Wang v Chief Commissioner of State Revenue [2016] NSWCATAD 61 at [14] to [20].

26. There is no suggestion that the Property was occupied “as a place of residence” by TIAA before its acquisition by the Applicants. However:

1. It was clearly acquired by the Applicants from TIAA; each of the Contract, the transfer from TIAA to the Applicants, and the title search of the Property demonstrate this;

2. Equally clearly the Property was acquired by TIAA from Zegna before it was in turn acquired by the Applicants from TIAA; the transfer to TIAA, the title search of the Property and the Respondent’s stamp duty records (which are indicative of a contract for the purchase of real estate by TIAA) indicate this;

3. The Applicants acknowledge (and the evidence, in the form of the Respondent’s stamp duty records, indicates) that TIAA itself acquired the Property under an off the plan purchase agreement;

4. I am satisfied therefore that TIAA’s acquisition of the Property was one under which the Property was sold to it “as a place of residence”; and

5. TIAA’s acquisition took place before the Applicants’ acquisition of the Property – it agreed with Zegna to purchase the Property off the plan before it agreed to sell the Property to the Applicants, and the transfer to it of the Property occurred before its transfer to the Applicants - so that when the Property was acquired by the Applicants it had previously been sold, to TIAA, as a place of residence.

27. The Applicants have not discharged the onus placed on them under section 28(3) of the Grant Act of proving their case in this review. They are not entitled, in my view, to a first home owner grant in respect of the Property because it had ceased to be a “new home” within the meaning of section 4A of the Grant Act when they acquired it.

Arguments made by the Applicants

28. The Applicants made several arguments which for completeness I should address.

29. They said that there was in reality only one single transaction on the date on which they acquired the Property, being a transaction under which they paid the balance of the purchase price for the Property in exchange for title to it. This oversimplifies the situation:

1. legally, there were:

1. two distinct contracts of sale which completed – one between Zegna and TIAA and one between TIAA and the Applicants;

2. two distinct transfers of the Property – one from Zegna to TIAA and one from TIAA to the Applicants; and

3. two distinct purchase prices paid – $600,000 by TIAA to Zegna, and $695,000 by the Applicants to TIAA;

2. this is the only legal analysis which the transactional history permits, and it is logically inescapable that, in order to discharge its obligation under the Contract to sell the Property to the Applicants, TIAA must first have acquired it from Zegna; necessarily, then, the transaction under which TIAA sold the Property to the Applicants was its second sale as a completed apartment and place of residence, the first being that under which TIAA acquired it from Zegna;

3. that:

1. both completions may have occurred at the same place and within the same brief period, and

2. most of the funds paid by or on behalf of the Applicants under the Contract may have been paid to Zegna at TIAA’s direction in order to meet TIAA’s payment obligations for the Property,

cannot alter that legal reality; and

4. significantly, there was a substantial difference between the price payable by TIAA to Zegna for the Property and that payable by the Applicants to TIAA; this reinforces at a commercial level the legal analysis, that there were two distinct sale transactions of which that to the Applicants was the second.

30. The Applicants in their Objection observed that:

“Prior to us buying the unit, another party (as listed in the contract) had committed to buy the unit, however they did not settle and the title did not transfer from the developer, Zegna Property. As such, in our view is this constitutes a first sale of the home, given a full settlement did not occur. The settlement resulted in the developer transferring the title directly to the owners’ cooperation”.

This is an earlier articulation of the arguments which they made at the hearing and which are dealt with in the previous paragraph. Completion of the sale as between Zegna and TIAA not only occurred but was a necessary precondition to completion of the sale by TIAA to the Applicants; this of itself is sufficient to establish that they did not acquire the Property as a new home for purposes of section 4A(1).

31. The Applicants referred the Tribunal to the definition of residential property in section 3(1) of the Grant Act, and sought to argue that its terms inform the interpretation of sections 4A, 7 and 13 of the Grant Act, under which the entitlement to a first home owner grant is determined. This defined term is, however, only used in section 11 of the Grant Act which excludes from eligibility for a first home owner grant any person who (or whose spouse) has held an interest in residential property (as so defined) in certain jurisdictions. It is thus of no relevance in interpreting sections 4A, 7 and 13.

32. The Applicants made a further argument which can be summarised as follows:

1. At the time of the contract between Zegna and TIAA all Zegna had was a development site with some works under way,

2. the Property did not exist,

3. accordingly the contract between Zegna and TIAA could not have been one for the sale of a home as defined in section 4 of the Grant Act, and

4. through a logical process which was not entirely clear, this meant that the transaction between them and TIAA was the first sale of the Property as a home.

There are several difficulties with this line of argument:

1. The first is that at the date of the Contract, on 21 October 2016, the Property still did not exist. Construction works may well have then been more advanced than they were in April 2016 when TIAA agreed with Zegna to acquire the Property, but registration of the strata plan – which brought the Property into legal, if not physical, existence – was still nearly two years away. If the incomplete construction status of the apartment complex in April 2016 was, as the Applicants appear to argue, sufficient to prevent TIAA from claiming a first home owner grant because there was no existing place of residence at that time, a similar conclusion must apply to the Applicants since the Property still did not exist at the date of the Contract, at least in any legally recognisable way. In any event whether or not the Property existed when TIAA or the Applicants agreed to purchase it is in my view entirely irrelevant, for reasons which I discuss below.

1. The scheme of the Grant Act is to provide a grant in respect of a transaction:

1. The combined effect of sections 7 and 13 of the Grant Act is that a transaction is a contract for the purchase of a new home where the applicants for the grant, the property itself and the transaction satisfy certain criteria set out in the Grant Act.

2. The grant is payable when, according to section 7(1)(b)(ii), the transaction “.. has been completed”.

3. In adopting this approach the Grant Act reflects two elementary features of real estate law and practice in New South Wales:

1. The first is that the pattern of real estate sale transactions typically involves two legal steps. The first occurs on signing of the contract for sale of the property, when the seller becomes obliged to sell and the purchaser to purchase the subject property in accordance with the contract. The second occurs when the purchaser pays the purchase price in accordance with the contract and the seller in exchange does all things necessary to be done by it to transfer title to the purchaser. It is only at this point that typically the purchaser becomes entitled as against the seller to possession of the property. This second step is generally known as completion of the purchase, and the definition of completed in section 13(5)(a) of the Grant Act is informed by this practice.

2. The second feature is that the contract between seller and purchaser does not of itself transfer legal ownership of the property to the purchaser. Rather it is merely a promise by the seller to do so at the time and subject to the conditions agreed in the contract, in exchange for the purchaser paying the purchase price. Hence, the contract can be for the sale of a residence which is yet to be built, with completion of the contract to occur only once the residence has been physically constructed and its occupation as a residence has become lawful. This is typically what contracts for the sale of apartments “off the plan” provide for, as the definition of “off the plan purchase agreement” in section 49A of the Duties Act 1997 recognises.

4. The consequence for purposes of the Grant Act is that a contract for the purchase of a residential apartment “off the plan” can perfectly well be an eligible transaction under section 13(1), because it is a contract under which the seller promises to sell and the purchaser agrees to purchase at an agreed future time a home in New South Wales. The relevant apartment may not exist at that time in any recognisable form, but the agreement is nonetheless one for purchase of the apartment when built and is thus capable, if the other conditions in the Grants Act are met, of entitling the purchaser to a first home owner grant.

33. The Applicants also argued, in summary, that since:

1. they were the first to occupy the Property as a place of residence following completion of their purchase from TIAA, and

2. TIAA never occupied the Property as a place of residence,

their purchase was the first one of the Property as a place of residence. The fallacy in this argument is that it looks to their and TIAA’s respective uses of the Property, rather than to what was sold (and agreed to be sold) in the underlying transactions. The evidence indicates that the transactions, both as between Zegna and TIAA and as between TIAA and the Applicants, were for the sale and purchase of a home, as defined, being an apartment which at the dates of the contracts was yet to be constructed but which when built would be able to be used as a place of residence. Both transactions were, therefore, for the sale and purchase of the Property as a place of residence. That the Applicants occupied the Property following completion while TIAA did not is irrelevant to the conclusion that what TIAA acquired form Zegna was a home within the meaning of the Grant Act.

34. The Applicants also argue that since TIAA never occupied the Property, the sale by Zegna to TIAA could not have completed within the meaning of section 13(5). They conclude that if there is a first home owner grant to be had in connection with the Property, the Applicants must be entitled to it because they are the first occupiers of the Property. There are three comments to be made concerning this argument:

1. Section 13(5) provides that a contract for the purchase of a home is completed when “the purchaser becomes entitled to possession of the home under the contract”. When the purchase price payable by TIAA to Zegna was paid and Zegna handed over to TIAA a transfer of the Property, TIAA became legally “entitled to possession” of the Property as against Zegna. That it may not physically have entered into occupation of the Property at that point is entirely irrelevant to this conclusion, as is the fact of the Applicants having themselves become legally entitled as against TIAA to possession of the Property immediately thereafter.

2. That TIAA may not have been entitled to a first home owner grant in respect of the Property does not mean that the Applicants are entitled to such a grant. Their application must satisfy the statutory conditions for the grant, both as to their personal characteristics and as to the characteristics of the transaction under which they acquire the Property. If it does not do so, then they are not entitled to the grant, whatever the position with TIAA may be.

3. As discussed above, a grant application will be unsuccessful if either:

1. the relevant property has previously been occupied as a place of residence, or

2. it has previously been sold as a place of residence.

The Property may well not have been occupied as a place of residence before the Applicants moved into it; that does not alter the fact that they were the second purchasers of the Property as (and following its completion as) a place of residence. For this reason the Applicants’ transaction fails the second limb of the test set out above.

35. Finally, the Applicants say that the decision under review deprives them of a grant to which they would otherwise be entitled because of a mere technicality. I understand their disappointment. The legislative rules, however, are clear and for the reasons explained above the Applicants are not eligible under them for a first home owner grant in respect of their acquisition of the Property.

Orders

36. The Assessments are affirmed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 02 April 2020