Lo v Chief Commissioner of State Revenue (Rd)

[2012] NSWADTAP 12

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation:

Lo v Chief Commissioner of State Revenue (RD) [2012] NSWADTAP 12

Hearing dates:

2 March 2012

Decision date:

19 March 2012

Jurisdiction:

Appeal Panel - Internal

Before:

M Chesterman, Deputy President
S Frost, Judicial Member
J Schwager, Non-judicial Member

Decision:

1. The appeal is dismissed

2. Unless within 21 days the Appellant files and serves submissions showing why costs should not be awarded against him, the Appellant is to pay on a party-party basis the Respondent's costs of and incidental to this appeal. If such submissions are filed, the Respondent must file and serve submissions in response within a further 21 days. The Appeal Panel will determine the matter of costs without a hearing, pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.

Catchwords:

Land tax - exemption for principal place of residence

Legislation Cited:

Administrative Decisions Tribunal Act 1997
First Home Owners Grant Act 2000
Land Tax Management Act 1956

Cases Cited:

Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP 41
Chief Commissioner of State Revenue v Mesiti [2003] NSWADTAP 57
Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184
Commissioner of Land Tax v Christie [1973] 2 NSWLR 526
Flaracos v Chief Commissioner of State Revenue [2003] NSWSC 68
Lo v Chief Commissioner of State Revenue [2011] NSWADT 224

Category:

Principal judgment

Parties:

Patrick Pat Kit Lo (Appellant)
Chief Commissioner of State Revenue (Respondent)

Representation:

W K Lo (Agent - Appellant)
Crown Solicitor (Respondent)

File Number(s):

119049

 Decision under appeal 

Citation:

Lo v Chief Commissioner of State Revenue [2011] NSWADT 224

Date of Decision:

2011-09-19 00:00:00

Before:

Revenue Division

File Number(s):

106045

decision

1. (M CHESTERMAN (DEPUTY PRESIDENT), S FROST (JUDICIAL MEMBER), J SCHWAGER (NON-JUDICIAL MEMBER): This is an appeal against a decision in the Revenue Division of the Tribunal ( Lo v Chief Commissioner of State Revenue [2011] NSWADT 224) delivered on 19 September 2011.

1. In this decision, the Tribunal affirmed a decision by the Respondent, the Chief Commissioner of State Revenue (hereafter 'the Commissioner'), that the Applicant-Appellant, Mr Patrick Pak Kit Lo, could not claim exemption from land tax on a residential property owned by him on the ground that during the relevant period it was his 'principal place of residence'.

1. In its decision, the Tribunal referred to the Applicant as Patrick and to his wife as Annette. We shall do likewise in our decision.

Outline of facts

1. The principal findings of fact on which the Tribunal based its decision were summarised in the Outline of Submissions furnished to it by the Commissioner (from which it quoted at length in its decision at [4]) and on an Agreed Statement of Additional Facts (from which it quoted at length at [9], having indicated that this Statement was to be read in conjunction with an affidavit sworn by Patrick). In short form, these findings were as follows.

1. The Applicant claimed the principal place of residence ('PPR' ) exemption in respect of the residential property that he owned at 12 Hopetoun Avenue, Mosman ('the Property'). The Applicant's parents, Barbara (aka Kam Ling Lo) and Wai Kong Lo own and occupy 14 Hopetoun Avenue, which is situated behind the Property.

1. The Applicant's parents acquired both the Property and 14 Hopetoun Ave on 25 May 1994.

1. In July 1995, Patrick moved to Hong Kong to work full time as an electrical engineer for Tektron Electronics (HK) Ltd ('Tektron'). He remained in this employment until he resigned in October 2010. On 23 November 2010, he returned to live in Australia.

1. The Applicant did not own the Property when he moved to Hong Kong. It was transferred to him by his parents on 29 December 1998.

1. Patrick has a Hong Kong identification card and is able to enter and depart Hong Kong without the need for a visa. He is also an Australian citizen and has an Australian passport. But when he and Annette paid visits to Australia between the time of their marriage in 2004 and their final departure from Hong Kong in November 2010, they described themselves as visitors on their immigration cards, not as returning residents.

1. Between about 1996 and October 2010, Patrick paid income tax in Hong Kong.

1. During the 15 years of his employment by Tektron in Hong Kong, Tektron always provided him with a rented apartment for his use. There were three such rented apartments.

1. In about 1997, Annette Wing Yan Yu (later to become his wife) moved to Hong Kong to be with him. She lived in a different apartment in Hong Kong (Flat G, 1OF Block 36, Laguna City) until they were married in October 2004.

1. On 7 January 2009, Patrick and Annette had a son, Adrian.

1. During the Tax Years, Patrick, while in Hong Kong, lived first in Flat G, 1OF Block 36, Laguna City, from the time of his marriage in October 2004 until about May 2009. His employer took over the lease as tenant. He then lived in Flat E, 26/F BLK 28 Laguna City, from May 2009 (or thereabouts) until about November 2010.

1. In relation to each of the two apartments during the Tax Years:

(a) Patrick and Annette were entitled to occupy the apartments by reason of his employment with Tektron and for so long as that employment continued;

(b) the only persons who had keys to the apartments were Patrick, his wife and the landlord;

(c) no other person (including any employee of Tektron) was entitled to enter or stay at the apartments, for so long as Patrick remained employed by Tektron;

(d) the apartments were unfurnished - all of the furniture in the apartments was paid for by either Annette or Patrick;

(e) Patrick paid for some furniture, including a marital bed and furniture for Adrian, which was kept at the apartments, the majority of the furnishings being Annette's from prior to the marriage;

(f) Patrick and Annette were not entitled to paint / decorate or alter the apartments (save for placing in them their furnishings and possessions);

(g) nearly all of Patrick's clothes were kept at the apartments and would bring some clothes with him when he came to Australia;

(h) Adrian has at all times lived with his parents since his birth;

(i) nearly all of Annette's and Adrian's clothes were kept at the apartments;

(j) nearly all of Adrian's toys were kept at the apartments;

(k) most of Patrick's personal effects (including toiletries, books and photographs) were kept at the apartments - the remainder being kept at 12 Hopetoun Ave, Mosman;

(l) Annette and Patrick cooked and ate all meals at the apartments while in Hong Kong (unless they went out to eat).

1. While working in Hong Kong, Patrick had bank accounts and credit cards with Hong Kong banks. These were used to pay his day-to-day living expenses while he was in Hong Kong. The statements for those accounts and cards were sent to his Hong Kong address.

1. While working in Hong Kong, Patrick also had a mobile phone and a landline phone. The statements for the accounts relating to these phones were sent to his Hong Kong address.

1. Patrick had treating doctors in Hong Kong while working there. The accounts, reports and other statements generated in connection with his treatment by them were sent to his Hong Kong address.

1. There are no gates or fence between the Property and the residence of Patrick's parents at 14 Hopetoun Avenue. Patrick's father had keys to the Property in order to allow him to organise cleaners and maintenance on Patrick's behalf.

1. The Property has 7 car spaces. Patrick allowed his parents to park their cars in them on a regular basis. Between July 1995 and October 2010, Patrick did not own a car. If he drove a car while in Sydney, it would be one of his parents' cars.

1. When, during his times at the Property, Patrick had a family dinner with his parents (which was not at a restaurant), the dinner would be held at his parents' residence.

1. Patrick did not have a separate landline phone at the Property. There was a communal landline phone, paid for by his father, which rang in his parents' residence and in the Property at the same time.

1. At some point after Adrian was born, Patrick and Annette registered him for a place at a school in Mosman.

1. The Commissioner issued a Land Tax questionnaire to Patrick on 14 August 2009. The Applicant's father furnished answers, in which he listed the Property as the only property owned by Patrick and claimed that it was his PPR.

1. On 15 September 2009, the Chief Commissioner issued an assessment for land tax to Patrick for the 2005-2009 Land Tax Years ('the Tax Years'). On 24 September 2009, the Applicant objected to this assessment ('the Commissioner's decision'), asserting that the Property was his PPR.

1. Patrick and his family returned to live in the apartment at Flat E, 26/F BLK 28 Laguna City, Hong Kong, in about April 2011 because Patrick resumed working for Tektron, on reduced hours.

1. In order to complete this outline of the Tribunal's findings of fact, we will reproduce in full one paragraph of significance (paragraph [18]) from its decision:-

18 I do not think it necessary to deal in precise detail with the periods of time spent by the Applicant and his wife in Australia during the relevant years. It seems likely that those time periods might be summarized in brief terms on the basis that the Applicant spent, according to one of the documents to which I have referred, 11 days in Australia in the 2005 year, 14 days in the 2006 year, 15 days in the 2007 year, 14 days in the 2008 year and 33 days in the 2009 year. While the Applicant's wife spent, and in the same land tax years, 11 days, 14 days, 39 days, 109 days and 89 days respectively. There was some degree of dispute as to where in Sydney the Applicant's wife stayed and when in particular she stayed at the home of her parents and when she stayed at the Property; on one occasion the Applicant and his wife stayed at the Four Seasons Hotel and this was explained on the basis that the stay at the hotel was part of a package with the airfares. Leaving aside for the moment the fact that there are some disputes as to where precisely and when they or either of them stayed at the Property the overall situation is that very little time indeed was spent in the Property; for reasons set out previously it is not necessary to go into detail. It would not in the view of the Tribunal be unreasonable to categorise the Property during the relevant years as analogous to a holiday home which was used (although very infrequently) and usually for short periods on visits to Sydney.

The Tribunal's reasons

1. In stating the legal principles that it considered to be relevant, the Tribunal first quoted in full (at [24]) the terms of subclauses (1) to (4) of clause 2 of Schedule 1A to the Land Tax Management Act 1956 ('LTMA'). These are as follows:

2 Principal place of residence exemption

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

(a) a parcel of residential land, or

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

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

(a) the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes since 1 July in the year preceding the tax year in which land tax is levied, or

(b) in any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the person's principal place of residence.

(3) If the owner of land is entitled to the exemption conferred by this clause, no other person is liable to be assessed for taxation under this Act in respect of the land during the period of the owner's entitlement to the exemption.

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

1. At [26] to [30], the Tribunal described various authorities relating to the interpretation of these provisions. The last three of these paragraphs should be quoted here:-

28 Cases involving a competition between two places of residence usually relate to a taxpayer who owns two residences and spends some time in each of them and thus requiring a factual analysis on an objective basis of which is his or her principal place of residence.

29 It is important to note that whether or not a particular relevance is owned by a taxpayer is in fact not relevant at all. In Chief Commissioner of State Revenue v Mesiti [2003] NSWADTAP 57 at [24], the first instance Tribunal member had concluded that s 3(3) (a) of the LTMA (the predecessor to clause 2 of Schedule 1A) applied only where the taxpayer is the owner of two properties which were used for residential purposes. The Chief Commissioner successfully appealed that conclusion of law.

30The Appeal Panel in Mesiti held at [46] that:

"We agree with the Appellant that Section 3(3) (a) of the Act [the predecessor to cl 2 of Schedule 1A] is not limited to apply only to cases where the taxpayer is the owner of two (or more) properties used for residential purposes. It is possible for land or a flat to have been "continuously used and occupied by a person for residential purposes and for no other purpose" within the meaning of Section 3(3) (a) without the person being the "owner" (as defined in Section 3(1) of the Act). Nothing in the language of Section 3(3) (a) of the Act suggests otherwise."

1. At [31], the Tribunal quoted a lengthy passage from the submissions that had been furnished to it by the Commissioner, in which further aspects of the applicable law were explained and reasons for rejecting Patrick's claim for exemption were advanced.

1. The following passages, drawn from paragraphs [21], [22], [32] and [35], contain the Tribunal's reasons for concluding that Patrick was not entitled to an exemption from land tax on the Property during the Tax Years (2005 to 2009):-

21 The Applicant contends that the fact that his son Adrian is registered for a place at a school in Mosman assists his case. It is of course of marginal relevance only. Children are often entered for schools at or soon after birth but it does not follow that they will take those places. As to whether Adrian ever becomes a pupil of the school in Mosman will depend on where his parents live and this in turn will be related to his father's health.

22 The position on analysis (and having regard to the Agreed Statement) is remarkably clear. During the relevant years the Applicant and his wife were resident in Hong Kong and they are again resident there. They lived, and presumably now again live, in an apartment provided by his employers and where their belongings are situated to a substantial extent. The fact that they did not own the apartment in question (and there were two different apartments during the relevant years) is not to the point. Nor is it to the point that they travel on Australian passports...

32 The evidence before the Tribunal indicates in the clearest possible terms that the Applicant and his wife were and regarded themselves during the relevant years as residents of Hong Kong and thus when they came to Australia did so as visitors and not as returning residents. Landing cards and other documents both when arriving in or departing from Australia were completed on this basis. The evidence before the Tribunal indicates moreover that throughout the relevant years the Applicant and his wife resided in an apartment provided by Tektron and which they regarded as their home and in which they kept a substantial proportion of their belongings.

35 It is clear on the evidence before me that at no time during the relevant years did the Applicant occupy the Property as his principal place of residence. On the contrary he occupied an apartment in Hong Kong as his principal place of residence and the fact that he was not the owner of that apartment is not to the point...

The conduct of the appeal

1. The Notice of Appeal was filed on 17 October 2011. The appeal was heard on 2 March 2012.

1. At this hearing, Mr Wai Kong Lo, who is Patrick's father, was given leave to represent Patrick as his agent. Mr Lo indicated that he relied on an amended Notice of Appeal, filed on 5 January 2012, and on a document headed 'Applicant's second submission' (hereafter 'the Appellant's submissions'), which he handed up at the hearing. This document is in fact a slightly expanded version of an earlier document bearing the same heading. It is lengthy and repetitive. Because Mr Lo is not proficient in spoken English, he did not seek at the hearing to supplement the Appellant's submissions to any significant extent.

1. Mr Gerard, who appeared for the Commissioner, relied on a Notice of Reply, filed in response to the amended Notice of Appeal, and on written submissions, filed on 31 January 2012. He handed up a copy of the earlier version of the 'Applicant's second submission', marked up in a manner that identified 18 numbered grounds of appeal within it. Mr Lo advised us that he was happy to adopt this clarification of the grounds of appeal.

1. Mr Gerard also applied for an order striking out the appeal under section 73(5)(g)(ii) of the Administrative Decisions Tribunal Act 1997 ('the ADT Act') on the ground that it was misconceived and lacking in substance. We declined to do so, stating that in our opinion it was preferable to hear arguments on the appeal in the normal way.

Our decision

1. Although, as just indicated, we were not prepared to dismiss this appeal summarily, we are firmly of the view, having considered the arguments put to us, that it must be dismissed.

1. In broad terms, our reasons for so deciding are these. A number of the 18 grounds of appeal evidently proceeded from a misunderstanding of the particular passages in the Tribunal decision to which they were directed. Although the amended Notice of Appeal stated that the appeal was made on questions of law only, many grounds alleged errors of fact, not of law. With one exception, the few errors of fact that were established were not such as to indicate that an error of law had occurred, or to require for any other reason that leave be granted, under section 113(2)(b) of the ADT Act, for the appeal to extend to the merits. The submissions supporting the grounds of appeal that did raise a question of law did not establish any error of law. Finally, the only error of law that we have discerned is not such as to require that the Tribunal's order affirming the Commissioner's decision should be set aside or modified in any way.

1. We will now elaborate on these reasons for dismissing the appeal.

Consideration of the individual grounds of appeal

1. Ground 1 alleges that the Tribunal (at [4]) misrepresented the contents of certain correspondence in late 2009 between the Commissioner and Patrick. The issues raised in that correspondence did not, however, bear to any extent on the correctness of the Commissioner's decision.

1. Ground 2 makes a similar assertion about the Tribunal's account (also at [4]) of correspondence in early 2010 between the Commissioner and Patrick. One matter alleged is that the Tribunal omitted to mention a claim by Patrick, in an email to the Commissioner on 9 January 2010, that members of the Lo family resided in the Property for various periods. Between 3 February 2008 and 31 March 2009, these periods allegedly totalled 208 days. Between 1 July 2008 and 31 March 2009, they totalled 189 days.

1. An assumption apparently underlying this claim, to which reference is also made in Grounds 8, 9,13 and 18, is that in assessing whether the Property was Patrick's PPR, periods when Annette (or Annette and Adrian) resided there without Patrick should be treated as equivalent to periods of residence by Patrick. But this assumption is incorrect, as the opening words of clause 2(1) of Schedule 1A to the Act ('Land used and occupied by the owner...') make clear. Confirmation of this point by the Court of Appeal in Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 at [57] was in fact expressly mentioned at [31] by the Tribunal, quoting from submissions put to it by the Commissioner.

1. Another fallacious assumption is that in determining liability to land tax for the 2009 tax year - which is the last of the five Tax Years involved in this case - periods of residence in the Property during the calendar year 2009 must be taken into account. The mention of a total number of days (189) for the period between 1 July 2008 and 31 March 2009 suggests an assumption that land tax is calculated by reference to the same tax years as are used for the purpose of income tax. But land tax is calculated by reference to calendar years and liability to tax for the 2009 tax year is based on the situation obtaining at midnight on 31 December 2008. This follows from section 8 of the Act, which states:-

8 Date of ownership for purposes of land tax

Land tax shall be charged on land as owned at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied.

In this section year means the period of twelve months commencing on the first day of January.

1. The other issues raised in the relevant correspondence between the Commissioner and Patrick did not bear to any extent on the correctness of the Commissioner's decision.

1. In Ground 3 , it is argued that the Tribunal (at [4]), instead of setting out briefly the reasons underlying the Commissioner's decision in the course of summarising the facts of the case, should have decided it in Patrick's favour, for reasons that are then outlined in the submissions accompanying Ground 3. It is sufficient to say that this Ground displays a complete misunderstanding of the role played by the relevant passage in the Tribunal's decision.

1. Ground 4 focuses on paragraph 11 of the Agreed Statement of Additional Facts (reproduced by the Tribunal at [9]), which was in these terms:-

Patrick was employed by Tektron in Hong Kong for 15 years, during which time Tektron always provided him with a rented apartment for his use; being three rented apartments over the 15 year period.

1. The claim made is that there was no evidence to support this finding and that the Tribunal should instead have stated:-

The company provided rented apartment ( sic ) since the Applicant's marriage with his wife, Annette, in October 2004.

Prior to the Applicant's marriage with Annette Yu, the Applicant shared apartment with various people and various lease agreements.

1. Because the relevant sentence in the Tribunal's decision formed part of the Agreed Statement of Additional Facts, we agree with a submission by Mr Gerard that it was not open to challenge in the appeal.

1. Ground 5 maintains that instead of explaining (at the commencement of [9]) the status of the Agreed Statement of Additional Facts, the Tribunal should have decided this case in Patrick's favour, for reasons that were then outlined in the Appellant's submissions. As with Ground 3, this Ground displays a misunderstanding of the role played by the relevant passage in the Tribunal's decision.

1. Ground 6 seeks to challenge a statement by the Tribunal (at [9]) that Patrick paid for some of the furniture at the apartments in Hong Kong where he lived with Annette. The basis of the challenge is that in oral evidence Patrick said that he paid for none of this furniture. But because the statement in the Tribunal's decision was drawn from the Agreed Statement of Additional Facts, it is not open to challenge in the appeal. Furthermore, the question raised in this Ground was a question of fact only.

1. Ground 7 challenges a ruling by the Tribunal (at [12]) that the 2011 tax year (in respect of which the Commissioner did grant an exemption from land tax on the Property) could not be brought into consideration because no mention of it had been made at the hearing and no application to reopen the proceedings in order to admit relevant evidence had been made. It is submitted that the Tribunal was 'aware of' the 2011 assessment of' the Property, that for the purposes of land tax the circumstances of the Tax Years and those of the 2011 tax year should have been held to be 'identical' and that 'extremely different' conclusions should therefore not have been reached. This submission does not, however, put forward any reasons for questioning the legal correctness of the relevant ruling by the Tribunal, namely, that in the particular circumstances of the case the evidence regarding the 2011 tax year should not be admitted.

1. Ground 8 challenges the Tribunal's characterisation of the Property (in paragraph [18], quoted above) as 'analogous to a holiday home', claiming that it was obviously Patrick's 'permanent home'. It maintains that this characterisation was 'based on incorrect evidence'. But the question raised is manifestly one of fact only, since the descriptive phrase 'holiday home' does not have, and was not identified by the Tribunal as having, any legal significance.

1. In Ground 9 , it is claimed that the Tribunal, at [21] (quoted above), should not have assumed, in the absence of evidence, that (a) Adrian might not actually attend the school in Mosman at which he had been registered, and (b) 'the Applicant will not reside in the Property because of his health'. As to the first of these claims, however, the Tribunal's recognition that registration for a school does not necessarily lead to enrolment is entirely justifiable. The second claim clearly proceeds from a misunderstanding of the Tribunal's observation regarding Patrick's health.

1. The alleged error identified in Ground 10 is as follows: the Tribunal said at [15] that the period during which Patrick lived in the Property between its acquisition by his parents and his departure for Hong Kong 'could not have lasted for more than approximately a year', whereas in fact it was '14 months, two months more than a year'. We will simply say that this Ground eminently deserves the label that Mr Gerard, in his application for the appeal to be summarily dismissed, sought to attach to the appeal as a whole. It is 'misconceived and lacking in substance'.

1. Ground 11 questions the Tribunal's reliance, at [32] (quoted above), on the fact that when arriving in or departing from Australia during the Tax Years, Patrick and Annette described themselves as visitors to Australia when filling in their immigration cards. In the accompanying submissions, it is pointed out that during the hearing the presiding Judicial Member stated that in his opinion (based on his experience at the Administrative Appeals Tribunal) 'they' (meaning presumably Patrick and Annette) 'did not take the immigration cards all that seriously', but completed them in a 'cavalier' manner. He said also that he did not think he ever saw a 'valid one'. These statements do indeed appear at odds with the observations in the Tribunal's decision. But that is insufficient to establish that these observations are erroneous, let alone that they constituted an error of law.

1. Ground 12 is addressed to paragraph [24] of the Tribunal's decision, which contained no more than a recitation of the terms of clause 2 of Schedule 1A to the Act. The claim made in this Ground is that, for reasons briefly summarised, the Tribunal should have held in Patrick's favour. In this Ground, there is again a misunderstanding of the role played by the relevant passage in the Tribunal's decision.

1. Ground 13 refers to a ruling by the Tribunal (at [25]) that Patrick was 'clearly not entitled to relief' under clause 8 of Schedule 1A. It contends that clause 8, which is quoted, was relevant in this case because Patrick and his family resided in the Property for 189 days between 1 July 2008 and 31 March 2009. In disposing of this Ground, it is sufficient to point out that the relief granted by clause 8 is available to owners of property which they have used as their principal place of residence, in circumstances where they reside for a period in another property which they do not own. Residence by Patrick in the Property between 1 July 2008 and 31 March 2009 could conceivably be relevant to a claim by him for exemption under clause 8 for the 2010 tax year or for some later tax year. But the Tax Years in these proceedings cease at 2009.

1. The remaining Grounds, 14 to 18, seek to rebut propositions that were put before the Tribunal in the Commissioner's submissions and reproduced, with an endorsement of their correctness, in the Tribunal's decision at [31].

1. Ground 14 takes issue with a statement that because the Act does not provide any 'technical or legal meaning' for the phrase 'use and occupy', this phrase must be understood according to its 'ordinary meaning'. The claim made is that this statement showed the Tribunal's decision to have been 'made without statutory provision' and that, having regard to a Land Tax Revenue Ruling, 'LT - 20: Principal Place of Residence' and to factors spelt out in preceding Grounds, Patrick's claim for exemption should have been granted. This submission, which seeks to establish that the Tribunal erred in law by interpreting the phrase 'use and occupy' in the Act in a manner that was 'without statutory provision', is manifestly without merit.

1. Ground 15 questions a statement relating to the interpretation of the phrase 'use and occupy'. The argument put is that this statement (called a 'finding') was 'partial and incomplete' and that a number of additional 'findings' should also have been made, including propositions as follows: (a) in order to establish 'occupation', one does not have to prove continuous physical presence or physical presence on every part of the land; (b) so long as a person retains the right to possession and control of possession, that person remains in 'occupation'; and (c) the question whether an occupation was by way of principal place of residence is not necessarily answered by considering the length of time of occupation, or the lack of any lengthy period of time, because no minimum time is specified in the Act. In support of this argument, passages from three cases are quoted: Commissioner of Land Tax v Christie [1973] 2 NSWLR 526 at 533-534, Flaracos v Chief Commissioner of State Revenue [2003] NSWSC 68 at [29] and Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP 41 at [15].

1. The assumption underlying this argument appears to be that the Tribunal held the Property to have not been a 'place of residence' of Patrick at any time during the Tax Years. But the Tribunal appears to have held, or at least assumed, to the contrary. In paragraphs [28 - 30], quoted above, it pointed out that where a taxpayer resides at different times in two places of residence, there must be 'a factual analysis on an objective basis of which is his or her principal place of residence'. In this situation, the principal place of residence may be found to be a property which the taxpayer does not own, with the consequence that the exemption in clause 2A cannot be claimed with respect to the place of residence that the taxpayer does own.

1. These considerations would not have been relevant to the Tribunal's decision in the present case if its view had been that the Property was never a place of residence of Patrick during the Tax Years. Its conclusion was that, irrespective of whether the Property was at times a place of residence, Patrick's principal place of residence during each of the Tax Years was in Laguna City, Hong Kong - first Flat G, 10F Block 36, then Flat E, 26/F Block 28.

1. For these reasons, while the propositions urged in Ground 15 are broadly correct as a matter of law, they do not provide any reason for disturbing the Tribunal's decision.

1. Ground 16 questions a recital (in the Commissioner's submissions to the Tribunal) of the factors to be considered in assessing a taxpayer's 'principal place of residence' through quoting passages from the Appeal Panel's decision in Chief Commissioner of State Revenue v Mesiti [2003] NSWADTAP 57. This was a case in which the taxpayer had two places of residence, at Willoughby and at Drummoyne, and a choice had to be made as to which was her principal place of residence. Within the passages quoted from Mesiti , the points emphasised in the Appellant's submissions are these: (a) 'it would be wrong to decide that a place was the principal place of residence merely, or even mainly, on the basis of a comparison of times spent in each' (at [57]); (b) the fact that the taxpayer had 'no enforceable interest in or right to reside in' the Drummoyne property was regarded by the Appeal Panel as indicating that it was not her principal place of residence (at [58]); and (c) the Panel made the following observations, at [61], when concluding that the Willoughby property was her principal place of residence:-

She owned it. She had continuous control of possession and occupation over it. Apart from her clothing, her possessions were there. Her sons lived there, rent free. The ties of her connection to it as a residence were stronger and more settled than those of her connection to Drummoyne.

1. Undoubtedly, these passages quoted in the Appellant's submissions are relevant to cases such as the present. But the argument put in Ground 16 is that the Tribunal should have treated them as mandating a decision in Patrick's favour, because some of the facts in Mesiti resemble facts present in this case. But far from identifying all of the relevant considerations, these passages only draw attention to a selected few that provide support for Patrick's claim. Other factual aspects of his situation - for example, the very short periods of time that he spent in the Property during the Tax Years - are conveniently left out of account. The passages quoted from Mesiti do not provide any reason for concluding that the Tribunal erred in identifying all the relevant considerations or attributing appropriate weight to them.

1. Ground 17 attempts, in a similar fashion, to demonstrate that the Property should have been held to be Patrick's principal place of residence because a passage in another Appeal Panel decision, Chief Commissioner of State Revenue v Ferrington (GD) [2004] NSWADTAP 41, refers to factors that are claimed to support his case. In that decision at [42], the Appeal Panel summarised as follows the principles applying to determining whether a property was the 'principal place of residence' under the First Home Owners Grant Act 2000 (authorities cited are omitted):-

First, the words "principal place of residence" should be given their ordinary meaning in the context in which they appear:... Thus the Commissioner's reference to the provisions of the Land Tax Management Act 1956 is of no assistance. 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 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 personal circumstances...

1. The argument put in Ground 17, based on the fourth and fifth of these principles, is as follows. Patrick did not have any 'permanent connection or relation' with either of the apartments where he stayed in Hong Kong, because they were rented by his employer for his use and his right to stay in them was dependent on the lengths of the rental agreements and on his continuing in employment. His connection with them was therefore 'temporary, transient [and] contingent'. By contrast, his connection with the Property, over which he had 'continuous control of possession and occupation', was 'permanent and tight'.

1. The principal flaw in this argument is that it treats the evidence in the case suggesting that Patrick had a long-term 'connection' with the Property - by virtue, particularly, of his having lived there for some six months after his return from Hong Kong in November 2010 and his having evinced an intention to return there at some future time - as carrying more weight than the evidence showing a very substantial and immediate 'connection' with the apartments where he resided in Hong Kong during each of the Tax Years. Furthermore, it fails to take account of the explicit warning, at the commencement of this passage from Ferrington , against applying the same interpretation of the phrase 'principal place of residence' in two different statutory contexts. The range of factors to be considered under the First Home Owners Grant Act 2000 were very different to those arising under the Land Tax Management Act 1956. The notion that only brief 'use and occupation' during a relevant period for tax purposes may be 'compensated for', in some sense, by evidence of a long-term future 'connection' with the property may have been sufficient under the former Act. But it cannot survive against the strong emphasis placed on current use and occupation by subclause (2) of clause 2 of Schedule 1A of the latter Act (and in particular, by the six-month requirement in paragraph (a) of this subclause).

1. Finally, Ground 18 responds to a brief outline (in the Commissioner's submissions to the Tribunal) of the nature of the factual inquiry confronting the Tribunal by, in effect, repeating once more all the reasons why, according to the Appellant, his appeal should be allowed. This submission is misplaced and its contents add nothing to what was already said in the context of the preceding 17 Grounds.

The error in the Tribunal's reasoning

1. As foreshadowed earlier, there is, in our opinion, one matter in relation to which the Tribunal's reasoning appears to be based on an error of law.

1. Near the commencement of paragraph [18], which is reproduced in full at [27] above, the Tribunal made the following findings as to periods of time spent by Patrick in Australia:-

... 11 days in Australia in the 2005 year, 14 days in the 2006 year, 15 days in the 2007 year, 14 days in the 2008 year and 33 days in the 2009 year.

1. The use of phrases such as 'the 2005 year' to describe these periods of time is ambiguous in the context of the Land Tax Management Act . The reason is that, as we indicated above at [42], section 8 provides for land tax to be charged on land as owned at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied. The phrase '11 days in the 2005 year' could therefore mean 11 days within the calendar year 2005, or it could mean 11 days within the period during which the taxpayer's place(s) of residence must be investigated in order to determine land tax for the tax year 2005 - i.e., within the calendar year 2004.

1. A table in paragraph 15 of Patrick's affidavit, sworn on 4 February 2011, demonstrates that the figures set out in this part of the Tribunal's decision did in fact relate to calendar years. He was in Sydney for 11 days during the calendar year 2005, 14 days during the calendar year 2006, and so on.

1. The Tribunal, however, clearly treated these periods of time spent by Patrick in Sydney during the calendar years 2005 to 2009 inclusive as the relevant periods when determining his land tax liability for the Tax Years 2005 to 2009. This was incorrect. By virtue of section 8, the period(s) of time spent by Patrick in Sydney during 2004, not 2005, should have been examined when determining his liability for the tax year 2005. The period(s) spent during 2009 would have been relevant to his liability for the tax year 2010, but since this liability was not in issue, they were not directly relevant to the decision to be made by the Tribunal.

1. This error was not mentioned in the Appellant's submissions. But we consider it appropriate, in all the circumstances, to treat it as sufficient to warrant a grant of leave for the appeal to extend to the merits under section 113 (2)(b) of the ADT Act, so far as is necessary to determine whether any interference with the Tribunal's conclusions is warranted. What needs to be done is to determine whether the grounds for assessing Patrick as liable for land tax during each of the Tax Years (2005 to 2009) are materially altered when the total amount of time that he spent in Australia during each of the calendar years 2004 to 2008 is linked with the tax year immediately following.

1. During the calendar years 2005 to 2008, the total amount of time so spent varied within a very limited range - 11 to 14 days - and was distinctly less than the total of 39 days for 2009. So far as the tax years 2006 to 2009 are concerned, therefore, the Tribunal's error is not of significance.

1. Patrick's affidavit discloses that during 2004 he visited Australia on three occasions: between 22 and 28 June, between 7 and 9 August and between 9 and 17 October (during which time he and Annette were married). The total time spent was only 16 days. Substituting 16 days for 11 days (the figure that the Tribunal treated as relevant for the tax year 2005) is not enough of itself to suggest that the Tribunal arrived at the wrong result for that year.

1. A further matter to be taken into account is, however, that it was only after his marriage to Annette in October 2004 that Patrick moved into the Hong Kong apartment - Flat G, 10F Block 36, Laguna City, formerly occupied by Annette alone - that the Tribunal held to be his principal place of residence for the purpose of assessing his liability for the 2005 tax year. The Tribunal's decision against him was evidently based on the assumption that during virtually all of the relevant period, which it took to be the calendar year 2005, he was residing in this apartment.

1. We have decided, after careful consideration, that this adjustment to the facts relevant to assessment for the 2005 tax year makes no difference to the outcome. The reason is that there are still no grounds for concluding that at midnight on the thirty-first day of December 2004 his principal place of residence was the Property that he owned in Mosman. He had not continuously used or occupied the Property for residential purposes during the preceding six months (as stipulated by paragraph (a) of clause 2(2) of Schedule 1A), nor were there other grounds to support this conclusion (as provided in paragraph (b)). All relevant factors point in fact to the conclusion that his principal place of residence had become (as it remained until May 2009) the apartment at Flat G, 10F Block 36, Laguna City, Hong Kong.

1. Accordingly, this error that we have discerned in the Tribunal's reasoning does not call for any interference with its decision.

Our orders

1. For the foregoing reasons, the appeal must be dismissed.

1. In his submissions, Mr Gerard advised that the Commissioner, if successful, would seek an order for the costs of the appeal. Awards of costs in Tribunal proceedings (including appeal proceedings) under the Act are governed by section 88 of the ADT Act. Section 88 commences as follows:-

(1) Each party to proceedings before the Tribunal is to bear the party's own costs in the proceedings, except as provided by this section.

(1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following:...

1. Within subsection (1A), there then follows a list of factors that the Tribunal must take into account in deciding whether it is 'fair' to award costs. Under subparagraph (c) of this subsection, a factor to be taken into account in determining whether it is 'fair' to award costs is 'the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law'. In recent Appeal Panel decisions under section 88, it has been said more than once that costs should generally be awarded against an appellant if the appeal had no reasonable prospects of success.

1. For reasons set out above, we would characterise this appeal as clearly unmeritorious. An award of costs to the Commissioner would therefore appear 'fair'.

1. This conclusion is however only provisional. Directions set out below provide an opportunity for it to be reconsidered.

1. We direct as follows. Unless within 21 days the Appellant files and serves submissions showing why costs should not be awarded against him, the Appellant is to pay on a party-party basis the Respondent's costs of and incidental to this appeal. If such submissions are filed, the Respondent must file and serve submissions in response within a further 21 days. The Appeal Panel will determine the matter of costs without a hearing, pursuant to section 76 of the ADT Act.

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Decision last updated: 19 March 2012