McKellar v Chief Commissioner of State Revenue

[2005] NSWADT 116

CITATION:	McKellar v Chief Commissioner of State Revenue [2005] NSWADT 116
DIVISION:	General Division
PARTIES:	APPLICANT Trent Finlay McKellar RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	043343
HEARING DATES:	15/12/2004
SUBMISSIONS CLOSED:	12/15/2004
DATE OF DECISION:	05/26/2005
BEFORE:	Needham J SC - Judicial Member
APPLICATION:	first home owners grant - reversal of original decision - First Home Owners Grant Act - first home owners grant - reversal of original decision
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	First Home Owners Grant Act 2000
CASES CITED:	Chief Commissioner of State Revenue v Ferrington [2004] NSWADTAP 41 McKellar v. Chief Commissioner of State Revenue [2004] NSWADT 22
REPRESENTATION:	APPLICANT In person RESPONDENT I Mescher, counsel
ORDERS:	1. The decision of the Chief Commissioner reversing the decision to issue a grant and seeking repayment of $8,400 (including a penalty of 20%) is overturned; 2. The applicant is entitled to retain the grant.

Introduction

1 I gave a decision in this matter on 17 February 2004 (McKellar v. Chief Commissioner of State Revenue [2004] NSWADT 22). The Chief Commissioner appealed from that decision to the Appeal Panel. The appeal was upheld and the matter remitted to me to “be heard and decided again by the Tribunal (as originally constituted) according to law, taking note specifically of the principles laid down by the Appeal Panel in Chief Commissioner of State Revenue v. Ferrington [2004] NSWADTAP 41”. The further hearing took place on 15 December 2004.

2 The principles referred to by the Appeal Panel appear in paragraph 42 of the Ferrington decision and are (citations and references removed and bold emphasis added):-

“ 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, as Gaines demonstrates. 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. In Bates the Tribunal said that “whether the reasons for not residing at the property were as a result of matters entirely out of the control of the applicant” was a factor to be considered. While that is undoubtedly correct, it should not be read as stipulating a requirement that the reasons for departure must be entirely out of that person’s control. The facts in Gaines illustrate that there are circumstances, peculiar to the individual concerned, which may, objectively viewed, adequately and reasonably explain a person’s decision to move out of a property, but which are not entirely out of the person’s control.”

3 The Appeal Panel further directed that the Tribunal should hear “any further evidence advanced by the parties” at the rehearing.

4 The parties, most appropriately, confined themselves to evidence and submissions which had not been considered at the first hearing. I am grateful to the parties for the way in which the rehearing was conducted.

Facts

5 The facts which I have found, taking into account the rehearing, are these.

6 Trent Finlay McKellar (“the applicant”) applied on 4 July 2000 for a First Home Owner Grant of $7,000 in respect of his purchase of the property 18 Cypress Close, Bluehaven, New South Wales (“the property” or “Bluehaven”). The application was granted on 3 August 2000 pursuant to s 17 of the First Home Owner Grant Act 2000 (“the Act”) and the grant paid to the applicant, who used it for the purchase of the property.

7 The applicant took a mortgage out on the property with the Commonwealth Bank. He disclosed to the Bank that the property was intended to be occupied by him as an owner/occupier rather than for investment purposes, and the loan application form in evidence reflects that disclosure..

8 At the time of purchasing the property, the applicant was (and remains) employed as an Avionics Technician with the Royal Australian Air Force. He was in a relationship with a Ms Rodgers who was then completing her nursing training at Wyong.

9 Prior to the settlement of the purchase, the applicant approached a local real estate agency, Lakehaven First National, and entered into a management agency agreement with them to rent out the property at a rent of $210.00 approx per week (exhibit C). This was new evidence on the rehearing.

10 A statement from an agent from Lakehaven First National was tendered at the rehearing, giving evidence of conversations with the applicant as to the applicant’s intention to reside in the property. Unfortunately that agent was not cross-examined on the apparent conflict between the statements by the applicant, and the management agency agreement which appears to indicate an intention to rent the property out.

11 The property purchase settled on 25 August 2000. The applicant stayed there overnight, and moved his furniture into the house from the barracks the next day. He connected the electricity and telephone in his own name. He insured the building, but not the contents. He says that he resided at the property from that time until 27 September 2000, although he sometimes stayed at Ms Rogers’ parents’ place in Pitt Town when he was working shift work, and for a period of eight days he was away with his squadron on a rescue.

12 On 20 September 2000 the applicant instructed the real estate agents to find tenants for the property, and the property was leased from October 2000 until it was sold by the applicant recently. The applicant moved back to the Air Force base, he says, for a number of reasons:-

a) He was finding the long drive from Bluehaven to Richmond difficult when called in urgently;

b) The time spent driving did not comply with Air Force guidelines, and that the distance and shiftwork impact may create a difficulty in his work.

c) His relationship with Ms Rogers broke up due to his work commitments and travel to and from Bluehaven, and as a result his intentions of living with her at Bluehaven, and Ms Rogers contributing to the expenses, were not fulfilled.

13 As a result of the above factors, he complied with a “suggestion” from his commanding officer that he reside closer to the Air Force Base in Richmond. He said in evidence that “suggestions” from supervisors, while not “orders”, were best complied with in the interests of his career.

14 Accordingly, he moved back to base, rented out the property, and has not purchased any other property. The property was subsequently sold.

15 On 30 January 2003 the Office of State Revenue (“OSR”) wrote to the applicant requiring a statutory declaration as to residence in the property along with documentary evidence of the occupancy. The applicant complied on 13 February 2003, citing the “break-up of a personal relationship” and a resulting inability to meet financial commitments as the reasons for his moving back to the barracks.

16 On 13 March 2003 the OSR sent a notice to the applicant pursuant to s 45 of the Act, reversing the decision to award a grant and imposing a penalty of 20%. The applicant’s solicitors objected on 7 April 2003, setting out broadly the same facts as set out above and contending that “he took up permanent residence in the property on 26 August 2000”.

17 The objection was considered by the OSR but disallowed by letter of 20 June 2003. The applicant sought review of the disallowance by filing an application with the Tribunal on 15 August 2003, which application was within the time provided by s 28(4) of the Act. As noted above, the matter has been to both a first instance hearing and to the Appeal Panel.

Consideration of the Evidence in the light of Ferrington

18 I come now to consider the evidence, both that given at the original hearing and that given on the rehearing, in light of the decision in Ferrington.

19 The first Ferrington factor does not involve any application to the facts. The second factor 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 dwelling.

20 The third Ferrington factor is that of the applicant’s intention. The applicant says that his intention was to occupy the dwelling as a principal place of residence, and the respondent says that that intention is undercut by the new evidence of the entering into of the Management Agency Agreement in relation to rentals of the property. While, on its face, entering into an agreement prior to the settlement of the purchase seems inconsistent with an intention to rent the property, the applicant explained it by reference to his job in the Air Force and the uncertainties which that held. He said that he recognised that he might be called away suddenly from his home for extended periods and have to rent the property out; in that situation, he wanted to have the agency already engaged and able to act on his wishes. I am satisfied that the applicant was being truthful in that explanation and, in the light of the requirements of his employment to leave home at short notice to serve away from base and, on occasion, overseas, the explanation is objectively reasonable.

21 The fourth Ferrington factor is the degree of permanence of the occupation. I found on the facts at the first hearing that, despite the shortness of the occupation, the occupation had the necessary permanence to it. The applicant moved in along with his belongings and began living in the property. He was not merely occupying the property as an impermanent residence; he was living there. I find that the occupation had the necessary degree of permanence to it.

22 The fifth and sixth Ferrington factors - the length of time the person occupied the property and the reason for leaving - can be considered together. The applicant says that while the occupation was short, it was terminated because of factors beyond the control of the applicant. The respondent claims that the entering into of the management agency agreement shows that the occupancy was short because the applicant intended, prior to moving in, to vacate and to rent the property out. Having seen the applicant in the witness box on two occasions, I am satisfied that his explanation for the shortness of occupation and of the reasons for his leaving the property are as he stated; that he was required by his work to live closer to the Base and that living at the property became infeasible.

Conclusion

23 I was satisfied at the original hearing, and I remain satisfied on consideration of the evidence presented at the further hearing, that the objective circumstances of the occupation was as the applicant’s principal place of residence.

24 Accordingly, I set aside the decision of the Commissioner to reverse the original decision to pay the applicant a grant under the First Home Owners Grant Act 2000, and the decision to impose a penalty. The original decision to pay the grant is upheld.