Meillis v Chief Commissioner of State Revenue

[2005] NSWADT 210

CITATION:	Meillis v Chief Commissioner of State Revenue [2005] NSWADT 210
DIVISION:	Revenue Division
PARTIES:	APPLICANTS Grahame Mellis & Elizabeth Mellis RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	056044
HEARING DATES:	6/09/2005
SUBMISSIONS CLOSED:	09/06/2005
DATE OF DECISION:	09/09/2005
BEFORE:	Block J - ADCJ (Judicial Member)
APPLICATION:	Duties Act - principal place of residence
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Duties Act 1997 Income Tax Assessment Act 1997 (Cth) Interpretation Act 1987
CASES CITED:	Chief Commissioner of State Revenue v Aldridge [2003] MSWTAP 50 Chief Commissioner of State Revenue v Aldridge [2003] MSWTAP 50 CIC Insurance Ltd v Bankstown Football Club Ltd (1997) CLR 384 Doney v Chief Commissioner of State Revenue [2005] NSWADT133 Full v Chief Commissioner of State Revenue [2005] NSWADT 190 Newcastle.City Council v GIO General Ltd (1997) 191 CLR 85
REPRESENTATION:	APPLICANTS In person RESPONDENT R Seiden, barrister
ORDERS:	The decision under review is affirmed

Part A. Introduction and general

1 The objection decision under review is the disallowance by notice (dated 8 April 2005) of an objection dated 8 March 2005 against an assessment of vendor duty dated 3 May 2005.

2 The Tribunal had before it the documents lodged pursuant to section 58 of the Administrative Decisions Tribunal Act 1997. In addition the Tribunal was furnished with submissions by both of the parties. The Respondent and moreover furnished the Tribunal with a binder containing relevant legislative material and case reports.

3 The facts are not in dispute. I include in these reasons the content of the Respondent’s Submissions under the head of “Background” as follows:

1. The facts are not in dispute.

2. The Applicants acquired their home at 11 Rangers Avenue, Mosman in December 1988 (“the Property”). The Applicants and (for some of the time) their children resided at the Property until January 1998.

3. From January 1998 until July 31, 2004, the Applicants resided overseas (over 6 and one half years of absence)

4. The Property was tenanted and the Applicants derived rental income from the Property during that time

5. The Applicants returned to Sydney in August 2004 and moved back into the Property.

6. The Property was listed for sale on October 30, 2004. The Applicants exchanged contracts for the sale of the Property on January 28, 2005 and the contract was settled on May 12, 2005.

7. The Applicants moved out of the Property (on sale) approximately 9 months after having moved in again

8. (not relevant having regard to clause 1 above) --

4 The Respondent’s submissions in this matter are particularly detailed. They deal comprehensively and clearly with all matters which are or might be relevant.

Part B Certain aspects raised during the hearing dealt with in brief

5 Mr Mellis who appeared for both Applicants, referred to the decisions of the Tribunal in Doney v Chief Commissioner of State Revenue [2005] NSWADT133 and Full v Chief Commissioner of State Revenue [2005] NSWADT 190; he claimed that in each of those cases a discretionary power contained in section 162B(4) of the Duties Act 1997 (“the Act”) was exercised in favour of the relevant applicant and that in his view the Applicants have a stronger case than either of the applicants in those cases. Whether this is so or not is irrelevant simply because the discretion in question was abolished. Section 162B(4) of the Act which contained the relevant discretionary power was repealed by Act 96 of 2004, as from its date of assent, and being 15 December 2004. The Respondent’s submissions, presumably ex abundante cautela, deal with the provisions of section 30(1) of the Interpretation Act 1987, and more particularly as to whether it could be argued that the repeal did not affect a right or privilege acquired by the Applicants under the Act. The simple answer is that at the date of the repeal, the Applicants had not acquired any such right or privilege because they had not then sold the Property. As set out previously, the Property was sold on 28 January 2005; that date is the “liability date” as defined in section 150 of the Act. The Respondent’s submissions referred to 12 May 2005 as the liability date; Ms Seiden, early in the hearing, said that the correct liability date was the date of exchange of contracts rather than the date of completion. Nothing turns on this question since the result in either case is the same.

6 The Respondent’s submissions also deal in considerable detail (and presumably for much the same reason) with the construction of the relevant legislation. Reference was made to the Second Reading Speech (in respect of the relevant bill) delivered on 7 May 2004 and which provided relevantly that:

In addition, a person who is required move away from their nominated principal place of residence without establishing another principal place of residence will be able to maintain exempt status for the property for vendor or duty purposes for up to six years. This concession is similar to the concession provided in the Commonwealth’s capital gains tax legislation. (Emphasis added)

7 In fact the legislation in respect of the relevant concession differs from that in respect of the main residence exemption for capital gains tax, contained in the Income Tax Assessment Act 1997 (“ITAA”). In particular the provisions of clause 5(1)(b)) of Schedule 2 to the Act do not appear in the corresponding provisions of ITAA. In addition, the vendor duty provisions contain no apportionment provisions analogous to section 118-185 of ITAA. The Respondent’s submissions deal in some considerable detail with cases referable to the manner in which statutes should be interpreted. Reference was made in particular to CIC Insurance Ltd v Bankstown Football Club Ltd (1997) CLR 384 and to Newcastle.City Council v GIO General Ltd (1997) 191 CLR 85. On the basis that the Second Reading Speech was relevant extrinsic material, it proposed only that the vendor duty concession would be similar to that in respect of capital gains tax. In any event to rewrite legislation (cast in clear terms) in accordance with comments of such a nature in extrinsic material would be altogether incorrect.

Part C. The legislation

8 The result then is that this decision turns on whether the Applicants do or do not fall within an exemption or concession contained in the Act.

9 The only possible exemption is that contained in section 162B(3) which reads as follows:

3) For the purpose of this Chapter, 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 for a period of at least 2 years ending immediately before the date on which, but for this Division, a liability for vendor duty would arise, or

(b) the land has been used and occupied by the person for residential purposes and for no other purposes for a total period of at least 3 years in the 5 years ending immediately before the date on which, but for this Division, a liability for vendor duty would arise and during those 3 years no other land was used and occupied by the person for residential purposes, or

(c) if the vendor became an owner of the land (or the land use entitlement to which the land is subject) less than 2 years before the date on which, but for this Division, a liability for vendor duty would arise, the Chief Commissioner is satisfied that the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes since the vendor became an owner of the land (or land use entitlement.

10 It is clear that the Applicants do not satisfy the provisions of section 162B(3); although they had owned the Property for a longer period, they resided in the Property for approximately 6 months prior to the liability date.

11 The only possible concession is that contained in clause 5 of Schedule 2 to the Act which reads as follows:

5 Concession for absences from former residence

(1) If the Chief Commissioner is satisfied that:

(a) land to which a vendor duty transaction relates ( "the former residence") has been used and occupied by the vendor as his or her principal place of residence for a continuous period of at least 2 years, and

(b) that period of use and occupation ended no more than 6 years before the vendor duty transaction occurred, the vendor is entitled (if the vendor so chooses) to be taken, for the purpose of the principal place of residence exemption, to have continued to use and occupy the former residence as his or her principal place of residence during the period after that actual use and occupation ended.

(2) The maximum period for which the vendor may be taken, under this clause, to continue to use and occupy the former residence as a principal place of residence is 6 years starting at the end of the most recent actual occupation period of at least 2 years.

(3) An "actual occupation period" is a period during which the former residence was actually used and occupied by the vendor as a principal place of residence, and does not include any period for which the vendor may be taken, under clause 4 or this clause, to have used and occupied the former residence as a principal place of residence.

(4) Any period for which a person is taken pursuant to this clause to have continued to use and occupy a former residence as his or her principal place of residence is to be disregarded as a period of use and occupation of any other residence as the person’s principal place of residence (despite the fact that the use and occupation of the other residence during that period was use and occupation as the person’s actual principal place of residence).

(5) This clause is subject to section 162DB (which limits members of a family to one principal place of residence exemption).

12 The Applicants comply with clause 5(1)(a) in that they did, up until January 1998 reside in the Property for a continuous period of more than two years. But the Applicants do not satisfy clause 5(1)(b) in that that period of residence ended approximately 7 years before the liability date. Compliance with both provisions is required in order to take advantage of the concession.

Part D. Other relevant matters.

13 The concession in clause 5 of Schedule 2 to the Act requires that the Respondent be satisfied as to compliance with its provisions. The Respondent cannot be satisfied as to compliance with clause 5(1)(b)). The provisions of clause 5 do not in their terms confer a general discretion. (Chief Commissioner of State Revenue v Aldridge [2003] MSWTAP 50)

14 The Respondent’s Submissions deal under the head of “Transitional Provisions and Retrospectivity” with an aspect which appeared to me to be of marginal relevance. It is sufficient to note that a statute is not retrospective simply because it relies on conduct (in this case the acquisition of the Property itself) which occurred before the relevant provisions of the Act were introduced. (Affinity Health Ltd v CCSR [2005] MSWSC 663) In any event the Act contains express provision to the contrary; see clause 41(1) of Schedule 1.

Part E Conclusion

15 In the result the Applicants cannot succeed simply because they do not come within either the exemption set out in section 162B(3) or the concession contained in clause 5 of Schedule 2. The Applicants are in many respects most unfortunate; a discretion which might have assisted them was repealed before they sold the Property. In addition an announcement that vendor duty is to be abolished came too late for them.

16 The result is that the decision under review must be affirmed