Miller v Chief Commissioner of State Revenue

[2009] NSWADT 136

CITATION:	Miller v Chief Commissioner of State Revenue [2009] NSWADT 136
DIVISION:	Revenue Division
PARTIES:	APPLICANTS Neill Desmond Miller and Katherine Julia Miller RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	086083
HEARING DATES:	20 May 2009
SUBMISSIONS CLOSED:	20 May 2009
DATE OF DECISION:	10 June 2009
BEFORE:	Handley R - Deputy President
CATCHWORDS:	Land Tax exemption – principal place of residence
LEGISLATION CITED:	Land Tax Management Act 1956 Taxation Administration Act 1996
CASES CITED:	IRG Technical Services Pty Ltd v Federal Commissioner of Taxation (2007) 165 FCR 57 Chief Commissioner of State Revenue v White [2008] NSWADTAP 27 Aronstan v Chief Commissioner of State Revenue [2008] NSWADT 8 Chief Commissioner of Taxation v Ferrington [2004] NSWADTAP 41 Executors of the Estate of William Kevin Hughes v Chief Commissioner of State Revenue [2009] NSWADT 8 Chief Commissioner of State Revenue v McIlroy [2009] NSWADTAP 21 Awan v Chief Commissioner of State Revenue [2009] NSWADT 75 Gilmour v Chief Commissioner of State Revenue [2007] NSWADT 145
REPRESENTATION:	APPLICANT M Richmond, counsel RESPONDENT A Rider, counsel
ORDERS:	The Chief Commissioner’s assessment of the Applicants’ liability for payment of Land Tax in respect of land at Rose Bay for the 2005 and 2006 Land Tax years is confirmed.

1 Neill Desmond Miller and Katherine Julia Miller (‘the Applicants’) have applied to the Tribunal for the review of a decision of the Chief Commissioner of State Revenue (‘the Respondent’), disallowing the Applicants’ objection to a notice assessing the Applicant as being liable for the payment of Land Tax on their property in Bayview Hill Road, Rose Bay (‘Bayview’) on the ground that it was not their principal place of residence at the relevant time.

The Facts

2 From 1988 until October 2002, the applicants resided at a property at Dalley Avenue, Vaucluse (‘Dalley’), initially with their three children. Between 1994 and 1996, their children moved out to establish their own homes. In March 2000, the Applicants bought a unit in a development in Walsh Bay off the plan with a view to ‘down-sizing’. They subsequently decided they had made a mistake: the unit was too small and they wanted to remain in the Eastern suburbs where most of their family and friends live. The Applicants therefore decided to sell the Walsh Bay unit and look for another suitable house in the Eastern suburbs. Settlement on the sale of the Walsh Bay unit took place on 1 August 2003, with the Applicants never having lived there.

3 On 22 March 2002, the Applicants exchanged contracts on the purchase of Bayview, with an extended completion date of 180 days to enable them to sell Dalley. Dalley was subsequently sold and settlement took place on 29 November 2002. Mr Miller said the house at Bayview was in poor condition and he and his wife decided that it would be necessary to demolish the existing house and build a new house on the land in order to meet their needs. The terms of the contract for their purchase of Bayview provided for the Applicants to obtain access to the property with architects, builders and other experts with a view to the re-development.

4 On 24 September 2002, the Applicants approved a design for the construction of a new house at Bayview with the architects David Walker and Peter Janks. Based on discussions with the architects, the Applicants expected the whole project – from design to the completion of construction - to take between two and two and a half years and to be completed before December 2004.

5 Settlement of the purchase of Bayview took place on 2 October 2002 and the Applicants moved into the property in November 2002. Because of the complexity of the re-development project, the development application (‘DA’) was not submitted to Woollahra Municipal Council (‘the Council’) until 8 May 2003. Then, because of the need to revise the hydraulic design to satisfy the requirements of Council, because of objections to the DA from a neighbour and a backlog in the Council’s processing of DA applications, DA approval for the re-development was not obtained until 10 February 2004. The approval was subject to 60 conditions.

6 Mr Miller said there were further delays in commencing demolition of the existing house, in part because of a lack of co-operation from a neighbour. Demolition commenced in late June 2004 and was completed in August 2004.

7 On 22 March 2004, the Applicants purchased an apartment in Ramsgate Avenue, North Bondi (‘Ramsgate’). Mr Miller said this was to provide them with a temporary place to live while the re-development of Bayview was being carried out and also as a potential investment. Ramsgate was close enough to Bayview to enable the Applicants to monitor its re-development. On 21 June 2004, the Applicants moved from Bayview to Ramsgate, where they lived until the re-development of Bayview was completed.

8 There followed further delays in the demolition and excavation of the Bayview site and the construction of the new house, which was not completed until October 2006. The Applicants moved back in on 20 October 2006.

9 On 21 May 2007, the Respondent issued a Land Tax Notice of Assessment to the Applicants in respect of Bayview for the 2005, 2006 and 2007 Land Tax years totalling $266,872.15 with remission of the premium rate of interest. Ramsgate was assessed as being exempt from Land Tax on the basis that it was the Applicants’ principal place of residence (‘PPR’). On 19 July 2007, the Applicants’ solicitors lodged an objection to the assessment, contending that Bayview was exempt from Land Tax as the Applicants’ PPR. Following correspondence between the parties, on 14 May 2008 the Respondent notified the Applicants’ solicitors that he had disallowed the objection in respect of the 2005 and 2006 Land Tax years, but had allowed the objection in respect of the 2007 Land Tax year and interest.

10 On 11 July 2008, the Applicants filed an application for a review of the decision with the Tribunal. Following three Directions Hearings, the matter was heard on 20 May 2009.

The Relevant Legislation

11 Pursuant to section 100(3) of the Taxation Administration Act 1996, an applicant for review bears the onus of proving his/her case in the Tribunal. The Applicants contend they were exempt from the payment of Land Tax in respect of Bayview for the 2005 and 2006 Land Tax years.

12 During the relevant period, pursuant to sections 7, 8 and 9 of the Land Tax Management Act 1956 (‘the LTM Act’), Land Tax was chargeable on the taxable value of land that was not exempt based on the ownership of the land as at midnight on the 31 December of each preceding year for which Land Tax was to be levied. Thus, the Applicants, being the registered owners of Bayview, were presumed to be liable for Land Tax on that land for the 2005 and 2006 Land Tax years based on their ownership of the land on 31 December of each preceding year, unless the land was exempt from tax.

13 Section 10(1) of the LTM Act provides, relevantly, that except where otherwise provided in the Act, certain lands shall be exempted from taxation under the Act, including:

(r) land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A,

14 ‘Principal place of residence’ is defined in section 3(1):

" principal place of residence " of a person means the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the principal place of residence of the person.

15 Schedule 1A of the LTM Act provides relevantly:

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) ...




(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".

(5) ...

3 Residential land - meaning

(1) In this Schedule, “residential land” means land that is used and occupied for residential purposes and for no other purpose, that use and occupation being use and occupation of buildings designed, constructed or adapted for residential purposes ...

6 Concession for unoccupied land intended to be owner’s principal place of residence

(1) An owner of unoccupied land is entitled to claim the land as his or her principal place of residence, if the owner intends to use and occupy the land solely as his or her principal place of residence. In such a case, the owner is taken, for the purpose of the principal place of residence exemption, to use and occupy the unoccupied land as his or her principal place of residence.

(2) This clause does not apply unless:

(a) the land is unoccupied because the owner intends to carry out, or is carrying out, building or other works necessary to facilitate his or her intended use and occupation of the land as a principal place of residence, and

(b) if those building or other works have physically commenced on the land, no income has been derived from the use and occupation of the land since that commencement, and

(c) the intended use and occupation of the land is not unlawful.

(3) This clause applies in respect of the assessment of a person’s ownership of land only in the period of:

(a) 2 tax years immediately following the year in which the person became owner of the land, or

(b) if the land is used and occupied for residential purposes by a person other than the owner at any time after the person became owner, 2 tax years immediately following the tax year in which the building or other works necessary to facilitate the owner’s intended use and occupation of the land are physically commenced on the land.

(4) The Chief Commissioner may extend the period in which this clause applies if the owner of the unoccupied land demonstrates that:

(a) there is a delay in the completion or, in a case referred to in subclause (3)(b), the commencement of the building or other works necessary to facilitate the owner’s intended use and occupation of the land, and

(b) the delay is due primarily to reasons beyond the control of the owner.

(5) ...

(6) ...

(7) This clause does not apply in respect of land owned by a person if:

(a) the person or any member of the person’s family (within the meaning of clause 12) is entitled to have his or her actual use and occupation of other land taken into account under section 9C or under this Schedule, or ...

(8) For the purposes of this clause:

"unoccupied land" means land that is not being used or occupied for any purpose.

16 I note, as pointed out by the Respondent, that the wording but not the substance of the cl 6 applicable in respect of the 2005 Land Tax year was slightly different to that of the cl 6 quoted above, which was applicable in respect of the 2006 Land Tax year.

17 In the course of the pre-hearing exchange of documents, the parties narrowed the issue for determination by the Tribunal to two issues: (1) whether cl 6(7)(a) is enlivened in this case so that cl 6 did not apply to Bayview for the 2005 and 2006 Land Tax years; and (2), if cl 6 did apply, whether the Tribunal should exercise the discretion in cl 6(4) to extend the period to which cl 6 applies to include the 2005 and 2006 Land Tax years. (At the hearing, Mr Richmond, for the Applicants, confirmed they accept that the cl 2 PPR exemption does not apply. Rather, they rely on the application of the cl 6 concession.)

Evidence

18 The Applicants provided the following affidavits: Neill Miller dated 12 February 2009 (with three folders of attachments) and 8 April 2009, Katherine Miller dated 12 February 2009, Peter Janks (one of the two architects involved in the redevelopment of Bayview) dated 13 February 2009, and Diane Glazer (the Applicants’ accountant) dated 12 February 2009. Neither the Applicants nor their other witnesses were required to give evidence.

19 In addition to the documents produced pursuant to s 58 of the Administrative Decisions Tribunal Act 1997, the Respondent produced a bundle of documents including insurance documents relating to Bayview and Ramsgate, photographs of Ramsgate, and documents produced under summons by the NSW Electoral Commission and the Department of Immigration and Citizenship.

20 The material facts are essentially not in dispute except in so far as there is disagreement between the parties over the application of cl 6(4). Where relevant, the evidence is referred to below.

Submissions and Consideration

Issue 1: Does cl 6(7)(a) preclude the application of cl 6?

(a) Applicants’ Submissions

21 With regard to the first issue, whether cl 6(7)(a) precludes the application of cl 6, the Applicants contend that the phrase in cl 6(7)(a) “entitled to have his or her actual use and occupation of other land taken into account under ... this Schedule” only applies where the other land has the character of the taxpayer’s PPR, because it is only in that situation that the use and occupation of the other land is taken into account under Sch 1A. This is a matter of statutory construction, requiring that the words “are read in the context of the statute as a whole and in their legal and historical context, having regard to the aim and purpose of the provision and the legislation, to any established canons of legal construction and to any inconvenience or improbability of result of any given construction”: IRG Technical Services Pty Ltd v Federal Commissioner of Taxation (2007) 165 FCR 57, at [21] (per Allsop J).

22 First, Mr Richmond said the context – the other provisions of Sch 1A – supports the Applicants’ construction. The provisions of Sch 1A – for example, cls 7, 8, 9, and 10 - all focus on whether the other land is actually used and occupied as the PPR of the taxpayer.

23 Second, the legislative history is that the precursor of cl 6 was s 10T of the LTM Act. The Second Reading Speech for the Land Tax Management (Amendment) Bill 1991 that introduced s 10T indicates that it was intended that the words would preclude the exemption “if the owner already owns a residence which is exempt”. When s 10T was repealed and Sch 1A incorporated in the LTM Act by the State Revenue Legislation Further Amendment Act 2003, in the Second Reading Speech on the Bill, Mr Gaudry, the Parliamentary Secretary, indicated that cl 6 was intended to ameliorate the previous operation of s 10T rather than introduce any new restrictions on it. Moreover, the key requirement for the Commissioner administering s 10T at that time was that the land be maintained as the owner’s PPR regardless of whether it was used as such. This was reflected in Land Tax Ruling LT 20, which emphasised the owner maintaining actual control of the land and permitted the owner to claim the PPR exemption in respect of one property even if the owner was temporarily residing elsewhere.

24 Third, Mr Richmond submitted that the Respondent’s contention produces a number of incongruous results. For example, if a taxpayer owns a holiday house as well as vacant land that would otherwise qualify under cl 6, and lives in a rental property while a house is being built on the vacant land, ownership of the holiday house would disqualify the taxpayer from relying on cl 6 due to cl 6(7)(a), notwithstanding that the holiday house would be unlikely to satisfy the PPR exemption. Another incongruous result would be if the Applicants had leased Ramsgate from a third party rather than owning it, cl 6(7)(a) would, on the Respondent’s construction, not apply, thereby penalising a taxpayer who owns rather than leases land while building work is being undertaken on the subject land.

25 Fourth, Mr Richmond submitted that cl 6 should be given a beneficial construction. The courts have consistently held that the exemptions in s 10(1) of the LTM Act are to be construed beneficially and not narrowly. Where the legislative purpose is clear, that purpose should not be frustrated by a pedantic construction of the provision.

26 Turning to the first of the Respondent’s contentions, that the operation of cl 6(7)(a) is not synonymous with the operation of cl 2, because cl 6(7)(a) does not refer to cl 2 (the PPR exemption) but (relevantly) refers generally to Sch 1A. Mr Richmond submitted that while cl 2 is not the only situation to which cl 6(7)(a) might apply, all the other situations where a person’s entitlement to have their actual use and occupation of other land taken into account would require that the other land be the taxpayer’s PPR.

27 Secondly, in relation to the Respondent’s contention that the words “taken into account” in cl 6(7)(a) are wide words that mean take into consideration, Mr Richmond said these words, when construed in their context, mean that the use and occupation of other land will only be taken into account when the other land is the taxpayer’s PPR. Otherwise, the incongruous results, referred to above, would follow.

28 Thirdly, with regard to the Respondent’s noting that Land Tax is an annual tax, the application of which depends on the objective facts existing as at the taxing date for each tax year, Mr Richmond submitted that this does not mean the application of the PPR exemption ignores the history of the use and occupation of the land. For example, cl 2(2) and cl 8 require that regard be had to prior use. Moreover, a place does not cease to be a person’s place of residence because he does not live there, provided he has the intention to return to it. He said that land can retain its character as a residence even though the owners are temporarily absent. In this case, Mr Miller maintained a temporary office at the property so that he could monitor the development work.

(b) Respondent’s Submissions

29 Mr Rider, for the Respondent submitted that cl 6 is a concession that comes with conditions. In the Applicants’ case, the facts enlivened cl 6(7)(a) thereby precluding the application of cl 6 to Bayview. First, Mr Rider noted that the clear and plain words of cl 6(7)(a) do not refer to cl 2 but, relevantly, refer generally to Sch 1A. Further, a person’s entitlement to have their actual use and occupation of land taken into account under Sch 1A is not restricted to cl 2 but extends to other provisions of Sch 1A, including cls 6, 7 and 8. The operation of cl 6(7)(a) is not synonymous with the operation of cl 2.

30 Second, Mr Rider said the expression ‘taken into account’ means that the objective fact of a person’s use and occupation of other land does not need to satisfy all of the relevant requirements of a provision of Sch 1A: merely that this is a relevant consideration. For example, in relation to cl 2, the fact that a person uses and occupies land as a residence, whether or not it is their PPR, is a relevant consideration in relation to the application of cl 2 to that land. The existence of that fact and its relevance to cl 2 will trigger cl 6(7)(a) regardless of whether cl 2 actually applies to the land. Thus, the fact that the Applicants owned, and used and occupied Ramsgate as their residence during the Land Tax years in issue, enlivened cl 6(7)(a) because this fact was relevant to cl 2: Aronstan v Chief Commissioner of State Revenue [2008] NSWADT 8 (‘Aronstan’); Chief Commissioner of State Revenue v White [2008] NSWADT 27 (‘White’). Of itself, this disposes of issue 1.

31 In relation to the Applicants’ submissions, Mr Rider said that as a starting point it should be noted that Land Tax is an annual tax which depends on the objective facts as at the taxing date for each year: Executors of the Estate of William Kevin Hughes v Chief Commissioner of State Revenue [2009] NSWADT 8, at [34] – [35]. Thus, whether Bayview was the Applicants’ PPR before and after the 2005 and 2006 Land Tax years has no relevance to whether it was their PPR for the Land Tax years. Nor does the Applicants’ subjective view that their absence from Bayview as only temporary. Rather, as the Appeal Panel held in Chief Commissioner of State Revenue v McIlroy [2009] NSWADTAP 21 (‘McIlroy’), at [40]:

“a person’s principal place of residence is where he or she spends the most time, and which is shared (where applicable) with his or her spouse and children”

32 Mr Rider said the Appeal Panel in McIlroy rejected the notion that emotional connection, length of occupation and subjective intention could outweigh the objective evidence of where a person lives with their partner as the determinant of a person’s PPR. Moreover, the Applicants simply could not live at Bayview during the Tax Years because at that time it was a building site and not a residence. Further, the fact that Mr Miller maintained an office on site at Bayview is not relevant because this was not a residential use.

33 Mr Rider said the Applicants have incorrectly proceeded on the basis that a parcel of land may retain its status as the owner’s PPR regardless of whether they occupy it as such. However, ‘PPR’ has no meaning or separate existence under the Act other than in connection with someone using and occupying land as their PPR: only use and occupation of land can afford it the status of actual PPR. Bayview was not the Applicants’ PPR during the Land Tax years in issue simply because they did not use and occupy it as such – it was not a residence. Instead, they lived at Ramsgate.

34 Mr Rider said that, in any event, Bayview could not be the Applicants’ PPR during the Tax years because, on its terms, cl 6 only applies to land that an owner ‘intends’ to use and occupy as their PPR and not land that is the owner’s PPR.

35 The facts are that the Applicants lived at Ramsgate during the Tax years and it was, therefore, their PPR. Thus, cl 6(7)(a) was enlivened because their actual use and occupation of Ramsgate was a relevant consideration to be taken into consideration under Sch 1A: White at [44].

Consideration

36 Clause 6 provides a concession to the presumption that the owner of land is liable for Land Tax. The concession, for unoccupied land intended to be used and occupied solely as the owner’s PPR, is subject to the conditions as to use and occupation of the land set out in cl 6(2) and, pursuant to cl 6(3), is limited to a two year period immediately following the year in which the person became the owner of the land or following another person’s residential use and occupation. However, cl 6(4) provides a discretion for the Respondent to extend this two year period where there is a delay, as discussed below. The cl 6 concession is also subject to the further condition in cl 6(7), which states relevantly that the concession does not apply if the person is entitled to have or her actual use and occupation of other land taken into account under s 9C or under Sch 1A.

37 Section 9C of the LTM Act applies in respect of flats on mixed development land or mixed use land and is not relevant here. As stated above, Sch 1A provides for the PPR exemption. The issue in this case, therefore, is whether the Applicants are entitled to have their “actual use and occupation of other land taken into account” under Sch 1A, thereby precluding the application of the cl 6 concession.

38 Mr Rider submitted that the words ‘taken into account’ means that the objective fact of a person’s use and occupation of other land is a relevant consideration, whether or not that use and occupation satisfies all the requirements of Sch 1A. He noted that the clear and plain words refer generally to Sch 1A rather than being limited to Sch 1A, cl 2. Mr Rider submitted that the fact that the Applicants owned used and occupied Ramsgate as their residence during the 2005 and 2006 Land Tax years enlivened cl 6(7)(a) because this was relevant to whether the cl 2 PPR exemption applied: Aronstan and White.

39 Mr Richmond submitted that cl 6(7)(a) only applies where the other land has the character of the taxpayer’s PPR, because it is only in that situation that the use and occupation of other land is taken into account under Sch 1A. He contended, as set out above, that the principles of statutory construction mean that the words in cl 6(7)(a) must be read in context and construed beneficially, and he rejected Mr Rider’s submissions on this issue.

40 The issue was considered by the Appeal Panel in White. The Panel, at [28], noted that cl 6 is a concession that applies to a sub-set of persons who may be entitled to the PPR exemption if they satisfy the conditions of the concession, including cl 6(7). The Panel stated, at [30]:

“The clear words of the statute say that if the respondents are entitled to claim an exemption elsewhere, they may not take advantage of the 6(1) concession.”

41 In that case, the applicants chose not to claim a concession in respect of the property which they owned, used and occupied while a new house was being built on other land they owned, but instead claimed a concession in respect of the other land which they intended to use and occupy as their PPR once the building and other work was completed. The fact that the applicants preferred not to claim a concession in respect of the land that they used and occupied (their existing home), but instead preferred to claim a concession in respect of their intended PPR (their new home) was irrelevant. It was the fact that the applicants were ‘entitled’ to have their actual use and occupation of ‘other land’, which they currently used and occupied, taken into account, that precluded them from relying on the cl 6 concession in respect of their intended (new) PPR. At [37], the Appeal Panel said that “the clear terms of sub-clause 6(7) cannot be ignored or read down”, and, at [40]:

“It is clear from the words of the Schedule that the 6(1) concession is limited to situations where no other property owned by the taxpayer is actually used and occupied as a principal place of residence.”

42 The Tribunal in Aronstan came to a similar conclusion. As in the present case, counsel for the applicants submitted that provisions dealing with concessions and exemptions in the taxation legislation should not be construed narrowly. At [67], the Tribunal noted that it had approached the interpretation of cl 6 in that manner, but said “care should be taken in construing such provisions to not give them any unintended application”.

43 In the present case, the undisputed facts are that the Applicants used and occupied their apartment referred to herein as ‘Ramsgate’ from 21 June 2004 until they moved back to Bayview on 20 October 2006. As at 31 December 2004 and 31 December 2005, the taxing dates for the 2005 and 2006 Land Tax years respectively, the Applicants were, in my view, entitled to have their actual use and occupation of Ramsgate taken into account under Sch 1A, bearing in mind the principles used in determining whether a person has used land as their PPR discussed by the Appeal Panel in Chief Commissioner of Taxation v Ferrington [2004] NSWADTAP 41, at [42], and noting the recent Appeal Panel decision in McIlroy, referred to above.

44 The fact that the Applicants were entitled to have their actual use and occupation of other land taken into account under Sch 1A was sufficient to enliven cl 6(7)(a) and preclude them from claiming a concession in respect of Bayview under cl 6(1). Thus, the Respondent correctly disallowed the Applicants’ objection in respect of the 2005 and 2006 Land Tax years and his assessment in respect of those years must be confirmed.

45 Although it is not strictly necessary to do so, the Applicants requested that in the event of the Tribunal finding against them on the first issue, it should, nevertheless, consider the application of cl 6(4).

Issue 2: Should the cl 6(4) discretion be exercised to extend the period in respect of which cl 6 applies?

Applicants’ Submissions

46 Mr Richmond noted that for the discretion in cl 6(4) to be exercised, the delay must be due “primarily” to reasons beyond the control of the owner. The ordinarily meaning of ‘primarily’ is chiefly or mainly, and the question is one of fact and degree to be determined on a broad commonsense basis. He noted that the Applicants’ evidence as to the delay was not challenged.

47 Mr Richmond said that while cl 6(4) may on its face appear to draw a distinction between a ‘delay in the completion’ of building or other works and a ‘delay in the commencement’ of building or other works, this does not mean that delays in the commencement of building work are to be ignored under cl 6(4)(a). He submitted that Awan v Chief Commissioner of State Revenue [2008] NSWADT 145 (‘Awan’), relied upon by the Respondent, was wrongly decided and should not be followed.

48 Mr Richmond noted that cl 6 re-enacts s 10T, which was repealed with Sch 1A being introduced into the LTM Act, and there was no intention to make the concession more restrictive. Section 10T(5) defined ‘acceptable delay’ as “a delay in the commencement or completion of the building or other work”. With the introduction of cl 6, the Parliamentary draftsmen saw a need to expand the concept of ‘acceptable delay’ to accommodate subcl (3)(b) because this only deals with delay in the commencement of building works. He submitted that the concept of a delay in the completion of building works is sufficiently broad to include delays in the commencement of building works that contribute to a delay in the completion of those works. The use of the words ‘other works’ in cl 6(4)(a) indicates that matters such as the DA process are included.

49 Mr Richmond submitted that the Respondent’s restrictive approach is contrary to commonsense and inconsistent with the approach taken in Land Tax Ruling LT 82, which refers to delay “in the commencement or completion of building works” where that delay is beyond the control of the owner.

50 Mr Richmond said the Applicants originally anticipated that the building or other works, including the demolition of the old house and construction of the new one, would be completed by 31 December 2004, within the two year period permitted by cl 6(3)(a). Completion did not in fact occur until October 2006 due to (a) delays in the processing of the DA by the Council, (b) delay in the demolition of the former house due to the inability to obtain a dilapidation report for an adjoining property, (c) delay in the builder completing excavation of the site, (d) delay in commencing construction due to the time taken to obtain a construction certificate from an independent certifier, (e) a further modification of the development consent required by the Council to deal with a problem with the hydraulic system, and (f) delays in the supply of construction materials by third parties.

51 Mr Richmond said that if the DA had been processed within the usual time frame for such applications, it was reasonable to expect completion of the building or other works by 31 December 2004. He submitted that since the delays that occurred were beyond the Applicants’ control and not as a result of their personal choice, this is an appropriate case to extend the period under cl 6(4) to cover the 2005 and 2006 Land Tax years.

Respondent’s Submissions

52 Mr Rider submitted that because Bayview was never tenanted from the time of the Applicants’ purchase, it is only delays in the ‘completion’ of the building or other works that are relevant under cl 6(4)(a), and not delays in the ‘commencement’ of the building or other works, which found the Applicants’ claims and are irrelevant: Awan at [75]. Mr Rider submitted that Awan states the law correctly and postdates LT 82, which does not have the force of law. Moreover, he submitted that pre-construction delays caused by the Council, neighbour complaints, design issues and constructions certificates do not comprise “building or other works” as required by cl 6(4). ‘Works’ refers to a physical process and not, for example, obtaining a development consent.

53 With regard to cl 6(4)(b), Mr Rider contended that the delay was due primarily to reasons within the Applicants’ control because they chose to build a house on a property with major hydraulic difficulties, with a design requiring extensive excavation and comprising over 1,223.4 square metres of covered space that use fixtures and finishes that were difficult to source: Gilmour v Chief Commissioner of State Revenue [2007] NSWADT 145, at [42] – [43].

Consideration

54 The second issue for consideration is whether, assuming the cl 6(1) concession applies, the Respondent’s discretion in cl 6(4) should be exercised to extend the two year period to which the concession is limited relevantly by cl 6(3)(a). The Respondent may extend the two year period, relevantly, if the owner demonstrates that (a) there is a delay in the completion of the building or other works necessary to facilitate the owner’s intended use and occupation of the land, and (b) the delay is due primarily to reasons beyond the control of the owner.

55 Mr Richmond contended that while cl 6(4) may appear to draw a distinction between a delay in the ‘completion’ of building or other works – applicable in respect of cl 6(3)(a), and a delay in the ‘commencement’ of building or other works – applicable in respect of cl 6(3)(b) where a person other than the owner has used and occupied the land for residential purposes at any time after the owner’s period of ownership commenced, this does not mean that delays in the commencement of building work are to be ignored under cl 6(4)(a). Mr Richmond submitted that the concept of delay in the completion of building works is sufficiently broad to include delays in the commencement of building works that contribute to delays in completion of those works. He submitted that Awan was wrongly decided and the Respondent’s restrictive approach to the interpretation of this provision is contrary to commonsense and inconsistent with the approach taken in LT 82.

56 Mr Rider submitted that Awan correctly states the law and postdates LT 82, which, in any event, does not have the force of law. Moreover, he submitted that pre-construction delays do not comprise ‘building or other works’ as required by cl 6(4) because ‘works’ refers to a physical process.

57 In my view, it could be argued that the facts of Awan are materially different to those in the present case. In Awan, the applicant had not commenced building or other works on the land on which he had originally intended to build his family home and PPR because he was unable to secure sufficient finance for the project. The land remained vacant. The Tribunal found, at [58]:

“As the works were never commenced, there can have been no delay in their completion. The words “delay in their completion” in subclause 6(4) ought not to be read as including delay in commencement because Parliament has in the same clause specified that delay in commencement enlivens the Chief Commissioner’s power in situations where subclause 6(3)(b) applies.”

58 I agree with the Applicants submission that the phrase “delay in the completion” of building or other works is sufficiently broad to encompass delays in the commencement of those works that result in a delay in completion, where the delay is due primarily to reasons beyond the control of the owner. Presumably, where, for example, land is tenanted, so that cl 6(3)(b) applies, different considerations may be relevant. A less restrictive interpretation of cl 6(4)(a) is also consistent with the Respondent’s LT 82.

59 With regard to the reasons for the delay identified by Mr Miller in his affidavit dated 12 February 2009 and summarised by Mr Richmond, set out above in paragraph 50, in my view these can be distinguished from those in Gilmour, where the Tribunal found that the delays occurred as a result of the applicant’s personal choice. In any residential building project, decisions made by the person(s) building the residence will be reflected in the time taken in the completion of the project. However, it is only where the completion of the project is delayed beyond the period of two years immediately following the year in which the person became the owner of the land as a result of decisions made by the owner, that the delay, of itself, could be said to be a result of the owner’s personal choice.

60 This is not the situation in the present case, and I do not accept the Respondent’s contention that the delay was due primarily to reasons within the Applicants’ control. I accept the Applicants’ evidence that they expected the whole project, from design to completion, to be completed within two to two and a half years, and before December 2004. This would have been within the two year period immediately following the year in which the Applicants became owners of the land. I also accept that the delay in the completion of the project was due primarily to reasons beyond the control of the Applicants. I note that one of the principal reasons for the delay was the excessive time taken for the Council to process the DA for the proposed development (according to Mr Miller, a period of nine months) and the need to meet a further, post-development consent, Council requirement for modification of the hydraulic system.

61 Thus, I find that the delay in the completion of the building or other works necessary to facilitate the Applicants’ intended use and occupation of the land was due primarily to reasons beyond the Applicants’ control. As I have stated above, this finding does not, however, affect the outcome of these proceedings which, pursuant to the application of cl 6(7) of Sch 1A is that the Respondent’s assessment in respect on the 2005 and 2006 Land Tax years must be confirmed.

Decision

62 The Chief Commissioner’s assessment of the Applicants’ liability for payment of Land Tax in respect of land at Rose Bay for the 2005 and 2006 Land Tax years is confirmed.