NARELLE WICKHAM & ACT REVENUE OFFICE (Administrative Review) - [2010] ACAT 80

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

NARELLE WICKHAM & ACT REVENUE OFFICE (Administrative Review) [2010] ACAT 80

AT 75 of 2009
Catchwords: ADMINISTRATIVE REVIEW – liability to pay land tax on property separated from main residence – the landlord’s right to access such property – whether the property was “rented”: whether the occupier has exclusive possession – what is a true bargain? - perception of bias in relation to counsel for the respondent

List of legislation: Land Tax Act 2004, ss.7, 8, 9 and 15
Residential Tenancies Act 1997, s.6A

List of cases: Aslan v Murphy [1990] 1WLR 766
Noble v Centacare [2003] ACTSC 37

Noblett & Mansfied v Manley [1952] SASR 155
Street v Mountford [1985] 2A11ER 289
Torrisi v Oliver [1951] VLR 380

Tribunal: Mr R Watch, Member

Date of Orders: 22 November 2010
Date of Reasons for Decision: 22 November 2010

AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AT 75 of 2009

BETWEEN:

NARELLE WICKHAM
Applicant

AND:

ACT REVENUE OFFICE
Respondent

TRIBUNAL: Mr R. Watch, Member

DATE: 22 November 2010

ORDER

1. The decision under review is set aside.

………………………………..

Mr R. Watch
Member

REASONS FOR DECISION

REASONS FOR DECISION

Background

The proceedings before the Tribunal have been brought regarding the Applicant’s liability to pay Land Tax in respect of premises known as “Studio Q” at 5 Boronia Drive, O’Connor ACT.
The Applicant, Narelle Wickham is the registered owner of the parcel of land known as 5 Boronia Drive, O’Connor (being Block 53 Section 12 O’Connor) (“the Land”).
Situated on that parcel of land are two buildings used for residential accommodation. One of these buildings is conveniently referred to as the main residence and the other a self contained studio apartment (known as “Studio Q”). There are other structures on the land but they are not relevant to these proceedings.
The Applicant gave evidence (T8/30) that for a period of time up to 2005 she occupied the main residence as her own home. The self contained apartment (“Studio Q”) was constructed about the year 2001 following approval of plans by the Building Section (“BEPCON”) of the ACT Department of Planning and Land Management.
I note that the plans for Studio Q were described as “Proposed Additions – an Extension to the Living Area”.
The plans for Studio Q were approved as Plan No. 005940/A on
25 August 2000. The approved plans show the proposed additions as comprising an almost square structure with a small deck and pergola at its entrance leading to a large room with an ensuite bathroom in one corner. The plans show the area of the addition as being 34.87 square meters.
The Applicant asserts that a Certificate of Fitness for Occupancy and Use had been issued for the Studio once it had been constructed, but that certificate was not tendered in evidence. I asked the Applicant to provide a copy of the Certificate to the Tribunal (T6/10) but I can find no record of having received such a copy. In the event nothing turns on that for the purposes of these proceedings.
The Applicant’s evidence (T8/30) is that she occupied the main residence as her own home until about 2005 when she relocated to Sydney.
There is no dispute that the main residence is now rented to tenants and the Applicant asserts that the occupants of Studio Q share access and general property space with the tenant of the main residence (T8/30).
Again there appears to be no dispute that the Applicant pays Land Tax pursuant to the Land Tax Act 2004 (previously Land Tax was levied under the Rates & Land Tax Act 1926) in respect of the main residence. That Act was repealed on 1 July 2004 concurrent with the commencement of the Land Tax Act 2004 and the Rates Act 2004.
It also appears to be undisputed that the main residence occupies about 75.70% of the total area of the Land.
I presume that the land tax apportioned to the main residence is calculated in accordance with the formula set out in Section 15 of the Land Tax Act.
Following investigations by the Department of Treasury ACT Revenue Office, the Applicant received a Notice of Assessment of Land Tax in respect of Studio Q for the period 2003/2004 year to the 2008/2009 year on or about
18 August 2008.
Pursuant to the provisions of the Land Tax Act both penalty tax and interest were imposed for that period. The total amount of Land Tax imposed was $11,114.73, the Penalty Tax $2,341.59 and the Interest $3,284.50 making the total liability $16,740.82.
On or about 17 October 2008 the Applicant lodged an Objection to the Land Tax Assessment with the ACT Revenue Office.
Sometime in late October 2008 the Applicant paid an amount of $10,498.00 to the ACT Revenue Office in reduction of the liability pursuant to the Assessment.
On 17 July 2009 the ACT Revenue Office having considered the Applicant’s Objection to the Assessment, disallowed the objection. Reasons for the disallowance were provided by the Revenue Office to the Applicant.
Following the disallowance of the objection the Applicant was informed of the balance outstanding for the Land Tax Penalty Tax and Interest and on
19 August 2009 the Applicant paid the balance outstanding and indicated to the ACT Revenue Office that she intended to bring proceedings in this Tribunal for a review of the decision.
The Applicant commenced proceedings by way of Application for a Review of Decision on 1 September 2009.
Various interlocutory steps then occurred and the substantive hearing before this Tribunal was heard on 19 July 2010.
Applicant’s Contentions
The Applicant contends that Land Tax cannot be levied on Studio Q under the Land Tax Act because she claims that Studio Q is not “rented residential land” pursuant to Section 9 of the Land Tax Act because it falls within the exception to “tenancy agreement” in Section 7 of the Act because the right of occupation granted in respect of Studio Q is as a boarder or lodger only.
The Applicant contends that the exclusion of boarders and lodgers from the definition of tenancy agreement in the Land Tax Act mirrors the definition of a “residential tenancy agreement” in Section 6A of the Residential Tenancies Act 1997.
The Applicant submits that Studio Q is not “rented”, there is no tenancy agreement when guests occupy the Studio and that there is no intention to create a tenancy agreement. She also submits that an occupant has no legal interest in the land and that they do not enjoy exclusive possession.
In her submission the Applicant states that Studio Q does not contain a fully equipped kitchen nor does it contain a dining room, a laundry or dedicated parking. She further states that “ guests do not reside in Studio Q, they stay as guests without the usual personal effects one would have at one’s residence or home. Guests at Studio Q stay on average between 1-5 nights and are provided with tea, coffee, milk, a range of cool drinks and snacks, basic toiletries, linen sufficient for a short term stay and a cleaning service on request”.
The Applicant also contends that “……guests cannot exclude me and I am not required to give notice to my guests before entering Studio Q. Indeed between 2001 and November 2005, I supplied breakfast and cleaning services to guests of Studio Q and I entered the studio on a daily basis. From November 2005 until the present time I visit and enter the studio at least monthly without prior arrangement with my guests…..”
Respondent’s Contentions
Essentially the Respondent asserts that Studio Q was “rented” by the Applicant to the various occupants of it because it is claimed they were granted exclusive right of occupation and that the exception given to boarders and lodgers in Section 7 of the Land Tax Act does not apply. On that basis the Respondent contends that that part of the property is liable for Land Tax pursuant to Section 9(2) and (4) of the Act.
The proceedings before the Tribunal
At the hearing of this matter before the Tribunal, the Applicant made various submissions and tendered various documents (Exhibits A1, A2 and A3).
The Applicant also raised a perception of bias on her part in relation to
Mr McCarthy appearing as Counsel for the Respondent. The Applicant claimed to have had a “series of personal and difficult emails within the nature of a personal relationship”.
Apparently Mr McCarthy and the Applicant were members of the same Club for more than 20 years. Mr McCarthy says he had not met the Respondent until the day of the hearing. Importantly though Mr McCarthy stated that he did not hold any confidential information concerning the Applicant that is relevant to these proceedings.
In the event I determined that there was no bias to the Applicant in
Mr McCarthy continuing to appear on behalf of the Respondent in the proceedings.
Following the Applicant’s submission and tendering of Exhibits the question arose to the evidentiary nature of the material presented by her. After a lengthy discussion the Applicant agreed (T33/42) that she should give evidence and allow herself to be cross examined to have that evidence tested.

The Evidence

The Applicant’s evidence amounted to the material set forth in her Facts and Contentions filed in the Tribunal (T34/20 et seq).
Mr McCarthy then cross examined the Applicant
Mr McCarthy cross examined the Applicant about several of her properties which were available for occupation; in particular premises at Knox Street, Watson ACT (“Pasadena”), at Newtown in Sydney (“Newtown Mews”) and Studio Q.
Mr McCarthy tendered (R1) an ACT Revenue Office Direct Debit Request for Land Tax in respect of Pasadena. He also tendered an extract from “wotif.com” describing the attributes of Studio Q (R2) and an aerial photograph of the relevant parcel of land (R3).
Mr McCarthy then cross examined the Applicant on the nature of the Studio Q premises, how it is separated from the main residence and the facilities provided in Studio Q.
It became apparent during the cross examination that there was no dispute that Studio Q is a separate building erected on the land; it is separated in that it is not attached to and does not form part of the main residence (T53/34); that it comprises 2 rooms. Then at T55 et seq the particular facilities of the Studio are described.
The Applicant concedes (T56/35) that she manages the bookings for the Studio remotely either by phone or by email over the internet.
Mr. McCarthy put to the Applicant (T61 et seq) questions regarding the Applicant’s ability to enter the premises whilst they were being occupied. The Applicant stated that she believed she was unfettered in her ability to access the premises save for knocking on the door before entering to respect the occupants privacy. It was also put to the Applicant (T623) that nowhere in the advertising material promoting Studio Q was it stated that the Applicant or her representative reserved the right to enter upon the property.
Mr McCarthy put to the Applicant (T62/20) “state in your marketing document “enjoy quiet privacy on secluded deck””.
The Applicant replied (T762/24) that “quiet privacy refers to the fact that it’s located in O’Connor”.
At the conclusion of the cross examination of the Applicant Mr McCarthy tendered a bundle of documents (T Documents) (R4).
The issue to be determined
At the outset the real question for determination in this matter is whether the premises Studio Q are “rented” within the definition of Section 7 & 8 of the Land Tax Act 2004.
The Applicant contends that the nature of the occupation is such as to allow it to fall within the exception provided to the definition in Section 7 of “tenancy agreement” provided by sub-section (b) namely “does not include an agreement giving a right of occupation only as a boarder or lodger”.
The Applicant’s case is clear; she states that she does not grant exclusive possession and that she has the right to come and go from and enter upon the premises at will, save for exercising courtesy and respecting privacy. She says that the situation is in clear contrast to that which applies in respect of the main residence where they are the subject of a tenancy agreement and in respect of which she acknowledges her liability to pay, and does pay land tax.
On the other hand the Respondent states that the exclusion from the definition of boarder and lodger from the definition of tenancy agreement in S.7 of the Land Tax Act does not apply because the Respondent states that occupants have an exclusive right of occupation and is available to be used by them as a residence during the period of the tenancy (whether it is their principal place of residence or not.
Section 9 of the Land Tax Act imposes land tax on land that is –
“(a) rented residential land”
“Rent” is defined in Section 7 to mean –
“valuable consideration for which a tenant is liable under a tenancy agreement in relation to the tenancy or a period of the tenancy”.
“Tenancy agreement”-
“(a)means an agreement under which a person grants to someone else for value a right of occupation of a parcel of land for use as a residence –

(b)whether the right of occupation is exclusive or not; and

(ii) whether the agreement is express or implied; and
(iii)whether the agreement is in writing, is oral, or is partly in writing and partly oral; but”

“(b)does not include an agreement giving a right of occupation only as a boarder or lodger”

Section 8(2) provides that a parcel of land or dwelling is taken to be rented if it is rented on the first day of a quarter.
Section 8(3) provides that premises are taken to be rented on the first day of a quarter if –
“(a) it is leased for residential purposes on that day; and;
(b) it was rented at any time in the previous quarter”.
The issue here becomes not one of exclusive possession or not, but whether or not the occupants can be regarded as boarders or lodgers.

The Law

Both parties referred in their submissions to Noble v Centacare
[2003] ACTSC 37, an unreported decision of Crispin J in the Supreme Court of the Australian Capital Territory.
In that case His Honour refers to a number of authorities which discuss the meaning of the terms “boarder” and “lodger”.
His Honour cites Torrisi v Oliver [1951] VLR 380 at 385 where Coppel AJ said
“I doubt whether any guiding principle can be discovered from the cases more specific than this: that a tenancy of a room or rooms in a dwelling house will be shown to exist where the occupier has not only the sole right to occupy the room or rooms but has the right to exclude the landlord therefrom. This is sometimes expressed by saying that if the landlord retains control of the rooms in question the occupier is a lodger and not a tenant”.
In Noblett & Mansfied v Manley [1952] SASR 155 at 158 Mayo J said
“The primary and usual meaning of “lodger”, as so defined, is “one who resides as an inmate in another person’s house, paying a certain sum periodically for the accommodation”, or “one who occupies an hired room in another person’s house”…..A “boarder” is one who…..has his food, or food and lodging, at the house of another for compensation, one who lives in a boarding house or with a family as one of its members, at a fixed rate; one who has food at another’s table or meals and lodgings in his house for pay, or compensation of any kind”.
Perhaps importantly in Street v Mountford [1985] 2A11ER 289 at 293 Lord Templeton said
“An occupier of residential accommodation at a rent for a term is either a lodger or a tenant. The occupier is a lodger if the landlord provides attendance or services which require the landlord or his servants to exercise unrestricted access to and use of the premises. A lodger is entitled to live in the premises but cannot call the place his own…..
If on the other hand residential accommodation is granted for a term at a rent with exclusive possession, the landlord providing neither attendance nor services, the grant is a tenancy; any express reservation to the landlord of limited rights to enter and view the state of the premises and to repair and maintain the premises only serves to emphasise the fact that the grantee is entitled to exclusive possession and is a tenant”.
Reference must also be made to the decision of Lord Donaldson in Aslan v Murphy [1990] 1WLR 766 at 773
“A landlord may well need a key in order that he may be able to enter quickly in the event of emergency fire, burst pipes or whatever. He may need a key to enable him or those authorised by him to read meters or do repairs which are his responsibility. None of these underlying reasons would of themselves indicate that the true bargain between the parties was such that the occupier was in law a lodger. On the other hand, if the true bargain is that the owner will provide genuine services which can only be provided by having keys such as frequent cleaning, daily bed making, the provision of fresh linen at regular intervals and the like, there are materials from which it is possible to infer that the occupier is a lodger rather than a tenant. But the inference arises not from the provision of the keys but from the reason why those provisions were provided”.
Despite the reasoning of the Respondent I am satisfied that the nature of the occupancy of Studio Q is not a tenancy for the purposes of Section 8 of the Land Tax Act.
I think that the evidence shows that the Applicant had no intention that the people who occupied Studio Q should do so as tenants. She retained keys to the Studio not only to enable her to gain access to the premises in the event of an emergency or to carry out repairs or maintenance but also to enable her (or her agent) to attend to cleaning, or the provision of fresh linen or the replenishment of other supplies that would not normally be the characteristic of a tenancy agreement.
As stated in Street v Mountford “the occupier is a lodger if the landlord provides attendance or services which require the landlord or his servants to exercise unrestricted access to and use of the premises. A lodger is entitled to live in the premises but cannot call the place his own”.
The nature of the occupation of Studio Q bears none of the hallmarks of a residential tenancy. The occupants have no interest in the land; they are there at will and for very short periods of time. Nothing was put to me to show that an occupancy for a period from 24 hours to 5 days could be regarded as a tenancy agreement.
The Decision under review is set aside.

………………………………..
Mr R. Watch
Member

PUBLICATION DETAILS

TO BE PUBLISHED

To be completed by Tribunal Staff

PART A FILE NO: AT 09/75

APPLICANT: NARELLE WICKHAM
RESPONDENT: COMMISSIONER FOR ACT REVENUE

COUNSEL APPEARING: APPLICANT:

RESPONDENT:

SOLICITORS: APPLICANT:

RESPONDENT:

OTHER: APPLICANT:

RESPONDENT:
TRIBUNAL MEMBER/S: Mr R. Watch, Member

DATE/S OF HEARING: 19 July 2010 PLACE: CANBERRA

DATE/S OF DECISION: 22 November 2010 PLACE: CANBERRA

PART B

RECOMMENDATION:

FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )

COMMENTS: