Nelson v Chief Commissioner of State Revenue
[2003] NSWADT 104
•05/16/2003
CITATION: Nelson v Chief Commissioner of State Revenue [2003] NSWADT 104 DIVISION: General Division PARTIES: APPLICANT
Timothy Benjamin Nelson
RESPONDENT
Chief Commissioner of State RevenueFILE NUMBER: 023256 HEARING DATES: 03/02/2002 SUBMISSIONS CLOSED: 02/25/2003 DATE OF DECISION:
05/16/2003BEFORE: Grotte E - 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: Administrative Decisions Tribunal Act 1997
Administrative Decisions Tribunal Legislation Amendment (Revenue) Act 2000
First Home Owners Grant Act 2000
Stamp Duties Act 1920
Taxation Administration Act 1996CASES CITED: DY v Chief Commissioner of State Revenue [2002] NSWADT 259
Lawrence & Anor v Chief Commissioner of State Revenue [2002] NSWADT 104REPRESENTATION: APPLICANT
S Rayfield, solicitor
RESPONDENT
G Van Emmerick, agentORDERS: 1. The decision of the Chief Commissioner to reverse the original decision under which an amount was paid to the applicant is affirmed.
1 On 3 October 2002, the applicant lodged an application with the Tribunal requesting a review of a decision of the Chief Commissioner of State Revenue (Chief Commissioner).
2 The Chief Commissioner authorised a grant of $14000 to be paid to the applicant. The Chief Commissioner reversed his decision on 18 September 2002 because the applicant had not moved into his home within 12 months after completion of the contract.
3 With the consent of the parties this matter was decided “on the papers” pursuant to section 76 of the Administrative Decisions Tribunal Act 1997 (ADT Act).
Relevant Legislation
4 Section 17 of the First Home Owners Grant Act 2000 (FHGO Act) gives the Chief Commissioner the power to decide an application and authorise payment for a first home owner grant. That section provides:
- (1) If the Chief Commissioner is satisfied that a first home owner grant is payable on an application, the Chief Commissioner must authorise the payment of the grant.
(2) Payment of a first home owner grant may be authorised under section 20 before completion of the relevant eligible transaction or in anticipation of compliance with the residence requirement.
5 The FHOG requires an applicant to comply with certain eligibility criteria. One criterion is the “residence requirement”. Section 12 of that Act states:
- (1) An applicant for a first home owner grant must occupy the home to which the application relates as the applicant’s principal place of residence within 12 months after completion of the eligible transaction or a longer period approved by the Chief Commissioner.
6 Section 20 of the FHOG Act gives the Chief Commissioner the power to authorise payment in advance in anticipation of compliance with the residence requirement if the Chief Commissioner is satisfied that the applicant who is required to comply intends to occupy the home in question within 12 months after completion of the eligible transaction or a longer period allowed by the Chief Commissioner. That section provides:
- (1) The Chief Commissioner may authorise payment of a first home owner grant:
- …
(b) in anticipation of compliance with the residence requirement, if the Chief Commissioner is satisfied that each applicant who is required to comply, but has not yet complied, with the residence requirement, intends to occupy the home as his or her principal place of residence within 12 months after completion of the eligible transaction or a longer period allowed by the Chief Commissioner.
- (a) give written notice of that fact to the Chief Commissioner, and
(b) repay the amount of the grant.
Maximum penalty (subsection (4)): 50 penalty units.
7 Section 23 of the First Home Owners Grant Act 2000 (FHOG Act) gives the Chief Commissioner the power to vary or reverse an earlier decision. That provision states that:
- (1) If the Chief Commissioner decides an application and is later satisfied (independently of an objection under this Act) that the decision is incorrect, the Chief Commissioner may vary or reverse the decision.
(2) A decision cannot be varied or reversed under this section more than 5 years after it was made.
8 The FHOG Act authorises the applicant to object to a decision to reverse an earlier decision. Section 25(1) states that:
- (1) An applicant who is dissatisfied with the Chief Commissioner’s decision on the application (including a decision to reverse or vary an earlier decision) may lodge a written objection with the Chief Commissioner.
9 The FHOG Act authorises the Chief Commissioner to require the applicant to repay the amount of the grant if the decision to pay the grant is reversed. Section 45 states that:
- (1) The Chief Commissioner may, by written notice, require an applicant (or former applicant) for the first home owner grant to repay an amount paid on the application if:
- (a) the amount was paid in error, or
(b) the Chief Commissioner reverses the decision under which the amount was paid for any other reason.
10 Section 46 of the FHOG Act authorises the Chief Commissioner to recover any amount an applicant is required to repay under the conditions of the grant.
Onus
11 Under section 28(3) of the FHOG Act the applicant has the onus of proving his case in an application to the Tribunal for review.
Jurisdiction
12 The FHOG Act authorises the applicants to apply to this Tribunal for a review of the Chief Commissioner’s decision. Section 28 states, in part, that:
- (1) An objector may apply to the Administrative Decisions Tribunal for a review of the decision (“the original decision”) to which the objection was made if:
- (a) The objector is dissatisfied with the Chief Commissioner’s determination of the objection.
…
13 The first issue for determination by the Tribunal is to identify the decision of the Chief Commissioner which the Tribunal has jurisdiction to review which.
14 In the event that the Tribunal has jurisdiction to review the decision not to extend the 12 month period, the second issue for determination is whether the Chief Commissioner made the correct and preferable decision.
15 The Tribunal received submissions on this matter and these are set out in detail below.
Respondent’s Submissions
16 It was submitted on behalf of the Chief Commissioner that the decision by the Tribunal in DY v Chief Commissioner of State Revenue [2002] NSWADT 259 is correct and that the Tribunal’s power to review is restricted to the Chief Commissioner’s decision on an application (including a decision to reverse or vary an earlier decision).
17 It was submitted that sections 25, 28 and 29 of the FHOG Act were considered in light of the Tribunal’s powers under section 101 of the Taxation Administration Act 1996. Section 101 of that Act applies to matters in the Revenue Division of the Administrative Decisions Tribunal and was introduced by the Administrative Decisions Tribunal Legislation Amendment (Revenue) Act 2000 which commenced by proclamation on 1 July 2001. It was submitted that prior to the amendments to incorporate reviews by the Tribunal, section 102 of the Taxation Administration Act was in similar terms and was proclaimed to commence on 1 January 1997. The respondent therefore submitted that as both amendments to give the power to review to the Tribunal were enacted at about the same time, that the government intended the review powers given to the Tribunal under the FHOG Act were to be less that those under the Taxation Administration Act.
Applicant’s Submissions
18 It was submitted on behalf of the applicant that it is against the spirit of the FHOG Act to impose an absolute non-reviewable automatic reversal of the original decision based upon facts that were not known to the applicant when making the application.
19 The objects of the FHOG Act are, amongst other things, to encourage and assist home ownership and to offset the effects of GST on the acquisition of a first home by establishing a scheme for the payment of grants to first home owners, to amend the Stamp Duties Act 1920 and to exempt such grants from financial institutions duty.
20 It was submitted that since the applicant did not know the date of completion when the declaration was signed, he could not have known with any real precision what the date 12 months from that date would be, especially since it was an “off the plan” purchase.
21 It was submitted that the Chief Commissioner is estopped from denying that the Tribunal has the power to review its decision as it has consistently represented to the applicant (and others) that review by the Commissioner and the Tribunal is available.
22 Section 25(4) of the FHOG Act authorises the Chief Commissioner to extend the time for filing objections.
23 If as a matter of law the Chief Commissioner’s actions in September 2002 are held to be non-reviewable, then this application should be treated as a review of an excusably late objection to the original decision under section 12(1) requiring occupation within 12 months.
24 If the application is approached as a late objection to the original decision the Chief Commissioner is, by his statements and actions, estopped from denying that the applicant has established a reasonable excuse for failing to lodge an objection within 60 days as the Chief Commissioner has throughout led the applicant to believe that a review by the Tribunal was available to him and has repeatedly represented to the Tribunal that it does exercise the discretion to review subsequent application to extend such as in Lawrance & Anor v Chief Commissioner of State Revenue [2002] NSWADT 104 and the matter of DY v Chief Commissioner of State Revenue [2002] NSW ADT 259.
25 It was submitted that DY’s case is not authority for the proposition that “financial difficulty” did not constitute an unforeseen circumstance within business rule 2.2 as contended by the Chief Commissioner. It was submitted that this was not part of the decision. The fact that the Commissioner has cited this as an issue is evidence that throughout the Commissioner has represented that there is a right of review.
26 It was also submitted that the applicant’s case is not based solely on financial difficulty.
27 It was submitted that the decision in DY’s case went against the applicant as that application was expressed to be a review of conditions imposed during the second review of the original decision (once again, reiterating the Chief Commissioner’s view that review is available and the Tribunal held in that case that it did not have jurisdiction to review that second decision.
28 The following points were made on behalf of the applicant in support of his submission that the Chief Commissioner is estopped from denying the Tribunal’s jurisdiction to grant a review:
- (i) In his letter of 11 July 2002 the Chief Commissioner states “If you disagree with this decision you may lodge an objection….”;
(ii) On 19 July 2002 further submissions were made on behalf of the applicant and these additional matters were incorporated by the Chief Commissioner in the original application and treated as an objection;
(iii) On 17 September 2002 the Chief Commissioner, in a letter giving notice of the decision to disallow the objection, stated “If you are dissatisfied with our decision then you may request the Administrative Decisions Tribunal to review the decision within 60 days of the date of this letter”. It was submitted that the real decision was made on 17 September 2002.
(iv) On 11 October 2002 the Chief Commissioner wrote consenting to a stay of execution. It was submitted that this action confirms the Chief Commissioner’s view that he did have the discretion under section 12 of the FHOG Act to grant an extension even after the grant is paid but would not exercise that discretion in favour of the applicant on the basis of the reasons given. The letter stated that “the discretion provided in section 12 was included to cater for extenuating circumstances”.
(v) On 16 October 2002 the applicant’s solicitor formally requested a copy of the “guidelines for review”;
(vi) On 23 October 2002 the Chief Commissioner wrote to the applicant’s solicitor stating that the “guidelines” are OSR’s internal working papers and is not in a position to release them.
(vii) On 20 November 2002 the Chief Commissioner released a copy of the file in compliance with section 58 of the Administrative Decision Tribunal Act. This file included the “guidelines”. This document specifically stated that the residence requirement can be extended at any time up to 12 months after completion of the transaction. It was submitted that the applicant’s letter of 8 July and his solicitor’s facsimile of 19 July met that deadline.
29 It was further submitted that if the Tribunal accepts that it does have jurisdiction to determine this matter the following are the relevant facts:
- (i) It was always the applicant’s intention to return to Australia in January 2002;
(ii) Consistent with that intention the residential tenancy agreement granted by him to the tenants of the property expired on 12 January 2002;
(iii) Due to work commitments overseas and the need to establish links in preparation for developing his own business upon his return to Australia, Nelson delayed returning to Australia until 1 April 2002 – well within the time required to occupy under the original decision – assuming that he would be able to readily gain employment and take possession of the property;
(iv) Unfortunately and unexpectedly the applicant was unable to obtain gainful employment upon his return from overseas;
(v) Within the twelve month period allowed by the original decision the applicant made a formal application for a review which was promptly rejected;
(vi) The original letter seeking an extension was prepared by the applicant himself without the aid of legal advice;
(vii) The applicant did not fully understand his legal obligations under the FHOG Act and also did not understand until it was too late that he was obliged to give his tenant 60 days notice to vacate;
(viii) On 19 July 2002 the applicant’s solicitor forwarded a comprehensive submission including evidence that the tenants in the property had been given notice to vacate the property within the minimum period allowed by law namely by 23 September 2002;
(ix) The tenants vacated on 30 August 2002 and the applicant occupied the property as his principal place of residence on 31 August 2002 and has resided there permanently since.
30 It was submitted that the Tribunal has the power to grant the application made by the applicant which is essentially an application for review of the decision to require occupation of the property by 20 July 2002 and to substitute for it a requirement to occupy by 20 October 2002 firstly because the Chief Commissioner is estopped from denying the Tribunal’s power in this respect and secondly, because the present application may be treated as an excusably late objection to the original decision made under section 12(1) imposing the obligation to occupy the property within 12 months from completion.
Reasons and Decision
31 The procedure under the FHOG Act is as follows:
32 The applicant makes an application for a first home owner grant. If the Chief Commissioner is satisfied that the applicant fulfils the eligibility criteria then the Chief Commissioner must authorise payment of the grant. The Chief Commissioner has a discretion under sections 17(2) and 20(1)(b) of the FHOG Act to authorise payment in advance in anticipation of compliance with the residence requirement if the Chief Commissioner is satisfied that the applicant intends to occupy the home as his or her principal place of residence within 12 months after completion of the eligible transaction. The Chief Commissioner also has a discretion to allow a longer period than the stipulated 12 months, that is to vary the conditions of the decision to grant the application. If the residence requirement is not complied with, the amount of the grant must be repaid.
33 Section 23 of the FHOG Act gives the Chief Commissioner the power to vary or reverse the decision to grant the application and authorise payment of the grant. Section 25 allows a person who is dissatisfied with the Chief Commissioner’s decision on the application (including a decision to reverse or vary an earlier decision) to lodge a written objection with the Chief Commissioner. An objector under section 25 may apply to the Administrative Decisions Tribunal for a review of the decision to which the objection was made (emphasis added).
34 In the circumstances of the case before me the applicant’s application was granted and payment was made in advance to the applicant on the basis that he would comply with the 12 month residence requirement. It is common ground that the 12 month period expired on 19 July 2001.
35 On 8 July 2002 shortly before the 12 month period expired, the applicant sought an extension of the 12 month period, that is, he asked the Chief Commissioner to vary the conditions of the original decision.
36 The Chief Commissioner refused to grant the extension. He decided not to vary the decision, because “financial difficulties” were not considered to be a sufficient reason.
37 On 11 July 2002, 8 days before the 12 month period expired, the Chief Commissioner’s delegate sent a letter to the applicant stating that “the Chief Commissioner has reviewed your circumstances and has decided not to allow a longer period for you to occupy the home”. The letter also informed the applicant that he was required to comply with the 12 month requirement but that he could lodged an objection if he disagreed with that decision.
38 The applicant objected and his solicitor made submissions on his behalf. On 17 September 2002 the Chief Commissioner’s delegate wrote to the applicant’s solicitor stating that the objection has been disallowed and that the decision made on 11 July 2002 was the correct decision.
39 The applicant was required to occupy his home within the 12 month period and failure to do so would result in the forfeiture of the grant. Once non-compliance occurred the Chief Commissioner automatically reversed the decision to grant the application.
40 A reviewable decision is a decision of an administrator that the Tribunal has jurisdiction under an enactment to review (see section 8 of the Administrative Decisions Tribunal Act 1997). Section 28 of the FHOG Act confers on the Tribunal the jurisdiction to review decisions by the Chief Commissioner “to which an objection was made” under section 25 of the FHOG Act. Section 25 of the FHOG Act allows a person to lodge an objection if that person is dissatisfied with the Chief Commissioner’s decision on an application “including a decision to reverse or vary an earlier decision”.
41 The legislation is ambiguous and although the Chief Commissioner states in his letter of 17 September 2002 that the decision of 11 July 2002 is “the correct one”, I am of the view that the reviewable decision is the decision by the Chief Commissioner stated in his letter of 17 September 2002 which is the refusal to vary by refusing to extend the 12 month period. It cannot be the reversal because the reversal had not yet occurred when the objection was lodged. Additionally it is my view that the provisions of section 28 of the FHOG Act intends to give an objector another avenue of review, being an external review by an independent Tribunal following an internal review.
42 I am of the view therefore that the Tribunal has jurisdiction to review the Chief Commissioner’s decision not to vary and extend the 12 month period but to reverse the earlier decision to grant the application under section 28(1) of the FHOG Act and section 38 of the Administrative Decisions Tribunal Act 1997.
43 The second issue for determination therefore before the Tribunal is whether the Chief Commissioner made the correct and preferable decision in refusing to grant and extension and in reversing the decision to grant the application.
44 The Commissioner has a discretion to allow a longer period than the 12 months from the date of the completion of the eligible transaction. As stated earlier in this decision it was agreed between the parties that the 12 month period expired on 20 July 2001. The legislation is silent on the circumstances in which the period might be extended but FHOG Business Rule 2.2 details the types of situations which might result in an extension of the 12 month period. The situations include interstate/overseas employment, hospitalisation, tending to sick relatives or any other unforseen circumstances which prevents occupation within 12 months”. It is noted in the Business Rule that as long as the application for extension is made within the 12 month period it will be considered by the Chief Commissioner.
45 The applicant applied within the 12 month period albeit 11 days before its expiration. The Tribunal notes that the Chief Commissioner considered that the reasons given by the applicant for his imminent failure to comply with the 12 month requirement amounted to financial difficulties and that they did not constitute an unforseen circumstances as many home buyers experience that problem and the intention of the first home owner grant legislation is to assist first home owner buyers and not investors.
46 The applicant himself stated that he intended to occupy the home in January 2002 although he had until 20 July 2002 to do so. His work commitments delayed his return to Australia, but he did so return on 1 April 2002 well within the time required to occupy the residence. He was unable to obtain employment upon his return and so he continued to rent out the property in question as he could not afford to live there. He continued to live at his parents’ house. Although it was submitted that financial reasons were not the only reasons preventing him from complying, it is my view that financial difficulties was the real reason he decided not occupy the home and the other problems with his tenants flowed from that reason. The fact that when the applicant realised the strict nature of the 12 month requirement he moved in as soon as he possibly could fortifies my view that it was a matter of personal choice for him. If the applicant had approached the Chief Commissioner sooner to request an extension of time, he would have been advised that his application for an extension was denied and he would have had sufficient time to organise himself in the way he did later.
47 It is my view therefore that the Chief Commissioner made the correct and preferable decision in refusing to vary the original decision by extending the 12 month period and in reversing the original decision and requiring the repayment of the grant.
Orders
48 The Chief Commissioner’s decision to reverse the original decision is affirmed.
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