Powell v Chief Commissioner of State Revenue

[2008] NSWADT 289

CITATION:	Powell v Chief Commissioner of State Revenue [2008] NSWADT 289
DIVISION:	Revenue Division
PARTIES:	APPLICANT Melva Marie Powell RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	086048
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	10 October 2008
DATE OF DECISION:	24 October 2008
BEFORE:	Handley R - Deputy President
CATCHWORDS:	Duties Act – First Home Owner Grant – eligible transactions
LEGISLATION CITED:	First Home Owner Grant Act 2000
CASES CITED:	Chief Commissioner of State Revenue v Clapoudis [2008] NSWADTAP 7
REPRESENTATION:	APPLICANT In person RESPONDENT S Benjamin, solicitor
ORDERS:	The decision under review is affirmed.

1 Melva Marie Powell seeks the review of a decision made by the Chief Commissioner of State Revenue (‘the Commissioner’) on 14 November 2006 to refuse Ms Powell’s application for a First Home Owner Grant (‘FHO Grant’) on the ground that there was no eligible transaction under section 13 of the First Home Owner Grant Act 2000 (‘the Act’) for which a grant can be paid.

The Facts

2 Melvina Florence Burke, died on 10 January 2003. By her will, executed on 8 October 1987, she appointed her sister, Robin Mason, and her daughter, Ms Powell, to be her executrixes and trustees. Mrs Burke bequeathed the property in which she lived at Carey Bay (‘the property’) to Ms Powell and the residue of her estate, after payment of debts and testamentary expenses, to be divided in equal shares between her six children, including Ms Powell. Ms Powell and her family had, for many years, lived at the property with her mother, to whom they provided support.

3 On 28 August 2003, Ms Mason and Ms Powell transferred the property to themselves as joint tenants pursuant to their position as executrixes of Mrs Burke’s estate. There followed a protracted dispute over the estate between Ms Powell and her siblings which led to an application being made to the NSW Supreme Court under the provisions of the Family Provision Act 1982. Ms Mason died in November 2005 leaving Ms Powell as the sole remaining executrix of her mother’s estate. Notice of Ms Mason’s death was provided to the Real Property Act Register on 7 April 2006.

4 On 7 March 2006, the NSW Supreme Court (Barrett J) ordered that the property should be sold and the proceeds applied in meeting the expenses of the sale and in paying any remaining debts and testamentary expenses, with the balance to be applied in paying legacies totalling $79,000 to four of Ms Powell’s siblings with the residue being paid to Ms Powell. His Honour also stated that it was open to the parties to agree a precise outcome in the light of the indications he had given.

5 Ms Powell and her siblings agreed that Ms Powell would purchase the property from her mother’s estate, and, for this purpose, Ms Powell and her husband, Neale Francis Powell, obtained a loan from the Westpac Banking Corporation, secured by a mortgage over the property granted by Ms Powell. The loan took effect on 16 June 2006.

6 On 9 November 2006, Ms Powell applied to the Commissioner for a FHO Grant. By letter dated 14 November 2006, a delegate of the Commissioner informed Ms Powell that her application had been refused because there was no eligible transaction for which a grant could be paid. On 19 February 2008, Ms Powell’s solicitors wrote to the Commissioner seeking a review of this decision. In a letter dated 11 March 2008, the solicitors explained the delay in seeking the review and asked that their earlier letter be treated as an objection to the Commissioner’s decision.

7 By letter dated 29 April 2008, a different delegate of the Commissioner informed Ms Powell’s solicitors that her objection had been disallowed, stating that to be eligible to receive a FHO Grant an applicant must have acquired the property under an eligible transaction. The Commissioner was satisfied that Ms Powell had acquired the property pursuant to the administration of her mother’s estate and not via a contract.

8 On 4 June 2008, Ms Powell lodged an application with the Tribunal for a review of this decision.

The Law and the Issue in Dispute

9 The relevant provisions of the Act, sections 7 and 13, state as follows:

Section 7 Entitlement to grant

(1) A first home owner grant is payable on an application under this Act if:

(a) the applicant or, if there are 2 or more of them, each of the applicants complies with the eligibility criteria, and

(b) the transaction for which the grant is sought:

(i) is an eligible transaction, and

(ii) has been completed. ...

Section 13 Eligible Transactions

(1) An "eligible transaction" is:

(a) a contract made on or after 1 July 2000 for the purchase a home in New South Wales ...

(5) An eligible transaction is "completed" when:

(a) in the case of a contract for the purchase of a home:

(i) the purchaser becomes entitled to possession of the home under the contract; and

(ii) except in the case of a terms contract, if the purchaser acquires an interest in land under the contract that is registrable under a law of the State - the purchaser’s interest is registered under that law ...

10 The relevant issue in this case is whether there was an ‘eligible transaction’ that would qualify for a FHO Grant. Pursuant to section 13(1), an ‘eligible transaction’ is a contract for the purchase of a home in NSW. In Ms Powell’s case, she acquired title to the property in the course of the administration of her mother’s estate. Following orders made by the Supreme Court, which, essentially, directed that the property should be sold and the proceedings distributed in accordance with its directions unless agreement could be reached between the parties, Ms Powell obtained a loan, secured by a mortgage, which she used to ‘pay out’ her siblings so that she could retain ownership of the property.

Submissions

11 The Commissioner submits that it is clear from the facts that Ms Powell acquired the property pursuant to her mother’s will and not as a result of a contract for the purchase of a home. The Commissioner relies on the decision of the Appeal Panel in Commissioner of State Revenue v Clapoudis [2008] NSWADTAP 7 (‘Clapoudis’), the facts of which are similar to those in the present case.

12 Ms Powell states that she and Mr Powell lived with and supported her mother, who had been deserted by her husband and suffered poor health, for many years. During this time, they maintained and improved the house and paid many of the household bills when her mother was unable to pay these. As a result, Ms and Mr Powell were unable to afford the purchase of a home of their own. It was for these reasons that her mother bequeathed the house to Ms Powell.

13 Ms Powell submits that the facts of the present case are different from those in Clapoudis because, in that case, the house was to be sold and the proceeds apportioned among the beneficiaries. By contrast, her mother left the house to Ms Powell and explained her reasons for doing so. Following the Supreme Court orders, essentially she and her husband used the balance from the sale of her mother’s house, together with the housing loan obtained from Westpac, to buy the property. They were thereby buying their first home, and the fact that there was no contract “is just a loophole and a technicality”. Morally and ethically they should be entitled to the FHO Grant.

Discussion

14 In Clapoudis, the deceased left the residue of his estate, including the property in issue, to be sold, with the proceeds to be distributed equally between the deceased’s wife, Ms Clapoudis, and three daughters. Following consent orders made in proceedings brought under the Family Provision Act 1982, Ms Clapoudis elected to stay in the property and raise the money necessary to pay the legacies set up by the consent orders by way of a housing loan secured by a mortgage over the property. The property was transferred into Ms Clapoudis’ name and a mortgage was registered over the property.

15 The Appeal Panel held, at paragraphs 33 to 34, that the arrangement between the parties was not a sale. If there was a contract:

“33. ... it was not a sale of the property; it was for a distribution of the estate on a basis, which would allow Ms Clapoudis to retain possession of the property in specie [in its own form].

34. If the arrangement between the parties was not a sale, then it could not have been a “contract for the purchase of a home” (cf Paravizzini [ Commissioner of State Revenue v Paravizzini [2005] VSC 302] paragraph [55]).”

16 I am not unsympathetic to Ms Powell’s submissions and recognise that the strict application of the law may sometimes be seen as a “technicality”. Nevertheless, I agree with the Commissioner’s submission that the Appeal Panel’s decision is applicable in her case. While the factual situations in the two cases are marginally different, in both cases there is no contract for the purchase of a home. In Ms Powell’s case, she acquired title to the property pursuant to the administration of her mother’s estate and not as a result of a contract for the purchase of a home.

17 Thus, there was no ‘eligible transaction’ in terms of section 13(1) of the Act for which a FHO Grant can be paid under section 7(1). The decision of the Commissioner must therefore be affirmed.