Reuman v Chief Commissioner of State Revenue

[2004] NSWADT 96

CITATION:	Reuman v Chief Commissioner of State Revenue [2004] NSWADT 96
DIVISION:	Revenue Division
PARTIES:	APPLICANT Bruce Reuman RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	036039
HEARING DATES:	4/03/2004
SUBMISSIONS CLOSED:	03/04/2004
DATE OF DECISION:	05/24/2004
BEFORE:	Hole M - Judicial Member
APPLICATION:	Land tax exemption - principal place of residence
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Land Tax Management Act 1956
CASES CITED:	Aldridge & Anor v Chief Commissioner of State Revenue [2003] NSWADT 120 revised – 13/10/2003 Buckley v Commissioner of Land Tax [1975] 1 NSWLR 189 Downie v Chief Commissioner of State Revenue [2003] NSWADT 233 Flaracos v Chief Commissioner of State Revenue [2003] NSWSC 68 Kilcare Investments Ltd v Commissioner of Land Tax (NSW) (1981) 81 ATC 4379 McNally & Anor v Commissioner of State Revenue [2003] NSWSC 1118 Mesiti v Chief Commissioner of State Revenue [2003] NSWADT 99 Newcastle City Council v Royal Newcastle Hospital [1959] AC 248 Stature Pty Ltd v Chief Commissioner of State Revenue [2002] NSWADT 271
REPRESENTATION:	APPLICANT In person RESPONDENT M Twohill, solicitor
ORDERS:	The assessment by the Chief Commissioner of State Revenue is affirmed.

Introduction

1 The applicant seeks a review of the decision of the Chief Commissioner of State Revenue to levy land tax for the years 2001, 2002 and 2003 in respect of the property being 26 Cavvanbah Street Byron Bay (Cavvanbah).

2 The applicant is the registered proprietor of Cavvanbah and of a property at 168 Terania Creek Road the Channon (Terania Creek) and was so on the relevant dates being 31 December, 2000, 31 December 2001 and 31 December 2002. The applicant is also the registered proprietor of 3/2 Lawson Street Byron Bay, this property is not subject of this application.

3 The Terania Creek property is exempt from assessment for Land Tax under section 10(1)(p)(i) of the Land Tax Management Act 1956 (the Act) being land used for primary production in the course of carrying on a business of primary production.

4 The applicant claims that his principal place of residence is Cavvanbah and that accordingly the exemption available pursuant to section 10(1)(r) of the Act should apply.

5 There is an old style weatherboard house constructed on Cavvanbah, together with sundry other structures including an attached garage and clothes line. There is also a freestanding structure of recent origin which has been constructed by the applicant at some distance from the house.

6 The applicant is employed in two full time occupations including one at TAFE and the one of primary production at Terania Creek.

Background

7 The house at Cavvanbah was the subject of an arrangement between the applicant and Ms M J Allen from 1985 to April 2003 whereby Ms Allen occupied the house. The arrangement included a lease signed in 1990 and at one stage a bond (which was returned to Ms Allen in 1991). The applicant provided information that over the period from 1988 to 1993 there had been a relationship between himself and Ms Allen. The applicant explained that from 1994 to 16 April 2003 Ms Allen continued to live in the house and arrangements were put in place to allow a compromise whereby the applicant was able to stay there also.

8 The compromise arrangements included the construction of the freestanding structure in the backyard. The construction commenced on 20 November 1999 and was completed on 2 June 2000. Council’s approval to this structure has not been sought by the applicant. A photograph taken in December 2003 by the applicant shows the structure to be approximate in size to a garage, having a sloped roof with at least one access door and two large windows. The structure is of steel purlins and fibro sheets. The structure appears to be surrounded on at least two sides by grass. It is a substantial structure. Evidence was given by the applicant that there was no bathroom or running water in the structure.

9 The applicant gave evidence both in written submissions and under cross examination that he keeps personal possessions in the structure. The applicant gave evidence under cross examination that he had not slept in the structure during the relevant years; that he attended at Cavvanbah approximately 3 days a week; that he was employed at TAFE 4 days a week and 2 evenings and fitted the occupation of primary production around the TAFE employment; that when he was working at Terania Creek and at TAFE he slept at Terania Creek; that he spends nights at Cavvanbah; that the house and attached garage were the territory of Ms Allen (during the relevant years); that he only leased the house and garage to Ms Allen with rights to go back and forward from the street to the house and that he maintained control of the land separate to the house.

10 The applicant gave evidence that he travels overseas for long periods of time and was absent from Australia for a long period in 2002.

11 The respondent provided evidence from Ms Allen, which the applicant did not dispute, by a Statement of Evidence. This evidence included reference to the two bedroom house with an attached garage, used as a third bedroom. Ms Allen lived in the premises for approximately 18 years to about April 2003. Ms Allen was the tenant and shared the house with various persons over the time, she also stated that the applicant ‘never lived at the premises with me, either in the house or in the garage’, that the applicant had stayed at the premises for about 1 week when she was away on holidays as arranged between them in advance, that the applicant visited the premises from time to time to do maintenance and he would partake of a meal but did not stay overnight.

12 The applicant provided a Statutory Declaration by Ms J Stiles who presently occupies Cavvanbah. The information in that declaration does not relate to the relevant dates.

13 The applicant submitted his view that the lease of the premises and the residential lease, and holding over after its expiry, did not exclude his use of the premises other than the house and garage and that he was occupying the freestanding dwelling as his principal place of residence.

14 The applicant made the following submissions:

(a) that Cavvanbah is his “principal place of residence” based on the interpretation of that phrase in the following cases: Commissioner of Land Tax v Christie, Newcastle City Council v Royal Newcastle Hospital, Stature Pty Ltd v Chief Commissioner of State Revenue, Flaracos v Chief Commissioner of State Revenue, Downie v Chief Commissioner of State Revenue and Aldridge & Anor v Chief Commissioner of State Revenue. The applicant submitted that his use and occupation of the freestanding structure was sufficient to make it his principal place of residence.

(b) that the interpretation of section 10(1)(r) in Flaracos v Chief Commissioner of State Revenue where reliance is placed on the description of “use” is as provided in Commissioner of Land Tax v Christie by Bowen JA is:

““Use” has regard to the purpose to which the land is put. Under sec 9(3)(e) it must be shown to have been devoted to the purpose of constituting the site of the dwelling house. Provided there is a unity in the land in question in a physical sense and a unity in what is done in devoting it to the purpose of providing or constituting the site, and provided there is a sufficiently proximate and not too remote connection between the dwelling house and its requirement or the requirements of its users or occupants on the one hand and the whole of the land in question on the other hand, then this element will be sufficiently established to demonstrate “use” as the site of the dwelling house.”
(c) In Mesiti v the Chief Commissioner of State Revenue at paragraph 35, the discretion is considered as follows:
“His Honour, Gzell J did not, in Flaracos , express any view about discretion given to the Chief Commissioner under s 3(3)(b). My own view is that it operates in cases where the taxpayer is not able to demonstrate that the residence has been “continuously used and occupied by the owner” for residential purposes. The discretion will become relevant where, for example, the residence is let out for a very short term because the owner is away or absent due to work or holiday purposes to be at some other location, or where some part of the residence is used for non-residential purposes (example a home office). In those cases, the Chief Commissioner is able to exercise his discretion to treat a property as the owner’s principal place of residence if all the facts and surrounding circumstances warrant that the Chief Commissioner take that view although the owner has failed to satisfy one or more of the strict requirements of s 3(3)(a). The question of “continuous physical presence” may arise for consideration under the discretion although it is a question to be tested against “possession and control”.
(d) In Aldridge & Anor v Chief Commissioner of State Revenue , the Judicial Member, Mr A Verick, commented that:
“An owner would satisfy the test and be entitled to the exemption, subject to all other requirements being satisfied, provided that, during the period of any physical absence, the owner retained the right to possession and maintained his rights of control over the land.”
The applicant submitted that he satisfied the test as to “continuous physical presence” as described in Flaracos v Chief Commissioner of State Revenue in that during his period(s) of physical absence he retained the right to possession and control over the land.

15 The respondent’s representative submitted that:

(a) the overall scheme of the Act had to be considered and that in this instance each of the tax years was not factually different from each other. The applicant has more than one place of residence being Terania Creek and Cavvanbah. Section 10 sets out a series of exemptions including section 10(1) (p)(i) which applies to Terania Creek regardless whether the applicant resides there; if he had a separate principal place of residence then he could claim the section 10(1)(p)(i) exemption for Terania Creek and the section 10(1)(r) exemption for the separate principal place of residence. The exemption in section 10(1)(r) refers to “used and occupied as the principal place of residence” which is also dealt with in Section 3(3) and as the applicant resided at Terania Creek for considerable periods of the relevant periods and as the applicant did not sleep at Cavvanbah then Terania Creek is his principal place of residence.

(b) Where a taxpayer has 2 possible principal places of residences then the facts must be considered, as referred to in Downie v Chief Commissioner of State Revenue at paragraph 26. The onus being on the applicant to distinguish one place of residence from the other.

(c) In Flaracos v Chief Commissioner of State Revenue the taxpayer had no other place of residence and he was away on holidays or looking for employment and he could return and occupy the place of residence whenever he chose.

(d) The applicant had entered into a landlord and tenant arrangement firstly in writing and then verbally; the tenant retained control of the house and garage and determined who lived there. The applicant did not have control over the residence. The applicant had constructed a separate structure without toilet or running water that he did not sleep in which he used as a storage place for some of his possessions. The applicant resided at Terania Creek when in Australia.

16 The applicant has the onus of proving that the residence, subject of the assessment, is his principal place of residence. The evidence discloses that the applicant has two possible places of residence being Cavvanbah or Terania Creek. The applicant did not provide any information as to the residence at Terania Creek in that he was of the view that it was already exempt as land used for primary production. The applicant and respondent provided evidence that the residence and garage on Cavvanbah was subject of various arrangements with Ms Allen during the relevant periods and that those arrangements provided that Ms Allen had control over the persons who could use and occupy the residence. The applicant constructed a freestanding structure separate to the residence at Cavvanbah and kept some possessions there, he maintained that he attended at Cavvanbah regularly. The evidence disclosed that he did not sleep there.

17 The land at Cavvanbah is used for residential purposes as described in Section 3(3), the question to be answered is whether it is used for residential purposes of the applicant. The applicant sought to distinguish the use of the land as a whole from the use of the premises by Ms Allen and his ability to come and go, as he pleased, to use the balance of the land (including the freestanding structure) other than the premises used by Ms Allen.

18 The applicant sought to prove that the freestanding structure was his principal place of residence relying on his use and occupation of that structure. In the event that there had not been the construction of the freestanding structure then the applicant would not be able to support the argument that Cavvanbah was his principal place of residence as the residence was let to Ms Allen who could determine who could use and occupy it.

19 The applicant has not sought or obtained Council’s approval to the freestanding structure. The structure has no toilet or running water, the applicant “stores” some of his possessions there.

20 Is the structure capable of being described as a residence or as a dwelling house? To be a residence it must be capable of being resided in, that is a person must be able to live there. To be able to live in the structure, it would be necessary to satisfy the requests of the State and local governments in respect of a structure that is to be lived in as a residence. This would include provision of bathroom facilities in these circumstances. The issues referred to in this paragraph do not impact on the matters for consideration in relation to this application.

21 The applicant provided evidence that he regularly went to the land, that he did not sleep there, that he attended to repair work on the house and he maintained the freestanding structure. He provided evidence that he had complete control over the freestanding structure having built it with an intention to use it for his principal residence. His evidence discloses that he was a considerate landlord who attended to the maintenance of the land. The applicant did not provide evidence as to the residence at Terania Creek.

22 The evidence provided by the applicant as to his use and occupation of the land does not satisfy the onus on him to satisfy the Tribunal that Cavvanbah is his principal place of residence rather than Terania Creek in the relevant years. The evidence does not establish that Cavvanbah is the applicant’s principal place of residence.

23 It is noted that the applicant has submitted payment of the assessed land tax and that there is no penalty or interest payable.

24 I find that:

The assessment by the Chief Commissioner of State Revenue is affirmed.