Richard Lorenzo and Secretary, Department of Defence
[2012] AATA 438
•12 July 2012
[2012] AATA 438
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2011/5193
Re
Richard Lorenzo
APPLICANT
And
Secretary, Department of Defence
RESPONDENT
DECISION
Tribunal Mr M D Allen, Senior Member
Date 12 July 2012 Place Sydney The Tribunal sets aside the decision under review and remits the matter to the Respondent to give effect to the Tribunal's findings.
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Mr M D Allen, Senior Member
Catchwords
DEFENCE – Defence Home Ownership Assistance Scheme – When was the construction of the Applicant’s dwelling house completed – Did the Applicant make the dwelling his home – Power of the Tribunal to abridge the period of residence for subsidy entitlement – decision under review remitted.
Legislation
Defence Home Ownership Assistance Scheme Act 2008 ss 27, 28, 30, 36, 40, 71, 74, 75, 76
Cases
Australian Securities and Investments Commission v Donald (2003) 136 FCR 7
Commissioners of Inland Revenue v Lysaght [1928] AC 234
Herbert v Byrne [1964] 1 All ER 882
Koitaki Para Rubber Estates Ltd v Federal Commissioner of Taxation (1941) 64 CLR 241
Re Samek and Secretary, Department of Social Security (1988) 16 ALD 295
Re Vassis; Ex Parte Leung (1986) 9 FCR 518Secondary Materials
Defence Home Ownership Assistance Scheme Bill 2008, Explanatory Memorandum
REASONS FOR DECISION
Mr M D Allen, Senior Member
12 July 2012
By application lodged on 5 December 2011 the Applicant sought review of an internal review decision made pursuant to s 74 of the Defence Home Ownership Assistance Scheme Act 2008 (the DHOAS Act), that determined he was not entitled to continued payment of monthly subsidy under s 27(4) of the DHOAS Act post April 2011.
The purpose of the DHOAS Act was set out in the Explanatory Memorandum that accompanied the Bill for the Act when the said Bill was introduced into the House of Representatives. The first paragraph of the Explanatory Memorandum reads:
This Bill will provide a home ownership assistance scheme that will be available to eligible members of the Australian Defence Force (ADF) who are serving on or after 1 July 2008. The Bill will establish a scheme to provide a subsidy on the home loan interest expense incurred in purchasing a home in which the member or their family will live. The proposed scheme will provide progressively higher levels of benefits to members as an incentive to remain in active service. Higher levels of assistance will become available on completion of 8 and 12 years’ service for Permanent ADF members and on completion of 12 and 16 years for Reserve Force members.
The general outline to the Explanatory Memorandum continues stating:
The assistance takes the form of a home loan interest subsidy because the Commonwealth can be reasonably assured that its outlays will be used by the beneficiaries toward the intended purpose, of providing a home for the ADF member and family, not an investment property. The loan on which subsidy is payable must be used for the purchase, maintenance and development of the subsidised borrower’s home.
The scheme of the DHOAS Act, as it affects the Applicant, is set out in the following sections of the Act, namely:
Section 27(1)
Authorisation of initial payment
(1) The Secretary must authorise the payment of subsidy to a person if subsidy becomes payable to the person under subsection 28(1).
Note: An authorisation under this subsection may be revoked under section 44. In certain circumstances related to membership of the Reserves, the authorisation may be varied under section 45.
Section 27(3)
Authorisation of continuing monthly payments
(3) The Secretary must (on a monthly basis) authorise the continued payment of monthly subsidy to a person while subsidy continues to be payable to the person under subsection 28(3).
Note: Monthly subsidy is paid to the subsidised borrower’s loan provider on a monthly basis (by a payment into the borrower’s subsidised loan account for the borrower’s benefit) under Division 4.
Section 27(4)
(4) The Secretary must refuse to authorise the continued payment of monthly subsidy to a person if subsidy stops being payable to the person under section 36.
Note: Part 5 provides for the administrative review of a decision to refuse to authorise the continued payment of monthly subsidy.
Section 28(3)
When subsidy continues to be payable
(3) After subsidy becomes payable to a subsidised borrower, monthly subsidy continues to be payable to him or her during a continuous period (an entitlement period) until it stops being payable under section 36, subject to section 44 (revocation of authorisation of payment of subsidy).
Note 1: If subsidy is payable to a person, the person is a subsidised borrower (see section 3).
Note 2: If payment of subsidy is suspended under section 61 because of a subsidised borrower’s death, the suspension does not break the continuity of the entitlement period.
Note 3: If the Secretary revokes an authorisation under section 44 in relation to an entitlement period, subsidy is taken never to have been payable during the period.
Section 30(1)(b)
When subsidy becomes payable – use of subsidised loan
(1) The Secretary must be satisfied that the subsidised loan is used, or is to be used, to do one of the following:
…
(b) to buy the interest in land and undertake work (building work) on the land consisting of any of the following:
(i) the construction or the completion of a house, other than a unit, on the land;
(ii) the enlargement, renovation or repair of a house on the land;
(iii) the construction of any other permanent improvement on the land, if the improvement is used primarily for private or domestic purposes in association with the house;
…
Section 30(2)
(2) If a house mentioned in subsection (1) is a unit, paragraphs (1)(b) and (c) do not cover building work in relation to any accompanying common property.
Note: For the definitions of house and unit, see section 3.
Section 36(a)
When subsidy stops being payable - general
Subsidy stops being payable to the subsidised borrower, in relation to the entitlement period:
(a) if an event mentioned in an item in the following table occurs;
An event mentioned in the table created by section 36(a) reads:
6. The Secretary is satisfied that the condition under section 39 or 40 (relating to occupation of the house is not met.
Section 40 then continues:
When subsidy stops being payable—occupation of house as a home (building loan)
Scope
(1) This section applies if the subsidised loan is for the purpose of building work, or to discharge another loan for such a purpose.
Subsidy Condition
(2) At any time during the period covered by subsection (3), the subsidised borrower, or a partner or dependant of the subsidised borrower, must occupy a house on the land as a home.
(3) This subsection covers the period:
a. starting on the day the building work is completed; and
b. ending:
i.1 year after that day; or
ii.if the Secretary is satisfied that there are service requirements, or exceptional circumstances, justifying a shorter period of occupation—at an earlier time approved by the Secretary in writing.
Note: The building work must be completed within 2 years after the first authorisation day for the subsidy (see section 37).
The Applicant lodged an application for a subsidy certificate, dated 28 January 2010, which was received by the Department of Veterans’ Affairs in Brisbane on 1 February 2010. A letter dated 2 February 2010 informed the Applicant that he had been granted a subsidy certificate under the DHOAS Act. No question arose in these proceedings regarding the Applicant’s entitlement to receive any payments under the DHOAS Act.
On 20 August 2010 the Applicant notified the Department of Veterans’ Affairs in writing of a change in his circumstances. The details of the change in personal circumstances outlined by the Applicant read:
Please commence subsidy payments effective immediately. The first (initial) progressive drawdown for construction of the home has commenced.
I am also unable to occupy the home following completion due to impending posting to another locality WEF Jan 11 (see attached) and therefore request an occupancy waiver.
The Applicant’s evidence was that he had purchased a block of land situated in the Adelaide suburb of Northgate in August 2009. Attached to the land was a covenant that a suitable dwelling be erected upon the said land within a period of two years.
A contract was entered into with a builder, Sterling Homes Pty Ltd, and construction of a single story dwelling house commenced on 7 August 2010.
On 13 August 2010 the Applicant, who was then posted to RAAF Base Edinburgh in South Australia, was notified of a posting effective 10 January 2011 to Williamtown RAAF Base in New South Wales.
From that time correspondence ensued between the Applicant and officers of the Department of Veterans’ Affairs administering the ownership assistance scheme. Some inconsistency exists regarding what the Applicant said at various times to these officers, but he gave sworn evidence in these proceedings and was cross-examined and it is from that material I have formed my view of the relevant facts.
Initially the Applicant was informed that from 11 February 2011 onwards, being the date the dwelling house was completed, he did not meet the eligibility criteria for the continuation of subsidy and that an overpayment of subsidy had occurred for the period 11 February 2011 to 16 May 2011.
That determination was varied upon internal review. The internal review decision decided:
(a)that the “building work” was completed in late April 2011, not 11 February 2011;
(b)that the applicant did not “occupy a house on the land as a home” as required by s 40(2);
(c)that compliance with the 12 month occupancy period in accordance with s 40(3)(b)(ii) of the DHOAS Act would not be waived;
(d)that the decision to refuse to authorise the continued payment of monthly subsidy pursuant to s 27(4) of the DHOAS Act was affirmed.
In these proceedings the Applicant maintained that the building work was completed on 11 February 2011, and that thereafter he occupied the house as a home until he took up his posting at RAAF Base Williamtown on 4 April 2011.
The Applicant’s evidence was that at Christmas 2011 he took Christmas and long service leave. This enabled him to delay taking up his posting at Williamtown until April 2011.
As at 11 February 2011 the house was habitable. Water and sewerage had been connected; electricity was connected as was television, telephone and internet. The hot water system was operating. I note that in an email to the Department of Veterans’ Affairs dated 5 May 2011 the Applicant lists various works which had not been carried out, including: landscaping, fencing, driveway, paths, outdoor living areas, internal floor covering, curtains and air-conditioning.
From 20 February 2011 the Applicant said that he commenced living in the Northgate house. At that time he owned a house at Hillbank, another Adelaide suburb, but he moved a refrigerator, bed, table and chairs plus television and radio, together with clothes and tools to the Northgate house. He lived at the Northgate property whilst completing certain works, for example a bench top, not undertaken by the builder.
Although the Applicant resided at the Northgate property, his mailing address, apart from the utility bills, remained his Hillbank house. This house was placed on the market a month or so before he moved to Williamtown and was subsequently sold, although in cross-examination the Applicant conceded an uplift of goods to accompany him on his new posting took place from the Hillbank house.
As I understand the evidence, from 20 February 2011 he resided at the Northgate house carrying out various works in order to complete its development into a dwelling, but he regarded himself as and from 20 February 2011 as residing at Northgate.
I find that the Northgate house was completed on 11 February 2011. Document T15 of the documents prepared for the Tribunal pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (AAT Act) is a certificate of compliance issued by the builder to the local authority stating building work had been completed. Exhibit A1 is a letter from the builder, Stirling Homes Pty Ltd, addressed to the Administrative Appeals Tribunal (AAT) dated 6 March 2012. The letter reads inter alia:
Our records indicate that on 11 February 2011 the Schedule 19A – Statement of Compliance was completed, signed and a copy handed to Mr. Richard Lorenzo. In order for this Statement of Compliance to be issued by Sterling Homes the following would be required to be satisfied:
1.Full payment for the contract to be received from Mr Lorenzo;
2.Keys to be handed to the client;
3.All contract obligations to be fulfilled;
4.House to have all services connected;
5.House to be in a habitable condition.
As is common practice for Sterling Homes, the contract did not include any external works or stormwater system.
That letter was admitted into evidence without objection. I am, given the above documents and the Applicant’s sworn evidence, satisfied that the building was completed on 11 February 2011.
With any new dwelling it is a question of degree as to what constitutes completion of the builder’s work. For example, some contracts may provide for landscaping while others do not. In my own experience, a builder will regard a dwelling as completed although the premises are devoid of carpets, light fittings and curtains – these matters being regarded as the responsibility of the owner. As I see it, the Applicant’s building was “completed” in so far as he and the builder were concerned and according to the contract between them. Thereafter, as stated by the builder, the premises were habitable and the Applicant occupied them with the aim of effecting improvements to raise it above a basic level of habitation.
The Respondent submitted that although the Applicant may have slept in the Northgate house overnight, that was for convenience, given he was spending long hours there working, but that he was not occupying the house as a home, and that his home remained the dwelling at Hillbank.
The words “occupy a house on the land as a home” in s 40(2) of DHOAS Act are ordinary English words devoid of technical meaning. What might constitute a “home” is essentially a question of fact and degree, or as Salmon LJ put it in Herbert v Byrne [1964] 1 ALL ER 882 at 887 “‘Home’ is a somewhat nebulous concept”.
As alluded to by Williams J in Koitaki Para Rubber Estates Ltd v Federal Commissioner of Taxation (1941) 64 CLR 241 at 249 a person may have maintained a “home or homes”.
In Re Vassis; Ex parte Leung (1986) 9 FCR 518 at 524, Burchett J adopted what had been said by Viscount Sumner in Commissioners of Inland Revenue v Lysaght [1928] AC 234 at 245 namely: “One thinks of a man's settled and usual place of abode as his residence”. At the same time his Lordship pointed out that “in many cases in ordinary speech one residence at a time is the underlying assumption and, though a man may be the occupier of two houses, he is thought of as only resident in the one he lives in at the time in question”.
Similar concepts were referred to by the Court of Appeal in Herbert v Byrne. At 886 Denning MR said:
In order to be in personal occupation of a house, it is not necessary that the tenant should be there himself with his family all the time. A sea captain may be away from his house for months at a time, but it is none the less his home… Nor does it mean that, to gain protection, the tenant must have it as his only home. A man who has a home in the country may also have a home in London, spending a couple of nights there a week, and yet be protected in respect of it… Nor does it mean that a man has no home if he is in the course of moving from one home to another. A man on the move may have a home in each place until the move is completed…
In this case, it is clear that, in December 1962, the tenant had a home at No. 42, New Cavendish Street. But he was in the course of moving to No. 37, Ifield Road, and it seems to me that he had also a home there. True, it was not so comfortable a home. He was pigging there…
The concept that a person may have more than one home was found to exist by the AAT (Senior Member Hayes) in Re Samek v Secretary, Department of Social Security (1988) 16 ALD 295. At 296 the Tribunal said:
The concept of “the principal home” assumes, however, that there is more than one property which is used as a home. If one moves from home to home, then the home in which one spends most time would, logically, be the principal home. But in the context in which it appears, to talk of one home being a principal home, and another being a secondary home, the respective “homes” must be “property” which can be valued for the purposes of the Act. Thus, as between the city house and the holiday house owned by a retired couple in my earlier example, the city house would remain their principal home for as long as they spent the bulk of their time there. But once they spent the bulk of their time in their holiday house, it would become their principal home.
A person who owns a residential property in the city and who is in the habit of living there, but who spends the bulk of his or her time travelling around the country, living in hotels, and pursuing business or recreational interests from those hotels, can still be regarded as retaining the city property as his or her principal home. While the person spends more time each year in hotels than at home, he or she has no proprietary interest in the hotel room and so cannot be regarded as setting up a home which can be regarded as such as to make the city home a secondary one. So it is I believe with the applicants in this case. For a period, when they were camping on their bush block and contemplating building on it, spending comparatively small amounts of time at their other property in Haberfield, they were “at home” in Inverell with their bush block being their “principal home”, and their Haberfield property being their secondary place of residence.
The above cases illustrate that although the Applicant from 20 February 2011 to just before he took up his post in early April 2011 owned two properties in Adelaide his intention was that the Northgate property was to be “his home”, and objectively this intention was fulfilled, albeit that he might be regarded, in the words of Denning MR, as “pigging” there.
I find therefore that at the Northgate property building work was completed on 11 February 2011 and that from 20 February 2011 to 4 April 2011 the Applicant resided in that property; it being his “home”.
The Applicant also applied to the Respondent to abridge the time he resided in his home from one year to his actual occupancy period, and thus ameliorate the full effect of s 40 of the DHOAS Act.
Section 40 of the DHOAS Act provides that to continue to be eligible for a subsidy under the Act, the borrower or his dependants must occupy the house as a home for the period of one year. Section 40(3)(ii) gives the Respondent the power to approve a lesser period if “there are service requirements or exceptional circumstances”.
In this matter the Respondent refused to exercise the discretion given by s 40(3)(ii) in the Applicant’s favour.
The Respondent submitted that any decision pursuant to s 40(3)(ii) of the DHOAS Act was not subject to review by the AAT.
In my opinion this submission is correct. Although the Tribunal is entitled to exercise all the powers invested in the original decision-maker, the Act does not provide for the Tribunal to review this section of the Act – see Australian Securities and Investments Commission v Donald (2003) 136 FCR 7 at 21 where Downes J said:
Arguments relating to the jurisdiction of the Tribunal such as those presented in this matter are not new. In Re Control Investment Pty Ltd and Australian Broadcasting Tribunal (No 2) (1981) 3 ALD 88 at 92 President Davies J said of s 43(1) of the AAT Act:
[T]he provision “For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision …” is not concerned to confer upon the Tribunal authority to limit its function but rather to confer upon it an amplitude of powers so that the Tribunal may exercise, if it is convenient and useful to do so, not only the decision-making power upon which the decision-maker relied, but all relevant powers and discretions which were conferred by the enactment upon the decision-maker. The provision extends the authority of the Tribunal so that it may more adequately exercise its function of reviewing on the merits the subject decision.
That statement was referred to by a Full Court of this Court (Lockhart, Wilcox and Burchett JJ) in Fletcher v Commissioner of Taxation (Cth) (1988)19 FCR 442 at 452 where it was held that the Tribunal could exercise a discretion conferred upon the Commissioner of Taxation by s 177F in Pt IVA of the Income Tax Assessment Act 1936 (Cth) when reviewing a decision under s 186 of that Act…
See also the decision of Kenny J at page 15 of ASIC v Donald.
Here the original decision-maker for the purpose of review by the AAT is a person designated by s 75 of the DHOAS Act. That person is conducting a review of a decision which, pursuant to s 71 of the DHOAS Act, is a “reviewable decision”. Section 71 sets out various decisions which are capable of review, and then pursuant to s 74 these specific review decisions can be the subject of further internal review. Section 76(1) of the DHOAS Act then provides:
Application may be made to the Administrative Appeals Tribunal for review of an internal review decision.
To my mind the DHOAS Act sets out with particularity those decisions which can be the subject of internal review and hence reviewed by the AAT and, notwithstanding the powers given to the AAT pursuant to s 43 of the AAT Act, if the person who made the original decision did not have the requisite power of review, neither does the AAT.
Notwithstanding the finding that the Tribunal does not have power to review a decision pursuant to s 40(3)(ii) of the DHOAS Act, I would have thought a mandatory transfer from Edinburgh base in South Australia to Williamtown in NSW satisfied the test of a “service requirement”. Any decision pursuant to s 40(3)(ii) is clearly a decision under an enactment and subject to challenge under the Administrative Decisions (Judicial Review) Act 1977. Should the Applicant seek to adopt this path of review, I would strongly advise him to first seek advice from a member of the RAAF’s legal panel; such advice should be given as legal aid to a member.
For the reasons given above the decision under review is set aside and remitted to the Respondent in order to give effect to the Tribunal’s findings.
I certify that the preceding 38 (thirty-eight) paragraphs are a true copy of the reasons for the decision herein of Mr M D Allen, Senior Member.
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Associate
Dated 12 July 2012
Date(s) of hearing 15 June 2012 Applicant In person Solicitors for the Respondent Will Sharpe, Sparke Helmore
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