St Baker v Chief Commissioner of State Revenue

[2004] NSWADT 280

CITATION:	St Baker v Chief Commissioner of State Revenue [2004] NSWADT 280
DIVISION:	General Division
PARTIES:	APPLICANT Justin St Baker RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	033278
HEARING DATES:	5/08/2004
SUBMISSIONS CLOSED:	10/29/2004
DATE OF DECISION:	12/02/2004
BEFORE:	Needham J - 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:	First Home Owners Grant Act 2000
CASES CITED:	Chief Commissioner of State Revenue v. Ferrington [2004] NSW ADT AP 41
REPRESENTATION:	APPLICANT In person RESPONDENT H Roberts, solicitor
ORDERS:	The decision of the Chief Commissioner of State Revenue to request repayment of the First Home Owner Grant in the sum of $7,000, plus $7,000 additional grant for the purchase of a new home, together with a penalty of 20% or $2,800, being a total of $16,800, is set aside.

1 Justin Cade St Baker, the applicant in these proceedings, entered into a contract to purchase a property known as 310/302-308 Crown Street, Darlinghurst on 19 June 2001. That purchase was an “off-the-plan” purchase and on 19 December 2001 the sale was completed. He made an application for a grant of $7,000 pursuant to s 7 of the First Home Owner Grant Act 2000 (“the Act”) on 19 December 2001 and that grant, along with the additional grant of $7,000 for a new property, was approved and paid on 9 January 2002.

2 On 3 December 2001, just before the sale was completed, the applicant left Australia and went to the United States of America where he took up employment as a snowboard instructor. He had previously entered into a Management Agreement with Carrington Real Estate for management of the property. The property was rented by Carrington Real Estate in his absence and when he returned to Australia on 19 June 2002, he gave notice to the tenants to vacate. He moved into the property in August 2002 and remained there until mid-October 2002. The applicant says that he lived at the property for some ten weeks, moving in on 2 August 2002, although that date is disputed by the respondent. A combination of circumstances, including his commitment to his studies at Wollongong University, the travel time from Darlinghurst to Wollongong and to his full-time employment in Hurstville, meant that living in the Darlinghurst property became untenable and he returned to live with his parents who lived at Oatley. In October he resigned from his job due to his inability to include study in his schedule, and after his exams he went back to the United States to resume snowboard instruction. In November 2002, the property was once again rented out.

3 The Office of State Revenue made enquiries of the applicant on 13 March 2003 as to his occupation of the property. The applicant provided a number of documents and a Statutory Declaration in response to that enquiry. As a result of the enquiry, the respondent issued a Notice of Repayment pursuant to s 45 of the Act, seeking repayment of the grant and a penalty of 20%, totalling $16,800.00.

4 On 26 May 2003 the applicant objected to the Assessment and sought a review. The objection was disallowed on 8 August 2003 and on 5 October 2003, the applicant filed an Application for Review with the Administrative Decisions Tribunal. That application is within the sixty days allowed by s 28(4) of the Act.

5 The respondent takes the view that the occupation of the property for ten weeks in the 17 months between 13 December 2001 and May 2003 (being the date of the lodgement of the objection to the decision to seek repayment of the grant on 26 May 2003) does not show adequate compliance with the “residence criterion” set out in s 12 of the Act, which provided, relevantly, at the time:-

“(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 The proceedings were heard on 5 August 2004 and the decision of the Tribunal reserved, pending the outcome of an Appeal Panel hearing on another matter in which the residence criterion was examined - Chief Commissioner of State Revenue v. Ferrington [2004] NSW ADT AP 41. Once that decision was handed down, the Tribunal requested any further submissions in the light of the decision in Ferrington. Documents were received from each side. Mr St Baker’s submissions included further evidence and documents intertwined with submissions, not all of which went to the leave granted to file further submissions in the light of the decision in Ferrington. Since Mr St Baker was cross-examined at the hearing, and the leave related only to submissions, I do not intend to take those further evidentiary matters into account and will disregard them.

The legislative scheme

7 The Act establishes a scheme to assist persons buying or building their first home by providing them with a grant. To be eligible for a grant, an applicant must satisfy the eligibility criteria that are contained in Division 2 of Part II of that Act, and the purchase of the property for which the grant is sought must be an “eligible transaction”. The only matter of eligibility in issue in these proceedings is the “residence criterion” of s 12(1), which is set out above.

8 Section 13(5) provides that where the transaction relates to a contract for the purchase of a home, that transaction is completed when the purchaser becomes entitled to possession of the home under that contract.

9 Section 23 gives the Commissioner power, within 5 years of the original decision, to vary or reverse a decision made in respect of an application for a grant where the Commissioner is later satisfied that the decision is incorrect.

10 Section 24(1) provides that where the Commissioner decides to reverse an earlier decision on an application for a grant, the Commissioner is required to give the applicant written notice of the reversal and state in the notice the reasons for the reversal.

11 Section 45 gives the Commissioner the power to request the repayment of a grant and to impose a penalty for non-compliance with such a request, or with the conditions of a grant. That section provides:

“45 (1) The Chief Commissioner may by written notice require an applicant (or a former applicant) for a 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.

(2) If, as a result of an applicant’s dishonesty, an amount is paid by way of a first home owner grant, the Chief Commissioner may, by the notice in which repayment is required or a separate notice, impose a penalty not exceeding the amount the applicant is required to repay.

(3) If an applicant (or a former applicant) for a first home owner grant failed to make a repayment required under this section or the conditions of the grant, the Chief Commissioner may, by written notice, impose a penalty not exceeding the amount the applicant is required to repay.

(4) If an amount is paid in error on an application for a first home owner grant by a third party, the Chief Commissioner may, by written notice, require the third party to repay the amount to the Chief Commissioner”.

12 Section 29(3) of the Act provides that an applicant who seeks review of the Commissioner’s determination of an objection has the onus of proving his or her case. That is, the onus of proof rests on the applicant to establish, on the balance of probabilities, those matters which he seeks to put before the Tribunal in support of his case.

13 The applicant sets out in his case the above chronological facts and further submits that the Darlinghurst apartment was his “principal place of residence” for the period in which he resided in it. In support of this contention he points to the following evidence:-

a) the fact that, while he lived with his parents for a period of time before and after he moved into the property, he did not regard their house as his “principal place of residence” after he moved into the Darlinghurst property. He points out (exhibit A3) that he lived at many other places in that year, and that the 10 weeks at Darlinghurst was the longest continuous time he lived anywhere in 2002.

b) he says that he bought the property with the intention of moving into it during the 12 month period required by s 12 of the Act;

c) he relies on a number of documents which were tendered, including photographs of the state of the property prior to his moving in and after the improvements he made to it, including painting and installation of pictures and furniture, as well as utility statements and other primary documents.

14 Mr St Baker was cross-examined about his actual occupancy of the property. From his bank statements, it appears that he may have stayed the night with his parents at Oatley during the ten weeks in which he resided at the property, money having been withdrawn from his account in areas close to his parents’ house in the early morning or late at night. Mr St Baker accepts that he may have spent some nights - he says less than 7 - with his parents during that time, but says that his principal place of residence was the Darlinghurst apartment despite staying some nights elsewhere.

15 He says that the reason for vacating the property was financial difficulties due to having to resign from work to enable him study for University exams, and the consequent need to go to the United States to earn better money than he would be able to do in Australia. He was, as noted above, travelling from Darlinghurst to Hurstville for work and to Wollongong for University. To remedy his finances he decided to go to the States to teach snowboarding, leaving some two days after his examinations finished.

16 I regarded Mr St Baker as a witness who did his best to be frank with the Tribunal and to provide the best answers he could. I did not regard his failures to recall particular matters as attempts to evade questioning; on the contrary, it is understandable that some two years after the events in question, he may not recall the exact matters of timing and expenditure about which he was asked.

The respondent’s case

17 The respondent disputes both the exact period which the applicant occupied the premises, as well as the nature of his occupancy. Mr St Baker was cross-examined as to the exact date on which he moved into the property, and there were some inconsistencies with the documentary evidence (such as the Field Force utilities documents and his correspondence with the real estate agent and his tenant) and his evidence that he moved into the Darlinghurst property on 2 August 2002.

18 The respondent submitted that the applicant was a “less than candid witness”. The respondent pointed to the short nature of the tenancy, the admitted stays elsewhere, the fact that the applicant could not recall some items of importance such as when he bought his airline ticket, and the submission that the purpose of the occupancy was other than as a principal place of residence - in this case, it is submitted, the occupancy was to improve the property by painting it and by making it more attractive to a tenant. Further, cross-examination went to the question of the “unforeseen change in circumstances”.

19 The respondent submitted that the following factors made a finding of “principal place of residence” unlikely:-

a) the fact that the applicant had applied for a visa well in advance of his departure overseas;

b) the improvements he made to the property; and

c) the fact that he moved in with his parents after leaving the Darlinghurst property.

20 The Appeal Panel of the Administrative Decisions Tribunal in Ferrington considered the criteria applicable to section 12(1) of the Act. In particular, paragraph [42] reads (leaving out citations of cases and breaking the matter into bullet points, for ease of later reference):-

- “First, the words “principal place of residence” should be given their ordinary meaning in the context in which they appear [in the Act ]. …

- Secondly, consideration of whether a person has been residing or occupying premises as their principal place of residence is to be assessed objectively, in the light of the circumstances relating to the actual occupation of the dwelling …

- Thirdly, the intention of the person concerned, gauged objectively, is relevant but not determinative of the issue. …

- Fourthly, to occupy a home as his or her principal place of residence a person’s occupation must have a degree of permanence to it: a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor is occupation for some other purpose. …

- Fifthly, the short length of a person’s residence, while relevant, is not determinative of the issue. … This is so since a recipient’s occupation of a home, while short, may have the requisite degree of permanence to it. But that will not happen if, when considered objectively, the occupation was transient, temporary, contingent or of a passing nature, or for some other purpose. One may occupy premises for a short time on a transient, temporary, or contingent basis, but one can also occupy for a short time as one's principal place of residence. It is the nature of that occupation which provides the element of permanence. The fact that a period of actual occupation is short, as in the present case, will in practice make it harder for a recipient to show that the occupation was as his or her principal place of residence, but it will not make it impossible … ”

21 The first point is a point of statutory construction. The term “principal place of residence” is not defined in the Act, and thus has its ordinary meaning. The word “principal” can mean “main” as well as “only”, and does not exclude having another, subsidiary, place of residence (such as with parents).

22 The second point requires consideration of the “circumstances relating to the actual occupation of the dwelling”. In this case, Mr St Baker occupied the premises, he says, for a period of two and a half months. He moved furniture and decorative items in, and changed the utilities into his own name. The records show that he was in actual occupation of the unit for a period of time. He says, and I accept, that he occupied the premises as his home. I accept that evidence. The photographic evidence shows artwork on the walls and the furniture is obviously in the process of being used on a daily basis. The applicant himself referred to the photographs as showing “all my junk in my unit from August 2002. I did some repainting and decorating to make the unit feel a little more homely”.

23 The third point requires a finding as to the intention of the applicant. While intention is not determinative, it is relevant. I am not convinced by the argument of the respondent that the only reason for the applicant occupying the premises was to renovate the apartment to receive a higher rental. The photographs, particularly the “after” photographs taken by the applicant in September 2002, show a residence, not a place to live during renovations. The improvements are more consistent with creating a better living environment than with seeking to improve rental return. It was put, but without much vehemence, to the applicant that he was residing in the property only to obtain the requisite documentary evidence to satisfy the residence requirements of the Chief Commissioner. There is no real evidence of a deceptive intention, and I accept the applicant’s evidence that he intended to reside in the apartment as his principal place of residence and that he intends, in the near future, to do so again.

24 The fourth point, the “degree of permanence”, requires a finding on the applicant’s formulation of the intention to travel overseas. He said he did not finally decide to go overseas until he was offered a position in the US ski fields in October 2002. It is clear that prior to being offered a position, he was considering the possibility of going overseas prior to that date, but even his investigations into an appropriate visa did not have the finality required for the occupation of the apartment to be merely “temporary” or “for some other purpose” as submitted by the respondent (and see Ferrington and the cases cited therein). A degree of permanence is shown by the applicant’s changing the address for the rate notices, his driving licence, insurance details and with his employer to the address of the property - something one may not do if one were occupying in a temporary or transient manner. Everything about the history of Mr St Baker’s occupation of the property speaks of a change of plans somewhere in late September or early October - the cessation of employment, the nearing of examinations, and the need to earn money as soon as the examinations were finalised.

25 The fifth point, the length of the residence, requires a finding on the period of time during which the applicant lived in the apartment. He says that the apartment was leased until the 28th of August, but that his tenant’s mother was sick and he asked to leave the apartment early. The applicant’s letter to the tenant, directing the rental payment due on the 2nd of August to be paid to him directly, was explained by the applicant as relating to a final payment as compensation for breaking the lease. The respondent says that it should be construed as showing that the applicant did not occupy the premises until at least the end of August. The applicant says that he took up residence on the 2nd of August while he was still working at NRMA and travelling to Wollongong, by mutual agreement with his tenant, Mr Loy. He moved back in with his parents on or about the 15th or 16th of October, and went overseas after his last exam in late November 2003. The respondent further points to the fact that the meter was read on the 26th of August 2004, not the 2nd, and that that shows that the tenant remained in the apartment until the end of August. The applicant explains this by saying that there was a confusion with the tenant over whose responsibility it was to change over the electricity, and that the matter was overlooked. Taking all of the above into account, I accept that the applicant took up occupancy of the unit in early August 2002 and stayed there until mid-October 2002, a period of some ten weeks. It is relevant to note that he also lived in the apartment for a period of 7 August 2003 until 5 December 2003, and intends to move into it again permanently in the near future.

26 Related to the fifth point is the reasonableness or otherwise of the decision to move out of the apartment. It is clear from the above that I accept that the situation the applicant found himself in was unfortunate and unforeseen, and his university commitments required that he cease work, give up the apartment and devote himself to study in a way that he did not contemplate as being necessary before he moved in.

27 The respondent submitted that even if the Tribunal found that the applicant resided at the unit in August through to mid-October 2002, it was open to find that it was not his “principal” place of residence and that his principal place of residence remained the home of his parents. The respondent points to the fact that his parents’ address remained his mailing address for a number of purposes, including for his bank accounts with St George, and the fact that he spent nights there even during the period he resided at the property. Taking all the considerations dealt with above into account, even though the applicant lived with his parents at various times in the first twelve months after purchasing the property, I do not consider that the home of his parents was, in the time he occupied the unit, the “principal” place of residence.

Conclusion

28 I consider that the applicant has discharged the onus of proof in showing that, on the balance of probabilities, he resided at the property 310/302-308 Crown Street, Darlinghurst (or Surry Hills) as his principal place of residence from 2 August 2002 until 16 October 2002.

29 The decision of the Chief Commissioner of State Revenue to request repayment of the First Home Owner Grant in the sum of $7,000, plus $7,000 additional grant for the purchase of a new home, together with a penalty of 20% or $2,800, being a total of $16,800, is set aside.