York v Commissioner of State Revenue Office of State Revenue
[2010] QCAT 664
•23 December 2010
| CITATION: | York v Commissioner of State Revenue Office of State Revenue [2010] QCAT 664 | |
| PARTIES: | Ms Pradeepa Jayawardena York | |
| v | ||
| Commissioner of State Revenue Office of State Revenue | ||
| APPLICATION NUMBER: | GAR131-10 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Hon James Thomas, AM QC, Member |
| DELIVERED ON: | 23 December 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | On review is determined that the applicant’s application for a first home owner grant dated 26 September 2009 is allowed. |
| CATCHWORDS: | Review – decision of Commissioner of State Revenue refusing a first home owner Grant – earlier transaction in 1993 in which applicant and boyfriend acquired a property in Victoria – pre-marriage contract in which applicant had no right to occupation unless and until parties married – failure of condition – sole title returned to boyfriend, and repayment of applicant’s contribution with interest Whether applicant had acquired a "relevant interest" – whether any "right to immediate occupation of the land" – whether interest held subject to a trust Observations on facts upon which Commissioner is entitled to act in making a determination First Home Owner Grant Act 2000 (Qld), ss 8, 14(1) |
APPEARANCES and REPRESENTATION (if any):
| Decision on the papers. |
REASONS FOR DECISION
Jurisdiction
This is an application to review a decision of the Commissioner of State Revenue. The parties will be referred to respectively as “the applicant” and “the Commissioner”.
The parties have agreed that the matter be determined in this Tribunal on the papers, and I have been assigned that task.
The applicant is Pradeepa Jayawardena York. She entered into a contract to purchase a property at Cotswold Hills Queensland on 23 September 2009, and on 26 September 2009 applied to the Commissioner for a First Home Owner Grant. The Commissioner refused the application on 7 October 2009. The applicant filed an objection to that decision on 10 November 2009, and on 15 February 2010 the Commissioner disallowed the objection.
That disallowance is the basis of the present application to this Tribunal. Jurisdiction to review the Commissioner’s decision exists under sections 59-60 of the First Home Owner Grant Act 2000 (“the FHOG Act”), and under division 3 of chapter 2 of the Queensland Civil and Administrative Tribunal Act 2009. The effect of section 60 of the FHOG Act and section 20 of the QCAT Act is that the review is to be conducted by way of reconsideration of the evidence before the Commissioner when the decision was made; its purpose is to “adduce the correct and preferable decision”; and it must be determined by way of a fresh hearing on the merits.
Issue
The question is whether the applicant is eligible for a first home owner’s grant. The ultimate contentious issue is whether she is ineligible for the benefit as a result of a transaction in which she was involved in Victoria in 1992-1993. The Commissioner’s contention is that the applicant previously owned an interest in a residential property in Victoria and that this is “a relevant interest” under the FHOG Act, rendering her ineligible to receive the grant. The applicant claims that in the circumstances the previous transaction did not lead to the acquisition of “a relevant interest” because she at no time obtained “a right to immediate occupation” of the Victorian land, and also because she held it subject to a trust.
It is therefore necessary to set out the relevant facts and then apply the relevant legislation to them.
Approach to Fact-Finding
The Commissioner does not appear to have accepted at face value the applicant’s statements of fact. The Commissioner’s counsel’s submissions in this Tribunal claim to “refute” many factual allegations of the applicant as well as her legal submissions. For example the Commissioner’s submissions here include that the Commissioner “refutes” the existence of any enforceable premarriage contract. However it is to be noted that the Commissioner at no stage sought or obtained evidence to refute the applicant's statements of fact, and the only requisition by the Commissioner for further information was adequately answered by the applicant.
It is of course not necessary for the Commissioner to accept the mere assertions of applicants. But any statement of fact that seems inherently unlikely may be challenged by requiring the applicant to give it under oath or by requiring further evidence or by making independent enquiries.
The Commissioner has ample powers of investigation (see FHOG Act sections 26, 32-39). These include cross-border investigations. The relevant powers include the appointment of investigators and requiring a person to attend at a stated time and place to answer questions relevant to the investigation.
[10] In the present case the applicant disclosed her previous Victorian dealings from the outset and presented consistent accounts thereafter. Indeed before purchasing the Queensland property she wrote a letter to the Commissioner on 18 January 2009 containing disclosure of the essential details of the earlier Victorian transaction and seeking a preliminary ruling. However the Commissioner declined to give one until an actual purchase had been made. The facts as stated in that letter were in due course followed up by an even more detailed statement titled “application – eligibility criteria” after she went ahead and purchased the Queensland property. She offered to submit a statutory declaration or affidavit of her statements if required, but that offer was not taken up by the Commissioner.
[11] In these circumstances, if the Commissioner proceeded to determine the application by rejecting some of the facts relied on by the applicant, a number of “natural justice” issues would clearly emerge. However it is not necessary to pursue whether the Commissioner’s determination was affected by procedural error. The present review is a fresh hearing on the merits and will be based on the material submitted.
[12] The circumstances and facts relied on by the applicant are by no means inherently unlikely and I propose to act on the uncontradicted facts she has stated and the documents that have been supplied.
Facts and Circumstances
[13] In 1992, long before there was any homeowner’s grant legislation in Victoria or Queensland, the applicant, then Ms Jayawardena, and her then boyfriend (Mr Kuruppu) made a financial agreement in expectation of marriage. She agreed to provide him with some money towards the purchase of a property in Mulgrave, Victoria.
[14] In the “eligibility criteria” statement attached to the application to the Commissioner the following facts are stated:
“I contributed $10,900.00 toward the March 1993 settlement of a contract to purchase a house for my then boyfriend, Mr Prince Kuruppu. I have contributed this money under an agreement with him. We had intended to share the house had we married, but otherwise the house was to be his. Under the agreement, I did not have a right to occupy the house. Under the agreement, I would have gained the right to occupy the house if we married, but we did not marry. Enclosed is executed agreement with my former boyfriend.
In April of the same year (1993), less than 1 month after settlement of the contract, my former boyfriend and I separated and he proceeded to repay my contribution in accordance with the agreement. That is, he repaid my contribution of $10,900.00 plus interest. Thus, my interest in the property had ended without me at anytime having an entitlement to occupy or actually occupying the property.
The agreement varied our respective interests in the house, the title and mortgage having been taken out in both our names. My former boyfriend had at all times maintained the sole right of occupancy of the house. He had the sole obligation for the maintenance and upkeep of the house and payment of rates and other expenditure associated with the property. My former boyfriend was liable for the payment of all the mortgage and associated loan costs. I did not have a right of tenure or the usual benefits of home ownership.
At no time did I live in the property or have a right to occupy the property.”
[15] The property was acquired in both names, but, as I understand the pre-marriage contract, unless and until a marriage took place Mr Kuruppu was to be solely beneficially entitled to the property and solely responsible for all expenditure related to it, including mortgage payments. The property would become the matrimonial home only if and when they married.
[16] One month after settlement of the Mulgrave purchase they ended their relationship. Under the pre-marriage contract the applicant at no time occupied the property or had any right to occupy it. Pursuant to their original arrangements, following the termination of their relationship, she transferred her title to him and he repaid her $10,990.00 plus interest. In short, she never occupied the property and never became entitled to occupy it. This is uncontradicted. The sole basis of the Commission’s refusal is that she for a time held a legal title.
[17] At a later time (12 May 1994) the applicant and Mr Kuruppu made a written record of its main provisions. The Commissioner seems to have entertained some suspicion that its preparation after the events in question was a spurious evidence-making exercise, but it was signed by both parties, and the applicant has verified the arrangement that it was drawn up to evidence. Moreover, all these events, including the written document, occurred long before the advent of any first homeowner’s grant legislation around Australia.
[18] The impugned “partnership agreement” should be regarded as a bona fide attempt to express their financial dealings in writing.
[19] Many years later, in April 2006, the applicant married another man (surname York). He and the applicant entered into a contract to purchase a home in Queensland in the Cotswold Hills area for $455,000.00. It was in respect of that purchase that she applied for a First Home Owner’s Grant of $7,000.00.
Discussion
[20] It is contended for the Commissioner that even if these facts are accepted the applicant cannot qualify for the grant that she seeks.
[21] The relevant legislation is the FHOG Act and its Victorian counterpart the First Home Owner Grant Act 2000 (Vic).
[22] At all material times the applicant and Mr Kuruppu did not cohabit, and he was not her "spouse", "partner" or "domestic partner" for the purposes of either act.
[23] The applicant satisfies all relevant eligibility criteria for a grant, save for the question whether she is made ineligible by sub-section 14(1) of the FHOG Act.
[24] That subsection states:
14.(1)An applicant is ineligible if the applicant or applicant’s spouse has, before 1 July 2000, held –
(a) a relevant interest in residential property in Queensland;
or
(b) an interest in residential property in another State that is a relevant interest under the corresponding law of that State.
[25] The act however contains an express exception to “relevant interest”. This is stated in section 8(2) as follows:
(2) However—
(a) an interest is not a relevant interest at a particular time unless the holder of the interest has, or will have within 1 year after that time, a right to immediate occupation of the land; and
(b) an interest is not a relevant interest in the hands of a person who holds it subject to a trust.
[26] The corresponding law of Victoria is the First Home Owner Grant Act 2000. Although there are some differences in wording, on the question of what constitutes a "relevant interest", the provision is relevantly for present purposes indistinguishable and it is unnecessary to set out that provision here. Section 11(1) of the Victorian Act, like section 14(1) of the Queensland Act disqualifies persons who have formerly held a relevant interest. “Relevant interest” is similarly defined in section 5(2) of the Victorian Act as in section 8(1) of the Queensland Act. In both Acts an estate in fee simple in the land will be a relevant interest. It was not suggested that section 5(3) of the Victorian act is relevantly distinguishable from section 8(2) of the Queensland Act for present purposes, but as the corresponding Victorian law is made applicable it will be here set out. It contains express exceptions to "relevant interest".
[27] Section 5(3) of the Victorian act provides
Subject to subsection (4) –
(a) an interest is not a relevant interest at a particular time unless the holder of the interest has, or will have within 12 months after that time (or a longer time allowed by the Commissioner), a right to immediate occupation of the land;
(b) an interest is not a relevant interest in the hands of a person who holds it subject to a trust;
(c) an equitable interest is not a relevant interest unless it is the interest of a person under a legal disability to whom a Guardian holds the interest on trust.
[28] The basis of the Commissioner’s decision is that in 1993 the applicant obtained a relevant interest in Victoria which does not fall within any of the recognised exceptions.
[29] The relevant Victorian conveyancing documents have not been obtained but it may be inferred against the applicant that for a time she and her boyfriend jointly obtained the fee simple title to the land, probably as joint tenants. If so, then prima face the applicant had a right to possession of the land. But she had contracted away such a right from the outset. The arrangement between her and her boyfriend would have been enforceable at law and in equity. I infer that under their enforceable arrangement she at no time had any right to immediate occupation of the land.
[30] In substance the applicant made a purchase subject to a condition that was never fulfilled. I am not referring to the purchase between the Victorian vendor and purchasers, but to the preceding broader pre-marriage contract.
[31] Extensive written submissions were presented along with abundant legal authorities on leases and licences (Radaich v Smith (1959) 101 CLR 209), joint tenants (Wright v Gibbons (1949) 78 CLR 313) partnerships and constructive trusts (Chan v Zacharia (1983) 53 ALR 417) and trustee’s duties (Boardman v Phipps (1967) 2 AC 46). But most of the respondent’s submissions are, I think, misconceived.
[32] It was contended for the Commissioner that as there was no lease granted to Mr Kuruppu there was no other interest in land granted by the applicant to him that would have the effect of depriving her of her legal rights as co-owner. This submission assumes that the effect of the arrangement was to grant a licence to Mr Kuruppu over the property, and that a mere licence could not effectively deprive the applicant of her right to occupy the property. I do not think that this correctly characterises the situation.
[33] As I see it on the uncontradicted facts, in equity the full beneficial ownership lay in Mr Kuruppu unless and until there was a marriage.The agreement did not need to create a lease in order to demonstrate that the applicant had no “right to immediate occupation of the land”. A Court of equitable jurisdiction could have, and on the evidence here would have, ruled that she had no such right.
[34] The applicant held a bare legal interest as trustee subject to an implied trust in favour of Mr Kuruppu. The agreed arrangements between them, and their implied duties were in due course all discharged in accordance with their arrangement.
[35] A further submission on behalf of the Commissioner was “that the applicant held both legal and beneficial title to the property, and on that basis, by her own admission, she contributed to the purchase price”. It is enough to say that this submission is simply contrary to the facts. The absence of a right to immediate possession can arise through contract, even an oral contract, or by an equity that the law would enforce between the parties.
[36] In substance the applicant made a purchase subject to a condition that was never fulfilled. She had a contingent right to future possession. The contingency (marriage) did not occur. Prior to such an event Mr Kuruppu had the sole right of occupation.
[37] It was also submitted on behalf of the Commissioner that the applicant’s behaviour in lending money to Mr Kuruppu (the beneficiary) was inconsistent with the role of a trustee. However even if that were a breach of trust it would not destroy the trust relationship. It is not improper, disqualifying or uncommon for parties in a spousal or attempted spousal situation to make arrangements which convert contributions to a loan repayable with interest, and an agreed allocation of beneficial interests inter se.
[38] It may be noted that the declared intent of the FHOG Act is “to encourage and help home ownership, and to offset the effect of GST on home ownership, by establishing a scheme for the payment of grants to first home owners”. The explanatory notes to the Act also declare the main purpose for introducing the scheme to be “to assist affordability for persons building or buying their first home” and to encourage first home buyers to enter the market. The issue here, broadly speaking, is whether this was the applicant’s “first home”. Putting aside strictly legal considerations for a moment, it is difficult to think that the applicant would in ordinary parlance be regarded as a person who has previously acquired a home. She attempted to become a house owner, but her attempt failed. In the interim she obtained a legal title, but it was subject to express agreement, equities and an implied trust. Whether one looks at the arrangement broadly or in fine technical detail, the applicant was not disqualified by reason of her Victorian venture in 1992.
[39] In general the acquisition of a legal title will be a useful sign-post for the Commissioner that an applicant is disqualified. But there may be exceptions, and this case is one of them.
[40] This is a fact situation in which the applicant never became entitled to occupation, and her interest was held subject to a trust.
[41] At law and in equity the failure of the specified condition means that the applicant failed to acquire a relevant interest at any material time.Mr Kuruppu was at all material times the beneficial owner of the property. The circumstances rendered the applicant a trustee for him of the property until marriage, which never occurred. Her true interest remained a right to recover her money with interest.
Determination
[42] The applicant has established an entitlement to a first home owner grant in respect of her purchase of the Cotswold Hills property in September 2009.
Orders
[43] On review is determined that the applicant’s application for a first home owner grant dated 26 September 2009 is allowed.
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