Burbar v Chief Commissioner of State Revenue [2008] NSWADT 197

CITATION: Burbar v Chief Commissioner of State Revenue [2008] NSWADT 197

DIVISION: Revenue Division

APPLICANT Lena Burbar PARTIES: RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 086019

HEARING DATES: 12 June 2008

SUBMISSIONS CLOSED: 12 June 2008

DATE OF DECISION: 18 July 2008

BEFORE: Verick A - Judicial Member

MATTER FOR DECISION: First Home Owner Grant – approval of application

LEGISLATION CITED : First Home Owner Grant Act 2000

CASES CITED: Bray and Commissioner for ACT Revenue [2007] ACTAAT 15

P Safi, solicitor REPRESENTATION: AH Rider, counsel

ORDERS: The decision of the Chief Commissioner of State Revenue not to approve the Applicant's application for a first home owner grant is set aside. In substitution for that decision, a decision is made to approve the Applicant's application for a first home owner grant.

REASONS FOR DECISION 1 This is an application for review of the Respondent's decision dated 17 July 2007 not to grant the Applicant a first home owner grant under the First Home Owner Grant Act 2000 (NSW) (the "Act"). 2 The reason for not approving the application was that the Applicant did not meet with the Criterion 4 eligibility requirement as set out in s 11 of the Act. Factual Background 3 The short facts are not in dispute and are as follows. 4 The Applicant entered into a contract on 21 December 2006 to purchase a property at 179 McFarlane Road, Minchinbury, New South Wales (the "Property") under her maiden name Lena Husari. 5 On 20 February 2007, the Applicant settled the purchase of the Property. 6 On the 3 March 2007, the Applicant married Mr Radi Burbar. 7 On 16 March 2007, the Applicant made an application for a First Home Owner Grant in her maiden name. In the application she did not disclose that she had a spouse on the date of the application and her husband also did not make any declaration in the part provided in the application to make a "Section 7 Declaration by spouse". 8 On 17 July 2007, the Respondent informed the Applicant that he had not approved her application for the Grant. The grounds were: "The First Home Owner Grant may only be approved if the applicant (s) and their spouse (s) satisfy each of the Eligibility Criteria. Your eligibility is based at the time of lodgement of your application. Since you are now married and your husband is not a first home buyer therefore you do not meet the eligibility criteria". 9 On 5 November 2007 the Applicant's solicitors objected to the Respondent's decision. It was an objection lodged outside the statutory period of 60 days. The Respondent treated it as a request for review. 10 In a letter dated 5 February 2008 to the Applicant's solicitors, the Respondent confirmed his earlier decision to refuse the Grant on the grounds that eligibility for a grant is "determined by the facts and circumstances available on the date a complete application is received by the Chief Commissioner" and the Applicant "signed a false declaration in that she was married at the time she signed and lodged the application yet she claimed she did not have a spouse". 11 At the hearing the Respondent was concerned whether the Tribunal had jurisdiction to hear the application, as the Applicant had not lodged the objection within 60 days as required by s 25(1)(a) of the Act. But "did not press the jurisdictional issue". As there is power with the Respondent under s 25(4) to extend the time for lodging the objection, the Tribunal at the hearing accepted the letter of 5 November 2007 from the Applicant's solicitors as an objection and to treat the Respondent's letter of 5 February 2008 as a decision on the objection. 12 The matter proceeded on the basis that the Tribunal had jurisdiction to hear the application lodged on 26 February 2008. The Applicant's reasons for seeking a review were as follows: "At the date of exchange of Contract and the date of settlement of purchase, I was single and unmarried. Settlement took place on 20 February, 2007 and I married Radi Burbar on 3rd March, 2007. Registration of the title into my name was dependent on my mortgagee, Perpetual Trustees Victoria Limited and my application for first home owners grant could not be lodged until such registration was completed. Such registration did not occur until after my marriage to Radi Burbar." Relevant Legislative Provisions 13 Historically, the Act was introduced to encourage and assist home ownership and to offset the effect of the Goods and Services Tax on the acquisition of a first home. The scheme has been continued to assist first home buyers to purchase or build their first homes. The entitlement requirements for a grant are set out in s 7 (1) of the Act as follows: "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." 14 The eligibility criteria is set out in Division 2 of Part 2 of the Act which requires an applicant to satisfy 5 "Eligibility Criteria" to obtain a grant. 15 The matter at issue is in respect of s 11 of the Act, which sets out Criterion 4. The relevant historical version applicable in this matter provides as follows: " 11 Criterion 4 – Applicant (or applicant's spouse) must not have had relevant interest in residential property (1) An applicant for a first home owner grant is ineligible for the grant if the applicant or the applicant's spouse has, before 1 July 2000, held: (a) a relevant interest in residential property in New South Wales, or (b) an interest in residential property in another State or a Territory that is a relevant interest under the corresponding law of that State or Territory. (2) In working out for the purposes of subsection (1) whether an applicant held a relevant interest (within the meaning of this Act or a corresponding law) in residential property at a particular time, any deferment of the applicant's right of occupation (because the property was subject to a lease) is to be disregarded. (3) An applicant is also ineligible if the applicant or the applicant's spouse has at any time before the commencement date of the eligible transaction to which the application relates: (a) held a relevant interest in residential property in New South Wales or an interest in residential property in another State or a territory that is a relevant interest under the corresponding law of that State or Territory, and (b) occupied the property as a place of residence for a continuous period of at least 6 months." 16 Section 17 of the Act gives the Chief Commissioner power to authorise the payment of a grant if he is satisfied that a first home owner grant is payable on an application. Submissions 17 The Applicant's case was that the relevant time for determining her eligibility for the Grant was at the time she purchased the property (when she was unmarried), not at the time she made the Grant Application (when she was married). 18 The Applicant also submitted that she could not make the application before her marriage because she did not have the documents required to support her application, in particular her utility bills, until after the settlement had occurred. 19 The Respondent submitted that under s 7 of the Act "an entitlement to a first home owner grant depends upon a person making an application and the applicant complying with the eligibility criteria" and that pursuant to s 44(2) of the Act an "application must contain the correct information at the time it is made". 20 The Respondent further submitted as follows: "31. The Respondent's decision to pay a grant depends on his satisfaction with an application – s 17 of the Act. The Respondent must be satisfied on the facts which exist at the time an applicant makes their application – see Bray and Commissioner for ACT Revenue [2007] ACTAAT 15 at [42] and [45], which concerned materially similar legislation to the Act. 32. At the time the Applicant made the Grant Application she had a "spouse" – she was legally married to Mr. Radi Burbar. The Applicant answered "no" to the question in the Grant Application whether she had a spouse. The Applicant also answered "no" to the question whether she had ever used any name other than that declared in the application – the Applicant had in fact used her married name "Burbar" to open an account with St George Bank. The Applicant knowingly gave false or misleading information in the Grant Application – the information was not correct at the time the Applicant made the Grant Application. 33. The Applicant was ineligible for the Grant because she failed eligibility criterion 4 under s. 11(1)(a) of the Act – the Applicant was married at the time she made the Grant Application and her spouse had before 1 July 2000 held a relevant interest in residential property. The Respondent had no power under the Act to exempt the Applicant from complying with eligibility criterion 4 under s. 11(1)(a). 34. The Respondent's Decision not to pay the Applicant the Grant was correct. 35. The Applicant's argument that she could not make the Grant Application until she received a utility account for the Property and/ or she was registered on title for the Property, both of which occurred after the date of her marriage, is incorrect. 36. An application may be made from the commencement date of the eligible transaction to which the application relates – s.14 (5) of the Act. The "commencement date" of an eligible transaction in the case of a contract is the date when the contract is made – s. 13(4) of the Act. The Contract, being the eligible transaction to which the Grant Application related, was made on 21 December 2006. The Applicant could have made the Grant Application from that date. 37. The Act did not preclude the Applicant from making the Grant Application pending receipt of the utility account or registration of her title to the Property." Findings and Reasons for Decision 21 The issue in this matter is the proper timing when the eligibility Criterion 4 for a grant under the Act is to be determined. 22 The Respondent takes the strong view that the proper time to consider eligibility for a grant is when an applicant makes the Grant Application. He relies in particular on sections 7 and 44 of the Act. 23 Section 7 deals with the entitlement to a grant under the Act. It directs the Respondent to pay a grant on an application made under the Act if the applicant complies with the eligibility criteria and the transaction for which the grant is sought is an eligible transaction, and has been completed. There is also provision in the Act to allow the Respondent to pay a grant before completion of the relevant eligible transaction. Section 44 of the Act is a penalty provision, which deals with false or misleading statements made by a person in or in relation to an application for a first home owner grant. 24 I do not think these sections of the Act assist the Respondent as contended by Mr Rider, counsel for the Respondent. 25 Section 14 of the Act deals with applications for grants. Section 14 gives an applicant an option to apply for the grant by making an application directly to the Respondent or to a financial institution or other person with whom the Respondent has made an administration agreement. The application must be in a form approved by the Respondent and must contain the information required by the Respondent. The Respondent has power to obtain further information or require information to be verified by statutory declaration under s 14. An application must be made within the application period, which commences on the commencement date of the eligible transaction to which the application relates and ends 12 months after the completion of the eligible transaction to which the application relates. Under s 14(6) the Respondent has a discretion to allow an application before or after the application period. 26 The Respondent is required under s 17 of the Act to decide applications. Under this provision he must authorise the payment of the grant if he is satisfied that a first home owner grant is payable on an application. 27 In this matter, the Respondent has argued that the date on which the application was made determines the timing when the eligibility criteria has to be satisfied by an applicant to be entitled to a grant. There is nothing in sections 14 or 17 to support this submission made by the Respondent. 28 In this matter, the Respondent's case was that the Applicant failed to satisfy Criterion 4 set out in s 11 of the Act when she made the application for the grant. 29 In my opinion, s 11 of the Act when read carefully provides the answer to the issue in this matter. Making an application is necessary to get a grant but the provisions of the Act dealing with applications do not deal with eligibility requirements, which are set out in Division 2 of Part 2 of the Act. 30 The eligibility criterion set out in s 11 of the Act is determined by the happening of two events, the commencement date and the completion date of an eligible transaction. When s 11 is carefully examined, in particular s 11(3) it is clear that a person is not eligible for a grant only if he or she has a relevant interest in residential property "at any time before the commencement date of the eligible transaction to which the application relates". S 11(1) when it speaks of "before 1 July 2000" it is in regard with the operation of the Act when first introduced. A person became ineligible if he or she had a relevant interest in residential property prior to the commencement date of an eligible transaction entered into after 1 July 2000. 31 In this matter, there is no dispute that the commencement date of the eligible transaction was 21 December 2006, the date on which the Applicant entered into a contract to purchase the Property. On that date, she did not have any relevant interest in any other residential property. The status remained the same even on the date of settlement in this matter. The Act allows an application to be made within 12 months or a longer period allowed by the Respondent after the completion date of the eligible transaction to which the application relates. In this matter, the Applicant was entitled to make the application within at least 12 months after settlement that took place on 20 February 2008. 32 The Respondent's decision was made by taking into account the eligibility of the Applicant on the date the Grant Application was lodged with the Respondent. That was clearly not in accordance with the provisions of the Act, in particular s 11 of the Act. The correct date was 21 December 2006. It was necessary for the Respondent when considering the Grant Application to examine the facts as at that date to determine if the Applicant had satisfied the eligibility Criterion 4. 33 The Respondent placed a great deal of reliance on the information provided by the Applicant in her application for the Grant after her marriage. In fact, he has suggested that the "Applicant knowingly gave false or misleading information in the Grant Application" at the time she made the Grant Application. She may have relied on her eligibility as at the time she entered into the eligible transaction when filling the Respondent's application form. The application form is not designed to record information where a change of circumstances occurs after the date of the settlement, as was the case here. It is understandable why she had difficulty in indicating her change of personal status in the application form. In my opinion the Respondent erred in law by taking into consideration the statements made by the Applicant in the Grant Application to determine the Criterion 4 eligibility requirement. 34 Some reliance was also placed by the Respondent on a recent decision of the Australian Capital Territory Administrative Appeals Tribunal in Bray and Commissioner for ACT Revenue [2007] ACTAAT 15. That case concerned a same sex relationship and the applicant was required to repay the grant because he had not disclosed the relationship in his application for the grant. His partner had obtained a first home owner grant previously and had purchased a residence. The applicant in that case sought to argue that his relationship with his partner had come to an end when he applied for the grant. However, the Tribunal affirmed the Commissioner's decision to require the repayment of the grant on the grounds that the applicant on the evidence had failed to establish that his relationship with his partner had come to an end. The decision in that case was essentially on the facts and has little relevance to this matter. 35 There is no dispute that at the time the Applicant entered into the eligible transaction and when settlement occurred she did not have a spouse, as she was not married. In those circumstances, the Applicant, subject to other eligibility requirements, which were not challenged by the Respondent, was entitled to the grant. Order The decision of the Respondent not to approve the application is set aside. In substitution for that decision, a decision is made to approve the Applicant's application for a first home owner grant.