Broun v Chief Commissioner of State Revenue [2006] NSWADT 115

CITATION: Broun v Chief Commissioner of State Revenue [2006] NSWADT 115

DIVISION: Revenue Division

APPLICANT PARTIES: Charlotte Doriam Broun RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 056111

HEARING DATES: 03/03/06

SUBMISSIONS CLOSED: 03/03/2006

DATE OF DECISION: 04/19/2006

BEFORE: Verick A - Judicial Member

CATCHWORDS: Duties Act - principal place of residence

MATTER FOR DECISION: Principal matter

Acts Interpretation Act 1901 (Cth) Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Duties Act 1997 Interpretation Act 1987 Taxation Administration Act 1996

Australian Communication Exchange Ltd v Deputy Commission of Taxation [2003] HCA 55 CASES CITED: CIC Insurance Ltd v Bankstown Football Club Ltd (1997) CLR 384 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355

APPLICANT In person REPRESENTATION: RESPONDENT S Free, solicitor

ORDERS: The decision under review is affirmed.

REASONS FOR DECISION 1 The applicant ("the applicant") has applied for review of the decision by the respondent ("the Chief Commissioner") to disallow an objection to a vendor duty assessment made under s 146 of the Duties Act 1997 ("the Act"). 2 In addition to the documents lodged pursuant to the provisions found in section 58 of the Administrative Decisions Tribunal Act 1997, the Tribunal was furnished with submissions made in writing by both parties. 3 The facts are not in dispute. On 8 February 2001 the applicant exchanged contracts to purchase Unit 3, 112 O'Donnell Street, North Bondi ("the property") as a residence for herself and her two children following the breakdown of the de facto relationship with her partner and father of the children. The location of the property was intentionally chosen within close proximity to the applicant's partner's home, so that the children would be close to their father and to allow him to visit the children regularly. Before settlement of the property, the applicant's relationship with her de facto partner deteriorated compelling her to move out of her partner's house and by special arrangements with the owner of the property occupy the property as a tenant from 1 March 2001 until 2 May 2001 when the purchase was settled. 4 Due to further serious deterioration in the relationship with her de facto partner, the applicant with her children was forced to move from the property to a rented house in Colo Vale in October 2002. 5 The property was rented for a term of 12 months commencing on 12 October 2002. The applicant continued to rent the property until the property was sold. Contracts for sale of the property were exchanged on 12 May 2005 and settlement took place on 16 June 2005. 6 The applicant was charged a vendor duty amounting to $9,001, as the contract for sale of the property was a vendor duty transaction within the meaning of s 146(1) (b)(i) of the Act. There is no dispute as to the application of the provisions of section 146 to the sale nor is there any dispute as to amount of vendor duty payable in respect of the sale. 7 The applicant's case is essentially that she purchased the property as her principal place of residence and that vendor duty should not apply to disadvantage her. The applicant has strongly argued that the provisions of the vendor duty were never intended to apply to cases where the relevant property was purchased and sold in her circumstances. 8 The applicant cites parts of the second reading speech in which the Minister when introducing the relevant provisions of the vendor duty made it clear that the duty was directed against investors making big profits which had "driven up the price of real estate" and that the vendor duty would "tilt the balance back in favour of first-time home buyers and away from investors". The Minister had also in the second reading speech assured that it was not government's policy to impose vendor duty to sale of property resulting from a breakdown of a marriage or de facto relationship. The applicant has submitted that the relevant provisions of the Act should be construed accordingly and in particular the Tribunal should have regard to the provisions of sections 33 and 34 of the Interpretation Act 1987 (NSW). 9 At the relevant time the law allowed an exemption from vendor duty in relation to the sale by a person of his or her principal place of residence. The exemption set out in s 162B was, however, only available if certain use and occupation conditions were satisfied. The exemption applied if the vendor was able to satisfy any one of the three tests set out in s 162B(3)(a), (b) and (c) at the relevant time. 10 The three "use and occupation" tests were (a) that the property had been continuously used and occupied by the person for residential purposes and for no other purposes for a period of at least 2 years ending immediately before the date on which, but for exemption, the liability for vendor duty arose, or (b) the property had been used for residential purposes and for no other purposes for a period of at least 3 years in the 5 years ending immediately before the date on which, but for the exemption, the liability for vendor duty arose and during those three years no other property was used and occupied by the person for residential purposes, or (c) if the vendor became an owner of the property less than 2 years before the date on which, but for the exemption, a liability arose, and the Chief Commissioner was satisfied that the property, and no other property, had been continuously used and occupied by the person for residential purposes and for no other purposes since the vendor became owner of the property. 11 Unfortunately, the applicant did not use and occupy the property as her principal place of residence for a sufficient period of time to satisfy any of the tests set out in s 162B(3). The Chief Commissioner was fairly generous in accepting that the applicant's period of occupation could be taken to have commenced from the date the applicant occupied the property as a tenant prior to settlement of the purchase, that is from 1 March 2001. The occupation ended on 11 October 2002. Accordingly, the applicant resided in the property for a period just over 19 months in total. The applicant owned the property for a period of a little over 4 years from settlement of the purchase on 2 May 2001 until exchange of contracts for the sale of the property on 12 May 2005. 12 The applicant is not able to satisfy the test in s 162B(3(a) because the applicant had not resided in the property continuously for a period of at least 2 years immediately before sale of the property. The applicant was also not able to satisfy that she had used and occupied the property for residential purposes for a total of at least 3 years in the 5 years before the sale of the property as required by the second test found in s 162B(3)(b). The applicant could not satisfy the third test set out in s 162B(3)(c), as she had owned the property longer than two years before the sale. 13 In addition, I need to refer to and consider a further concession contained in clause 5 of Schedule 2 to the Act. The concession applied in cases where the vendor had used and occupied the relevant property as his or her principal place of residence for a continuous period of at least 2 years and where the period of use and occupation ended no more than 6 years before the vendor duty transaction occurred. In those circumstances clause 5, by way of a legal fiction, treated the vendor's use and occupation for the purposes of the principal place of residence exemption, to have continued in relation to the former residence as his or her principal place of residence during the period after the actual use and occupation ended. The applicant also fails to qualify for this concession as she had not used and occupied the property as her principal place of residence for a continuous period of at least 2 years. 14 Finally I deal with the submission that the Tribunal should have regard to the provisions found in sections 33 and 34 of the Interpretation Act in considering individual sections of the Act. 15 Section 33 provides that in "the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object". 16 Section 34 permits consideration of extrinsic material in "the interpretation of a provision of an Act or statutory rule, if [the] material not forming part of the Act or statutory rule is capable of assisting in the ascertainment of the meaning of the provision" in order to confirm that meaning of the provision is the ordinary meaning conveyed by the text "taking into account its context in the Act or statutory rule and the purpose or object underlying the Act or statutory rule", or resolve ambiguity or obscurity, or to determine the meaning of the provision or statutory rule when the ordinary meaning of the text leads to manifest absurdity or unreasonableness. A non-exhaustive list of potentially available extrinsic materials, including speeches made to a House of Parliament by a Minister or other member of Parliament, is set out in s 34(2). 17 These provisions are similar to sections 15AA and 15AB respectively of the Commonwealth Acts Interpretation Act 1901. In considering the Commonwealth provisions the High Court has in a number of cases provided guidance as to when it is necessary to resort to these statutory directions. The High Court has ruled that where a provision of the law under review "is ambiguous and unclear" and where "the plain meaning rule will not yield the solution to the problem", it is "then necessary, both by the requirements of statute law and by developments of common law for regard to be had to the purpose of the legislation". (See CIC Insurance v Bankstown Football Club Ltd (1997) 187 CLR 384, Project Blue Sky Inc v. Australian Broadcasting Authority (1998) 194 CLR 355 and Australian Communication Exchange Ltd v. Deputy Commissioner of Taxation [2003] HCA 55.) Regard to sections 33 and 34 of the Interpretation Act would likewise be essential where a provision of an Act was unclear and ambiguous. 18 In the present matter, the provisions under review are clear and not ambiguous. The meaning of the actual words used in the relevant provisions is easily understood and do not lead to a result that is manifestly absurd or is unreasonable. There is no need to resort to these statutory aids to interpret the relevant provisions. Accordingly, the principles of purposive construction found in the provisions of sections 33 and 34 of the Interpretation Act do not assist the applicant. 19 The applicant certainly has a very sympathetic case. A discretion in the relevant law that might have assisted her was unfortunately repealed before she became liable to the vendor duty. The provisions relating to vendor duty have also since been repealed. In addition, there was no vendor duty when the applicant purchased the property or when she moved from the property. In addition, the applicant had purchased the property as her principal place of residence but was compelled to move from the property after only residing for some 19 months in circumstances beyond her control. 20 The applicant has expressed hardship in meeting with the additional impost of the vendor duty. Whilst this Tribunal has no jurisdiction to consider hardship as a ground, the Hardship Review Board set up under section 106A of the Taxation Administration Act 1996 has power to waive the payment of any tax, either wholly or in part, if it is satisfied that the person liable to pay it is in such circumstances that the exaction of the full amount of tax, would result in serious hardship for the person or the person's dependants. The applicant's circumstances may warrant a consideration by the Hardship Review Board. 21 Unfortunately, the result in this matter is that the Chief Commissioner's decision under review must be affirmed.