Sabatier v Chief Commissioner of State Revenue [2006] NSWADT 75

CITATION: Sabatier v Chief Commissioner of State Revenue [2006] NSWADT 75

DIVISION: General Division

APPLICANT PARTIES: Paul Robert Sabatier RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 053130

HEARING DATES: 28/10/2005

SUBMISSIONS CLOSED: 11/11/2005

DATE OF DECISION: 03/13/2006

BEFORE: Hole M - Judicial Member

CATCHWORDS: 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 : Duties Act 1997 First Home Owners Grant Act 2000

Bates v Chief Commissioner of State Revenue [2004] NSW ADT 13 CASES CITED: McKellar v Chief Commissioner of State Revenue [2004] NSW ADT 22 McKenzie v Chief Commissioner of State Revenue [2005] NSWADT 214 Tomasian v Chief Commissioner of State Revenue [2004] NSW ADT 37

APPLICANT In person REPRESENTATION: RESPONDENT S Benjamin, solicitor

ORDERS: The decision of the Chief Commissioner of State Revenue to recall the First Home Owner Grant is confirmed.

REASONS FOR DECISION Relevant facts 1 This is an application made by the applicant on behalf of himself and Ms Kylie Gillespie to review the decision of the Chief Commissioner of State Revenue to require repayment of the First Home Owners Grant ("the Grant"). For ease of reference the applicant and Ms Gillespie will be referred to as the applicants. 2 The applicants purchased the property known as 6/47 Kirkham Street Moss Vale ("the property") on 24 March 2003. At the time of purchase there was a tenant in the property. 3 The applicants declared that they expected to occupy the property in November 2003. Following completion of the purchase the applicants entered into an Agency Agreement with L J Hooker on 7 April 2003 to lease the property for six (6) months. A lease was entered into for a six (6) month period expiring in September 2003. Unfortunately, the tenant, who held over under the lease would not vacate and ultimately an application was made to the Consumer, Trader and Tenancy Tribunal ("the CTTT") to evict the tenant. The CTTT decided on 16 March 2004 that the tenant should vacate and he did so on 22 March 2004. The applicants received the keys on 22 March 2004. 4 During the period that the applicants were unable to reside in the property, from July 2003, they were able to reside with relatives near by. 5 When the tenant did vacate the property, the applicants found that the property was in a poor state, requiring extensive cleaning and substantial repairs. 6 The applicants had been persuaded by the agent to resist serving a notice to vacate in December 2003 as the tenant had difficult personal circumstances including having been involved in a car accident, having custody issues in respect of his young son and working shift work. If they had done so it may be, as they submitted, that they would have been able to occupy the property earlier. 7 The respondent forwarded a compliance notice to the applicants in September 2004. The applicants returned this notice being in the form of a statutory declaration dated 19 October 2004. They declared that they had not occupied the property within 12 months of the date of settlement. Relevant Legislation 8 The relevant legislation is Section 12(1) of the First Home Owner Grant Act 2000 ("the Act") applicable as at 31 December 2003. This section required that: "(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." Compliance with the requirement that the home be occupied as the principal place of residence within 12 months of the purchase has been the subject of several cases and submissions in respect of those cases are set out below. 9 The relevant legislation in respect of the imposition of a penalty is Section 45 of the Act. 10 Where an applicant has been unable to or has not complied with Section 12(1) then Section 20(3) requires an applicant to notify the Chief Commissioner of State Revenue within 14 days after the end of the period for compliance which in this case was 24 March 2004. There is a facility provided by Section 20(2) for the Chief Commissioner of State Revenue to extend the period of 12 months provided that a request for extension is made prior to the expiry of the 14 days after the end of the 12 months. In this case an application for extension would need to have been made before 7 April 2004. Any application made in this manner would have been considered by the Chief Commissioner of State Revenue and would not necessarily have been granted. Submissions by Applicants 11 The applicants provided evidence by way of statutory declaration and Ms Gillespie gave evidence in person. The evidence provided sets out comprehensively the attempts by the applicants to evict the overstaying tenant and their reasons for not serving a notice to quit at an earlier date. In hindsight, they realised that the notice should have been served at an earlier date albeit the tenant was in difficult circumstances. 12 The applicants were distressed at the state of the premises when they did obtain possession. They did not realise that possession of the premises following the eviction of the tenant did not apparently equate to occupation as their principal place of residence. The tenant vacated the property on Friday 22 March 2004 and the applicants received the keys to the property on that day. Submissions were received from the applicants directed to disclosing that they had occupied the property for a short period of time prior to expiry of the 12 month period, that is for 2 days. They had the electricity connected on 27 April 2004, the following Wednesday. 13 The applicants did not consider that their temporary residence with relatives, from July 2003 until when they moved permanently into the property, to be their principal place of residence or their home. They did spend a period of approximately 4 weeks overseas during this time. The reason that they did not fully occupy their home (that is, in their statement, that they did not spend the remaining available nights at the property) was on account of the poor state that the tenant had left the premises. 14 The applicants were unaware that they were required by Section 20(3) to notify the Chief Commissioner of State Revenue that they had not occupied the property as their principal place of residence. If they had been, they would have written to the Office of State Revenue. 15 The applicants did not disclose when they commenced occupying the property as their principal place of residence. Although they noted that they resided with relative for some weeks after the expiry of the 12 month period. 16 The applicants submitted that the period from 22 March 2004 to 24 March 2004 was similar to the period established by the applicant in Tomasian v Chief Commissioner of State Revenue [2004] NSW ADT 37 which was held by J Needham JR to be sufficient to satisfy the requirements of Section 12(1) of the Act. Further that the comments of S Higgins JM in Bates v Chief Commissioner of State Revenue [2004] NSW ADT 13 at paragraph 39: "(a) The terms "occupy" and "principal place of residence" should be given their ordinary meaning having regard to the objects and purposes of the Act. That purpose being similar to the abovementioned tax rating cases in that the legislative scheme of the Act is to provide first home owners some relief towards the cost of purchasing their first home. Accordingly, in the context of this Act, in my opinion, "occupy" means to reside in the property. However, that residence must also be such that it is the person's "principal" place of residence or to use the terms of the title of the legislation, the persons "home". This in my opinion, requires the occupation to be ongoing and involves an element of permanence;" supported their submission that on the facts they had occupied the property as their principal place of residence as being "… occupation .. ongoing and involves an element of permanence, …" and at paragraph 39: "(b) … These matters, if established, must be considered in light of all the evidence including, where the applicant resided otherwise during the relevant period, the reasons given by the applicant for not residing or continuing to reside at the property, whether the reasons for not residing at the property were as a result of matters entirely out of the control of the applicant and the nature of the applicant's residence at the property. This list is by no means exhaustive as each case must be considered in the context of its own particular facts." 17 The applicants believed that they had fulfilled their obligations once the tenant was removed, in their minds they considered the property was their home as they had moved various items into the property including cutlery, crockery, kettle, radio, small table and chairs, linen and cleaning equipment and tools on 24 March 2004. Submissions by Respondent 18 The respondent's representative submitted that the respondent relied on the facts as disclosed that the applicants had not occupied the property as their principal place of residence. That the requirement to repay the Grant was statutory since the provisions of Section 12(1) and Section 20(3) had not been complied with. 19 The respondent did not seek any penalty on the recall of the Grant. 20 The respondent's representative submitted that there was no discretion available to extend the time for compliance after expiry of the 12 month and 14 day period set out in Section 20(3). Reasons for decision 21 All material and submissions provided to the Tribunal by the applicants and the respondent have been taken into consideration. Ms Gillespie was a truthful witness. 22 The applicants were honest and genuinely believed that they had complied with all requirements of the Grant criteria. The period of occupation of the property as the principal place of residence was at best 2 days. They had moved some belongings into the property whilst they continued to reside at the relative's house where they had resided for a period of approximately 7 months prior to expiry of the 12 month period. They continued at that residence for some weeks after expiry of the period. 23 The reason that the applicants could not occupy the property as their principal place of residence earlier was as a result of the timing of the eviction of the tenant. This was unfortunate. However, it was not a matter entirely out of the control of the applicants if they had applied consideration to the need to comply with Section 12(1) that is to occupy the property as their principal place of residence. The applicants did not recover outstanding rent in the sum of approximately $844.00. 24 The Chief Commissioner of State Revenue could not exercise the discretionary power provided in Section 20(3) after expiry of the 14 days notice period. This has been considered in McKenzie v Chief Commissioner of State Revenue [2005] NSWADT 214 wherein O'Connor J President of the Tribunal commented: "There is a long line of cases in the Tribunal which have held in those circumstances there is no discretionary relief that can be afforded to the applicant to take account of any special circumstances that may have meant that the person could not occupy within the twelve month period. There is no doubt that in this case there are special circumstances of a kind that, where there a discretion in favour of the applicant, it might well have been exercised." As in that case, there is no doubt that there are special circumstances of a kind that in this case a discretion might well have been exercised in favour of the applicant. This may only go to penalty in this case and no penalty has been sought by the Chief Commissioner of State Revenue. 25 In McKellar v Chief Commissioner of State Revenue [2004] NSW ADT 22 J Needham JM found that: "It does not matter if the resident is for a short period of time as long as the occupation is as a principal place of residence; that is, a person's main residence (see Zakariya v. Chief Commissioner, Office of State Revenue [2003] NSW ADT 26)." In this case the applicants were not resident in the property as their principal place of residence, their main residence remained at their relative's house. ORDER The decision of the Chief Commissioner of State Revenue to recall the First Home Owner Grant is confirmed.