Gibson v Chief Commissioner of State Revenue [2006] NSWADT 211

CITATION: Gibson v Chief Commissioner of State Revenue [2006] NSWADT 211

DIVISION: Revenue Division

APPLICANT PARTIES: Wayne Gibson RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 066027

HEARING DATES: 30/06/06

SUBMISSIONS CLOSED: 06/30/2006

DATE OF DECISION: 07/17/2006

BEFORE: Verick A - Judicial Member

CATCHWORDS: First Home Owners grant - reversal of original decision

MATTER FOR DECISION: Principal matter

LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 First Home Owner Grant Act 2000

CASES CITED: Bates v Chief Commissioner of State Revenue [2004] NSWADT 13 Chief Commissioner of State Revenue v Ferrington [2004] NSWADT 41

APPLICANT In person REPRESENTATION: RESPONDENT S Benjamin, solicitor

ORDERS: The decision of the Chief Commissioner of State Revenue that the $14,000 first home grant is to be repaid is affirmed.

REASONS FOR DECISION Background 1 The applicant is the registered proprietor of a unit situated at 84 Linden Street, Sutherland. The applicant entered into a contract to purchase the unit on 11 September 2001 and settlement of the purchase occurred on 24 October 2001. 2 The applicant applied for a first home owner grant under the provisions of the First Home Owner Grant Act 2000 (the "Act") to assist him to purchase the unit and received a grant of $14,000. Subsequently the respondent recalled that grant and the decision to recall the grant is the subject of this application for review. 3 At the time when the applicant purchased the unit, he was twenty-two years old living with his mother and working in a junior capacity with an advertising agency. The applicant has produced two pay advice slips indicating that at the time he purchased the unit he earned $673 and after deducting tax and other deductions he received a net pay of about $300 each week. The applicant claims that he was entitled to further commissions if he reached certain projected targets. At the relevant time he was not reaching the targets and was not receiving any additional remuneration by way of commissions. 4 The applicant sought the assistance of his mother, a mortgage broker, to obtain a loan from the St George Bank to purchase the property. The mortgage repayments were approximately $1,551 per month. 5 The applicant also claims that he moved into the unit with all his belongings on the 5 October 2001 and moved out of the unit on 16 November 2001. The property was let from 17 November 2001 and to date remains an investment property let to tenants. 6 The applicant claims that he had intended to make the unit his principal place of residence but within days of occupation he realised that he could not financially pay the mortgage payments and enjoy a certain standard of living that he was used to. He moved back to his mother's residence and has to date resided there. 7 During his stay at the unit, he did not arrange to connect any utilities such as electricity or gas. The applicant claims that he was able to use free of charge these facilities that had already been connected to the unit by the builder. The applicant made no efforts to notify his new address to the Road Transport Authority in relation to his driving licence or to the State Electoral Office of his change of address. 8 The applicant has produced a signed letter dated 6 February 2006 from the builder of the relevant unit in which the builder states as follows: " To Whom It May Concern: We refer to the original sale of unit 4 at 84 Linden Street, Sutherland and confirm that settlement of the said property took place on 24 October 2001. For a number of weeks following settlement the purchaser, Mr Wayne Gibson, was seen frequently visiting the unit and was involved in the installation of carpets and floor boards." 9 In addition he has produced two other "to whom it may concern" letters. One from his estate agent responsible for letting the property which states as follows: "This letter is to advise that Wayne Gibson purchased the above mentioned property on 26/10/2001. To the best that we can recall he resided in it at various times between this date and the date of its rental on 17/11/2001." 10 The other, an unsigned letter from a friend, "David Nelson", in which the writer claims that: "Following Wayne's purchase of this unit he invited me over frequently to celebrate in his purchase. This was the first time Wayne had moved away from his family home in Revesby. Wayne and I attended various local bars and eateries during the initial stages of his purchase and I often stayed over night at the unit after a night out. From time to time I also dropped by to see Wayne at his unit on my return home from work." 11 The respondent on 30 January 2003 made "routine follow-up enquiries" with the applicant to confirm that he had actually met all eligibility requirements for the grant. These enquiries led the respondent to make a decision on 17 January 2006 to reverse the decision to pay the applicant the grant on the grounds that the applicant had not occupied the unit within 12 months of the purchase settlement as his principal place of residence. The respondent disallowed an objection by the applicant against this decision. Relevant Legislation 12 The Act was introduced to encourage and assist home ownership and contains a complete scheme dealing with government financial grants to enable residents of New South Wales to purchase or build their first homes. 13 Part 2 of Division 2 of the Act requires 5 Eligibility Criteria that an applicant needs to satisfy to obtain a grant. This matter relates only to Criterion 5, the "Residence Requirement", which is set out in s 12 of the Act. Section 12 as it then was (the terms have been since amended to ensure that the criterion is not easily circumvented by applicants) provided as follows: "(1) An application 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 Commissioner. (2) If an application is made by joint applicants and at least one (but not all) of the applicants complies with the residence requirement, the non-complying applicant or applicants are exempted from compliance with the residence requirement." 14 The term "residence requirement" at the relevant time was defined in s 3 of the Act in the following terms: " residence requirement means the requirement that an applicant for the first home grant must occupy the home to which the application relates as the applicant's principal place of residence within 12 months after the completion of the eligible transaction or a longer period approved by the Chief Commissioner." 15 Section 13 of the Act sets out what an "eligible transaction" is for purposes of s 12. There is no dispute the purchase of the unit was an "eligible transaction" for purposes of s 12 of the Act. The respondent in recalling the grant has taken the view that the applicant has failed to satisfy the other tests set out in s 12 of the Act. 16 The respondent has exercised his power under s 45 of the Act, which allows the respondent to recover a grant where the applicant fails to satisfy the eligibility requirements. Case law 17 In order to satisfy Criterion 5 as it stood at the time, an applicant had to establish the following requirements: (1) that the applicant occupied the property within 12 months of the purchase of the property; (2) that the property was occupied as the applicant's principal place of residence and (3) that purchase of the property was an "eligible transaction". 18 The Tribunal in a number of cases has considered the relevant legislative provisions and a great deal of guidance is available from these cases to understand their scope and extent of their application. In Bates v Chief Commissioner of State Revenue [2004] NSWADT 13, Judicial Member Higgins has, in a succinct and elegant manner, set out in paragraph 39 of the decision useful principles of general application as to the meaning of "occupation" and "principal place of residence", the two terms that determine the operation and scope of s 12 of the Act, as follows: 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 above-mentioned] 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 person's "home". This in my opinion requires the occupation to be ongoing and involves an element of permanence. Whether an applicant has "occupied" the property as his/her "principal place of residence" as prescribed under the Act, is a question of fact that is to be assessed objectively having regard to all the circumstances. The intention of the applicant is relevant but is not determinative of the issue. Nor is the fact that the applicant resided in the property for a short period of time during the relevant period. 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. 19 These principles have been considered and adopted by the Appeal Panel in Chief Commissioner of State Revenue v Ferrington [2004] NSWADTAP 41. They were summarised by the Appeal Tribunal, also relying on various other authorities, in the following manner: First, the words "principal place of residence" should be given their ordinary meaning in the context in which they appear; 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; and 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. 20 In this matter there was no dispute as to the purchase of the unit being an "eligible transaction" for purposes of the grant application. Findings and Decision 21 The applicant claims that he resided at the unit from 5 October 2001 to the 16 November 2001. The builder's evidence was that he saw the applicant following settlement "frequently visiting the unit and was involved in the installation of carpets and floor boards". His real estate agent was able to confirm that the applicant resided in the unit at various times between 26 October 2001 and the date of it's rental on 17 November 2001. 22 In order to satisfy the residence requirement an applicant has to demonstrate that he or she resided within 12 months after completion of the eligible transaction. In this matter the purchase of the unit was settled on 24 October 2001 and it was let out from 17 November 2001. In between settlement and the letting there was a period of about three weeks. The applicant claims that he resided at the unit during this period and had intended the unit to be his principal place of residence. 23 The statements in the letters of both the builder and the applicant's real estate agent do not support the applicant's claim that he had occupied the unit as his principal place of residence. The builder merely saw him "visiting" the unit and the estate agent can only recall the applicant residing in it "at various times". Little weight can be placed on the unsigned third letter from a friend. The writer of that letter was not produced to give any evidence. In any case the letter provides very little assistance to establish that the applicant had occupied the unit as his principal place of residence. 24 At the best the applicant's occupation of the unit during the short period could only be described as "transient, temporary, contingent or passing in nature" and was insufficient to satisfy the residence requirements. 25 The applicant did not take steps to connect any utilities to the unit, nor did he inform any agency of his new address. These are, generally, features that establish the quality of a person's stay at a particular place. The applicant's claim that he was able to use with out any charge electricity during his short stay at the unit was merely a temporary arrangement with the builder and such an arrangement could not continue indefinitely. 26 The applicant at the hearing accepted that he did not have the financial capacity to service the home loan prior to moving into the unit and that his intention of making the unit his principal place of residence could not be fulfilled because of the level of his income. The applicant in his evidence accepted that he did not have the financial capacity to meet the monthly payments to the bank and enjoy a quality of life that he was used to. This he said led him to move out and let the unit. It is an unusual case because the applicant's mother who is a mortgage broker negotiated the loan to purchase the unit did not advise her son as to his financial inability to meet the monthly payments due under the loan. 27 The unit has been rented out since 17 November 2001 and to date remains an investment property. The applicant has continued to stay with his mother. These are matters that the Tribunal can take into account in determining an application for a review of a reviewable decision. This power of review is set out in s 63 of the Administrative Decisions Tribunal Act 1997 which, inter alia, provides that the "Tribunal is to decide what the correct and preferable decision is having regard to the material then before it" including any factual material and any applicable written or unwritten law. (Emphasis added) 28 These additional facts do not help the applicant's case. On the contrary, they would indicate that there was and never has been any real pursuit by the applicant to establish an independent place as his principal place of residence. The grant is made under the Act to help applicants to establish their first home and not to assist them to buy their first investment property. When all the facts are taken into account, it is difficult not to conclude that, with the assistance of his mother, a mortgage broker, the applicant was merely buying real estate as an investment. 29 But to use the analysis in Bates and Ferrington, one must consider all the surrounding circumstances. Unfortunately, in this matter, the evidence in relation to surrounding matters provides very little help to the applicant to establish that his occupation of the unit, for a short period, was essentially as his principal place of residence. The onus was on the applicant, under s 28(3) of the Act, to establish that on the balance of probabilities. In the opinion of the Tribunal, the applicant has failed to discharge it. The applicant may have intended the unit to be his principal place of residence, but that intention never came to fruition. 30 Accordingly, the Tribunal confirms, under s 29(1) of the Act, the decision made by the respondent to recall the grant.