Tomasian v Chief Commissioner of State Revenue [2004] NSWADT 37

CITATION: Tomasian v Chief Commissioner of State Revenue [2004] NSWADT 37 DIVISION: General Division APPLICANT PARTIES: Artin Tomasian RESPONDENT Chief Commissioner of State Revenue FILE NUMBER: 033171 HEARING DATES: 15/09/2003 SUBMISSIONS CLOSED: 09/15/2003 DATE OF DECISION: 02/25/2004

BEFORE: Montgomery S - Judicial Member APPLICATION: 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 : Administrative Decisions Tribunal Act 1997 First Home Owners Grant Act 2000 CASES CITED: Bates v Chief Commissioner of State Revenue [2004] NSWADT 13 McKellar v Chief Commissioner of State Revenue [2004] NSWADT 22 APPLICANT REPRESENTATION: In person RESPONDENT I Mescher, barrister ORDERS: 1. The decision of the Commissioner that the $7,000 first home owner grant is to be repaid is affirmed.; 2. The decision of the Commissioner to impose a penalty of $1400 is set aside. In its place the decision is made that a penalty of $700 is imposed.; 3. These amounts are to be paid within 28 days of these orders.

The Application 1 This is an application by Mr Artin Tomasian ("Mr Tomasian") seeking a review of a decision by the Chief Commissioner of State Revenue ("the Commissioner") under the First Home Owner Grant Act 2000 "the Act". The Commissioner's decision was that Mr Tomasian repay the $7,000.00 first home owner grant that he had been paid in relation to a property at 1/6 Croydon Street Cronulla ("the property"). The Commissioner also imposed a penalty of $1,400, which meant that Mr Tomasian was required to pay $8,400. 2 There appears to be some inconsistency within the documentation that was put in evidence with respect to the details of the recipients of the grant. Some of the correspondence from the Commissioner is addressed to Mr Tomasian and indicates that he is required to repay the amount of the grant plus the penalty. Other correspondence is addressed to Ms Janse Chaharmahali and also asserts the requirement that she repay those amounts. Still other correspondence is addressed to solicitors acting on behalf of to Mr Tomasian and Ms Chaharmahali ("the owners"). This correspondence suggests that the obligation for payment is on both of the owners. For the purposes of these proceedings I have worked on the assumption that the application brought by Mr Tomasian is brought on behalf of the owners. 3 The basis of the Commissioner's decision was the owners' failure to occupy the property as their principal place of residence within twelve months of having purchased the property. This was a requirement under section 12 of the Act. 4 The Tribunal has jurisdiction to hear Mr Tomasian's application by virtue of sections 25 and 28 of the Act and section 38 of the Administrative Decisions Tribunal Act 1997. Background 5 The owners entered a contract for the purchase of the property on 20 August 2001. They applied for a grant under the Act on 30 October 2001. The grant was paid and, according to the Commissioner, settlement of the sale of the property took place on 1 November 2001. There is no evidence before me to show the actual date of settlement. It appears that the owners moved into the property on 2 November 2001. They entered a Residential Management Agreement on 10 November 2001 and tenants commenced to reside in the property on 30 November 2001. The owners moved into the property again on 1 February 2002. 6 On 7 March 2003 a delegate of the Commissioner issued a Notice under section 45 of the Act. The Notice was addressed to Ms Chaharmahali and was in the following terms: "I refer to the First Home Owner Grant that was transferred to your nominated account to assist with the purchase of Unit 1, 6 Croydon St, Cronulla NSW 2230. Section 45(1) of the First Home Owner Grant Act 2000 (the Act) authorises the Chief Commissioner of State Revenue, by notice in writing, to require an applicant (or a former applicant) for a first home owner grant to repay an amount paid on the application if: (a) the amount was paid in error, or (b) the Chief Commissioner reverses the decision under which the amount was paid for any other reason. Based on the information now available, and in accordance with section 23(1) of the Act, I have reversed the decision under which the grant was paid to you as you did not occupy the premises as your principal place of residence within 12 months of settlement of the property. Accordingly, I require you to pay to the Chief Commissioner the amount of $7,000 for repayment of the grant. A penalty of 20% of the amount of the grant has also been imposed for the following reasons: · You failed to occupy the property as your principal place of residence within 12 months from the settlement date. · You failed to advise the Office of State Revenue that you would not reside in the grant property within the required time period. · You failed to repay the grant within 14 days of the 12 months elapsing. Please forward the payment of $8,400 accompanied by the enclosed remittance advice, to the Chief Commissioner at the address shown on the advice. The payment should be forwarded within 21 days of the date of this notice to avoid further penalty of up to $7,000 as provided by section 45(3) of the Act. An applicant who is dissatisfied with the Chief Commissioner's decision on the application (including a decision to reverse or vary an earlier decision) may lodge a written objection within 60 days after the date of the notice of decision. The grounds of the objection must be stated fully and in detail in the notice of objection." 7 By letter dated 29 April 2003 the solicitors acting for the owners wrote to the Commissioner objecting to the Commissioner's decision. The Commissioner responded by letter dated 9 May 2003 and confirmed the original decision. The Commissioner wrote: "I refer to your facsimile of 29th April 2003 objecting to a decision by this office requesting the applicants to repay of the grant, plus penalty, in respect of the property. I have considered the reasons for your objection, but unfortunately I have to disallow your objection. The onus is on the applicants to clearly demonstrate that they occupied the property as their principal place of residence in order to meet the eligibility criterion provided for under section 12 of the Act (ie occupation of the property as their principal place of residence within 12 months after completion of the eligible transaction). The applicants claim that they occupied the property for 4 weeks (ie 1/11/01 to 30/11/01), the only information produced to substantiate their claim of residency is an electricity bill for the period 7/11/01 to 29/11/01, the bill was not addressed to the property and was for the amount of $5.67. It is noted that settlement took place on 1/11/01; a Residential Management Agency Agreement was entered into on 10/11/01 and the property was leased from 1/12/01 until early 2002; The applicants resided at 16 Sheehan Street, Eastwood for over 12 months prior to acquiring the property and continued to reside there whilst the property was leased. As your clients have not clearly demonstrated that they have met the eligibility criterion provided for under section 12 of the Act they are ineligible for the grant. When the grant is paid in advance of occupation and an applicant requires a longer period in which to occupy the home such request must be made within 12 months and 14 days from the completion of the eligible transaction, otherwise the residence requirement cannot be extended, as the applicants would already be in breach of section 20(3) of the Act. As the applicants did not give written notice requesting an extension of the occupation period (under section 12) within 14 days of completion, they are in breach of section 20(3) of the Act and the residence requirement cannot be extended. Consequently, it is considered that the Notice under section 45 of the Act was correctly issued and is to stand." 8 Mr Tomasian lodged his application for review by this Tribunal on 300 June 2003. The matter was heard on 15 September 2003. Relevant Legislation 9 The relevant legislation is that contained in the Act. The Act establishes a scheme to assist persons buying or building their first home by providing them with a grant of a described amount of money. To be eligible for a grant, an applicant must satisfy the five eligibility criteria that are contained in Division 2 of Part II of the Act and the purchase of the property for which the grant is sought must be an eligible transaction. 10 The eligibility criteria relevant to this application is the fifth criteria which is set out in section 12 of the Act which provides: "12 Criterion 5--Residence requirement (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. (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." 11 Section 13 of the Act defines the term an "eligible transaction" for the purposes of the Act. Section 13 provides: " 13 Eligible transactions (1) An eligible transaction is: (a) a contract made on or after 1 July 2000 for the purchase of a home in New South Wales, or (b) a comprehensive home building contract made on or after 1 July 2000 by the owner of land in New South Wales, or by a person who will on completion of the contract be the owner of land in New South Wales, to have a home built on the land, or (c) the building of a home in New South Wales by an owner builder if the building work commences on or after 1 July 2000. (2) A contract is a contract for the purchase of a home if the contract is a contract for the acquisition of a relevant interest in land on which a home is or is to be built under the contract by or on behalf of the vendor. (3) However, a contract made on or after 1 July 2000 is not an eligible transaction if: (a) in the case of a contract to purchase a home--the purchaser had an option to purchase the home granted before that date or the vendor had an option to require the purchaser to purchase the home granted before that date, or (b) in the case of a comprehensive building contract--either party had a right or option granted before that date to require the other party to enter into the contract. (4) The commencement date of an eligible transaction is: (a) in the case of a contract--the date when the contract is made, or (b) in the case of the building of a home by an owner builder: (i) the date when laying the foundations for the home commences, or (ii) another date the Chief Commissioner considers appropriate in the circumstances of the case. (5) An eligible transaction is completed when: (a) in the case of a contract for the purchase of a home: (i) the purchaser becomes entitled to possession of the home under the contract, and (ii) if the purchaser acquires an interest in land under the contract that is registrable under a law of the State--the purchaser's interest is registered under that law, or (b) in the case of a contract to have a home built--the building is ready for occupation as a place of residence, or (c) in the case of the building of a home by an owner builder--the building is ready for occupation as a place of residence. (6) If a person purchases a moveable building and intends to use it as a place of residence on land in which the person has a relevant interest but on which it is not situated at the time of purchase: (a) this Act applies as if the person were an owner builder building a home on the land, and (b) the commencement date of the transaction is taken to be the date of the contract to purchase the moveable building, and (c) the transaction is taken to be completed when the moveable building is ready for occupation as a place of residence on land in which the purchaser has a relevant interest. (7) The consideration for an eligible transaction is: (a) in the case of a contract for the purchase of a home--the consideration for the purchase, or (b) in the case of a comprehensive home building contract--the total consideration payable for the building work, or (c) in the case of the building of a home by an owner builder--the actual costs to the owner of carrying out the work (excluding any allowance for the owner builder's own labour)." 12 In this case, it is not disputed that the contract for the purchase of the property, by Mr Tomasian, was an "eligible transaction" under the Act. Pursuant to subsection 13(5) of the Act, Mr Tomasian's transaction was completed when the he became entitled to possession of the home. 13 Section 20 of the Act provides for the payment of a grant in anticipation of compliance with the resident's requirement. Section 20 states: " 20 Payment in advance, subject to statutory conditions (1) The Chief Commissioner may authorise payment of a first home owner grant: (a) before completion of the relevant eligible transaction, if the Chief Commissioner is satisfied that it is appropriate to do so in particular circumstances, or (b) in anticipation of compliance with the residence requirement, if the Chief Commissioner is satisfied that each applicant who is required to comply, but has not yet complied, with the residence requirement, intends to occupy the home as his or her principal place of residence within 12 months after completion of the eligible transaction or a longer period allowed by the Chief Commissioner, or both. (2) If a first home owner grant is paid before completion of the relevant eligible transaction, the payment is made on condition that, if the transaction is not completed within 12 months of the commencement of the transaction or a longer period allowed by the Chief Commissioner, the applicant must within 14 days after the end of the period concerned: (a) give written notice of that fact to the Chief Commissioner, and (b) repay the amount of the grant. (3) If a first home owner grant is paid in anticipation of compliance with the residence requirement, the payment is made on condition that, if the residence requirement is not complied with, the applicant must within 14 days after the end of the period allowed for compliance: (a) give written notice of that fact to the Chief Commissioner, and (b) repay the amount of the grant. (4) A person who fails to comply with the condition prescribed by this section is guilty of an offence." 14 The Commissioner therefore has power to extend the period within which an applicant for a grant must take up occupancy of the property as a principal place of residence pursuant to section 20(1)(b) of the Act. If there is no extension of the period allowed for compliance, an applicant must satisfy the "resident requirement" within 12 months after completion of the eligible transaction. 15 The term "resident requirement" is defined in section 3 of the Act in the following terms: "residence requirement means the requirement that 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 the completion of the eligible transaction or a longer period approved by the Chief Commissioner (see section 12)". 16 Section 23 of the Act gives the Commissioner power to vary or reverse a decision he has made in respect of an application for a grant. Section 23 of the Act provides: "23 Power to correct decision (1) If the Chief Commissioner decides an application, and is later satisfied (independently of an objection under this Act) that the decision is incorrect, the Chief Commissioner may vary or reverse the decision. (2) A decision cannot be varied or reversed under this section more than 5 years after it was made." 17 Section 24(1) of the Act provides that where the Commissioner decides to reverse an earlier decision on an application for a grant, the Commissioner is required to give the applicant written notice of the reversal and state in the notice the reasons for the reversal. The applicant may object to the decision and may then seek review by this Tribunal if dissatisfied with the outcome of the objection. On a review, the Tribunal may confirm, vary or reverse the original decision, and make any further orders as to costs or otherwise as it thinks fit. 18 Mr Tomasian bears the onus of proof in regard to his application for review by this Tribunal. Section 28 of the Act provides in part: "28 Reviews by Administrative Decisions Tribunal (1) An objector may apply to the Administrative Decisions Tribunal for a review of the decision (the original decision) to which the objection was made if: (a) the objector is dissatisfied with the Chief Commissioner's determination of the objection, or (b) 90 days have passed since the objection was lodged with the Chief Commissioner and the Chief Commissioner has not determined the objection. (2) The applicant's and respondent's cases on an application for review are not limited to the grounds of the objection. (3) The applicant has the onus of proving the applicant's case in an application for review." 19 Section 45 of the Act gives the Commissioner the power to request the repayment of the amount approved and paid under an application for a grant under the Act. Section 45 of the Act provides: "45 Power to require repayment and impose penalty (1) The Chief Commissioner may, by written notice, require an applicant (or former applicant) for a first home owner grant to repay an amount paid on the application if: (a) the amount was paid in error, or (b) the Chief Commissioner reverses the decision under which the amount was paid for any other reason. (2) If, as a result of an applicant's dishonesty, an amount is paid by way of a first home owner grant, the Chief Commissioner may, by the notice in which repayment is required or a separate notice, impose a penalty not exceeding the amount the applicant is required to repay. (3) If an applicant (or former applicant) for a first home owner grant fails to make a repayment required under this section or the conditions of the grant, the Chief Commissioner may, by written notice, impose a penalty not exceeding the amount the applicant is required to repay. (4) If an amount is paid in error on an application for a first home owner grant to a third party, the Chief Commissioner may, by written notice, require the third party to repay the amount to the Chief Commissioner." Evidence 20 Mr Tomasian appeared and relied on the material that had been forwarded to the Commissioner in support of the owners' objection to the Commissioner's decision. This material included written submissions prepared by his former solicitors. In addition to this material, Mr Tomasian gave oral evidence. The written submissions provide a reasonable summary of Mr Tomasian's case. Those submissions stated: "Pursuant thereto on our clients' instructions, we make the following submissions noting that the applicant and her partner welcome the opportunity to verify these on declaration if required. Prior to doing so we summarise the following relevant dates: a. completion 1 November, 2001; b. occupation from or immediately after completion up to approximately 30 November, 2001; c. energy bill for period 7/11/01 to 29/11/01; d. date of signature of Management Agency Agreement (discussed hereunder) 10 November, 2001; e. Residential Tenancy Agreement commencement date 1 December, 2001; f. AGL account showing on reverse side entry for date commencing 1/2/03; g. Energy bill showing commencement date 1/2/03. Recording the above chronology we make the following submissions: 1. The drafter of the Legislation makes no provision for a minimal period for residence requirement in regard to occupation. In the writer's view your initial letter of 5 February improperly suggests evidence of a period of at least three months. Noting the definition of "residence requirement" within the dictionary to the Act and the provisions of Section 12, the matter must rest on intent. It is clear in this case that our clients' had an intent to occupy prior to and immediately post completion. Both applicants formed an intent during mid year 2001 to move from the single storey residence of Mr Tomasian's parents with whom they had been residing for a previous period of approximately 12 months. With them in this residence with the parents was Mr. Tomasian's young brother and this left both applicants with very limited, if any, privacy. They made determined steps to save for a deposit with a view to moving out from Mr Tomasian's parents' property as soon as they were able with a view that they have their own space and noting that at that time Mr Tomasian was aged 27 years and still living at home. Neither applicant was keen to continue living with Mr Tomasian's parents. Just prior to completion the applicants were able to obtain access to the property with a view to cleaning and carrying out basic renovations for purposes of and with the intent to reside. Several factors critically impacted upon the applicant's financial budget. These included: i) just prior to settlement, Mr Tomasian was involved in a motor vehicle accident and was unable to recoup the motor vehicle repair expenses to his vehicle which was written off and as such he had to replace that vehicle on short notice from his own funds just prior to completion; ii) it was Miss Chaharmahali's intent to obtain work during her summer semester whilst university was in recess, in her occupation as an assistant nurse. Just subsequent to completion she was advised that her father who lived in Sweden had been diagnosed with bone marrow cancer. She cancelled arrangements to commence summer work and flew home to Sweden on 15 January, 2002. Both applicants therefore were unable to have the benefit of her income budgeted upon from completion in that given the news of her father's illness Miss Chaharmahali elected to refrain from commencement of employment and made alternative arrangements to fly home which in itself brought about a further expense not budgeted for; iii) the proposed minimal renovations contemplated became more major and incurred costs to the applicants over and above that budgeted upon by them. These three incidents, none of which were anticipated by the applicants, put their intention to immediately permanently reside in the subject property on hold. On a precautionary basis they entered into a management agreement on 10 November having done a "rethink" and having regard particularly to the illness of Miss Chaharmahali's father. It is submitted that their intent has been made out and the test of occupation has been satisfied. 2. In the alternate, although we submit that satisfactory evidence within Section 12 has been made out noting the drafter has not opted to give guidance on a minimum period, that same Section in any event provides for a longer period approved by the Chief Commissioner. The same discretion is allowed under Section 14(6) such that it appears clear that the intent of the drafter was to consider the merits of each individual application on a discretionary basis. 3. Documents f. and g. clearly show the applicants' intent to resume occupation of their residence at the first available opportunity. The parties had formally sought a loan from Mr Tomasian's parents prior to electing to enter into the management agreement with David Newton Real Estate and that being unavailable took the view to rent the property until such time as they were able to re-establish their financial position. That occurred as evidenced by those documents on 1 February some eight days prior to receipt by Miss Chaharmahali of your letter of 5 February, 2003, that letter being their first indication that any inquiry was being considered. In fact their intent was to occupy in October, 2002, they having re-established some financial stability. At that time they approached the managing agent to arrange whatever notice was then required to enable them to re-occupy the premises. You will recall that the period of the lease was six months expiring on 1 June, 2002. Having no experience in management or letting of properties, their understanding was that in contacting the agent they would be able to re-occupy the property on short notice, the lease term having expired. They were then advised for the first time in October, 2002 that under the lease provisions they were required to give 60 days notice to the tenants. The agent's advice also was that having regard to the impending Christmas recess it might be unreasonable to "push" the tenants to vacate just prior thereto. You will see from the initial submissions of our clients to you that purchase of the property was actually effected in December, 2001. They were unable to obtain records from the conveyancer previously acting for them and it was with surprise that they were advised by the writer that completion was actually effected on 1 November, 2001. Their own view, and we endorse that within these submissions, is that they had in any event made out residency within the requirement of the Act by their first occupation. Had that not been so they were genuinely otherwise convinced that in approaching the agent in October, 2001 and thinking that completion had only been effected in December they would in any event be well within time to have otherwise occupied within the 12 month period. We make these points noting that Section 12 provides for "a longer period as approved" at the discretion of the Chief Commissioner. We submit that whilst the first residency period can be validly made out, the applicants are entitled in any event to the Section 12 discretion noting the background features. 4. We note provision for penalty as thus far imposed by you can only be made out in the event of the applicants' dishonesty at Section 45(2). There has been no suggestion in your three point decision of 7 March, 2003 that any dishonesty occurred or in our view can there be any made out. Noting that in any event we submit that no penalty, in this instance 20%, can be validly imposed. 5. The applicant's intent to re-occupy was not precipitated by but was earlier than and unrelated to your initial inquiry of 5 February, 2003 such that the Chief Commissioner's discretion, if needed, could be validly applied. In summary, the applicants' intent was clear prior to their purchase and they had a valid reason for wishing to purchase the property. Neither owned nor do subsequently own any other properties as investment or otherwise. Circumstances beyond their control prevented continuous immediate occupation. The loan application was on the basis of residential occupation not investment or negative gearing. They have subsequently occupied within close proximity in any event to the 12 month period and without the advent of or knowledge of your inquiry." 21 Mr Tomasian's oral evidence was consistent with the argument set out on his behalf. Mr Tomasian also made oral submissions in which he submitted that the material before the Tribunal establishes that the resident requirement contained in section 12 of the Act had been met. That is, the material establishes that he intended to reside in the property as his principal placed of residence and he did so as soon as he was able. The fact that circumstances changed after he had taken up residence, should not be taken by the Tribunal as being evidence of Mr Tomasian's failing to meet the requirement. 22 Mr Mescher, on behalf of the Commissioner, provided a chronology of events. The chronology of events provided by Mr Mescher is not disputed. Mr Mescher put in evidence documents supporting that chronology. Those documents included the Commissioner's record of the application for the grant, the Commissioner's letter to Ms Chaharmahali dated 7 March 2003 advising of the decision to reverse the original grant decision, and the letter dated 9 May 2003 to the solicitor acting on behalf of Mr Tomasian and Ms Chaharmahali advising that the objection had been unsuccessful. 23 Mr Mescher also provided written submissions which set out the Commissioner's case. Mr Mescher submitted: "The Respondent relies on the chronology annexed to these submissions outlining the relevant events in the matter. Relevant Provisions of FHOG 2. A first home owner grant is payable on an application under FHOG if, inter alia, the Applicant complies with the eligibility criteria: section 7(l)(a) FHOG. "Eligibility criteria" are defined in section 3 FHOG to mean the criteria for determining whether an applicant for a first home owner grant is eligible for the grant (see Division 2 of Part 2). Division 2 of Part 2 FHOG now contains 6 criteria known as eligibility criteria for the purpose of a first home owner grant under FHOG. Criteria 1, 1 A - 4 contained in sections 8, 8A -11 are not applicable to the present case. Criterion 5, however, is contained in section 12(1) FHOG and states as follows: "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. " 3. If an applicant does not satisfy Criterion 5 known as the "residence requirement" pursuant to section 12(l) FHOG then, ipso facto, he or she is not entitled to the grant. 4. The transaction was "completed" for the purposes of FHOG when the Applicant became entitled to possession of the home (section 13(5)(a)(i)). In this particular case, that entitlement occurred on the date of settlement - being 1 November 2001. 5. The relevant payment was authorised by the Commissioner on 30 October 2001 in accordance with section 17(1) FHOG. 6. Accordingly. the only issue in the proceedings is whether or not the Applicant occupied the property as the Applicant's principal place of residence within 12 months after completion of the relevant transaction - ie whether the Applicant occupied the property as the Applicant's principal place of residence on or before 1 November 2002. Residence Requirement 7. For the purpose of complying with Criterion 5 in section 12(1) FHOG, it is submitted that the Applicant must first "occupy" the property on or before 1 August 2002. The relevant occupation must then be "as the applicant's principal place of residence" within that 12 month period - ie on or before 1 August 2002. 8. The words "occupation", "occupy" and "occupied" have been considered in a number of cases dealing with, inter alia, statutory provision. 9. Thus, in Baulkham Hills Shire Council v Mekol Pty Limited (1970) 92 WN (NSW) 553, the word "occupy" as found in section 313(j) Local Government Act 1919 (NSW) was held to mean presence on the premises with some element of regularity, continuity and permanence. It was held by the Court that persons who merely visit the premises for short periods only as customers of a retail store or clients of a business conducted in the subject building do not come within the relevant expression in section 313(j). 10. In Allison v Lowe [1998] Tas R 21 ("Allison") it was held by the Supreme Court of Tasmania that the word -'occupy", considered alone and without context, is a word of uncertain meaning Sometimes it denotes legal possession in the technical sense as when occupation is made the test of rateability under certain statutes. At other times "occupation denotes nothing more than physical presence in a place for a substantial period of time as when a person is said to occupy a seat or pew: Allison at 25. The Court held that the word "occupied" must be construed not alone and without any context but in a specific context. In terms of the legislation in Allison, it was considered in the context of a criminal penal statute. The Court went on to hold in Allison that occupation includes possession as its primary meaning but it is not confined to legal possession and the actual possession of a squatter is not sufficient to constitute "occupation". The Court also held that it is not necessary to show that "occupation" is permanent but mere transitory user is not sufficient: Allison at 26. It was likewise held that repeated user of the premises may go a long way towards showing that the person was the "occupier" of the premises. For the purpose of "occupation" it was relevant to consider whether the person had the requisite degree of control over premises so as to exclude from them those he or she wished to exclude: Allison at 27. 11.In Harris v McKenzie (1996) 9 NSWLR 139 ("Harris") in construing the terms of section 18(4)(e) Liquor Act 1982 (NSW), whereby the word "occupied" was used, the Court held that the word did not require a formal or legal possession (eg Newcastle City Council v Royal Newcastle Hospital (1957) 96 CLR 493 at 507-508) and that the "occupation" contemplated was intended to be of a nature more practical than consensual. It was held that "occupation" is a term that describes what a person is doing in relation to particular premises and focuses upon what he does or may do in relation to the premises generally: Harris at 152-153 per Mahoney JA. 12. In light of all the above, it is submitted that the Applicant did not "occupy" the relevant premises as his principal place of residence during the period 1 November 2001 – 1 November 2002. He may have resided in these premises for 4 weeks but that does not necessarily mean that he "occupied" them. It is submitted that "occupy" in section 12(1) FHOG, similar to the legislation considered in the above cases, denotes some degree of permanence, continuity and regularity. The fact that the Applicant simply resided in the property for 4 weeks from the date of settlement does not lead to the conclusion that he "occupied" the property within the 12 month period expiring on 1 November 2002. 13. However, even if it can be said that the Applicant did indeed "occupy" the property during this period and mere residence for 4 weeks is sufficient to constitute "occupation" for the purpose of section 12(1) FHOG then it is submitted that he did not, in any event, occupy the property as his "principal place of residence" during the period 1 November 2001 - 1 November 2002. "Principal place of residence" is not defined in FHOG. However, the expression is defined in section 3(3) Land Tax Management Act 1956 (NSW) ("LTMA") which states that land is not used or occupied as the principal place of residence of a person unless the land has been continuously used and occupied by that person for residential purposes and for no other purpose (emphasis added) or the Chief Commissioner is otherwise relevantly satisfied. Although this definition cannot be applied mutatis mutandis to the provisions of FHOG, nonetheless, it is submitted that during the period 1 November 2001 - 1 November 2002 the Applicant must have occupied or used the property continuously for residential purposes and for no other purposes. On the facts of this matter, there was another purpose - ie a commercial purpose whereby the Applicant let out the property to tenants for 11 months of the 12 month period expiring on 1 November 2002. For this reason alone, the property was not used as the Applicant's "principal place of residence" within the 12 month period expiring 1 November 2002. It was used principally as a commercial property for the purpose of letting out to tenants. 14. In Deane v Commissioner of Stamp Duties [1996] 2 Qd R 557 Fryberg J. distinguished between the terms "place of residence" and "principal place of residence" as defined in the provisions of the Stamp Act 1894 (Q). With respect to the word "principal" in the definition of "principal place of residence" his Honour held that the definition allows a wide range of factors to be taken into account and implies an objective test of what is the principal place of residence. The intention of the person acquiring the residence is a relevant factor but not a dominant factor. Applying these principles to the facts of this matter, whilst the intention of the Applicant of making the property her principal place of residence is relevant, it is not dominant. In particular the relevant inquiry is - what would a reasonable person believe was the Applicant's principal place of residence during the period 1 November 2001 - 1 November 2002? The Respondent submits that 16 Sheahan Street Eastwood was his principal place of residence and not the property the subject of these proceedings. 15.Two further ACT land tax decisions are relevant. The first is the decision of the ACT Administrative Appeals Tribunal in Newman v Commissioner for ACT State Revenue (1993) 93 ATC 2087 where it was held that the term "principal place of residence" under the Rates and Land Tax Act 1926 (ACT) does not extend to include a place from which one is absent for a period of time but with the intention of returning there to live. Secondly, in Fincher v Commissioner for ACT Revenue (1996) 96 ATC 2030 it was held that the term "principal place of residence" in the Rates and Land Tax Act 1926 (ACT) implies that a person may have more than one place of residence at any one time but each place of residence must have something of a settled character about it - a person cannot be said to reside at a place if his or her connection with the place is transient or temporary or of a passing nature. During the period 1 November 2001 - 1 November 2002 the Applicant had a connection with the property that was merely transient or temporary given his actual length of residence at the property, irrespective of intention. The property was not, during this period, his principal place of residence for the purpose of section 12(1) FHOG. 16. The Respondent accordingly submits that the Application should be dismissed and the Chief Commissioner's decision dated 9 May 2003 (disallowing the objection of the Application under section 26(1)(a)) should be confirmed under section 29(1)(a) FHOG." 24 Mr Mescher, on behalf of the Commissioner, also made oral submissions in which he submitted that the material before the Tribunal was not sufficient to satisfy the resident requirement under section 12 of the Act. He argued that the Tribunal must examine the events as they happened during the whole of the twelve-month period following the date on which the grant was paid together with what had happened subsequently. On this material, it was his contention that the Tribunal can only find that the owners took up occupancy of the property as their principal place of residence in February 2003, which was well outside the prescribed twelve month period that ended on 1 November 2002. He also pointed out that at no time had the owners sought extension of the resident requirement period. 25 In respect of the evidence about the time Mr Tomasian resided at the property between 2 November 2001 and 30 November 2001, Mr Mescher pointed to the fact that the electricity bill for this period was for an amount of only $5.67. The inference to be drawn from this was that Mr Tomasian did not spend much time at the property. Reasons and Decision 26 The issue in this application is whether the owners satisfied the resident requirement that is set out in section 12 of the Act. This issue has been considered in two recent decisions of this tribunal differently constituted. 27 The first of those matters was McKellar v Chief Commissioner of State Revenue [2004] NSWADT 22 in which the applicant had purchased a property with settlement on 25 August 2000. The applicant stayed in the property overnight, and moved his furniture into the house the next day. He connected the electricity and telephone in his own name. He insured the building, but not the contents, as he did not have a large amount of furniture. He resided at the property from that time until about 27 September 2000, although he sometimes stayed elsewhere, and for a period of eight days he was away altogether. On 20 September 2000 the applicant instructed agents to find tenants for the property, and the property was leased from October 2000 until the applicant sold it recently. 28 In accepting the applicant's argument that he had satisfied the requirements of section 12 of the Act, Judicial Member Needham stated: "23 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] NSWADT 26). 24 There are no grounds, in my opinion, to say that the applicant did not "occupy" the premises. As I have said, the applicant's evidence, oral, written and photographic, show that he moved items such as outdoor furniture, lawn mowers, a kettle, food, clothes and a bed into the property. He slept there. He connected utilities there. He told the Bank he intended to live there, and obtained an "owner/occupier" loan, thus providing documentary corroboration of his intention to live there and treat the property as his home. 25 The real question is whether, given the short duration of the occupation, it can be said to have been his principal place of residence. As I have said, the Act does not require a minimum period of residence, merely a period of one year in which that occupation must take place. Given the intention of the applicant to reside there permanently, and his acting on that intention by moving into the property and living there, albeit for a short period, he does comply with the "residence requirement" in s 12(1) of the Act notwithstanding the fact that he moved merely a month later owing to unforeseen circumstances." 29 In Bates v Chief Commissioner of State Revenue [2004] NSWADT 13, Judicial Member Higgins found in favour of the Commissioner on the basis that an applicant who had resided at the property for a period of about two months had "occupied" the property for the purposes of section 12 of the Act but she had not occupied it as her "principal place of residence". Mr Mescher indicated that the submissions in Bates were in similar terms to those made in these proceedings. Ms Higgins undertook an analysis of the various authorities to which she had been referred and concluded: "[T]he following principles of general application also apply in this application: (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; (b) 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 it 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." 30 I have considered the arguments offered by each of the parties and I have also considered the reasons provided in the matters of McKellar and in Bates. Having done so, I have formed the view that I agree with the approach adopted by Judicial Member Higgins in Bates. 31 In my opinion the evidence in this case does not establish that the owners met the residential requirement of the Act. I accept that it was the owners' intention, when they applied for the grant to make the property their home or principle place of residence. They in fact did so at a later stage. The fact that the owners re-occupied the property before they were contacted by the Commissioner to seek repayment of the grant supports this view. Nevertheless, to meet the requirements of the Act the owners must provide proof that they in fact "occupied" the property as their "principle place" of residence during the prescribed period. Their circumstances were such that they were unable to remain in the property despite their intentions. 32 In my opinion the owners' period of residence at the property in November 2001 was for the purpose of renovating the property in preparation for more permanent occupation. During the relevant period, in my opinion, the owners' home or principle place of residence remained that of Mr Tomasian's parents. Although the owners did spend time occupying the property, they did not do so as their "principal place of residence" and thus they do not fulfil the residence criteria for the purposes of section 12 of the Act. 33 For the reasons stated above, in my opinion the decision of the Commissioner that the owners had failed to satisfy the resident requirements of section 12 of the Act was correct. Accordingly, the decision of the Commissioner is affirmed. 34 I also agree with the views of Judicial Member Higgins in Bates where she stated: "Having regard to the purpose and intention of the Act, where the Commissioner subsequently ascertains that the resident requirement eligibility criteria has not been met, in my opinion, Parliament intended the Commissioner to exercise his powers under section 23(1) and section 45 so as to deprive the applicant of any benefit that he or he was not entitled to, unless there are exceptional circumstances which warrant him not to exercise such a discretion." 35 In my opinion, there are no exceptional circumstances in this matter that would warrant the Commissioner not to exercise his discretion. On the basis of this finding, section 20(3) of the Act requires the owners to repay the amount of the grant. Penalty 36 This leaves the issue concerning the penalty imposed by the Commissioner pursuant to section 45 of the Act. This decision is equally reviewable by the Tribunal. As mentioned above the basis on which such a penalty may be imposed is contained in sub-sections 45(2) and (3) of the Act. Sub-section 45(2) only applies where it has been established that the applicant has acted dishonestly in his/her application for a grant under the Act. In this case there is no such evidence and the Commissioner was not entitled to impose a penalty under that sub-section. 37 Sub-section 45(3) of the Act applies in two circumstances. The first circumstance is where the applicant has failed to make a repayment as required under section 45(1) of the Act. The second set of circumstances are those where the applicant has failed to make a repayment of the grant as required under the conditions of the grant. As is mentioned above, section 20(3) of the Act provides that where an applicant fails to meet the resident requirement under the Act, the applicant is required to repay the amount advanced within fourteen (14) days "after the end of the period allowed for compliance". 38 In the circumstances, the owners have had the benefit of the grant for a period of over two years in circumstances where he was not entitled to the funds. It appears from the evidence that the property was tenanted for around 14 months of that period. From at least March 2003 the owners were on notice that the Commissioner considered that they had not satisfied the requirements of section 12 and therefore were not eligible for the grant. In my view, it was never the intention of Parliament that grants provided under the Act be used to fund rental properties. 39 In my view, it is reasonable that the owners pay some contribution towards the cost to the public of his having use of that money. The Commissioner has assessed the penalty at $1400. This is 20% of the amount of the grant. In my view this is excessive given current interest rates. In all the circumstances, it is my view that a reasonable penalty would be 10% of the amount of the grant. That is, $700. 40 The Tribunal orders: 1. The decision of the Commissioner that the $7,000 first home owner grant is to be repaid is affirmed. 2. The decision of the Commissioner to impose a penalty of $1400 is set aside. In its place the decision is made that a penalty of $700 is imposed. 3.These amounts are to be paid within 28 days of these orders.