Pending Appeal : CITATION: Coleman & anor v Chief Commissioner of State Revenue [2005] NSWADT 236 DIVISION: Revenue Division APPLICANTS Geoffrey Harry Coleman PARTIES: Diana Catherine Coleman RESPONDENT Chief Commissioner of State Revenue FILE NUMBER: 056059 HEARING DATES: 12/10/2005 SUBMISSIONS CLOSED: 10/12/2005 DATE OF DECISION: 10/19/2005 BEFORE: Block J - ADCJ (Judicial Member) APPLICATION: Land tax exemption - principal place of residence MATTER FOR DECISION: Principal matter LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Land Tax Management Act 1956 Commissioner of State Revenue v Applewood Residential Developments [2005] VSC 232 McMillan v Commissioner of Land Tax [1972] 1 NSWLR 545 CASES CITED: Patullo v Municipality of Condobolin [1918] 18 S.R. (N.S.W.) 297 Ryan v Chief Commissioner of Land Tax [1982] 1 NSWLR 305 Timbs v Chief Commissioner of State Revenue [2005] NSWADT 173 APPLICANT REPRESENTATION: M Boulton, solicitor RESPONDENT S Free, barrister ORDERS: The decision under review is affirmed REASONS FOR DECISION Part A Introduction and background 1 The decision under review by the Tribunal is the refusal by the Respondent of a claim for a principal place of residence exemption by the Applicants in relation to the property situated at 8 Gunyah Street, Cronulla (" Gunyah "), in respect of the 2005 land tax year ("the relevant year") 2 The Tribunal accepted the tender of the documents lodged pursuant to section 58 of the Administrative Decisions Tribunal Act 1997. It also admitted into evidence affidavits by each of the Applicants dated 10 August 2005 and marked exhibit A1 in the case of Mr Coleman and exhibit A2 in the case of Mrs Coleman. In the case of Mrs Coleman, Mr Boulton noted that clause 2 is erroneous in that it refers to the commencement of construction of the New House (as defined hereafter) as having occurred in 2003 whereas in fact commencement of construction of the New House occurred in 2004. Mr Coleman gave evidence and was (briefly) cross-examined. Mr Free (properly) did not raise any question as to the credibility of Mr Coleman's evidence. 3 Although Mrs Coleman was not originally an Applicant she was joined as such prior to the hearing of this matter. 4 It is convenient (by way of introductory background) to include clauses 7 to 13 (inclusive) under the head of "Factual Background" contained in the Respondents written submissions as follows: 7. From 1993, the applicants resided in a dwelling that was, until September 2003, situated on Lot 114 of DP828424 (street address 8 Gunyah St). In September 2003 the land was subdivided, resulting in the creation of new lots. Following the subdivision, the applicants jointly owned (and continue to own) the newly created Lots 1142 and 1143 in DP1058050. The residence at 1B Redgum Avenue is wholly contained within DP1058050/1143. The property with the street address of 8 Gunyah St is wholly contained within DP1058050/1142. These are adjoining lots. 8. The residence at 1B Redgum Avenue consists of a residential dwelling and garage, both situated beneath a tennis court. This is the residence in which the applicants resided from 1993 and in which, as at 31 December 2004, they still resided. 9. In May 2004, work commenced on the construction of a new residential dwelling wholly contained within DP1058050/1142 (ie at the street address of 8 Gunyah St). According to the evidence of Geoffrey Harry Coleman, he and his wife did not wish to subdivide the original land but were required to do so by Sutherland Shire Council in order to gain approval for the construction of the new dwelling at 8 Gunyah St. (See paragraph 9 of the affidavit of Geoffrey Harry Coleman sworn on 10 August 2005.). As at the taxing date for the 2005 Tax Year (ie 31 December 2004), the construction work had progressed to the point that the building had foundations, some walls and concrete slab floors at ground level and the first storey. 10. The applicants intend to reside in the new dwelling at 8 Gunyah St when construction is completed. According to the evidence of Geoffrey Harry Coleman, the applicants' daughter will occupy the residence at 1B Redgum Avenue below the tennis court. 11. The applicants contend that, as at 31 December 2004, 8 Gunyah Street and 1B Redgum Avenue together constituted a single parcel of residential land that was used by the applicants as their principal place of residence, according to the criteria set out in the Land Tax Management Act. 12. In response to the objection lodged on behalf of the applicants, the Chief Commissioner accepted that for the 2004 Tax Year the two adjoining properties at 8 Gunyah Street and 1B Redgum Avenue did comprise a single parcel of land which was used and occupied by the owners as their principal place of residence. This was based on an assessment of the use and occupation of that land as 31 December 2003. 13. In respect of the 2005 Tax Year, the Chief Commissioner determined that, as at 31 December 2004, the land at 8 Gunyah St was no longer being used and occupied as part of the taxpayers' principal place of residence. Rather, that land was being used and occupied for the purpose of constructing a separate residence. As such, the Chief Commissioner determined that the principal place of residence exemption was applicable for the 2005 Tax Year only in respect of 1B Redgum Avenue. This remains the position of the Chief Commissioner. 5 Mr Bolton furnished the Tribunal with a rough sketch plan in respect of Gunyah and the adjoining property situated at 1B Redgum Avenue, Cronulla ("Redgum"). Having regard to that diagram together with the evidence and submissions before me I have constructed a chronology of relevant events which are contained in the remaining numbered clauses of this Part A (and even though there is some degree of repetition of the Respondent's submissions included previously), as follows. 6 In 1993 the Applicants acquired Lot 114 of DP 828424 (referred to in these reasons as the "Property") and which after subdivision resulted in the creation of Gunyah and Redgum. At the time of acquisition, the Property was improved only by the construction of an old blockhouse which was subsequently demolished. 7 The Property was improved by the construction on that portion of the Property which after subdivision became Redgum, of a house in which the Applicants and their children resided. That house (the "Old House"), which consisted of four or five bedrooms, living rooms, kitchen and the usual other appurtenances, together with parking for some 12 cars, was constructed in such manner that the Old House and the parking accommodation were adjacent to each other and were situated underneath a tennis court constructed on the roof. The tennis court is fenced, (but to an extent only) so as to limit the extent to which balls can fall outside the court. Clause 14 of Exhibit A1 provides inter alia that "There is no dividing fence between lot 1142 and lot 1143." 8 In respect of the Old House there is access from Redgum Avenue through land belonging to a third party. There is access also from Gunyah Street in the north and again through land belonging to a third party. Regarded as a whole, the Property slopes downwards quite markedly (about 8 m) from north to south. Access to Darook Park Beach Reserve is provided from the south-west of Redgum. 9 Having regard to the diagram finished to the Tribunal the area of Redgum is, in extent, less than half that of the Property. On the western side of Redgum there was and is bush. There was and is also bush on a substantial part of the south-western part of Gunyah. There are garden areas towards the west of Gunyah. 10 Garbage and postal facilities are available on the northern boundary of Gunyah. 11 In 2000 the Applicants determined that they no longer wished to live under the tennis court and as they put it, wished to live "in the sun". To this end they formulated plans to construct a house (the "New House") on the north eastern portion of Gunyah. 12 The Sutherland Shire Council ("the Council") was prepared to allow the construction of the New House, only if the Property was subdivided. (Mention was also made in brief, in this context of problems with the Council as regards access). In September 2003 the Property was subdivided, resulting in the creation of new Lots 1142 and 1143 in DP 1058050. The New House is constructed on Lot 1142 (Gunyah) while the Old House was (as has been noted) constructed on Lot 1143 (Redgum). 13 Plans for the New House were approved in July 2003 after proceedings in the Land and Environment Court. The subdivision of the Property was effected, as has been noted, in September 2003. 14 In May 2004 work commenced on the construction of the New House. (As was previously indicated, the reference to 2003 contained in clause 2 of exhibit A2 was erroneous). By 31 December 2004 (which is referred to in these reasons as "the relevant taxing date") construction had progressed to the point that, as set out in clause 9 of the Respondents Submissions " the building had foundations, some walls and concrete slab floors at ground level and the first storey". 15 The Applicants moved out of the Old House and into the New House in August 2005, and prior to the date upon which construction of the New House was complete. The Applicants' daughter, Catriona, now aged 29 who had been in London for some three years returned to Sydney, together with her intended husband, a few months earlier. They took occupation, at or about the time when the Applicants took occupation of the New House, of the Old House. Catriona and her husband currently reside in the Old House. They do not pay rent for the Old House to the Applicants; moreover and as regards the tennis court, the Applicants have a (priority) right of use of it. The Applicants store books and other items in the Old House. The Applicants have a 27 year old son (Scott) who lives in the New House with the Applicants and a 25-year-old married daughter who lives elsewhere. The Applicants and Scott obtain access to the beach through Redgum. 16 Between the New House and the Old House there is a timber deck which leads directly from the New House to the tennis court. The timber deck is sometimes used for entertaining. Of the two entrances to the Property as a whole, the Gunyah entrance is preferred by visitors who come to play tennis because that access is easier. 17 The New House, which was architect-designed, was constructed at a cost in excess of $1 million. As set out previously, it is occupied by the Applicants and their son Scott. 18 Mr Coleman gave evidence as to the intentions of the Applicants as regards the Old House at the time when construction of the New House was first contemplated. He said that at that time and thereafter and although they had no fixed ideas they always considered it desirable that the Old House be occupied by a family member. He said that it was at one time contemplated that the Old House would be occupied by Mrs Coleman's parents; however Mrs Coleman's parents died in 2001 (in the case of her father who was then 93) and 2003 (in the case of her mother who was then 91). Mr Coleman said also that at the relevant taxing date they had no firm intentions as to what would occur as regards occupation of the Old House when construction of the New House had been completed. Part B Legislation 19 The legislation in respect of the principal place of residence exemption is now, following amendments which took effect as from the 2004 year, contained for the most part but not exclusively in schedule 1A to the Land Tax Management Act 1956 (the "Act"). 20 The Respondents in clause 16 of his written submissions included a number of clauses (1, 2, 3 and 12) contained in schedule 1A to the Act as follows: "Schedule 1A Principal place of residence exemption Part 1 Preliminary 1 Definitions (1) In this Schedule: principal place of residence exemption — see clause 2. residential land -see clause 3. taxing date - means midnight on the thirty-first day of December. (2) For the purposes of this Schedule, a reference to the owner of land includes, if there are joint owners, any one or more of those joint owners. Part 2 Principal place of residence exemption 2 Principal place of residence exemption (1) Land used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose, is exempt from taxation under this Act, in respect of the year commencing 1 January 2005 or any succeeding year, if the land is: (a) a parcel of residential land, or (b) a lot under the Strata Schemes (Freehold Development) Act 1973 or a lot under the Strata Schemes (Leasehold Development) Act 1986. (2) Land is not used and occupied as the principal place of residence of a person unless: (a) the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes since 1 July in the year preceding the tax year in which land tax is levied, or (b) in any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the person's principal place of residence. (3) If the owner of land is entitled to the exemption conferred by this clause, no other person is liable to be assessed for taxation under this Act in respect of the land during the period of the owner's entitlement to the exemption. (4) The exemption conferred by this clause is referred to as the principal place of residence exemption. 3 Residential land - meaning (1) In this Schedule, residential land means land that is used and occupied for residential purposes and for no other purpose, that use and occupation being use and occupation of a building or buildings designed, constructed or adapted for residential purposes, other than a building or buildings: (a) comprised of lots within a strata plan or residential units, or (b) containing (out of the total of all rooms in the building or buildings) occupancies other than that of the owner, or (c) from any part of which income is derived. (2) Land does not cease to be used and occupied as provided by subclause (1) by reason of there being on that land any building or improvement that is used or occupied for a purpose ancillary to the purposes for which the building is, or the buildings are, designed, constructed or adapted. Note. Clause 4 allows one residential occupancy to be disregarded in applying the principal place of residence exemption. Clause 5 allows the use of land for purposes ancillary to a business conducted at a different place to be disregarded in certain circumstances. Part 4 Restrictions 12 Only one principal place of residence for all members of same family (1) For the purposes of the principal place of residence exemption, only one place of residence may be treated as the principal place of residence of all members of the same family. (2) If members of a family own (whether jointly or separately) more than one residence used and occupied by any of them as a principal place of residence, the Chief Commissioner is to treat the one place of residence elected as the principal place of residence of the family as the principal place of residence of all members of the family in respect of a tax year. (3) Such an election is to be made, by or on behalf of the members of the family, in writing and must be lodged with the Chief Commissioner within the period for the lodging of objections under section 89 of the Taxation Administration Act 1996. (4) An election may be made, in respect of a tax year, by the end of the period allowed for the lodging of an objection to a notice of assessment of land tax liability (being an initial assessment of land tax liability) for that tax year. (5) If an election is not made, the Chief Commissioner is to treat the residence that has the highest land value for land tax purposes as the principal place of residence of all members of the family. (6) For the purposes of this clause, a family consists of the following: (a) a person and his or her spouse (if any), (b) any dependent child or dependent step-child of the person and his or her spouse (or of either of them) who ordinarily resides with the person or his or her spouse. (7) A person is the spouse of another person if: (a) they are legally married, or (b) they are living together as a couple in a de facto relationship within the meaning of the Property (Relationships) Act 1984. (8) However, if the Chief Commissioner is satisfied that a person: (a) is legally married to another person but not cohabiting with that other person, and (b) has no intention of resuming cohabitation with that other person, the person is not to be regarded as the spouse of that other person and if a dependent child or dependent step-child of the person has a joint interest in the principal place of residence of the spouse, that interest is to be disregarded. (9) A person who is the child or step-child of another person is a dependent child or a dependent step-child if the person is under 18 years of age and is not legally married. (10) Nothing in this clause prevents more than one residence from being treated as the principal place of residence of members of a family under clause 7 (Concession for sale of former principal place of residence). Clause 6 of schedule 1A was referred to in the context of the exemption in relation to land upon which a taxpayer intends to build. Clause 6 of schedule 1A. is of no relevance having regard to the 2 year limitation contained in clause 6(2), and bearing in mind that the Applicants acquired the Property in 1993. 21 Mr Boulton furnished the Tribunal with the Explanatory Note in respect of amendments to the Act in 1987 and in secular to the second paragraph reading as follows: "The object of this Bill is to amend the Land Tax Management Act 1956 to expand the scope of exemption from land tax in cases of multiple occupancy of land. The bill provides that land used as the principal place of residence of the owner of the land will not cease to be exempt because there is a "granny flat" on the land as well as the owner's home." 22 Clause 4 to schedule 1A of the Act in its current form reads as follows: 4 Concession for land on which there is one other residential occupancy (1) For the purposes of the principal place of residence exemption, if a building or buildings used or occupied for residential purposes contains or contain a residential occupancy other than that of the owner, the use of the building or buildings for the purpose of that residential occupancy may be disregarded if: (a) the residential occupancy is an excluded residential occupancy, and (b) the building contains or buildings contain (out of a total of all rooms in the building or buildings) not more than one of those excluded residential occupancies (not including the occupancy of the owner). (2) For the purposes of this clause, each of the following residential occupancies is an "excluded residential occupancy": (a) one room, (b) one suite of rooms (not being a flat) each room of which all occupants of the suite are entitled to occupy, (c) one flat, (d) one suite of rooms (not being a flat) each room of which all occupants of the suite are entitled to occupy, and one room, (e) one flat and one room, (f) 2 rooms, each of which is separately occupied. (3) Accordingly, land does not cease to be residential land because there is on the land one, but not more than one, such excluded residential occupancy, even if income is derived from the residential occupancy 23 Clause 4 of schedule 1A must be considered in the context of the definitions of "flat" and "single dwelling" contained in section 3 of the Act, (collectively referred to as "the granny flat provisions") and reading as follows: "flat" means a room or a suite of rooms (whether or not forming part of a building or a detached building): (a) used or occupied as a separate dwelling, or (b) so constructed, designed or adapted as to be capable of being used or occupied as a separate dwelling, but does not include a single dwelling "single dwelling" means a house: (a) used or occupied as a separate dwelling, or (b) so constructed, designed or adapted as to be capable of being used or occupied as a separate dwelling Part C The law 24 The most important case in the context of this matter is Ryan v Chief Commissioner of Land Tax [1982] 1 NSWLR 305 ("Ryan"). Ryan was decided in 1982 prior to the 1987 amendments previously referred to in these reasons, but the Tribunal considers that the principles established by Ryan are as valid at this date as they were in 1982, and there was no suggestion by either party to the contrary. 25 Hunt J. commenced in Ryan by setting out the facts, at page 306, as follows: In 1964, Mr and Mrs Ryan jointly purchased a block of land known as No 1 Baden Road, Kurraba Point. At the same time, and in his own name only, Mr Ryan purchased the contiguous block of land known as No 3 Baden Road, although completion of this purchase was delayed until 1966. The vendor in each case was the same, and one purchase price was paid for the two blocks. In 1965, a large house was constructed upon the land at No 1 Baden Road which, together with a garage, poolhouse, swimming pool and associated facilities, virtually fills the whole of that land. There is no physical separation between the two blocks of land. Number 3 Baden Road is used and occupied by Mr and Mrs Ryan as a garden entertainment and recreation area; gardens have been laid and a barbecue built. The only other building constructed upon the land at No 3 Baden Road consists of stone steps which commence on the land at No 1 Baden Road next to the house and cross the boundary into No 3 Baden Road. Mr Ryan says, and I accept, that both blocks of land have been used and occupied together at all times as the one residential area 26 Hunt J then went on to consider, in considerable detail, the meaning to be attributed to the term "parcel of residential land" and concluded at page 310 as follows: It follows, in my view, that contiguous blocks of land can comprise a "parcel of residential land" within s 10(1) (r) (ii) only where they are undivided not only by physical separation but also in use, occupation and title. (Emphasis added by the Tribunal) 27 In accordance with the Act, land tax is computed in respect of any land tax year (and being any calendar year) by reference to the land owned at midnight on the preceding 31st December. The exemption will be available if that land was owned and used as the taxpayer's principal place of residence at that 31 December and had been so owned and used since the preceding 1 July. (Clause 2(2)(b) of schedule 1A provides that discretionary relief as to the six-month period requirement can in certain circumstances be granted, but that relieving provision is not relevant for the purposes of this decision). It is relevant moreover that the exemption is granted as at a 31st December in respect of the ensuing land tax year, and so that what occurs thereafter does not affect the grant of the exemption. An exempt property sold during the ensuing land tax year does not result in any claw-back of the land tax which would, but for the exemption, have been payable. 28 It will be noted that the decision in Ryan went against the taxpayer precisely because in respect of one lot the registered owner was Mr. Ryan while in respect of the other lot Mr. and Mrs. Ryan were the registered owners. The lots were divided as to title and accordingly could not constitute a parcel of residential land. It is clear that if in Ryan both lots had been registered in the name of Mr Ryan or in the names of both Mr and Mrs Ryan the decision in Ryan would have gone the other way. 29 Ryan as the judgment of a superior court of this State is binding on this Tribunal, and there was no suggestion that it is distinguishable. 30 It follows then that for two separate lots to constitute a parcel four tests must be satisfied. The two lots must not be physically separate and they must not be divided as to use, occupation, or title. 31 There are a number of dates which are relevant for the purposes of this decision. The relevant taxing date is for obvious reasons the most important but it is also relevant to consider the position at 31 December 2003 which was the taxing date for the purposes of the 2004 land tax year and 6 August 2005 and being the date on which the Applicants took occupation of the New House and (presumably) Catriona and her husband took occupation of the Old House. 32 It is convenient in the first instance to deal with Mr. Boulton's contentions to the effect that the New House could be treated as falling within the granny flat provisions. Mr. Boulton argued but understandably enough, not with any great conviction, that the New House fell within the granny flat provisions more particularly because there is no statutory definition of the term "house" and so that the exclusion of a 'single dwelling" from the definition of "flat" in section 3 of the Act did not apply. The term "house" must in the absence of a statutory definition be given its ordinary meaning. There is no basis upon which the New House, architect designed and costing in excess of $1m and situate some distance from the Old House is not a house, and thus a single dwelling, and so excluded from the definition of "flat". 33 It is convenient next to deal with the position at 6 August 2005 and being the date on which the Applicants took occupation of the New House and (presumably) Catriona and her husband took occupation of the Old House. From that time onwards Redgum and Gunyah were undivided in some respects (title and physical separation) but it cannot be said that they were undivided as to use and occupation. This is so because Catriona and her husband were and are in occupation of and used and use the Old House, and notwithstanding the fact that the Applicants retain some residual access storage and rights. Catriona is not a dependent; (this no doubt is the reason why clause 12 of schedule 1A to the Act was included in the provisions of the Act included by the Respondent in his written submissions). Of courser the Tribunal is concerned for the purposes of this decision, with the relevant year, which requires it to have regard to the position as at the relevant taxing date. 34 The intentions of the Applicants at the relevant taxing date and as regards the Old House and in other words as to how it would or might be dealt with in the future are not relevant. The Tribunal refers in this regard to Commissioner of State Revenue v Applewood Residential Developments [2005] VSC 232;.Hansen J said in clauses 46 to 49: 46 The Senior Member also erred in his treatment of the word "purpose" which appears in s 9(1)(j) and s 9(2AA). Ultimately, he conflated "purpose" with "used and occupied". His starting point appears to have been that, because the land is destined to become a single retirement village the whole of the land "has no purpose or was not used for any purpose other than a retirement village". However, he used the word "purpose" in a loose sense, akin to stating the landowner's intention, which is irrelevant to the exemption provision which is concerned with the nature of the actual use and occupation at a particular time. Following the statement about purpose, and without further explanation, the Senior Member concluded that the part of the disputed land on which buildings were under construction "is being used as a retirement village and is ancillary to that part of the retirement village which is presently being occupied by retired persons. That is, it is part of the whole development" . He then said that the same applies to the "vacant land" in that it is "part of the entire complex and ancillary to that complex". Leaving aside for the moment the concept of the land being "occupied", the Senior Member appears to have used the "purpose" which he identified to found the statement that the disputed land is "ancillary" to and is being "used as a retirement village". This approach was incorrect. 47 How then is "purpose" to be understood in s 9(1)(j)? The fact that "land is used and occupied as a retirement village" is necessary - but not sufficient – to satisfy the terms of s 9(1)(j). The taxpayer must also show that the land is used "for no other purpose", taking account in this respect of s 9(2AA) which provides that land is not used for another purpose simply because any building or improvement on the land is used for a purpose ancillary to that of a retirement village. That is, s 9(2AA) is to be read with s 9(1)(j) and applied where appropriate. The process involved is one of characterisation of the use and occupation of the subject land. The exemption will be applicable if the proper characterisation is that the subject land is used and occupied as a retirement village and for no other purpose. Hence, a decision that the exemption is applicable involves a finding (for this purpose invoking, if necessary, s 9(2AA)) that at the relevant time the use and occupation of the subject land is for the purpose only of a retirement village. 48 In effect, the Tribunal jumped from a general conclusion as to the disputed land having "no other purpose" to a specific conclusion that, at the relevant time, the disputed land was used and occupied as a retirement village. This is an example of "using the negative to prove the positive" to which the Commissioner referred. I further accept the Commissioner's submission (at [31(c)] above) that the reasoning in the cited passage in Burwood Terrace was erroneous, and I conclude that the Senior Member made a similar error. The correct approach was to ask whether, at the relevant time, the disputed land was used and occupied as a retirement village and for no other purpose. If it was not so used and occupied, the matter was at an end as the exemption could never apply. 49 On the facts, it was not open to the Tribunal to conclude that the disputed land was used and occupied as a retirement village. Section 9(2AA), which only goes to the "no other purpose" aspect of s 9(1)(j), was irrelevant because the provision presupposes that the land in question is "used and occupied as a retirement village". 35 In much the same context the Tribunal refers to McMillan v Commissioner of Land Tax [1972] 1 NSWLR 545, a judgment of Isaacs J and where His Honour referred to a statement by Sir William Cullen (in Patullo v Municipality of Condobolin [1918] 18 S.R. (N.S.W.) 297) and cited by Isaacs J at page 555 as follows: "It is contended on behalf of the Council that the effect of the subdivision of the land although it had not been effectuated by actual sale in regard to them on a deposited plan coupled with the intention of the owners to dispose of them in separate lots was to make each of them a separate parcel or a parcel separately held within the meaning of s. 136. Now to begin with I cannot see how the intention to sell can affect the matter…If the purchaser bought several contiguous lots and wither left them as they stood or enclosed them in a ring fence and held so, it seems to me impossible to say that he would hold three separate parcels. The parcels would not be separated in title; they would not be separated by physical severance or by use or by occupation" 36 It may be noted in this context that the Tribunal was referred to the decision of this Tribunal in Timbs v Chief Commissioner of State Revenue [2005] NSWADT 173; reference to it has been omitted because it is under appeal by the Appeal Panel of the Tribunal. 37 Applewood's case was concerned with the corresponding legislation in Victoria (and which differs from the legislation in New South Wales) and with a retirement village development in progress... It is relevant however in that Hansen J found in specific terms that in the Tribunal decision which had been appealed the Senior Member 'conflated purpose with used and occupied". Part D Conclusions and decision 38 The attention of the Tribunal was drawn to the fact that the Applicants received the principal place of residence exemption for both of Gunyah and Redgum in respect of the 2004 land tax year even though at 31 December 2003, (and which was the taxing date for the 2004 land tax year) the subdivision had been registered and plans for the New House had been passed. The Tribunal considers that the exemption was correctly granted. On 31 December 2003 all of the Ryan tests were satisfied. Gunyah and Redgum were not physically separate and they were also not divided as to use occupation or title. Construction of the New House had not commenced (and it was not to commence until May 2004) and so that it can be said that at that date the use of Gunyah and Redgum was not divided in that they were used together and in the same way as they were used prior to the subdivision. The intentions of the Applicants as to the New House were at that date in no way relevant in respect of use prior to commencement of construction. 39 On the relevant taxing date however the use of Gunyah had altered to a marked extent. On that date construction of the New House had been in progress for some 7 to 8 months and had reached the significant stage previously described. 40 It was held in Ryan that title was divided because in the case of one lot Mr Ryan was the owner while Mr and Mrs Ryan were the owners of the other. This suggests that the tests must be complied with precisely. 41 The evidence before the Tribunal as to the position of Gunyah as at the relevant taxing date was in some respects sparse. There was evidence in somewhat broad terms as to the stage which had been reached in respect of the construction of the New House. There was also evidence that the area of the New House is 12.83% of the area of Gunyah. There was no evidence as to how much had been spent on the New House at that stage and how much was required to complete the New House. There were no photographs of Gunyah or the New House at that time although it is accepted that perhaps none were taken. There was some little evidence (largely inferential) as to the extent to which Gunyah was being used for recreational purposes at that date. On that date then it may be said that there was a dual use of Gunyah in that it was being used for recreational purposes and it was also (importantly) being used in respect of the construction of the New House and which for the reasons set out previously, could not be treated as exempt within the granny flat provisions. This being so use as at the relevant taxing date was divided and so that this Ryan test was not satisfied. 42 During the course of the hearing Mr. Free referred to the "dominance" of the construction of the New House. The Tribunal considers that what was meant by this submission is that where there are two (or more) uses it is necessary to have regard to that use which is dominant. As to whether at that date the construction of the New House was dominant is not clear. The Tribunal knows only that construction commenced in May 2004 and that it was completed at some time after 6 August 2005 although the fact that occupation was taken on that date suggests that it must have been nearly complete. It is conceivable, but this is not certain, that construction had passed the half-way stage. It cannot be doubted that the construction of the New House was, at the very least a significant use. (It must also be remembered that in these proceedings the Applicants bear the onus.) 43 So far as the Tribunal is aware there is no relevant statutory or case law reference to "dominance" or "dominant" in this context. It is conceivable that having regard to Ryan it is necessary the Gunyah was used at the relevant taxing date exclusively in one manner only and that is in conjunction with the use of Redgum in the manner applicable prior to subdivision. Such a view is to some extent consistent with the grant of the exemption for both Gunyah and Redgum in respect of the 2004 land tax year since even though construction of the New House was intended at 31 December 2003, it had not then commenced. On that date use was not divided. 44 Mr Free submitted that the matter may be one of fact and degree. If that submission is correct it seems likely that it will not be easy to ascertain where to draw the line. Assume by way of hypothesis that on the relevant taxing date construction had just commenced and so that had been some little building activity. It may be that on a "de minimis" basis that small activity could be ignored. But assuming that it is possible to ignore construction of so minor a nature a "dominant" concept might require consideration of the extent to which construction had progressed. The Tribunal does not think it likely, in the light of Ryan, that "dominance" is the correct approach. It is necessary always to go back to basics and in this matter the basics are found in the tests laid down by Ryan. If it is possible on a de minimis basis to ignore some small element of construction it is not possible to so regard the significant stage which the New House had reached at the relevant taxing date. On this basis also the use test was not satisfied at the relevant taxing date even though the other Ryan tests were then satisfied. 45 The result is that at the relevant taxing date Gunyah and Redgum did not constitute a parcel of residential land and the exemption in respect of Gunyah was correctly refused. This being so the decision under review is affirmed. 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