Konchalowsky v Chief Commissioner of State Revenue [2006] NSWADT 99

CITATION: Konchalowsky v Chief Commissioner of State Revenue [2006] NSWADT 99

DIVISION: General Division

APPLICANT PARTIES: Natalie Maree Konchalowsky RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 053106

HEARING DATES: 28/10/05

SUBMISSIONS CLOSED: 10/28/2005

DATE OF DECISION: 04/06/2006

BEFORE: Hole M - Judicial Member

CATCHWORDS: first home owners grant - reversal of original decision - First Home Owners Grant Act - first home owners grant - reversal of original decision

MATTER FOR DECISION: Principal matter

LEGISLATION CITED : Duties Act 1997 First Home Owners Grant Act 2000

Bates v Chief Commissioner of State Revenue [2004] NSW ADT 13 CASES CITED: Scurry v Chief Commissioner of State Revenue [2006] NSWADT 29 Snow v Chief Commissioner of State Revenue (No 2) [2005] NSWADT 278

APPLICANT In person REPRESENTATION: RESPONDENT S Benjamin, solicitor

ORDERS: That the decision of the Chief Commissioner of State Revenue is confirmed.

REASONS FOR DECISION Facts 1 The applicant has applied for a review of the decision of the Chief Commissioner of State Revenue to recall the First Home Owner's Grant ("the Grant") application no 053106 and revoke the First Home Plus stamp duty concession ("the concession") application no 056034 in respect of her purchase of a home unit at Cronulla ("the property"). The applicant's brother was a joint purchaser, he has not applied for a review of the Chief Commissioner of State Revenue's decision. Circumstances 2 The circumstances of each application are identical. 3 Contracts for Sale were exchanged whereby the applicant agreed to purchase the property, together with her brother Peter, and the purchase was settled on 1 November 2002. The applicant moved into the property on 1 November 2002 together with another person. On her account the applicant had the intention to live there permanently as the applicant had not previously lived away from her parent's home. The applicant was a full time student of nursing at Sydney University. 4 The applicant found that she had not properly anticipated the cost associated with living away from her parent's home. She found that although she was employed in two part time jobs, 7 days a week whilst attending university it was a struggle. She became very anxious about her financial situation and due to his similar impecuniosity her brother (partner in ownership of the property) was unable to assist. 5 The applicant's health began to suffer, as did her University marks and she decided to return to her parents home on 17 December 2002. A Management Agency Agreement was entered into between the applicant and a real estate agent on 17 December 2002 to rent the property out. 6 In response to a compliance letter received by the applicant from the Office of State Revenue the applicant provided a statutory declaration sworn on 13 May 2004 that she had commenced her residency on 1 November 2002 as at 13 May 2004. The area provided on the form to disclose when the residency ceased or if the residency was continuing by showing "ongoing" was not filled in, although the applicant had left the property on 17 December 2002. 7 The Office of State Revenue requested the applicant to supply further evidence of her residency by letter dated 7 December 2004. Suggested evidence being: "Documentary evidence indicating you resided in the subject property as your principal place of residence from 1 November 2002 to 17 December 2002. This evidence should include, but is not limited to, the following: Invoice for removal of furniture and possessions from Caringbah property to Cronulla Invoice for further removal after you vacated the Cronulla property and moved back to Caringbah Documents concerning any new furniture and whitegood items purchased and delivered to the Cronulla property Copy of home contents insurance policy for the contents of your home during the time of your occupation Evidence of change and the date of change of address for the RTA Evidence of change and the date of change of address for the Electoral Office. Please send a copy of the enrolment acknowledgment card issued to you by the Electoral Office. Any other documentary evidence that may assist your claim." The applicant responded to this on 9 December 2004 disclosing: "Further to your conversation, the requested documentary evidence cannot be supplied to you due to the following reasons: The removal of my furniture was carried out by my brothers and father, I did not require professional removals assistance Once again with moving back to Caringbah my brothers and father assisted me once again. My furniture was basically good will, all cooking utensils and cookware was supplied by my mother, the lounge suite I used was given to me by a friend along with my fridge and my bed was purchased at least two years prior to moving into the property. As you can imagine from the above mentioned array of charity furniture I believed contents insurance was unnecessary not to mention the cost involved was something that was not attainable to me at that time of financial hardship. I did not have a car to use for a majority of the time of my residence and therefore did not change my details with the RTA. I was worried that any important information sent by mail to the Parramatta address such as electoral information may be lost, stolen or accidentally put into another mailbox situated very closely to mine by mistake, for this reason my mother suggested I have my mail continue to come to her address – 59 Wentworth Street Caringbah 2229. Once a week I collected my mail from her house." 8 The applicant gave oral evidence supporting the written material that she had supplied. She described the dilemma that she had found herself in and that she thought that she was required to live at the property "which didn't work out unfortunately". 9 In evidence, the applicant referred to her mail being lost and that the only proof that she had was the electricity bill which she had paid as soon as she had received it. The electricity had been connected to the property in her name and being of the address of the property. She also gave evidence that she dined during the period at her mother's occasionally as it was cheaper to eat there as a single person, noting that she found it better to live at (i.e. her parents' home). 10 Other than: the electricity bill referred to above, a reference letter given by a friend (previous employer) who has known her since October 2002 who alluded to discussion between the applicant and herself to the effect that "Natalie discussed with me the idea of moving back home to her parents as an answer to help her financial situation", a reference letter from a person who says that he was "living with Natalie at her residence (the property) … from 1st of November through to the 17th December.", and the written comments referred to in her letter dated 9 December 2004, the applicant did not provide any further evidence or call any witness to support her application. 11 Following the recall of the Grant together with a requirement to pay a 20% penalty and the requirement to repay the stamp duty concession together with interest on 25 August 2004, the applicant lodged an objection on 20 October 2004. This objection was partly allowed by the Chief Commissioner of State Revenue in that the penalty was waived. Legislation 12 The relevant legislation in this matter is Sections 7, 12 and 28 First Home Owner Grant Act 2000 ("the Act") in respect of the Grant and Section 76 of the Duties Act 1997 ("Duties Act") in respect of the stamp duty concession: " First Home Owner Grant Act 2000: Section 7 - Entitlement to grant (1) A first home owner grant is payable on an application under this Act if: (a) the applicant or, if there are 2 or more of them, each of the applicants complies with the eligibility criteria, and (b) the transaction for which the grant is sought: (i) is an eligible transaction, and (ii) has been completed. (2) Despite subsection (1) (a), an applicant need not comply with the eligibility criteria to the extent the applicant is exempted from compliance by section 9 (2) or 12 (2) or both. (3) Despite subsection (1) (b), a first home owner grant is payable before completion of the relevant eligible transaction, as authorised by section 20. (4) Only one first home owner grant is payable for the same eligible transaction." and "Section 12 – Criterion 5 – Residence requirement (Provisions relevant until 31 Dec. 2003) (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." and "Section 28 Reviews by Administrative Decisions Tribunal … (1) The applicant has the onus of proving the applicant's case in an application for review. …" and "Duties Act 1997 76 Residence requirement (1) The home must be occupied by the person or persons who are acquiring it as a principal place of residence for a continuous period of at least 6 months, with that occupation starting within 12 months (or such longer period as the Chief Commissioner may approve) after completion of the agreement or transfer. This requirement is referred to as "the residence requirement". (2) The Chief Commissioner may, if satisfied there are good reasons to do so in a particular case: (a) modify the residence requirement by approving a shorter period of occupation by the person or persons, or (b) exempt the person or persons from the requirement to comply with the residence requirement. (3) In the case of an agreement or transfer for the acquisition of a vacant block of residential land, it is sufficient that the Chief Commissioner is satisfied that the vacant block is intended to be used as the site of a home to be occupied by the person or persons who are acquiring it as their principal place of residence. (4) The residence requirement does not apply to a person who acquires an interest in the property concerned solely for the purpose of assisting the eligible persons under the scheme in financing the acquisition. (5) For the purpose of this section, an agreement or transfer is "completed" when a purchaser or transferee becomes entitled to possession of the home and, if the interest in the land acquired by the purchaser or transferee is registrable under a law of the State, the interest is so registered. (6) (Repealed)." Applicant's submissions 13 The applicant submitted that she purchased the property with the intention of occupying the property as her principal place of residence and living permanently there. She had moved an array of furniture given to her into the property and had found that the cost of living there was more stressful than when she had been at home. Due to the financial situation her health and studies were suffering and that it was necessary for her to move back to her parents. The applicant gave oral evidence which supported her written comments. She did not provide any evidence other than as set out at paragraphs 7, 8, 9 and 10. 14 The applicant noted that she had repaid the Grant and the concession together with interest other than $124.11. Respondent's submissions First Home Owners Grant 15 The respondent's representative submitted that although the applicant had taken possession of the property on settlement of the purchase she had not provided sufficient evidence to support her contention that the property had become her principal place of residence. That the applicant bore the onus of proof that pursuant to Section 28(3) of the Act on the balance of probabilities she had to establish that the contention that the property became her principal place of residence, and she had not done so. 16 The respondent's representative submitted that the applicant had not changed her address on her licence, the electoral roll or for any other purpose other than that of the connection of the electricity and that she had been preparing the property for letting. 17 The respondent's representative submitted that the Office of State Revenue had considered the applicant's objections. The Office of State Revenue had taken the view that although the applicant had the intention to occupy the residence as her principal place of residence, she had not proven that she had done so however, she had assumed that she had met the criteria. Accordingly the Office of State Revenue had waived the 20% penalty taking into account the applicant's erroneous assumption. 18 The respondent's representative also submitted that the applicant's stay at the property did not demonstrate a degree of permanence or substantial connection with the property. The concession 19 The respondent's representative submitted that the Tribunal does not have jurisdiction to consider an application for review of the Chief Commissioner of State Revenue's decision concerning the decision and that, at the time of hearing, this issue had been considered in Snow v Chief Commissioner of State Revenue (No 2) [2005] NSWADT 278 and Scurry v Chief Commissioner of State Revenue [2006] NSWADT 29 which had been reserved. The decisions in both matters have now been given which support the jurisdiction of the Tribunal to adjudicate on the concession. 20 The concession provided is subject to the applicant complying with the requirement of Section 76 of the Duties Act. That is the residence requirement, being that the applicant does occupy the property for a continuous period of at least 6 months as the applicant's principal place of residence. The applicant must have intended to occupy the property as the applicant's principal place of residence as set out in Section 76A of the Duties Act. 21 The respondent's representative submitted that the onus of proof of residence remains with the applicant, and that this has been supported by the decision in Bates v Chief Commissioner of State Revenue [2004] NSW ADT 13. Reasons for decision 22 The circumstances are not dissimilar to those in Bates, although Ms Bates occupied her property for a period of approximately three (3) months. The test is not whether an applicant occupied the property, the test is as set out in Section 12 of the Act and Section 76 of the Duties Act in that the property must be occupied as a principal place of residence. The period required for the Grant (in respect of pre 31 December 2003 situations) is indeterminate and in respect of the concession is six (6) months. This was considered at length in Bates, where S Higgins JM commented at paragraph 31: "However, the critical issue is whether this satisfies the requirement in s.12(1) that she "occupied" the property as her "principal place of residence". The Act contains no definition of these terms and guidance must be obtained from the ordinary meaning of those words, the context in which those words are used and the meaning attributed to those words by other case law." For the same reasons set out at paragraphs 32 to 39 inclusively in Bates and taking into consideration the evidence provided by the applicant, in my opinion, it has not been established that the applicant met the residential requirements of either the Act or Duties Act. The applicant resided at her parents as her principal place of residence immediately prior to the period that she spent at the property, she returned to her parents home when it became financially unviable for her to continue at the property. During the period that she spent at the property her principal place of residence remained that of her parents' home. 23 The Chief Commissioner of State Revenue accepted the applicant's submissions made prior to this application and in consideration thereof waived the penalty sought on repayment of the Grant. The Chief Commissioner of State Revenue's reasoning being that the applicant had assumed incorrectly that holding control of the property equated to it becoming her principal place of residence. Therefore, the applicant has not been required to pay a penalty. The Grant has been repaid. The Chief Commissioner of State Revenue had also taken into account that the applicant was co-operative and honest. 24 The Chief Commissioner of State Revenue recalled the concession and required interest to be paid on the concession amount that the applicant had the use of for approximately two (2) years. The interest components do not include a penalty rate, the components are the market rate together with a premium rate. The concession has been repaid together with the interest charged other than the sum of $124.11 which remained outstanding at the date of the hearing. 25 The applicant expressed her intention to reside in the property and, due to the affect on her financial circumstances, study and health was unable to realise her intention. The reasons for the applicant not being able to take up the occupation of the property as her principal place of residence were not entirely out of her control and she has not established that the property became her principal place of residence during the time that she spent at the property. 26 For the above reasons the decision of the Chief Commissioner of State Revenue to recall the Grant and the concession (together with interest) on the basis that the applicant had not satisfied the residency requirements was correctly made. ORDER That the decision of the Chief Commissioner of State Revenue is confirmed.