CITATION: Morris and anor v Chief Commissioner of State Revenue [2007] NSWADT 110 DIVISION: Revenue Division APPLICANTS PARTIES: Nigel Adrian Morris & Claire Morris RESPONDENT Chief Commissioner of State Revenue FILE NUMBER: 066076 HEARING DATES: 16 May 2007 SUBMISSIONS CLOSED: 16 May 2007 DATE OF DECISION: 22 May 2007 BEFORE: Block J - ADCJ (Judicial Member) CATCHWORDS: Duties Act - First Home Plus Scheme - residence requirement - First Home Owners grant - reversal by administrator MATTER FOR DECISION: Principal matter Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Duties Act 1997 First Home Owner Grant Act 2000 Taxation Administration Act 1996 Bates v Chief Commissioner of State Revenue [2004] NSWADT 13 CASES CITED: Drake and Minister for Immigration and Ethic Affairs (No.2) (1979) 2 ALD 634 Federal Commissioner of Taxation v G.M. Swift and others 89 ATC 5101 Powles & anor v Chief Commissioner of State Revenue [2006] NSWADT 156 APPLICANTS N Morris in person REPRESENTATION: RESPONDENT S Benjamin, solicitor ORDERS: The decision under review is affirmed REASONS FOR DECISION Part A Preliminary and introduction 1 The Respondent seeks the reversal of a grant paid to the Applicants under the First Home Owner Grant Act 2000 ("the Act") and also the reversal of the related stamp duty concession allowed in respect of the duty which would otherwise have been payable under the Duties Act 1997. Those two applications for reversal constitute the decision under review by the Tribunal. 2 The Tribunal had before it the documents lodged pursuant to section 58 of the Administrative Decisions Tribunal Act 1997 (referred to as the "section 58 documents") and in addition a document tendered by Mr Benjamin entitled "Statement of Reasons for Decision" (additional to the statement of reasons forming part of the 58 documents) and constituting in fact submissions by the Respondent (and referred to as the "Respondent's submissions. The Tribunal also accepted into evidence as exhibit R1 a bundle of documents and including the original application under the First Home Owner Grant Scheme (referred to in these reasons as the "grant application"). 3 It is relevant to note that the application for review of the relevant decision was brought by Mr Morris alone although it should have been brought by both Applicants, given that it is they who received the grant and the concession and the fact that the property in question is owned by them as joint tenants. An application to join Mrs Morris as an Applicant was, at the suggestion of the Tribunal made, and with Mr Benjamin's consent, granted. 4 The case for the Applicants was conducted by Mr Morris alone and the term "Applicant" in the singular refers to him, unless the context expressly otherwise requires, alone, while a reference to "Mrs Morris" should be construed as a reference to Mrs. Claire Morris who is the other Applicant, and who was joined as an Applicant as set out previously in these reasons. 5 This application was originally, and on 26 July 2006 listed for hearing on 18 September 2006. It was on that date postponed and listed for hearing on 13 February 2007. On that first date i.e.18 September 2006, the Tribunal gave directions that written statements and submissions be filed by the end of 2006. (The listing sheet dated 18 September 2006 is silent as to the reasons why the matter was then postponed but to the best of the Tribunal's recollection it arose from the desire of the Applicants to seek legal representation.) The Applicants did not either by that date or thereafter file any written statements or submissions. The matter was then again postponed, at the request of the Applicants, and because the Applicant wished to undertake a business trip overseas, and the matter was eventually heard on 16 May 2007. The Applicant was asked why the Applicants had not complied with the directions given by the Tribunal in September 2006; he replied that he had hoped to have pro bono representation by a barrister but was "let down" by that barrister. He subsequently said that he had been "let down" by two barristers. As to why this should have prevented the Applicants from compliance with the directions is not clear. Although the Applicant has limited formal academic qualifications he has a senior position with BP Solar and he handled the hearing articulately and with some ability, and in the opinion of the Tribunal with more ability than most self-represented applicants are able to demonstrate. To produce the documents directed was a task which was well within his capabilities. 6 The documentary evidence before the Tribunal consists to a large extent of the section 58 documents; page references should be construed as references to numbered pages in the section 58 documents. 7 The basic facts are adequately set out under the head of "Relevant Facts of the Case" in the Respondent's submissions and it is convenient to reproduce that content under this head as follows: Relevant Facts of the Case Mr Nigel Morris and Mrs Claire Morris lodged an application on 6 May 2004 for a grant of $7,000 under the First Home Owner Grant Act 2000 (the Act), also known as the First Home Grant Scheme (the Scheme). The application lodged was in respect of a property at 7 Lorraine Street, Charlestown NSW 2290 (referred to as the grant property). The application disclosed that: 1. the current residential address of the applicant being 28 Farnell Street, Curl Curl, NSW 2096; 2. the property for which the applicants sought the grant is known as 7 Lorraine Street, Charlestown NSW 2290; 3. the contract of sale was dated 4 March 2004. The settlement took place on 3 May 2004. The consideration was $260,000. The payment of $7,000 was made on 7 May 2004. On 14 May 2004 the ownership was registered with the Land Titles Office. Through an audit program conducted by the Office of State Revenue (OSR) Mr & Mrs Morris were sent a Statutory Declaration to verify if they had met the residency requirement. The Declaration dated 23 Dec. 2005 was returned indicating that the applicants had not taken up occupation and used the property as their principal place of residence. Based on internal investigations it was confirmed that the applicants had not fulfilled the statutory requirements and therefore they were issued two notices of assessments. They were: (a) Notice of assessment dated 12 Jan. 2006 in respect of the grant $7,000 plus penalty at the rate of 20%, $1,400, a total of $8,400; and (b) Notice of assessment dated 13 Jan. 2006 in respect of the stamp duty concession of $7,592.00 plus interest $1490.26 (as at 13 Jan. 2006). The interest component continues to accrue on a daily basis [see second part of the submission — ISSUE II] An objection dated 7 March 2006 was received from Mr Morris (on behalf of the applicants) against the two notices. The objection was disallowed and the decision was communicated to the applicant on 23 June 2006. 8 It will be noted having regard to the preceding clause that the property in respect of which the grant was made is situated at 7 Lorraine St, Charlestown which is referred to in these reasons as the "Charlestown property". The Applicants at the time of the grant resided and they still reside at 28 Farnell St, Curl Curl which is referred to as "their home" or as the "Curl Curl property". Part B The evidence of the Applicant 9 The extent to which, at the commencement of the hearing, there might be a dispute of fact was not then clear. It is in these circumstances that the hearing commenced with statements by the Applicant in answer to questions from the Tribunal. However Mr Benjamin indicated that he wished to ask the Applicant a number of questions; accordingly the Applicant took the witness stand and affirmed that all of the statements which had been made by him were true and correct, and whereafter a brief cross-examination by Mr Benjamin ensued. 10 The Applicant was educated in Adelaide where he completed year 10 in (according to his evidence) 1984 or 1985. In November 1997 the Applicant commenced employment with BP Solar which is part of the BP group, and which is referred to in these reasons as "Solar". The Applicant was at first, assistant to the accounts manager and earning approximately $45,000 per annum. The term "accounts" in this context means client accounts and not accounts in the sense that he was involved in the keeping or audit of accounts. 11 By 2002 and in consequence of promotions, the Applicant had become the national sales manager of Solar and earning approximately $75,000 per annum. He said that there had over the years been alterations in the nature of his duties. He is currently in much the same position with Sonar and is presently earning approximately $85,000 per annum. That his position must be regarded as senior is demonstrated by the fact that the hearing in February 2007 was, at the request of the Applicants, postponed to enable him to undertake a business trip overseas for Solar. 12 The Applicants at the time of the grant application lived and at this time still live in their home (which is rented by them); they have a young son and another child is expected. 13 Mrs Morris is one of the five children of Mr Paul Ginty (who is referred to in these reasons as "Mr Ginty") and who according to the Applicant was the controller of Nu-Steel Homes Newcastle Pty Limited, (referred to as "the Company"). (A subsequent name change in respect of the Company is not relevant for the purposes of these reasons.) The Applicant said that Mr Ginty was a director of the Company and might have been the only director and shareholder. His four sons were all employed by the Company, which constructed custom designed steel framed houses. The Applicant said that a steel frame differs in important respects from a timber frame. 14 The Applicant said that in the course of his employment by Solar he had obtained practical experience in the setting up of solar systems. He said that the Company operated in an area where electric power was expensive and so that solar power was attractive, and made even more so because the Company had embarked on sales into areas of the South Pacific which do not have adequate electric power infrastructure systems. Mr Ginty could not, in Newcastle, obtain an employee with experience in solar power, and he, the Applicant, was attracted by the idea of moving into the Company's employ. 15 The Applicant said that in June 2004 Solar embarked on a restructure programme which required all staff to reapply for their positions. He had no guarantee that he would be reemployed. He applied in fact for three positions and being those of regional manager Australia, manager product lines and strategic marketing manager; see pages 12 13 and 14 of the 58 documents 16 The Applicant said that although he did not ever produce a witness statement the content of such a statement could be elicited from documents contained in the 58 documents, He referred in particular to pages 24 and 32 although there are other pages to which he might also have referred. 17 Page 32 is a short statutory declaration by the Applicant dated 18 July 2006 reading as follows: Statutory Declaration I Nigel Adrian Morris, hereby declare that: At the time of applying for the First Home Owner Grant, I had full intention of moving to 7 Lorraine St Charlestown within the required period thereby meeting the requirements of the Home Owner Grant Amendment Act 2003 The evidence I have provided to support this intention (job offer to me by a Newcastle company, my wife's employment by a Newcastle company and restructuring at my. employer of the time) is an honest and true reflection of the events The evidence I have provided to support this intention (job offer to me by a Newcastle company, my wife's employment by a Newcastle company and restructuring at my. employer of the time) is an honest and true reflection of the events 18 Page 24 is in fact a letter by Sonar dated 2 February 2006 which reads as follows: February 2nd 2006 To whom it might concern Dear Sir, This letter is to confirm details and key dates regarding the history of restructuring at BP Solar and it's relevance to Nigel Morris's positions. In July 2004 a series of management decisions were taken resulting in a need to reduce staffing levels by approximately 25% at BP Solar's Sydney operation, and additional cuts in other global offices. The methodology adopted was to ask all salaried employees to re-apply for a new set of positions. Nigel Morris was included in this process and applied for 4 positions; Strategic Marketing Manager, Manager, Product Lines, Regional Manager, Australia and Distribution and Grid Manager; Australia. Some of these positions had the potential for considerably less time in the office as they were linked to global responsibilities. In discussions Nigel had also expressed his desire to work from home more often and this was factored into some of the discussions regarding his suitability for these roles. Ultimately, Nigel was retained in the role of Distribution and Grid Manager and was advised office in late 2004. His responsibilities widened to include more markets, management responsibility and a larger team which required his presence in the office. This was a very unsettling time for all salaried staff and I was aware that Nigel along with many other staff was looking at alternative employment possibilities in the event that they may not be successful in their re-applications. Nigel has spoken candidly to mean about the problem he now faces with respect to his First Home Owner Grant and we would ask for your leniency given the somewhat tenuous nature of his employment during the period in question. The Applicant said that in early 2005 he occupied his position at Solar in an acting role and that he was reappointed to that position in early February 2005. 19 The Applicant met Mrs Morris some seven years ago and they have been married for approximately 4 years. He explained that Mrs Morris is close to her family, all of whom were living in the Newcastle area and that to be reunited with them was attractive both to her and also to him. Accordingly discussions with Mr Ginty with a view to his entering the employ of the Company had been taking place for some years. He said, at an early stage of his evidence, that he had received an informal offer from Mr Ginty, although he did not specify the terms of that offer, and whether as to salary or any other relevant aspects. The precise nature of that "informal offer" was not elucidated, 20 Mrs Morris took up employment with the Company in December 2003 on a part-time basis doing administrative and clerical work. The Applicant said that Mrs Morris was able to do this work from their home and needed merely to go to Newcastle from time to time; he said that her visits would have occurred approximately once a month. Page 15 is a letter dated 23rd of December 2003 and which constitutes the Company's offer to Mrs Morris, and which reads (in part) as follows: Thank you for your application for part time employment as assistant to our customer liason officer. We take pleasure in offering you the position on the following terms: An annual salary of $18,000.00 per annum including superannuation (Based on 20 hours per week) Hours of duty, and days per week to be negotiated. Congratulations on your employment. At your earliest convenience please provide Ms. Jenny Hutton of our office with your tax details, and information concerning your superannuation fund. We look forward to you commencing the week commencing 5 January 2004 21 Reverting to the possibility of working for his father-in-law, the Applicant repeated that the discussions had been taking place for some time. He said that the decision was "tough" because he had a good job with Solar and in essence had two possible options and being either to stay with Solar or to move into his father-in-law's business. He said (at this stage of his evidence) as regards the possibility of working for the Company that there was never any discussion of salary or terms and that he never received a formal offer. The discussions in question focused on the extent to which he might be of use to the Company, more particularly because of his experience in solar power. The Applicant said that he thought that although no terms were ever discussed, his working for the Company might be possible. He drew attention to the fact that Mr Ginty lived in a large expensive house (worth about $1 million) and had two Porsche cars. The Applicant did not ever look at the books or records or accounts of the Company and made no investigations as to its financial standing or position. He assumed, having regard to Mr Ginty's lifestyle, that the concern was prosperous. However this possibility ended when the Company went into liquidation and closed its business on 9 August 2004. The Applicant said that its financial difficulties arose from misconduct by employees costing about $900,000. 22 In respect of the Charlestown property contracts were exchanged on 3 March 2004. The purchase consideration was $260,000 and a mortgage from National Australia bank ("the Bank") in an amount of $240,000 was obtained. He explained the very large size of the mortgage in relation to the purchase consideration on the basis that his father-in-law had a good relationship with the Bank. It was Mr Ginty who found the Charlestown property and who negotiated the purchase consideration. The Applicants saw it just once before exchanging contracts. He said that completion took place in May 2004 and the house was almost immediately thereafter rented to a tenant for a period of six months and at a rental of between $210 and $220 per week. He said that the tenant left after six months (and here Mr Benjamin interrupted to note that the period was 13 months) and when the Charlestown property was rented to another tenant. At some time thereafter there was an increase in the rent but the Charlestown property is a drain on the Applicants given that the mortgage payment is $1700 per month (previously $1600 per month) and the Applicants must pay rates and taxes and other outgoings, in addition to the excess of the mortgage payment over and above the rental derived. The Applicant did not produce any leases vouchers or other documents as to the financial circumstances referable to the leasing of the Charlestown property. 23 When asked why the Applicants purchased a house in Charlestown the Applicant said that it was near Newcastle. He said also that he had always wanted to work in his own business and viewed at the Company as an avenue suitable for this purpose and notwithstanding the fact that it also employed his four brothers-in-law and of course his father-in-law. 24 Reverting to the Company's difficulties and also his own position with Solar, he said that Solar commenced a restructure in June 2004 but that he had had knowledge of the forthcoming restructure for some time before it was announced. The Company loss was discovered in May 2004; it involved misappropriation of materials by several employees and which had gone on for some time; he thought that this might have occurred in consequence of the fact that the Company had businesses or divisions in five different locations in New South Wales. 25 The Applicant knew in early August 2004 that the Company could not be saved. He said that he should have advised the Respondent that the Applicants had not taken up residence in the Charlestown property but did not do so for two reasons; in the first place he thought that he might be able to perform his services to Solar working from the Charlestown property and in the second place he thought that Mr Ginty might have been able to start something else in the Newcastle area. He accepted that the Applicants did not ever occupy the Charlestown property and in addition that they did not ever advise the Respondent that they had not done so. He said also that his father-in-law is now the manager of a small resort in Port Stephens. 26 The remainder of this part B relates to the cross-examination of the Applicant. 27 Mr Benjamin drew the attention to the fact that the grant application contains a statement that occupation of the Charlestown property would be taken in April 2005. The Applicant said that he had no idea where this date came from. He said also that the handwriting (of this date in the grant application) was not his or that of his wife but agreed that the application was signed by both Applicants. 28 The Applicant was referred to pages 10 and 11 of the 58 documents and which are rental bond search results, and agreed that the first tenant stayed in the Charlestown property for a much longer period than he had first suggested. 29 The Applicant described himself as an optimist. He agreed that he did not lose his job at Solar although others did. 30 The cross-examination of the Applicant revealed that although there may have been discussions as to the Applicant becoming employed by the Company he did not ever receive a formal offer; he said moreover that he did not expect one. 31 It was put to the Applicant that he should have notified the Respondent that the Applicants had not occupied the Charlestown property; he replied that he had made "administrative errors" Part C The evidence of Mr Ginty 32 Mr Ginty is now the manager of the Colonial Ridge Resort in Soldiers Point. Although he is the manager his family has an interest (the nature of which was not disclosed) in the resort, through a family trust. 33 Mr Ginty said that he was the sole director of and shareholder in the Company. He said that it had four (not five as stated by the Applicant) divisions in Newcastle, Gosford, Port Macquarie, and Bowral and that the largest was in Newcastle. 34 Mr.Ginty had in March 2006 furnished a letter to the Respondent in support of the Applicants and reading as follows: Office of State Revenue NSW TREASURY GPO Box 4042 SYDNEY NSW 2001 7th March, 2006, Dear Sir/Madam FIRST HOME OWNERS GRANT ACT 2000 N & C MORRIS I wish to advise that I was formerly the director of Nu-Steel Homes Newcastle Pty Limited, and Ginty Management Pty Limited. The latter company acted as a management company for the building company, and employed all administration personnel. Nu-Steel Homes Newcastle Pty Limited underwent a name change in February, 2004, to Steel Builders NSW Pty Limited. Claire Morris was employed by Ginty Management Pty Limited in December, 2003. In early 2004 I entered into discussions with Nigel Morris concerning his involvement with my building company, and the integration of solar energy in new home design. It was my intention to employ Nigel in August, 2004. In May, 2004, it was determined that a number of staff had misappropriated a large sum of money over a period of 18 months thereby placing considerable strain on working capital. The matter was reported to Police. Subsequently the company was not able to present a balance sheet to the standard required to maintain Home Owner Warranty Insurance, and for that reason I closed the business on the 9th August, 2004. In the lead up to the closure I informed Nigel that I could not proceed with our arrangement, which involved him relocating his family to Newcastle. Steel Builders (NSW) Pty Limited was placed into liquidation in November, 2004. These events resulted in the loss of some 25 jobs, in Newcastle, Sydney, and Bowral, including the position held by Mrs. Morris. I am aware that the decision to purchase a home in Newcastle was based on the employment opportunity I extended to Nigel. I am also aware that it was necessary for him to re-apply for. a position with his then employer, BP solar. Fortunately he was successful, however, the extra commitment relating to the purchase of the home in Newcastle has placed a financial strain on the family. Yours faithfully 35 Mr. Ginty said that in April 2004 the Company discovered a "discrepancy in our accounting systems leading to investigations in Bowral". By May 2004 it had become apparent that the deficit was between $900,000 and $1.4 million. 36 The Company's problems were compounded by the HIH collapse and in consequence of which insurance could not be obtained unless the Company could meet minimum equity requirements. Despite the fact that Mr Ginty had (according to his evidence) other assets, those minimum requirements could not be met and the Company was placed in liquidation in August 2004 on his petition. 37 As to quite how so large a misappropriation was discovered only after it had been going on for a long period of time was not made clear. The letter by Mr. Ginty would appear to suggest that it was first discovered only in May 2004. There are other aspects of that letter which, in the light of the evidence before the Tribunal, are dubious. It states that the Company had employed Mrs. Morris; this was so but the nature of the employment was such that it did not require Mrs. Morris to leave the Curl Curl property. Insofar as it states that arrangements had been made for the employment by the Company of the Applicant and which arrangements could not be taken further because of the Company's collapse the evidence suggests otherwise. In his letter Mr. Ginty said that it was his intention in 2004 to employ the Applicant from August 2004; that this is unlikely is suggested by the evidence that by May 2004 the very large loss had been discovered; indeed the loss was of such a magnitude that it is might well have been discovered in whole or in part at an earlier date. At all events the circumstances of the Company by the early part of 2004 were such that the Applicant was clearly better off where he was and with Solar and that in fact employment by the Company was not a realistic proposition That letter sets out that liquidation took place in November 2004 but other evidence would indicate that this took place in August 2004. One aspect is abundantly clear; to employ the Applicant in August 2004 was not then realistic and in fact it had become realistic at some earlier date. Even if Mr. Ginty had such an intention (which is itself doubtful) it appears to have been unilateral since the Applicant did not speak of any corresponding binding obligation and by the middle of 2004 was plainly concerned with the retention of a suitable position with Solar. There was not then or at any other time any contract of employment between the Company and the Applicant. 38 Mr Ginty said of Mrs Morris that the Company employed by the Company in a preparatory and nominal role in the hope that she could be trained to give advice on colour schemes. He said that she came to Newcastle on the business of the Company on only three occasions altogether. His evidence made it clear that he did not regard the employment of his daughter by the Company as a matter of significance. 39 As to the Applicant, Mr Ginty spoke of the Company's interest in solar energy and its desire to become an agent to Solar for whom it had performed some work. It was in this area that he thought that the Applicant could be useful; however their discussions never reached the stage of discussion as to salary or other relevant terms. He said the money was never an issue; a formal offer was in any event not necessary within the family. (It may be noted though that Mrs Morris received a formal offer). It will be noted also that in his letter to the Respondent he said that it was his intention to employ the Applicant as from August 2004; the Applicant in his evidence did not make any mention of August 2004 as being a relevant date; indeed his evidence as to the relevance of that month is that it was the date on which the Company's business closed down. 40 In cross-examination Mr Ginty confirmed that Mrs Morris had had very little experience and that he intended that she would be trained in particular in the area of selections. 41 The cross-examination of Mr Ginty confirmed that the Company collapsed because the net worth criteria could not be met. Mr Ginty no longer has the expensive home or the Porsches all of which had to be sold. 42 Mr Ginty agreed that he encouraged the Applicants to buy the Charlestown property and said moreover that the high mortgage (in percentage terms) was obtained in part because he gave his own personal guarantee to the Bank; he went on to say that his guarantee was released after three months because a higher valuation was obtained. There was no documentary evidence before the Tribunal as to any of these aspects. Part D The law, submissions, and conclusions. 43 In respect of the Act sections 12 and 20 are particularly relevant; they read as follows: 12 Criterion 5 - Residence requirement (1) An applicant for a First Home Owner grant must: (a) commence occupation of 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 the period approved by the Chief Commissioner under this section, and (b) occupy the home as a principal place of residence for a continuous period of at least 6 months or the period approved by the Chief Commissioner under this section. (2) This requirement is referred to in this Act as the "residence requirement". (3) The Chief Commissioner may, if satisfied there are good reasons to do so, do either or both of the following: (a) approve the commencement of occupation by the applicant of the home to which the application relates as a principal place of residence more than 12 months after completion of the eligible transaction, (b) approve the occupation of the home as a principal place of residence for a period of less than 6 months. (4) The Chief Commissioner may, if satisfied there are good reasons to do so, exempt an applicant from the residence requirement. 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 for a continuous period of at least 6 months commencing 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. 44 It is clear enough that the Applicants did not ever occupy the Charlestown property either as their principal place of residence or for that matter in any way at all and it is equally clear that they did not, and in breach of section 20 (3) of the Act notify the Respondent. 45 The Applicant drew attention to a Parliamentary debate referable to the discretion (set out in section 12 (3) of the Act) which indicated that relief might be granted to a person who after taking up employment acquires a home with the aid of a grant and thereafter is forced to sell or lease the home because his employment ceases. The relevance of that line of argument is unclear in the light of the fact that the Applicant did not ever take up employment with the Company, and on the evidence before me did not ever agree to do so. On the contrary the evidence reveals that the most that could be set as to this aspect was that there were some discussions and perhaps even hopes, but which did not advance beyond that preliminary stage. 46 The Applicant in his closing submissions said that "I purchased the house opportunistically. We were unable to move there immediately". His use of the term "opportunistically" was in my view apposite in all the circumstances. It was bought at a time when the Applicant did not have employment in the Newcastle area. Nor can it be said that Mrs Morris was employed in the Newcastle area. She had a nominal job given to her by a (family) Company in the Newcastle area but which did not require her presence in the Newcastle area other than on a very occasional basis. As to why the Charlestown property has been retained in these circumstances and where the rental derived is so much less than the mortgage repayments and other outgoings is unclear. It has been leased out ever since it was purchased. It is a least possible that it is seen as an investment. The Applicant said in this context that the prospect of capital gains in Charlestown is not high. As to whether this is so is perhaps open to doubt given that Charlestown and Newcastle are only 10 minutes apart (according to the Applicant's evidence) and property values in Newcastle have risen substantially over the past years. 47 Evidence was given before the Tribunal as to the fact that there was some form of employment arrangement between the Company and the Applicant but which was frustrated by the Company's collapse. In this context, and in the written evidence before the Tribunal, the Applicants pointed to the evidence as to the employment of Mrs. Morris by the Company. However the evidence revealed that Mrs. Morris was never employed in any real or meaningful sense and that the Applicant was never employed at all. It may well be that (as set out previously) the Applicant had some hopes in this direction but they were never more than just hopes. 48 The fact that the Applicant could present no hard evidence as to the leasing of the Charlestown property is surprising. As to how a firm date for the occupation of the Charlestown property came to be inserted in the grant application in circumstances where the Applicants allegedly knew nothing of it is also difficult to understand. It must be remembered that the Charlestown property has been let from the time of its acquisition. 49 Mr Benjamin referred me in relation to the discretionary power to a recent decision by Ms M. Hole, a judicial member of this Tribunal in Powles and anor v Chief Commissioner of State Revenue [2006] NSWADT 156. Although that decision turned on the refusal of a grant rather than the reversal of a grant which had been made, the facts are similar in a number of respects. I agree, with respect with the decision of Ms Hole in Powles case, clauses 27 to 32 (excluding clause 28) of which read as follows: 27 Insofar as the decision of the Chief Commissioner is concerned relating to the refusal to exercise the discretion in Section 12(1B) the evidence has disclosed the following facts: (a) the purchase of the subject property was settled on 30 June 2003 following exchange of contracts on 24 May 2003; (b) at the time of purchase there was an existing lease due to expire on 14 November 2003; (c) the applicants lived and worked in Sydney at the time of the purchase; (d) the applicants intended to reside in the subject property as their principal place of residence, at some time in the future, after settlement of the purchase; (e) the applicants were renting their residential premises in Sydney and after settlement of the purchase they were receiving rental from the subject property; (f) the applicants' work commitments in Sydney allowed them to service the mortgage on the subject property; (g) the applicants re-let the property, after expiry of the initial lease, for a period to expire on 23 December 2004; (h) an opportunity arose in May 2004 for the applicants to commence a business in Armidale; (i) as the subject property was let through to 23 December 2004, they rented residential premises in Armidale; and (j) on an undisclosed date the applicants signed a declaration attached to an application for First Home Owner Grant which was submitted to the Chief Commissioner of State Revenue on 22 October 2004. 29 The Chief Commissioner of State Revenue has a duty to exercise the discretion having regard to the particular circumstances of the case. The material that was available to the Chief Commissioner of State Revenue at the time that the circumstances of the case were considered included all the matters as set out in paragraph 27(a) – (j) above. The information provided in the letter dated 1 February 2005 in paragraph 28 does not disclose that all of the items (a) – (j) had been considered. However, the items that are referred to disclose that having regard to those items the circumstances are not sufficiently exceptional to warrant the exercise of the discretions to allow the application after the application period (Section 14(6)) or to approve a longer period as to when the applicants' must occupy the home. 30 The applicants were aware of the First Home Owner Grant Scheme in 2001/2002 and have had the benefit of able representation by their agent who practised as a solicitor prior to retirement. 31 It is clear that the applicants did intend to reside in the subject property as their principal place of residence at some time in the future after it was purchased. As at November 2003 they had considered their options and re-let the subject property through to 23 December 2004. At the time that they re-let the property for that period of time they had made the decision, after considerable opportunity for advice and guidance, to remain living in another residence (or residences) other than the subject property until well after the 12 months period which had been selected by the legislature as a suitable period for the large majority of applicants to organise their affairs. The discretion built into the Act, to be fair and reasonable to all applicants (disadvantaged or otherwise) must be exercised bearing in mind all the implied duties and only exercised where the particular circumstances of the case warrant it. 32 The scope and purpose of the Act is expressed to be: "...to encourage and assist home ownership, and to offset the effect of the Goods and Services Tax on the acquisition of a first home, by establishing a scheme for the payment of grants to First Home Owner; to amend the StampDuties Act 1920 to exempt such grants from financial institutions duty; and for other purposes." The circumstances, in this case taking into account the scope and purpose of the Act, do not warrant exercise of either discretion. 50 In Bates v Chief Commissioner of State Revenue [2004] NSWADT 13, Ms. Higgins, also a judicial member of this Tribunal, said at para 45: "...policy and purpose is to provide first home Owner with assistance in purchasing their first home and the eligibility for such assistance is expressly stated to include a requirement that the applicant occupies the property the subject of the grant as his or her principal place of residence within twelve months of a grant. That is, the Act does not. provide assistance where an applicant fails to occupy the premises within the requisite period and rents out that property notwithstanding the applicant's intention to ultimately make the property his or her permanent place of residence". 51 Superior courts have ruled that consistency in decision making is desirable. On this basis this Tribunal should follow the decision in Powles unless satisfied that it is wrong; as set out previously the Tribunal considers that it was correct. See in particular Drake and Minister for Immigration and Ethic Affairs (No.2) (1979) 2 ALD 634 where Brennan J said. "Inconsistency is not merely inelegant: it brings the process of deciding into disrepute, suggesting an arbitrariness which is incompatible with commonly accepted notions of justice. In matters of deportation, which so profoundly affect the interests of the deportee and his family and which are of relevance to the community at large, inconsistency born of the application of differing standards and values should be reduced as far as it is possible to do so." 52 In Federal Commissioner of Taxation v G.M. Swift and others 89 ATC 5101 French J made it clear (in relation to a discretion of a similar nature) that the dispensing power is incidental and ancillary to the primary object of the legislation; he noted also that there will be a threshold beyond which the primary object of the legislation would be defeated; see page 5116 as follows: The dispensing power is incidental and ancillary to the primary object of the legislation. On the spectrum of cases in which it could conceivably be exercised, there will be a threshold beyond which it would defeat the primary object of the legislation. It is unnecessary to define that threshold for present purposes. 53 See also French J in Swift's case at page 5118 as follows: It may be said that the Tribunal's exercise of its discretion has undermined the objectives of the Act. If that be so, then it is for the legislature to consider confining the dispensing power. But the conflict between the primary purpose of collecting evaded company tax and the ancillary function of dispensation has not risen here to such a level that the primary purpose is defeated. Any dispensation under sub-s.5 (4) will necessarily undermine the primary purpose, for tax which might have been collected will not be collected. That is an inescapable consequence of the operation of Sub-s.5 (4). Its invocation by the Tribunal in this case has not, in my opinion, involved the crossing of that threshold beyond which the exercise of the discretion falls outside the scope and objects of the Act. 54 It is my view that this is not a case in which it would be proper to exercise the discretion in favour of the Applicants in respect of the grant. To do so would indeed cross the threshold referred to by French J. in Swift's case. It would also run directly counter to the decision in Powles' case which in my view, and with respect, was decided correctly. 55 There was, during the hearing, virtually no discussion as to the stamp duty concession; it is nevertheless desirable that I deal with it in brief terms. 56 The statutory provisions contained in the Duties Act as regards the duty concession are in some respects similar to those contained in the Act referable to the grant. Section 76 of the Duties Act contains the residence requirement; sections 76(1) and 76(2) of the Duties Act read as follows: 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 57 Section 76A(2) of the Duties Act contains a provision which is similar to section 20 (3) of the Act; section 76A(2) of the Duties Act reads as follows: 76A(2) If an application is approved in anticipation of compliance with the residence requirement, the approval is given 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) pay the relevant duty to the Chief Commissioner. 58 Importantly the Duties Act contains a provision to the effect that the Respondent's decision is final; section 79 of the Duties Act reads as follows: 79 Determination of applications An application is to be determined solely at the discretion of the Chief Commissioner whose decision is final. 59 The Respondent contends that the Tribunal does not have jurisdiction in respect of the duty concession on the basis that to the extent of any conflict between section 79 of the Duties Act and section 96 of the Taxation Administration Act 1996 (which confers jurisdiction generally) section 79 of the Duties Act, which is the specific provision, must prevail. It is my view that the Respondent's contention as to the effect of section 79 of the Duties Act has merit. But even if that view is not correct (and it is not necessary for me to decide the point) and the Tribunal does have jurisdiction in respect of the duty concession, the question of whether or not discretionary relief should be granted would be governed by the same principles as are applicable to the grant. Where relief in respect of the grant relief cannot be given then it is likely that the same result will follow in respect of the duty concession. Nothing whatever was said as to interest referable to the amount of the duty concession; however an interest charge in respect of an amount which should have been paid appears to me to be appropriate. 60 There was also virtually no discussion during the hearing of the penalty which was imposed in respect of the grant although the Tribunal noted that in accordance with the Respondent's statement of reasons, it was imposed at a rate of 20% which was subsequently reduced to 10%. The Tribunal considers that a penalty at the rate of 10% is neither unfair nor inappropriate. It is altogether. In accord with a number of other decisions of this Tribunal, cited by the Respondent in the Respondent's submissions, and if anything it is, when considered in the light of those decisions generous. I do not think it necessary to refer to those decisions specifically. 61 Accordingly the Tribunal determines that the decision under review should be affirmed DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.