Deveney v Chief Commissioner of State Revenue [2006] NSWADT 87

CITATION: Deveney v Chief Commissioner of State Revenue [2006] NSWADT 87

DIVISION: Revenue Division

APPLICANT PARTIES: Denise Marilyn Deveney RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 056084

HEARING DATES: 12/12/2005

SUBMISSIONS CLOSED: 12/12/2005

DATE OF DECISION: 03/24/2006

BEFORE: Hole M - Judicial Member

CATCHWORDS: First Home Owners grant - approval of application

MATTER FOR DECISION: Principal matter

LEGISLATION CITED : First Home Owner Grant Act 2000

APPLICANT In person REPRESENTATION: RESPONDENT S Benjamin, solicitor

ORDERS: The refusal to grant the First Home Owner Grant to the applicant is affirmed.

REASONS FOR DECISION FACTS 1 This is an application by the applicant to review the decision of the Chief Commissioner of State Revenue to refuse to grant the First Home Owners Grant ("the Grant") to her on her purchase of a share in a property at Oak Flats ("the property"). 2 The applicant sought to obtain an interest in a property to call her home. Due to financial restrictions she was limited as to the amount she could borrow and had been unable to purchase a home independently. 3 The owner of the property agreed to sell a 50% share to the applicant. The property consisted of a large block of land upon which was constructed a three (3) bedroom brick veneer home. The sale was to be on the basis that the existing owner and the applicant would obtain sufficient finance to enable work to be undertaken to convert the home into a dual occupancy which would then be converted into strata title. The end result to be that they would each own their own home. 4 The owner of the property and the applicant, after obtaining independent legal advice, agreed to proceed. The advice related to the initial purchase, finance and strata title, it did not specifically address eligibility for the Grant. The applicant was advised that she may be eligible for the Grant. When she had satisfied herself that she would be entitled to the Grant (after reading information from the Office of State Revenue) because she had not invested previously in property she proceeded with the investment in the property. The purchase was completed on 15 June 2004. 5 An architect was engaged to provide plans to extend the brick veneer home and to "strata title two (2) dwellings". Two separate mortgages for equal amounts were sought to finance the estimated cost of additions, these mortgages were between the owner as mortgagor and the applicant as mortgagor and the same funding mortgagee. The funding mortgagee was the same organisation that had provided finance to the applicant to permit her to purchase the 50% initial interest in the property 6 The document supplied to the Tribunal by the applicant from the mortgagee does not disclose that there were two (2) separate mortgages. The applicant understood that the mortgage would be in the form of two (2) individual loans after completion of the construction work and strata titling. 7 Due to illness the applicant was unable to proceed with the project and the development and funding mortgages were placed on hold until the applicant was able to return to full time work. 8 The applicant has not sought legal advice or assistance for the purpose of this application. 9 On 15 March 2005 the applicant applied for the Grant. The Grant was refused by the Chief Commissioner of State Revenue on 5 April 2005. The refusal was based on Section 15 of the First Home Owner Grant Act 2000 ("the Act") and the fact that the owner of the property prior to the applicant's purchase had held a relevant interest in residential property prior to 1 July 2000. The owner had owned a 50% interest in the property from 9 January 1990 and then 100% from March 2004. There is no relevant issue as to any relationship between the owner and the applicant. 10 The applicant was put in touch with the owner at a time when the owner was seeking a venture partner to purchase a 50% interest in the property as Tenant in Common. 11 The application made by the applicant on 15 March 2005 in the form of a declaration correctly disclosed that two (2) people would have a relevant interest in the property. The ownership's history of the property obtained from the Office of State Revenue at the time of the application disclosed that the owner had held an interest in the property from 9 January 1990. 12 The applicant and the owner were relying on each others co-operation and good faith to enable the venture to proceed. There is no formal documentation. The applicant found that the cost of the anticipated "legals and stamp duty" were 'frightening' and as a result had decided to complete the venture in one hit. Applicable legislation 13 Section 15 of the Act states: "All interested persons to join in application All interested persons must be applicants. (1) An "interested person" is a person who is, or will be, on the completion of the eligible transaction to which the application relates, an owner of the relevant home but does not include the following persons: (a) a person who is excluded from the application of this section by the Chief commissioner because the Chief Commissioner has recognised the interest of another person to be a non-conforming interest under section 5 (4), (b) in the case of a home being purchased or built under a multiple occupancy contract, a purchaser of another home under the contract or party to the contract for whom another home is being built under the contract, and who does not, on the completion of the contract, acquire any entitlement to occupy the home that is the subject of the application, …" 14 Section 15 provides that all interested persons must be applicants and that an interested person includes any person who will be an owner of the relevant home. The owner of the other share in the property is deemed to be an interest person and thus is necessarily an applicant for the Grant. The exclusions from this as set out at Section 15(2) (a) and (b) do not apply to the present situation. 15 Section 5(4) states: "Ownership of land and homes (4) The Chief Commissioner may recognise an interest (a "non-conforming interest") as a relevant interest in land even though the interest may not conform with the above provisions (and even though the interest may not be recognised at law or in equity as an interest in land) if there is, in the Chief Commissioner's opinion, good reason to do so." 16 Section 5(4) permits the Chief Commissioner to recognise an interest for the purposes of considering a request to provide the Grant where there is non conformity with the provisions. In this present situation where the interest is a share as tenant in common, it is not an interest that does not conform with the description of an interest in land. 17 Section 11 Criteria 4 states: "(1) An applicant for a first homeowner grant is ineligible for the grant if the applicant or the applicant's spouse has, before 1 July 2000, held: (a) a relevant interest in residential property in New South Wales, or (b) an interest in residential property in another State or a Territory that is a relevant interest under the corresponding law of that State or Territory." 18 Section 11 Criteria 4 does not preclude the applicant in this matter from obtaining the Grant by virtue of reference to "or applicant's spouse". This criteria is directed to where an applicant albeit deemed an applicant by virtue of Section 15 held a relevant interest prior to 1 July 2000. Applicant's submissions 19 The applicant submitted that her purchase was to enable her and her family to have a home. That they had encountered difficulties with the Local Council in respect of various issues including drainage and that she had not anticipated all the complications. Further that as the owner was neither her spouse nor de facto partner that the Grant should be available to her. 20 The applicant submitted that the Act discriminates against single persons by way of the definition of applicant in Section 15. 21 The applicant moved into the property after purchase and it is her principal place of residence. 22 The transfer to the applicant of 50% share in the property dated 27 May 2004 was expressed to be from the owner referred to herein to the applicant for $167,500.00. It was stamped on the dutiable amount of $172,500.00 and the full duty paid. 23 The applicant submitted that she had bought the 50% from a third person and not the owner, therefore the owner should not be equated to an applicant. That her intention to construct a separate strata title unit to be held solely in her name would attract the application of Section 15(b) of the Act. Respondent's submissions 24 The representative of the respondent submitted that upon application of the provisions of the Act to the facts the applicant was not entitled to the Grant. That by virtue of the definition of an "interested person" set out in Section 15(2), the owner needed to be an applicant. 25 An applicant for a Grant (which included the owner pursuant to Section 15(2)) is precluded from obtaining a Grant if the applicant had held a relevant interest in residential property (not necessarily the property) prior to 1 July 2000. Thus because the applicant for the Grant (which included the owner) was precluded from obtaining the grant by virtue of the previous ownership, the applicant in this matter was also precluded. Decision 26 The applicant honestly and genuinely intended to purchase the interest in the property, to proceed with the joint venture and reside in the resultant strata unit as her principal place of residence. If the venture had proceeded to the stage where she had been able to contract to purchase the separate unit when completed then she may have been eligible for the Grant. 27 By virtue of the combined effect of the provisions of Section 15(1) and (2) and Section 11 Criteria 4, the applicant cannot be considered to be eligible for the Grant. ORDER The refusal to grant the First Home Owner Grant to the applicant is affirmed.