O'Neill trading as Guardian Angel Pty Ltd v Chief Commissioner of State Revenue [2006] NSWADT 133

CITATION: O'Neill trading as Guardian Angel Pty Ltd v Chief Commissioner of State Revenue [2006] NSWADT 133 This decision has been amended. Please see the end of the decision for a list of the amendments.

DIVISION: Revenue Division

APPLICANT PARTIES: Henry Grant O'Neill trading as Guardian Angel Pty Limited RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 056082

HEARING DATES: On the papers

SUBMISSIONS CLOSED: 12/13/2005

DATE OF DECISION: 05/04/2006

BEFORE: Hole M - Judicial Member

CATCHWORDS: Land tax exemption - principal place of residence

MATTER FOR DECISION: Principal matter

Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Land Tax Management Act 1956 Taxation Administration Act 1996

Hunter Valley Development Pty Limited v Cohen (1984) 3 FCR 344 CASES CITED: Patsalis v Commissioner of Police, NSW Police (No 2) [2004] NSWADT 185 William Padget Pty Ltd and Chief Commissioner of State Revenue (No 2) [2005] NSWADT 110

APPLICANT In person REPRESENTATION: RESPONDENT P Gormly, barrister

ORDERS: 1. The time for lodgement of this application in respect of the decision made on 16 June 2005 is extended; 2. The time for lodgement of an application in respect of the decisions made on 25 September 2003 and 2 April 2004 is not extended; 3. The decision made by the Chief Commissioner of State Revenue on 16 June 2005 is confirmed.

REASONS FOR DECISION 1 The applicant is the sole director of a registered company being Guardian Angel Pty Limited ("the company"). The company is the registered proprietor of a parcel of land ("the property") at Willoughby and has been during the period from 1991 to 2005. The respondent has assessed the property for land tax for the tax years from 1991 to 2005 inclusive. 2 The application has been made for review of the decisions made by the respondent on 25 September 2003, 2 April 2004 and 16 June 2005. 3 The sole shareholder of the company is the applicant. The applicant resides in the property. Legislation 4 For the purposes of this application the following legislation is specifically relevant: - (a) Section 57 Administrative Decisions Tribunal Act 1997 ("ADTA") "57. Late applications to Tribunal (1) Despite section 55(1)(d), the Tribunal may, on application in writing by an interested person seeking to make a late application to the Tribunal, extend the time for the making by that person of an application if the Tribunal is of the opinion that the person has provided a reasonable explanation for the delay in making the application. (2) The time for making an application for a review of a reviewable decision may be extended under subsection (1) although that time has expired. (3) In this section, "late application" means an application not made within the time prescribed by the rules of the Tribunal (or prescribed by or under the enactment under which the application is made)." (b) Section 99 Taxation Administration Act 1996 ("TAA") "99 Time for making application for review (1) An application for review following a determination by the Chief Commissioner of an objection must be made not later than 60 days after the date of issue of the notice of the Chief Commissioner's determination of the objection. The court of tribunal to which the application is to be made may allow a person to apply for a review after that 60-day period. (2) An application for review following a failure of the Chief Commissioner to determine an objection within the relevant 90-day period may be made at any time after the end of that period." (c) Section 3(a)(i) and (ii) Land Tax Management Act 1956 ("LTMA"), definition of "owner" "(a) in relation to land, every person who jointly or severally, whether at law or in equity: (i) is entitled to the land for any estate of freehold in possession, or (ii) is entitled to receive, or is in receipt of , or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise, …" "(d) a person who, by virtue of this Act, is deemed to be the owner." Further, Section 3 refers to: "person" includes a company. (d) Section 7(1) Land Tax Management Act 1956 "7 Land tax on land value (1) Land tax at such rates as may be fixed by any Act is to be levied and paid on the land value of all land situated in New South Wales which is owned by taxpayers (other than land which is exempt from taxation under this Act)." (e) Section 10(1)(r) Land Tax Management Act 1956 "10 Land exempted from tax … (r) land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A, …" (f) Clause 11(1)(a) Part 4 Schedule 1A Land Tax Management Act 1956 (as inserted in 2003) "11 Exemption does not apply to land owned by companies and trustees (1) Land is not exempt from taxation under the principal place of residence exemption if: (a) the land is owned by a company, unless the land is owned by a trustee company acting in its representative capacity or a company acting in its capacity as trustee of a concessional trust, or …" The facts 5 The company is registered and one of the objects, a copy of which was supplied by the applicant at clause (e) of the company's Memorandum of Association is: - "To act at all times in a non-entity capacity, that is to say that as if the Company had no legal existence and to act at all times as if it was a registered business name but does not conduct any business and has not the contractual power to do so, the proprietor of which is Grant O'Neill (Henry Grant O'Neill) and that it actually be, by way of the force and effect of these objects, a business name owned in full by Grant O'Neill and that in that capacity or those capacities the Company's object is the protecting and preserving of the temporal welfare (and it follows the persons long term welfare that is, after the vegetative bodies can no longer be activated) of the seven members of the said O'Neill Family and such acts and duties by the Company to protect and preserve the temporal welfare of the O'Neill Family shall not either directly or indirectly or expressly or implicitly constitute or be deemed to constitute any form of ownership legally, equitably or otherwise whatsoever of any earthly chattels real or personal (which includes land and buildings) or of any intangibles of any kind including rights and franchises express or implied and specifically all the real and personal chattels of all kinds including homes which provide shelter, person peace, person development and a protective haven and the facilities within that atmosphere to carry out earthly survival and carry on day to day living procedures which includes the supply of food and medicines and such chattels real and personal which constitute working tools including land and buildings and plant and equipment to produce a basic income to supply sustenance and nourishment to the said O'Neill Family and further to all the above, the Company is stripped of and disenfranchised of all rights, power and privileges at law, statutory or otherwise, and has no power or right to own or possess any earthly property of any description or the power or the right to assume or take on any liabilities or to incur any liabilities nor to have any debts owing to it and it shall rely on its survival solely on Grant O'Neill, the principal shareholder and controlling director and its survival shall only be on the basis that it is the unpaid employee of Grant O'Neill, its survival being its only reward and that the Company be such exclusive and permanent employee for as long as any one or more of the seven members of the O'Neill Family be shareholders and or directors of the Company. Further to all the above, the Company shall at all times be seen and actually be at law an apparition or an apparency and the Company shall not go beyond being such an apparition or apparency as if the Company did not exist either materially, legally, equitably, at common law or statutorily." 6 The applicant has resided in the property for the relevant years being 1991 to 2005. 7 The respondent has issued assessments for land tax to the company care of the applicant for each of the years 1991 to 2005. 8 The applicant, on behalf of the company, has objected to the assessments over the years and has provided to the respondent voluminous material setting out the objections and submissions. 9 The applicant has indicated that he is aged 81 and is not well, suffering from permanent heart impairment which requires that he is not permitted any physical or mental stress. Evidence of the applicant's illness and medical expenses particularly in 2003 was provided by way of copy of clinical records. 10 The respondent has supplied a copy of voluminous material provided to the Office of State Revenue by the applicant in support of his various objections. Some of the correspondence forwarded to the Office of State Revenue canvasses the applicant's concern about the attitude and ability of the staff of the Office of State Revenue in vehement terms whilst reiterating the reasoning of the applicant in respect of his view that land tax is not assessable. 11 Apparently, in 1996, there were two properties which had been subject to correspondence between the applicant and the respondent. This application is in respect of one property only. 12 By letter dated 25 September 2003 the respondent advised the company care of the applicant that the objections to assessment for the land tax years 1991 to 2003 had been disallowed. This letter also advised that there was a facility to have the decision of the respondent reviewed by the Administrative Decisions Tribunal or the Supreme Court. 13 By letter dated 2 April 2004 the respondent advised the company care of the applicant that the objections to assessment for the land tax years 1991 to 2003 had been disallowed as intimated in the letter dated 25 September 2003 and that the objections in respect of the 2004 tax year had been disallowed. This letter also advised that there was a facility to have the decision of the respondent reviewed by the Administrative Decisions Tribunal or the Supreme Court. 14 By letter dated 16 June 2005 the respondent advised the company care of the applicant that the objection to assessment for the land tax year 2005 had been disallowed. This letter also advised that there was a facility to have the decision of the respondent reviewed by the Administrative Decisions Tribunal or the Supreme Court. 15 In December 2003 the respondent lodged a caveat on the property claiming an interest: "as first chargee pursuant to Section 47 of the Land Tax Management Act 1956.". The applicant objected directly to the respondent about lodgement of the caveat. 16 At the directions hearing on 6 December 2005 the applicant requested, by telephone, that the matter be decided on the papers and submissions. The applicant and the respondent were directed to file any further submissions on or before 13 December 2005. Submissions by the applicant 17 The applicant made many written submissions in relation to the status of the company, these submissions have been taken into account and include the following: (a) that the company is a 'not for profit' company; (b) that the company is wholly owned by the applicant; (c) that the powers and duties of the company set out an object of the company as for "the temporal welfare of the seven members of the said O'Neill Family"; (d) that the company is at law "an apparition" and that it is therefore a trustee only, and the company is prevented by its constitution from owing property. 18 The applicant submitted that the principles in Padgets case (Re William Padget Pty Ltd and Chief Commissioner of State Revenue (No 2) [2005] NSWADT 110) should be applied to his situation. 19 The applicant is resident in the property as his principle place of residence and submitted that he is entitled to the exemption provided in Section 10(1)(r) of the LTMA. 20 The applicant also submitted that the respondent had not given a proper explanation of the decisions made to assess the property for land tax for the years 1991 to 2005 inclusive. 21 The applicant made extensive written submissions in relation to the delays in responding to the decisions made on 25 September 2003, 2 April 2004 and 16 June 2005. These submissions related to the precarious state of health of the applicant who was diagnosed in mid 2003 with a heart condition being 50% impaired which had resulted from (amongst other things) a continuing series of minor heart attacks for at least two years prior to 2003. The applicant advised the Tribunal that he is on a strict regime of tablets and lifestyle and that he is required by his medical advisors to avoid duties, responsibilities, physical and mental stress. The applicant did not supply any doctor's certificates relating to the period after his hospitalisation in 2003. 22 The material supplied to the Tribunal comprehensively sets out the applicant's objections to the land tax assessments and includes material forwarded to the Office of State Revenue in October 1994. In October 1994 the applicant advised the Office of State Revenue of several concerns that he had regarding the assessment for land tax including: - "I must eventually have my name duly registered on the title." "In 1987 there was a necessary but temporary reason why Guardian Angel Pty Limited be the apparent purchaser of 16 Havilah Street Chatswood on my behalf and of recent times the person I was afraid of in respect of my security in my old age regrettably and sadly died which eliminated that reason." "There are no beneficiaries in my two cases but just straight out owners that is "Bare Trusts"." 23 In response to the respondent's submissions, the applicant referred to extracts from "An Introduction to Clinical Theology" (a text written by the applicant) including specifically referenced pages, which according to the applicant, rebut the submissions made by the Crown Solicitors' Office on behalf of the respondent. These references relate to moral issues as opposed to legal issues and refer to honesty and attitudes of officials. 24 The material supplied to the Tribunal by the applicant strenuously argued that the company should not be assessed for land tax as the property is the principal place of residence of the applicant. The applicant has submitted material that discloses he has continuously corresponded with the Office of State Revenue to this effect since being assessed in 1991 and that due to his health an application has not been lodged in the Administrative Decisions Tribunal previously, although he has been aware since April 2000 that he could do so. Submissions of respondent 25 The respondent supplied written submissions that addressed when it is permissible for the Tribunal to extend the time as to when an application may be lodged. The respondent also supplied written submissions as to the liability of the company to be assessed for land tax. 26 The respondent submitted that the applicant has not provided a satisfactory reason for delay. The assessments fall into three (3) distinct time periods being: (a) the decision made on 25 September 2003 which was appealed against 12/3 years late, (b) the decision made on 2 April 2004 which was appealed against 1 year 11/2 months late, and (c) the decision made on 16 June 2005 which was appealed against 2 months and 2 days late. 27 The respondent relied on the decision in Patsalis v Commissioner of Police, NSW Police (No 2) [2004] NSWADT 185 ("Patsalis") wherein the issues relevant to late lodgement of appeal were canvassed. In Patsalis the relevant factors in considering the discretion to extend time pursuant to Section 57 ADTA were: the reason for the failure to lodge (an application); length of the delay; diligence in lodging the application once the applicant became aware of the circumstances justifying his appeal; the effect of the decision on the applicant's rights; the adequacy of the information conveyed to the (applicant); and any possible prejudice to the respondent. 28 The respondent also referred to Hunter Valley Development Pty Limited v Cohen (1984) 3 FCR 344, particularly the principles summarised by Wilcox J therein where he indicated that fairness of granting an extension of time as between the applicant and other persons, in a like position, is relevant. 29 Insofar as the applicant's reliance on his health and age, the respondent submitted that the applicant's health issues, unsupported by medical certificates relate to his unfortunate heart attack on 21 April 2003 and further that age is not a relevant factor especially demonstrated by the paperwork prepared by the applicant. If these issues are relevant then, it is submitted by the respondent they would only be applicable to the decision made on 16 June 2005. 30 The respondent submitted that the merits of the application must be considered as the provisions of Section 10(1)(r) LTMA relating to the principal place of residence is only applicable to where the land is owned other than by a company. That insertion of Schedule 1A in the Act in 2003 clarified the situation that existed prior to the amendment. 31 Insofar as the substantive matter being whether the company is assessable to land tax the respondent submitted that the company is the registered proprietor of the land, that the company is not a trustee company acting in its representative capacity or acting in its capacity as trustee of a concessional trust. 32 The respondent submitted that the applicant has a legal and equitable interest in the company, but not in its assets. Accordingly the exemption provided in Section 10(1)(r) LTMA cannot be applied. The land tax burden is on the registered proprietor of the property i.e. the company; that an allegation that the company is acting outside its constitution does not negate the land tax liability. Any allegation that the company is acting outside its constitution is a matter between the company, its members and officeholders. 33 The decision in Re William Padget Pty Limited is distinguished as in that case the question which required a decision was related to the liability for land tax between a vendor and purchaser and the manner in which Section 26 LTMA was to be interpreted when an agreement for sale of land had been entered into. Reasons for decision 34 It is appropriate to deal with the reasons for delay in applying to the Tribunal first. There is no doubt that the applicant was severely affected by the heart attack in April 2003, although no medical certificates have been provided, his life and lifestyle have been considerably curtailed and it is unfortunate that he finds himself in the position where he has made this application and has supplied comprehensive and voluminous material and submissions to the Tribunal. 35 The applicant has been aware, since at least 2000 that he could apply to the Tribunal for a review of decisions made by the respondent. Consideration must be given to the fairness to other persons in a like position. In applying the factors set out in Patsalis the response in this matter would be: the reason for failure to lodge on time – health of applicant; length of delay – as set out paragraph 26 above; diligence in lodging application following becoming aware that this was possible in his circumstances: the applicant was aware prior to his heart attack that an application could be lodged with the Tribunal, his position had not altered since prior to 1994, the effect of the decision on the applicant's rights – the situation will not change in the event that the liability is upheld, if the liability is not upheld then this factor will become more important, although on its own it would not be a persuasive factor; the adequacy of the information conveyed to the applicant – the applicant has received adequate information as to his rights to lodge an appeal at least since 2000; any possible prejudice to the respondent – potential to reduce the tax base of the State. 36 To extend the time to lodge an application in a matter of this nature may be unfair on persons in like positions where they have not sought to extend the time for lodgement. 37 The explanation for delay in lodging in respect of the decisions made on 25 September 2003 and 2 April 2004 is not reasonable for the reasons set out in paragraph 35. During the period from the time of the applicant's heart attack and the lodgement of the application the applicant was engaged in a continual and constant written dialogue with the respondent (and other officials) as to his objections. Although the applicant knew of his rights at least by the year 2000, it would be helpful both to the applicant and the respondent to consider the substantive matter of liability. Taking into consideration the various submissions made by the applicant, even though unsupported by independent evidence as to his health, it would be reasonable to extend the time for lodgement in respect of the decision dated 16 June 2005. 38 Whether the company is liable to assessment for land tax relies on whether there is a provision in LTMA which allows an exemption, this is pursuant to Section 7(1) LTMA. The owner of land as defined in Section 3 LTMA is either the person who is entitled to the land, is entitled to receive the rents and profits whether as beneficial owner or trustee etc. or who is deemed to be the owner. Section 3 LTMA includes a company as a person. 39 The decision in Re William Padget Pty Limited is distinguished as there is no contract for sale between the company and the applicant. 40 The various submissions made by the applicant relating to the company range from him believing that he must eventually have his name registered on title to there are no beneficiaries, just straight out owners. The applicant also drew attention to the company's Memorandum of Association which discloses that there is an intention that the company assets be protected for "seven members of the said O'Neill Family". The company statement of 7 July 2005 discloses 15 redeemable preference shares as beneficially held. The question then arises as to whether the company has breached its constitution, this is a matter for the company, its members and shareholders. When the applicant does transfer his interest or it is disposed of by way of probate of his Will, it is not clear as to who will become the owner. Nevertheless the question whether there is an exemption available is the question to be dealt with here. This will only be so if the company is acting in its "representative capacity" or its "capacity as trustee of a concessional trust" and therefore outside the provisions of Part 4 Clause 11(1)(a) of Schedule 1A. This provision was inserted into LTMA in 2003 and recognised the general provisions prior to the amendment relating to circumstances such as exist here. There is no evidence that the company is a trustee of a concessional trust and there is no evidence that the company is a trustee company acting in its representative capacity. There is no evidence that the company is a not for profit company. To the contrary, the applicant has submitted that he is the sole owner of the company and therefore the sole owner of the shares in the company. 41 For the above reasons the Tribunal extends the time in respect of the decision made on 16 June 2005 and disallows the objection to that decision as the exemption provided by Schedule 1A Part 4 Clause 11(1)(a) does not apply. ORDER 1. The time for lodgement of this application in respect of the decision made on 16 June 2005 is extended. 2. The time for lodgement of an application in respect of the decisions made on 25 September 2003 and 2 April 2004 is not extended. 3. The decision made by the Chief Commissioner of State Revenue on 16 June 2005 is confirmed.