CITATION: Small v Commissioner of State Revenue [2004] NSWADT 18 DIVISION: General Division APPLICANT PARTIES: Kristy-Ann SMALL RESPONDENT Commissioner of State Revenue FILE NUMBER: 033241 HEARING DATES: 12/12/2003 SUBMISSIONS CLOSED: 12/12/2003 DATE OF DECISION: 01/29/2004 BEFORE: Montgomery S - Judicial Member APPLICATION: 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 : Administrative Decisions Tribunal Act 1997 First Home Owners Grant Act 2000 CASES CITED: DY-v-Chief Commissioner of State Revenue [220] NSWADT 259 Lawrance & anor -v- Chief Commissioner of State Revenue [2002] NSWADT 104 APPLICANT REPRESENTATION: In person RESPONDENT K Guilfoyle, barrister ORDERS: Date of Orders: 12 December 2003; 1. The Chief Commissioner's decision to reverse a previous decision that Ms. Small is entitled to the First Home Owners Grant and to request repayment of the amount of the $7,000 is affirmed. 1 On 29 August 2003, Ms Kristy Ann Small applied to the Tribunal pursuant to section 28 of the First Home Owners Grant Act 2000 ("the FHOGA") and section 38 of the Administrative Decisions Tribunal Act, 1997. Ms. Small sought a review of the decision by the Chief Commissioner of State Revenue ("the Chief Commissioner") to reverse the original decision, under which Ms. Small was paid an amount of $7,000 under the FHOGA, and to demand repayment of that amount. 2 On 30 August 2001 Ms. Small applied to the Chief Commissioner for a First Home Owner's Grant under the FHOGA in relation to a property at Moss Vale, ("the property"). The Grant was approved and paid on 19 September 2001. Settlement took place on 2 October 2001. 3 By Notice dated 12 May 2003 the Chief Commissioner advised Ms. Small in the following terms: "Based on the information now available, and in accordance with section 23(1) of the Act, I have reversed the decision under which the grant was paid to you as you did not occupy the premises as your principal place of residence within 12 months of settlement of the property. Accordingly, I require you to pay to the Chief Commissioner the amount of $7,000 for repayment of the grant. Please forward the payment of $7,000 accompanied by the enclosed remittance advice, to the Chief Commissioner at the address shown on the advice. The payment should be forwarded within 21 days of the date of this notice to avoid further penalty of up to $7,000 as provided by section 45(3) of the Act." 4 On 19 June 2003 Ms. Small wrote to the Chief Commissioner objecting to the reversal of the decision to grant the $7,000 grant, provided details of circumstances that had prevented her occupying the property and asked that her special circumstances be taken into consideration with a view to reinstating the original decision. The Chief Commissioner responded by further letter dated 3 July 2003 which stated: "I have considered the reasons for your objection, but unfortunately I have disallowed your objection. You have not met the eligibility criterion provided for under section 12 of the Act (ie, you did not occupy the property as your principal place of residence within 12 months after completion of the eligible transaction) consequently, you are ineligible for the grant. As you did not request an extension of time in which to occupy the property within 12 months and 14 days from completion of the eligible transaction you are in breach of section 20(3) of the Act and the residence requirement can not be extended. The Notice under section 45 of the Act was correctly issued and is to stand." 5 Ms. Small applied to the Tribunal for review of that decision. Applicable Legislation 6 Pursuant to section 23 of the FHOGA, the Chief Commissioner has power to vary or reverse an earlier decision. Section 23 states that: "(1) If the Chief Commissioner decides an application, and is later satisfied (independently of an objection under this Act) that the decision is incorrect, the Chief Commissioner may vary or reverse the decision. (2) A decision cannot be varied or reversed under this section more than 5 years after it was made." 7 The FHOGA authorises an applicant to object to a decision to reverse an earlier decision. Section 25(1) states that: "(1) An applicant who is dissatisfied with the Chief Commissioner's decision on the application (including a decision to reverse or vary an earlier decision) may lodge a written objection with the Chief Commissioner." 8 The FHOGA authorises the applicant to apply to this Tribunal for a review of the Chief Commissioner's decision. Section 28 states, in part, that: "(1) An objector may apply to the Administrative Decisions Tribunal for a review of the decision (the original decision) to which the objection was made if: (a) the objector is dissatisfied with the Chief Commissioner's determination of the objection." 9 The FHOGA requires an applicant to comply with certain eligibility criteria. One criterion is the "residence requirement." Section 12 states that: "(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." 10 The FHOGA authorises the Chief Commissioner to make payments in anticipation of compliance with the residence requirement. Section 20 relevantly states that: "(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 within 12 months after completion of the eligible transaction or a longer period allowed by the Chief Commissioner, or both. (2) . . . (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. Maximum penalty (subsection (4)): 50 penalty units. 11 The FHOGA authorises the Chief Commissioner to require the applicant to repay the amount of the grant if the decision to pay the grant is reversed. Section 45 states that: "(1) The Chief Commissioner may, by written notice, require an applicant (or former applicant) for a first home owner grant to repay an amount paid on the application if: (a) the amount was paid in error, or (b) the Chief Commissioner reverses the decision under which the amount was paid for any other reason." 12 Section 46 of the FHOGA authorises the Chief Commissioner to recover any amount an applicant is required to repay under the conditions of the grant. Issue and onus 13 The issue in this case is whether the Chief Commissioner made the correct and preferable decision in reversing the decision to approve the First Home Owner Grant. Under section 28(3) of the FHOGA, in an application for review to this Tribunal the applicant has the onus of proving their case. Evidence 14 On 30 August 2001 Ms. Small lodged an application for a grant of $7,000 under the FHOGA in relation to a proposed purchase of the property. Pursuant to section 20(1)(b) of the FHOGA, the grant was paid in advance subject to compliance with the residence requirement as set out in that section and section 12 of the FHOGA. That requirement was that Ms. Small occupy the property as her principal place of residence within 12 months after completion of the purchase of the property. As settlement of the purchase occurred on 2 October 2001, occupation of the home was required by 2 October 2002. 15 Ms. Small had intended to secure a job in the Southern Highlands and move into the property within the twelve-month period. She rented out the property from 6 October 2001 under a Residential Tenancy Agreement for a period of 6 months which she thought would have allowed her time to secure a job and move to the property. During the period of the tenancy Ms. Small became ill and was unable to apply for a job in the Southern Highlands until she recovered. She was also delayed because her fiancé was awaiting medical discharge from the Australian Defence Force. 16 Ms. Small stated that by early September 2002 she knew that she would have to request that her tenant move out and she advised the real estate agent who handled the tenancy to give the tenant notice to vacate. The property manager explained that she was required to give the tenant 60 days' notice to vacate. There was a delay in sending the notice to vacate. It was not given until 30 September 2002. The tenant vacated the Property on 4 November 2002. Ms. Small's submission 17 Ms. Small submitted that she had intended to move into the property within the twelve-month period. The Residential Tenancy Agreement for tenant of the property was only drawn up for a period of 6 months which she thought would have allowed her time to secure a job in the Southern Highlands. However, due to her health problems she was unable to seek work. Further, the delay in her fiancé's discharge from the Australian Defence Force and the required notice to the tenant meant that she was not in a position to move into the property within the twelve-month period. The Chief Commissioner's submission 18 Ms Guilfoyle provided written submissions on behalf of the Chief Commissioner and relied on those submissions. Essentially she relied on section 12(1) of the FHOGA. That provision states, in part, that "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". 19 Ms Guilfoyle submitted that the purpose of the FHOGA is clearly set out in its long title. That is, "An Act 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 owners; to amend the Stamp Duties Act 1920 to exempt such grants from financial institutions duty; and for other purposes". The FHOGA was not enacted in order that the taxpayer fund investment properties. For this reason, the residential requirements of the FHOGA are mandatory. The scope and purpose of the FHOGA require strict compliance with the residential requirements. Section 20(1)(b) of the FHOGA permits the Chief Commissioner to authorise payment of the grant in anticipation of the residence requirement. In such circumstances, the onus is on the applicant to notify the Chief Commissioner if the conditions are not met. Ms. Small did not, at any time, request an extension of time in which to occupy the property. 20 Ms Guilfoyle argued that the residential requirements under the Act are mandatory, and reflect the general tenet of the Act that assistance be given to those persons who actually reside in the property for which assistance is given. This condition is operative regardless of Ms. Small's intention. 21 Sections 23 and 45 confer powers upon the Chief Commissioner to exercise a discretion to vary or reverse the decision to confer the grant in circumstances where the criteria set out in those sections have been satisfied. That is, pursuant to s 45(1)(b), the Chief Commissioner may, relevantly, by written notice, require the applicant to repay an amount paid on the application if the decision under which the payment was made by the Chief Commissioner is reversed and pursuant to s 23(1) of the Act, if the Chief Commissioner has first decided an application and secondly, has satisfied himself that the decision is incorrect, then the Chief Commissioner has a discretion to reverse or vary that decision. Section 12(1) provides for a mandatory requirement of occupancy within the specified time period. Sections 23 and 45 of the Act do not confer a discretionary power upon the Chief Commissioner to allow the retention of a grant to which the applicant had no entitlement. 22 Under the Act, the burden is on Ms. Small to establish her case. There is no indication in the present case that the Chief Commissioner allowed extraneous or irrelevant matters to guide or affect him, that he mistook the facts or did not take into account some material consideration. Furthermore, there is no indication by the nature of the decision that the decision was unjust or unreasonable such that there may be an inference that there was a failure to properly exercise the discretion. 23 In these circumstances it is submitted, the decision by the Chief Commissioner was in accordance with the purposes of the Act, and was made with regard to the express provisions of the terms of the legislation. Reasons and decision 24 The decision the Tribunal has jurisdiction to review is the Chief Commissioner's decision to reverse the initial decision under which the $7,000 grant was paid. In this case, the grant was paid in anticipation of compliance with the residence requirement. Pursuant to s 20(3), the payment is made on condition that if the residence requirement (or any longer period granted by the Commissioner) is not complied with, then the first home owner must repay the amount of the grant. The Chief Commissioner has the power to require an applicant to repay the grant if the Chief Commissioner reverses the decision under which the amount was paid. The Chief Commissioner did reverse the decision because he was satisfied that the decision was incorrect. 25 In DY -v- Chief Commissioner of State Revenue [2002] NSWADT the Deputy President of this Tribunal considered a decision by the Chief Commissioner to reverse an earlier decision. The Deputy President stated: "Once the residence requirement was not complied with, and no longer period had been allowed by the Chief Commissioner, then the original decision could not stand. (See s 23(1) of the FHOGA.) Consequently, the decision of the Chief Commissioner to reverse the original decision was the correct and preferable decision." 26 In Lawrance & anor -v- Chief Commissioner of State Revenue [2002] NSWADT 104 the Deputy President stated: "15 In authorising the payment of the grant in anticipation of compliance with the residence requirement the Chief Commissioner must be satisfied that at least one of the applicants intends to occupy the home within 12 months after completion of the transaction or within "a longer period allowed by the Chief Commissioner." In my view the phrase "a longer period allowed by the Chief Commissioner" in s 20(1)(b) refers to a longer period allowed prior to the Chief Commissioner authorising payment of the grant. The Chief Commissioner cannot be satisfied of the applicants' intention if the period is not specified at the time. Section 20(3) supports this interpretation because it provides that it is a condition of any payment made in anticipation of compliance with the residence requirement that the applicant must repay the grant if the residence requirement (12 months or a longer period approved by the Commissioner) is not complied with. 16 The Chief Commissioner appears to be under the impression that a "longer period" can be approved after payment has been authorised and the grant has been paid. Even if this is the correct view, the applicants did not apply to the Chief Commissioner for a longer period than 12 months in which to occupy the home as their principle place of residence. 17 Section 20(3)(b) stipulates that the applicants must give written notice to the Chief Commissioner that the residence requirement has not been met. When Mr Lawrance contacted the Chief Commissioner the 12-month residence requirement period and the 14-day notice period for the applicants to advise the Chief Commissioner of the fact that the residence requirement had not been met, had both expired. 27 In Lawrance the applicants had not complied with the residence requirement under the FHOGA and had not provided written notice in compliance with their obligations under s 20(3)(a). In those circumstances the Deputy President affirmed the Chief Commissioner's decision to reverse a previous decision that the applicants were entitled to the First Home Owners Grant and to request repayment of the amount of the grant. 28 The circumstances of this matter are comparable to those in DY and in Lawrance. Ms. Small has not complied with the residence requirement under the FHOGA and the Chief Commissioner had allowed no longer period. Further, Ms. Small did not provide written notice in compliance with her obligations under s 20(3)(a). Therefore, the original decision could not stand. 29 I agree with Ms Guilfoyle's submission that section 12(1) provides for a mandatory requirement of occupancy within the specified time period. The discretion provided to the Chief Commissioner under sections 23 and 45 of the FHOGA must therefore by applicable to circumstances unrelated to the requirement of occupancy. In my view those sections do not confer a discretionary power upon the Chief Commissioner to allow the retention of a grant to which an applicant had no entitlement. Even if that view is incorrect, Ms. Small has the onus of proving that she should be allowed to retain a grant to which she had no entitlement and I am not satisfied that she has succeeded in doing so. It follows, in my view, that the Chief Commissioner's decision is the correct and preferable one. 30 Accordingly, the Chief Commissioner's decision to reverse a previous decision that Ms. Small is entitled to the First Home Owners Grant and to request repayment of the amount of the $7,000 is 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.