CITATION: Cullen v Chief Commissioner of State Revenue [2007] NSWADT 121 DIVISION: Revenue Division APPLICANT PARTIES: Daniel Barry Cullen RESPONDENT Chief Commissioner of State Revenue FILE NUMBER: 066133 HEARING DATES: 16 April 2007 SUBMISSIONS CLOSED: 14 May 2007 DATE OF DECISION: 8 June 2007 BEFORE: Seve J - Judicial Member CATCHWORDS: First Home Owners grant - reversal by administrator MATTER FOR DECISION: Principal matter Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : First Home Owner Grant Act 2000 State Revenue Legislation Further Amendment Act 2003 State Revenue Legislation Further Amendment Act 2005 Alexopoulos v Commissioner of State Revenue (Taxation) [2006] VCAT 806 Basonovic v Chief Commissioner of State Revenue [2006] NSWADT 236 Cullen v Chief Commissioner of State Revenue [2006] NSWADT 252 Greig v Chief Commissioner of State Revenue [2006] NSWADT 146 Hare v Commissioner of State Revenue (Taxation) [2006] VCAT 1054 Harvey & anor v Chief Commissioner of State Revenue [2006] NSWADT 240 CASES CITED: Huertas v Chief Commissioner of State Revenue [2007] NSWADT 28 Lawrance & anor v. Chief Commissioner of State Revenue [2002] NSW ADT 104 McKenzie v Chief Commissioner of State Revenue [2005] NSWADT 214 Morris and anor v Chief Commissioner of State Revenue [2007] NSWADT 110 Spresian v Chief Commissioner of State Revenue [2006] NSWADT 239 Taylor v Chief Commissioner of State Revenue [2004] NSWADT 36 WM v Chief Commissioner of State Revenue [2006] NSWADT 199 APPLICANT In person REPRESENTATION: RESPONDENT S Benjamin, agent ORDERS: 1. The decision of the Commissioner to require repayment of the grant is affirmed. ; 2. The decision of the Commissioner to impose a 20% penalty is set aside and substituted with a penalty of 10%. REASONS FOR DECISION 1 This application relates to a decision of the respondent ("Commissioner") to require repayment of a grant ("the Grant") paid to the Applicant under the First Home Owner Grant Act 2000 ("FHOG Act") and to impose a penalty of 20% under the FHOG Act. 2 The decision of the Commissioner was made after the Commissioner had reconsidered an earlier decision of his (to recall the Grant and impose a 20% penalty), as required by an order of the Tribunal in Cullen v Chief Commissioner of State Revenue [2006] NSWADT 252 ("the Earlier Decision"). Under that order, the Commissioner had to consider his discretion under s 12(1A)(b) of the FHOG Act in reconsidering his earlier decision. Background Facts 3 The background facts to this application as they existed at the time of the Earlier Decision were set out at paragraphs 1, 2, 4 and 5 of the Earlier Decision as follows: "1 The applicant is the registered proprietor of a residence situated at 44 Mathews Parade, Corindi Beach ("the property"). He purchased the property in the year 2004 and settlement occurred on 15 April 2004. 2 The applicant applied for a first home owner grant under the provisions of the First Home Owner Grant Act 2000 (the "Act") to assist him to purchase the property as his first home and received a grant of $7,000. Subsequently the respondent recalled that grant and imposed a penalty. The decision to recall the grant with a penalty is the subject of this application for review. 4 The applicant is employed in the Australian Defence Force and during the relevant time was based in Sydney. Sometime in early 2004, he decided to purchase the property in which he could live on the assumption that the army would transfer him from Sydney to either Coffs Harbour or Grafton. He applied for a transfer and was given assurance that he could move but to date he has not been able to obtain the transfer. He is currently on long service leave from the army. 5 The property has been let, initially to the vendor for a short period and subsequently, from about 16 August 2004, to various other tenants. The leases in each case have been for periods not exceeding six months. The applicant had hoped to move in before the end of 2004 but was not able to do so because the army did not support his request for a transfer to either Coffs Harbour or Grafton. Currently, he is hoping to leave the army and seek employment in the area in which the property is situated to allow him to occupy the property as his principal place of residence." 4 After the Earlier Decision, by letter dated 28 September 2006, signed by Mr S Benjamin for the Commissioner, the Applicant was advised as follows: "As a delegate of the Chief Commissioner I have given consideration to the circumstances of your case and have decided that there are no exceptional circumstances due to which your residency requirement under the legislation should be waived. The reasons for my decision are as follows: i. you did not occupy and used the property (at 44 Mathews Parade, Corindi Beach – referred to as "the property") as your principal place of residence (PPR); ii. you did not inform the Chief Commissioner of your inability and explain the circumstances why you could/did not occupy and use the property as your PPR; iii. you did not produce any evidence to your claim that ADF had promised you a transfer to ADF's base near the property enabling you to take up residence and use the property as your PPR; iv. you have received rental income from the property since you purchased it and as such the property does not in any respect satisfy the character of being a "first home", within the FHOG Act; v. in your letter dated 6 June 2006, you have stated: "This is after all the first property I have purchased and seeing how it is only a one off grant it should make no difference whether or not I live in or use it as an investment property". These words, in my opinion, demonstrate that you do not appreciate the objects of the First Home Owner Grant Act 2000. vi. on hearing your presentation at the Tribunal, I am of the view that there is no prospect of you taking up occupation of the grant property and using it as your PPR; and vii. the use of discretionary powers should not be allowed to erode the integrity of the first home owner scheme, which is meant to assist those who are ready to purchase a residential property and are ready to take up occupation of the that property and use that property as their PPR, unless there had been an exceptional set of circumstances that impacted on the intended (or prevented) occupation and use of the property as the owner's PPR. In light of the above background, I considered the discretionary powers provided under the legislation, and determined that given your circumstances the discretionary power should not be exercised in your favour. The exercise of discretion in your circumstances would defeat the primary object of the Act. In order to support this proposition, I also rely on the following case law: French J noted in Federal Commissioner of Taxation v Swift 89 ATC 5101 at 5116, that dispensing power such as found in section 12 (1A) of the FHOG Act, should be pursuant to the objects of the legislation – French J said: "The dispensing power is incidental and ancillary to the primary object of the legislation". Given the background, it is important to note that the penalty of 20% has been imposed pursuant to section 45(3) of the First Home Owner Grant Act 2000, that is the failure to notify the Chief Commissioner and repay the amounts received, when you did not take up occupation of the property and use it as your PPR. Consequently the assessment must stand. The First Home Owner Grant Act allows you to lodge an appeal ..." 5 The Applicant lodged with the Tribunal, an application for review of the decision of the Commissioner. The application was dated 21 November 2006 and the reason for seeking review of the decision was cited in the application as "Circumstances have changed significantly and I am now in a position to move into the property". 6 The Applicant faxed to the Tribunal a submission dated 21 February 2007 which stated that: "The reason for my appeal against the previous decision is for the following reasons. Firstly it was stated that there would be little chance of myself taking up residency in the grant property which I have now moved into and intend staying for at least the minimum term if not well beyond the required amount. I have sacrificed my career within the defence force to move to the area as I was unable to obtain a transfer or even move my wife and daughter into the house as a last ditch attempt. This has also effected me financially as there are very few opportunities which are of comparable salary in the area." 7 The Applicant's submission had attached to it, a copy of a third instalment notice for Council rates for the property from the Coffs Harbour City Council, addressed to the Applicant at the address of the property dated 25 January 2007. The Applicant's submission also had attached to it, a copy of a document headed "Discharge or Transfer Certificate" from the Australian Army relating to the Applicant, indicating that effective on 8 December 2006, the Applicant would be "Transferred" under "Defence Personnel Regulations" "56(B)". 8 Regulation 56 (b) of the Defence (Personnel) Regulations 2002 (Cth) provides that a member may apply to the Chief of the member's Service for permission to transfer from the Permanent Force of that Service to a category of the Reserves of that Service. The Hearing 9 At the hearing, the Tribunal had before it, a copy of the Earlier Decision, a copy of the original application for the FHOG Scheme by the Applicant dated 15 April 2004, a copy of a letter dated 28 September 2006 from the Commissioner to the Applicant advising the Commissioner's decision the subject of this application, the Applicant's application for review of the decision dated 21 November 2006 and the faxed submission with annexures from the Applicant dated 21 February 2007. The Tribunal also heard oral submissions on behalf of the Commissioner and, by telephone from the Applicant, at the hearing. 10 At the hearing, the Applicant advised the following: (1) before the time of his purchase of the subject property, the Applicant had made a request for a transfer to an Australian Army base near the subject property but the Applicant did not have a copy of that request and it was difficult to obtain copies of documents from the Australian Army; (2) applications for a posting elsewhere within the Australian Army had to be in writing and took a period of months to process; (3) within the early years of service in the Australian Army (as is applicable to the Applicant), approval of applications for postings elsewhere within the Australian Army are discretionary; (4) the Applicant was not given information by the Office of State Revenue about applying for an extension of time for compliance with the residence requirement under the FHOG Act within the period of 12 months after completion of his purchase; (5) the Applicant was very busy and overlooked the requirement to commence 6 months continuous occupation of the home as his principal place of residence within 12 months after completion of the purchase; (6) the copy Discharge or Transfer Certificate filed with the Tribunal by the Applicant evidences that the Applicant was transferred to the Standby Reserve of the Australian Army which means that the Applicant is no longer in active service or full time employment with the Australian Army, but in the event of war, could be called upon to serve; (7) following the Applicant's transfer to the Standby Reserve of the Australian Army effective from 8 December 2006, the Applicant moved into the subject home as the principal place of residence of the Applicant and the Applicant is in the process of finding new employment in the area. 11 The Tribunal determined at the hearing that the Applicant should be given further opportunity to file and serve proof of the Applicant's submission regarding his request before he purchased the subject property, for a transfer to the area of the subject property. 12 The Tribunal ordered that the Applicant request written confirmation and proof from the Australian Army, regarding the Applicant's submission as to the Applicant's application for a transfer to the area of the subject property and to file and serve a copy of such request, within 14 days, by 30 April 2007. 13 Pursuant to s 65 of the Administrative Decisions Tribunal Act 1997, the Tribunal remitted the decision to the Commissioner for reconsideration in light of material to be filed by the Applicant, such reconsideration to be made by 14 May 2007. 14 The Tribunal also ordered that the Commissioner file and serve a copy of the Commissioner's decision on his reconsideration and written submissions in respect to this matter, by 14 May 2007. 15 The Applicant faxed to the Tribunal on 28 April 2007, a document dated 28 April 2007 signed by the Applicant which stated as follows: "After consulting my army careers advisory authority I have been able to provide 1 relevant document which is a career guidance interview that states I was attempting to gain a posting to 41 Royal NSW Regiment (RNSWR) which is located in Coffs Harbour. Unfortunately I have not been able to extract my original application for posting. This document states that I would have been likely to be posted to the area in 2007 which I know is well out of the window of opportunity for moving into the property. Other attempts were made both previous and after this interview to secure a posting to the region. Please consider my frustration in not being able to come up with anything more substantial knowing that I made every attempt to be moved to the area." 16 The document attached to the fax was dated 28 October 2004 was one page in length and included a comment against a forecast as to a posting to 41 RNSWR in 2007: "dependant on PAC clearance". 17 On 9 May 2007, the Tribunal received a letter signed by Mr S Benjamin on behalf of the Commissioner, which included the following: "Having entered into a contract on 5 March 2004, the property (44 Matthews Parade, Corindi Beach), was purchased on 15 April 2004 (as per the FHOG application). Based on the document submitted by the Applicant, Mr Cullen it is clear that the opportunity or the capacity to move to the area would have risen only sometime during 2007. Given the reasons already submitted in the Respondent's initial submission and subsequent written and oral submissions, the Chief Commissioner of State Revenue has decided that exercising discretionary powers in this particular case, will be unfair to those in similar situations, who are required to take up occupation and the use of their property purchased using the grant paid under the FHOG Act." Legislation 18 Section 12 of the FHOG Act as it relevantly applies provided as follows: "(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 for a continuous period of at least 6 months. (1A) However, if the Chief Commissioner is satisfied there are good reasons to do so, the Chief Commissioner may: (a) approve a shorter period, or (b) exempt the applicant from the requirement to comply with subsection (1). (1B) The period of occupation required under subsection (1), or the shorter period approved under subsection (1A) (a), must start 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." Earlier Decision 19 The following order was made in the Earlier Decision: "28 The decision of the respondent is set aside and the matter is remitted to the respondent for reconsideration in accordance with these reasons". 20 The following are extracts from reasons in the Earlier Decision: "17 The difficulty faced by the applicant to satisfy the "residence requirement" is understandable. There is also some merit in his claim that the law is discriminatory. 18 A similar difficulty by a member of the Australian Defence Force was highlighted in Snow v Chief Commissioner of State Revenue (No1) [2005] NSWADT 244 where the applicant, a naval officer, was not able satisfy the residence requirement because he "remained a serving member of the Defence Force with a posting to an important military vessel". In that case, the Tribunal correctly reached the conclusion that the applicant's "principal place of residence remained accommodation provided by the Navy (either aboard ship or in the single men's barracks)." 19 In Snow the Tribunal considered the "residence requirement" in Section 12 in its original version which read as follows: "(1) An application 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 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." 20 There was in the law at that time only an opportunity for applicants to seek a longer period to satisfy the occupation test. The law was subsequently amended and the provisions of the third version of section 12, which apply to this matter, allow the Chief Commissioner to exempt an applicant from the requirement to comply with the "residence requirement" if the Chief Commissioner is satisfied that there are good reasons to do so. In the present matter, the Chief Commissioner's decision was based on the failure of the applicant to reside at the property for a continuous period of six months within 12 months of the purchase of the property. Whilst that decision of the Chief Commissioner was correctly made, in fairness to the applicant the Chief Commissioner ought to have, in accordance with the terms of the law, considered his discretion to exempt the applicant from the requirement to comply with the "residence requirement". The respondent clearly failed to direct his mind to the circumstances that may have warranted an exemption from compliance with the "residence requirement" in this matter. 21 The provisions of the relevant version of s 12 do not require that an applicant should make a request for the Chief Commissioner to exercise his discretion. The discretion should be exercised by the Chief Commissioner quite independently in cases where "there are good reasons to do so". The law recognises that in some cases applicants cannot satisfy this requirement but should not be denied the grant. Various examples can be suggested which may warrant the exercise of this discretion. For example, a person may purchase a property for immediate occupation as his or her principal place of residence but due to serious illness or the need to perform occupational duties overseas over an extended period the person is unable to satisfy the "residence requirement" within the period allowed. There are other examples including the situation highlighted in Snow. 22 Whilst I have not conclusively considered the exercise of this discretion in this matter, I am nevertheless of the opinion that there are "good reasons" why the applicant has not been able to occupy the property since its purchase. The respondent in both exercising his power under s 45 of the Act to recall the grant and subsequently in considering the applicant's objection, which highlighted the reasons why he was not able to occupy the property, was required to consider whether the discretion should be exercised favourably in the applicant's case. The respondent failed to consider his discretion found in s 12(1A) in both instances. 23 Having made a decision on the "residence requirement", the respondent ought to have then considered whether there were "good reasons" for his discretion in s 12 (1A) to be invoked. The respondent clearly erred in not considering the application of the discretion in this matter ... 27 Under s 45(3) the respondent is entitled to impose a penalty where an applicant fails to pay an amount demanded by the respondent in an assessment made under section 45 or where an applicant fails to repay the grant if required by a condition of the grant. The first limb of s 45(3) would only apply where an applicant fails to pay the amount demanded in an assessment issued under s 45. Hence in this case only the provisions of the second limb of s 45(3) are relevant. The respondent was entitled to impose a penalty as he concluded that the applicant had not complied with the "residence requirement". But in the circumstances that the respondent is now required to reconsider his principal decision to recall the grant, the whole question of imposing a penalty under s 45 should also be reconsidered on a de novo basis." Preliminary Issue 21 The Earlier Decision presumed that the discretion of the Commissioner under s 12(1A)(b) may be exercised at any time, including after the 12 month period referred to in s 12 (1B) of the FHOG Act (as is relevant to this matter). This conclusion could be in doubt if the approach to interpretation of the Commissioner's discretion to approve a longer period than 12 months under the original version of s 12 of the FHOG Act (which discretion continues to exist under s 12(1B) as applicable in this matter), adopted in previous decisions of the Tribunal (and by the VCAT in respect to similar legislation in Victoria) as referred to below, is applied. At the hearing, the Commissioner's representative requested that this issue be addressed by the Tribunal in its decision. 22 The Earlier Decision recited (at 7) that there are, historically, five versions of s 12 of the FHOG Act. Although there are, historically, five versions of the FHOG Act, there are, historically, only three versions of s 12 of the FHOG Act, namely: 07 Dec 2005 to date (the third and current version) 27 Nov 2003 to 06 Dec 2005 (the second version) 1 July 2000 to 26 Nov 2003 (the original version) 23 The version of s 12 of the FHOG Act applicable in this matter is the second version. 24 Previous decisions of the Tribunal as referred to below, have considered the discretion of the Commissioner to approve a longer period than 12 months under the original version of s 12 of the FHOG Act and have held that the Commissioner did not have power to extend the period, after the period of 12 months had expired. 25 The following decisions of the Tribunal considered the original version of s 12 of the FHOG Act: (1) Lawrance & anor v Chief Commissioner of State Revenue [2002] NSW ADT 104 wherein it was decided (at 15 and 16) as follows: "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." (2) Taylor v Chief Commissioner of State Revenue [2004] NSWADT 36 ("Taylor's Case") wherein it was decided (at 20) as follows: "20 In the facts of this case, as I have said, the applicant does not comply with the residence requirement. On the basis of both Lawrence and the terms of s 45 of the Act , her application for approval of a longer period to comply with the residence requirement, some year and a half after the 12 month period ended, was properly refused by the Chief Commissioner." (3) McKenzie v Chief Commissioner of State Revenue [2005] NSWADT 214 ("McKenzie's Case) wherein it was decided (at 20 and 21) as follows: "20 The Parliament intended to set strict boundaries. The usual strict boundary is provided by the twelve months rule, that is people can have the grant in advance but they must move in within twelve months. This view is borne out by the following provisions – s 7(1)(b)(ii); s 7(2); s 12(1); and s 20(2). 21 The scheme of the Act contemplates certainty as to the period within which a person must move in. Any change must be made known ahead of the expiry of what might be called the usual period. The period of permitted delay is either twelve months or such extended period as has been permitted ahead of the expiry of that period (plus fourteen days)." The reference to s 20(2) (which relates to completion) in paragraph 20 of the McKenzie Case appears to have been intended to be to s 20(3) (which relates to the residence requirement). McKenzie's Case was also followed by the VCAT in respect to FHOG legislation in Victoria in Hare v Commissioner of State Revenue (Taxation) [2006] VCAT 1054 (at 11-14) and Alexopoulos v Commissioner of State Revenue (Taxation) [2006] VCAT 806 (at 19 -20). (4) Basonovic v Chief Commissioner of State Revenue [2006] NSWADT 236 ("Bosanovic's Case) wherein it was decided (at 25) as follows: "25 … In this case the Tribunal will follow the principles set down in Taylor v The Chief Commissioner of State Revenue [2004] NSWADT 36 and McKenzie v Chief Commissioner of Revenue [2005] NSWADT 214 : that the Commissioner has no power to extend the time period of compliance with the residence requirement after the expiry of the period and that must be the position in this case particularly when no request was ever made by the applicant, either within or out of time." The reference to the date of the application (at 3) in Basonivic's Case as 15 May 2005 appears to be in error (as it would mean that the second version and not the original of s 12 was applicable) and appears to have been intended to be a reference to 15 May 2003. (5) Huertas v Chief Commissioner of State Revenue [2007] NSWADT 28 wherein it was decided (at 22) as follows: "22 With regard to Mr Huertas' application to extend the 12 month period for compliance, as Mr El-Hage has submitted, because Mr Huertas applied on 27 October 2005, after the time for compliance had expired, the Commissioner has no power to extend the time for compliance: Basonovic v Chief Commissioner of State Revenue [2006] NSWADT 236, at par 25, following a number of similar decisions, for example, McKenzie v Chief Commissioner of State Revenue [2005] NSWADT 214, at par 16." 26 Although s 12 the subject of the previous decisions of the Tribunal was amended after the relevant facts of those respective cases by the State Revenue Legislation Further Amendment Act 2003 ("SRLFA Act 2003") (with effect from 27 November 2003), so that it was different to the s 12 applicable in this case, the amendments did not remove the prima facie requirement under s 12 (previously in subsection (1) but moved into new s 12 (1B)) that occupation of the home as the principal place of residence of the applicant must start within 12 months after completion of the eligible transaction. The Commissioner's power to approve a longer period, previously found in s 12(1), was moved to s 12 (1B). 27 The SRLFA Act 2003 inserted new s 12 (1A) and s 12(1B) into the FHOG Act which are applicable to this matter. Section 12 (1A) as quoted earlier, gives the Commissioner power, if the Commissioner is satisfied there are good reasons to do so, to: "(a) approve a shorter period, or (b) exempt the applicant from the requirement to comply with subsection (1)". 28 Sections 12(1), 12 (1A) and 12 (1B) as applicable in this case can not be read in isolation of one another. If the Commissioner approves a shorter period under s 12 (1A) (a), that period must commence within 12 months after completion of the eligible transaction as required by s 12 (1B), unless the Commissioner approves a longer period under s 12 (1B). If the Commissioner exempts an applicant from the requirement to comply with s 12 (1) under s 12 (1A) (b), s 12 (1B) is inapplicable. For this reason, the approach to interpretation of the discretion of the Commissioner under the original version of s 12, deserves to be considered, not only in the context of the discretion of the Commissioner under s 12(1B), but also, because of the inter-relationship between the sections, also, the discretions of the Commissioner under s 12(1A). 29 The SRLFA Act 2003 did not amend s 7 or s 20 of the FHOG Act (as relied upon in McKenzie's Case) other than to insert into s 20(1) a reference to the new requirement of a continuous period of at least 6 months. The SRLFA Act 2003 also did not amend s 45 of the FHOG Act (as relied upon in Taylor's Case). 30 Section 12 of the FHOG Act as applicable in this matter, was replaced with effect from 7 December 2005 by the State Revenue Legislation Further Amendment Act 2005 ("SRLFA Act 2005"). 31 The new, third and current version of s 12 of the FHOG Act inserted by the SRLFA Act 2005 included a new s 12(5) as follows: "(5) An approval or exemption under this section may be given by the Chief Commissioner at any time, even if the period of 12 months after completion of the eligible transaction has already expired or the applicant's occupation of the home as a principal place of residence has already ceased." 32 The new s 12(5) of the FHOG Act inserted by the SRLFA Act 2005 makes it clear that the Commissioner's powers under s 12 may be exercised at any time, including, after the time for compliance has expired. 33 The transitional provision in Clause 9 (1) of Part 5 of Schedule 1 of the FHOG Act provides that: " The amendments to this Act made by the State Revenue Legislation Further Amendment Act 2005 in relation to the eligibility criteria for a first home owner grant apply in respect of applications for a first home owner grant that are made on or after the commencement of the amendments." 34 This transitional provision operates to restrict the application of s 12 of the FHOG Act as inserted by the SRLFA Act 2005, to applications made on or after 7 December 2005. This means that the version of s 12 immediately preceding enactment of the SRLFA Act 2005 (i.e. without the above quoted s 12 (5) of the FHOG Act) applies in this case. 35 However, to the extent that regard can be had to a subsequent amendment (and relevant extrinsic material) to assist in confirming the meaning of a prior provision, the following is noted in respect to the SRLFA Act 2005. 36 The SRLFA Act 2005 did not amend s 20 or s 45 of the FHOG Act (which were foundations for the strict interpretation of the Commissioner's power under the original version of s 12 (1) of the FHOG Act adopted in the previous decisions of the Tribunal abovementioned). This means that if under the third and current version of s 12, a Commissioner's power under s 12 is not exercised until more than 14 days after the initial time for compliance has expired, there remains an issue as to the obligations of the applicant under s 20(3) of the FHOG Act, to comply with the conditions of the grant imposed by that section, to notify the Commissioner and repay the grant within 14 days after the end of the original period allowed for compliance, with the applicant being guilty of an offence under s 20(4) if there is non-compliance with those conditions. There remains also an issue if the Commissioner has required repayment of the grant and/or imposed a penalty under s 45 of the FHOG Act. 37 New s 20(5) of the FHOG Act must mean that s 20(3) and s 20(4) and s 45 of the FHOG Act are and have always been (because the latter sections have never been amended) intended to be subservient to the powers of the Commissioner under s 12. That is, for example, if the Commissioner exercises his power to extend the period of 12 months under s 12 (1B) or, to exempt under s 12 (1A)(b), an applicant from the requirement to comply with the residence requirement, in either case, more than 14 days after the relevant period of 12 months has expired, such extension must operate ab initio (from the beginning) so that the obligation to notify the Commissioner and the obligation to repay the grant (imposed under the conditions imposed by s 20 (3)) must be regarded as never having come into existence and the offence under s 20 (4) must be regarded as never having been committed and any requirement to repay the grant and any penalty imposed under s 45 must be regarded as having never having been made or imposed. Otherwise, s 20(5) would be denied operative effect. 38 The following is an extract from the Second Reading Speech by the Hon. Michael Costa on the SRLFA Bill 2005 (which became the SRLFA Act 2005) in the NSW Legislative Council on 29 November 2005: "… The bill also clarifies the circumstances in which the Chief Commissioner may exercise certain discretionary powers. Eligibility for the grant includes a residence requirement, which states that the applicant must occupy the home as his or her principal place of residence for at least six months commencing within 12 months of purchase. The Chief Commissioner is given the power to extend the period of 12 months, to reduce the period of 6 months, or to waive the residence requirement completely. The discretions are intended to allow the grant to be retained in circumstances where the applicant genuinely intended to occupy the home as his or her principal place of residence, but failed to do so due to a change in circumstances after the purchase of the home. The legislation limits the time at which the Chief Commissioner can exercise this discretion. This could have unfair consequences, particularly where a failure to comply with the residence requirement arose from changes to the health, employment or financial situation of the applicant or the applicant's family. The bill confirms that the Chief Commissioner can exercise the discretions at any time. Finally, the bill provides a right to object to decisions of the Chief Commissioner to require repayment of the grant or to impose a penalty, in addition to the existing right to object to the Chief Commissioner's decision on an application for the grant. This will formalise the existing practice of the Office of State Revenue. As a result of these amendments, a small number of applicants who would currently be required to repay the $7,000 grant will be eligible to retain the grant in future, and a small number of additional applicants will be eligible for the grant." 39 The Second Reading Speech states that: "The legislation limits the time at which the Chief Commissioner can exercise this discretion". However, prior to amendment by the SRLFA Act 2005, the FHOG Act did not expressly limit the time at which the Chief Commissioner could exercise his discretion (s) under s 12. A limitation on the time at which the Commissioner could exercise his discretion under s 12 was interpreted into the legislation in earlier decisions of the Tribunal, primarily because of the operation of s 20(3) and s 45 of the FHOG Act which have never been amended and remain unchanged in the FHOG Act. The Second Reading Speech states that: "This could have unfair consequences … The bill confirms that the Chief Commissioner can exercise the discretions at any time". Earlier, the Second Reading Speech also states that: "The bill also clarifies the circumstances in which the Chief Commissioner may exercise certain discretionary powers". 40 Although the transitional provision for the SRLFA Act abovementioned restricts the application of the amendments to s 12 to applications made on or after the commencement of the amendments, I do not find this to be the end of the matter. 41 In light of the absence of any amendment to s 20 (3), s 20 (4) and s 45 of the FHOG Act by the SRLFA Act 2005 or by any other Act and the use of the words "clarifies" and "confirms" (as compared to words such as "extends" or "increases") in the Second Reading Speech to the SRLFA Act 2005 as it relates to the amendments effected to s 12, I find that the effect of the amendment of s 12 of the FHOG Act by the SRLFA Act 2005 which inserted new s 12 (5), was to remove doubt as to the meaning of s 12 as it applies in this case. I find that s 20 (3), s 20(4) and s 45 of the FHOG Act must be, and must have been intended to be, subservient to the power(s) of the Commissioner under s 12 as applicable in this case. 42 It follows that in my view, the discretions of the Commissioner under s 12 as applicable in this case, were not restricted as to time and were capable of exercise by the Commissioner at any time. 43 For this reason, notwithstanding that s 12 (5) of the FHOG Act inserted by the SRLFA Act 2005 was not included in the version of s 12 applicable in this case, I do not find that the approach to interpretation of the Commissioner's discretion under the original version of s 12 of the FHOG Act adopted in previous decisions of the Tribunal (and by the VCAT in respect to similar legislation in Victoria) as abovementioned should be adopted in this case. 44 For the above reasons, I agree with the presumption in the Earlier Decision, that the discretion of the Commissioner under s 12(1A)(b) may be exercised at any time, including after the 12 months period referred to in s 12 (1B) of the FHOG Act (as is relevant to this matter). 45 However, for the reasons that follow, I do not find that the Applicant has discharged his onus of proving his case as required under s 28(3) of the FHOG Act in respect to the decision of the Commissioner to require repayment of the Grant. Decision on requirement to repay the Grant 46 The Applicant is required to repay the Grant pursuant to the conditions imposed in respect to the payment of the Grant under s 20(3) of the FHOG Act, unless the Commissioner favourably exercises one of his discretions under s 12 of the FHOG Act. 47 The Commissioner has 3 discretions under s 12, namely, under s 12 (1A)(a) which is not relevant to this matter, under s 12 (1A)(b) and under s 12 (1B). 48 On the material before the Tribunal, for the reasons hereunder, I do not find that the Commissioner's decision not to favourably exercise his discretion under s 12 (1A)(b) was in error. 49 Since I have found that the powers of the Commissioner in s 12 of the FHOG Act as applicable in this case, are not restricted as to time, in my view, the Commissioner should have also considered his power to extend the period of 12 months under s 12 (1B) of the FHOG Act. Under s 63 (2) of the Administrative Decisions Tribunal Act 1997, the Tribunal may exercise all of the functions that are conferred or imposed by any relevant enactment on the administrator who made the decision, in deciding what the correct and preferable decision is having regard to the material before the Tribunal. Pursuant such to s 63 (2), I have considered the power of the Commissioner under s 12 (1B) of the FHOG Act and find that it would not be fair or appropriate for the Commissioner to approve a period of 2 years and 8 months (or longer, according to when the Applicant actually commenced occupation of the home), by way of an extension of 20 (or more) months on the original period of 12 months, under s 12 (1B) of the FHOG Act in the circumstances of this case. 50 The extract from the Second Reading Speech to the SRLFA Bill 2005 quoted above included the statement that: "The discretions are intended to allow the grant to be retained in circumstances where the applicant genuinely intended to occupy the home as his or her principal place of residence, but failed to do so due to a change in circumstances after the purchase of the home". This is a clear statement of the objectives of the discretions of the Commissioner in s 12 of the FHOG Act under the third and current version of s12, in the context of where a grant is paid and is sought to be retained. The discretions of the Commissioner in s 12 of the FHOG Act under the third and current version of s12 can obviously also be exercised before or at the time of a grant (since the discretions are not limited as to time) in which case, a "change" in circumstances would not be relevant. 51 I find the statement of objectives of the discretions of the Commissioner in current s 12, in the circumstance where a grant is paid and is sought to be retained, set out in the Second Reading Speech to the SRLFA Bill 2005, to be relevant to the discretions of the Commissioner in the version of s 12 as applicable in the context of this case. Even though the statement was made in Parliament in respect to discretions under a new version of s 12, the discretions under the version of s 12 applicable in this case are still of the same kind as those that now exist under the new version of s 12. The statement of objectives is also consistent with an ordinary interpretation of the discretions in s 12 as applicable in this case, in light of the objective of the FHOG Act "to encourage and assist home ownership" recorded under the long title to the FHOG Act. 52 In this matter, the Applicant did not provide any evidence to substantiate his claim referred to at paragraph 4 of the Earlier Decision that the Applicant "was given assurance that he could move" by the Australian Army. To the contrary: (1) the testimony of the Applicant at the hearing was that within the early years of service in the Australian Army (as is applicable to the Applicant), approval of applications for postings elsewhere within the Australian Army were discretionary which means that until the Australian Army's discretion was favourably exercised in respect to an application for transfer in posting, there was no certainty that an application from the Applicant for a posting to a base near the subject property would be approved; (2) the Applicant stated in his fax to the Tribunal dated 28 April 2007, that "Other attempts were made both previous and after this interview to secure a posting to the region" which indicates that a move to a base near the home was never made certain by the Australian Army to the Applicant; and (3) the document dated 28 October 2004 from the Australian Army attached to the fax dated 28 April 2007 from the Applicant noted a forecast as to a posting to Coffs Harbour in 2007, more than 2 years and 8 months after the purchase of the subject property by the Applicant and such forecast was expressed to be "dependant on PAC clearance" which meant that it was not certain. 53 This evidence of the Applicant does not indicate or support any finding of "a change in circumstances after the purchase of the home". 54 At the time of purchase of the home, the Applicant was employed by the Australian Army, based in Sydney (Liverpool). From the evidence provided by the Applicant, at the time of purchase of the home, the prospects of the Applicant obtaining, within continued employment by Australian Army, a transfer to Coffs Harbour, in order to make occupation of the home as the principal place of residence of the Applicant feasible during continued employment by the Applicant with the Australian Army, were no more than a "mere possibility". 55 From the date of purchase of the home until the date the Applicant made a decision to take a transfer to Standby Reserve within the Australian Army, those circumstances of the Applicant remained the same, namely, a transfer to Coffs Harbour or elsewhere near the property remained only a "mere possibility" for the Applicant. The Applicant did not obtain a transfer to Coffs Harbour within 12 months after completion of the purchase of the home or any time thereafter and this fact did not represent any "change" in the Applicant's circumstances. 56 Even if the Applicant genuinely (ultimately) intended to occupy the home as his principal place of residence, his failure to do so commencing within 12 months after completion of the purchase was not due to any change in circumstances after the purchase of the home but rather, because of a continuation of the existing circumstances of the Applicant. 57 The only practical way that the Applicant could have taken up occupation of the home as his principal place of residence in his circumstances, was to take leave from the Australian Army. This, in the end, is what the Applicant did, more than a year and 8 months after expiry of the 12 month period in which the Applicant was originally required to commence occupation of the home as his principal place of residence. In the interim, the Applicant leased the home on a number of occasions. 58 Although the Applicant has, by his conduct in taking leave from the Australian Army and moving into the home as his principal place of residence, indicated that the home was ultimately intended to be his principal place of residence, the following circumstances indicate that it would be inappropriate for the Commissioner to exempt the Applicant from the residence requirement as defined in the FHOG Act: (1) The Applicant did not establish that there was any change in his circumstances after his purchase of the home. At the time of purchase of the home, realistically, the Applicant only had a "mere possibility" of a transfer by the Australian Army to a base near the home. That possibility did not eventuate and the circumstances of the "mere possibility" remained until the Applicant finally took leave from the employment of the Australian Army more than 2 years and 8 months after the Applicant purchased the home. (2) The Applicant actively decided, on more than one occasion during the period of more than 2 years and 8 months after his purchase of the home, to lease the home. On each such occasion, the Applicant was effectively also making a conscious decision not to take occupation of the home as the Applicant's principal place of residence. (3) During the period of more than 2 years and 8 months after the purchase of the home until the Applicant took occupation of the home, the Applicant's leasing of the home gave the home the character of an investment property which is not what the FHOG Act is directed towards assisting. (3) The length of time between completion of the purchase and the Applicant's actual occupation of the home as his principal place of residence being 2 years and 8 months (more than 150% greater than the original 12 months period required by the FHOG Act) is excessive, given the absence of any "change" in the circumstances of the Applicant. (4) As submitted by the Commissioner in the letter received by the Tribunal on 9 May 2007, it would be unfair to those in similar situations, who are required to take up occupation and the use of their property purchased using the grant paid under the FHOG Act within 12 months after completion of the purchase, to exempt the Applicant from compliance with the residence requirement (as defined in the FHOG Act) in the above circumstances. 59 The Applicant completed the FHOG Scheme Application form which included a declaration that "I will be occupying the home as my principal place of residence within 12 months of the date of settlement or within 12 months of the date of completion of construction". As earlier mentioned, the Applicant submitted that the Applicant was not given information by the Office of State Revenue about applying for an extension of time for compliance with the residence requirement under the FHOG Act within the period of 12 months after completion of his purchase. In administering the FHOG Act, in pursuit of the objectives of the FHOG Act to "assist" first home buyers, it may be appropriate for the FHOG Scheme Application form to include information about the right of applicants to apply for an extension of time or exemption from the residence requirement under the FHOG Act. However, even if such information had been included in the FHOG Scheme Application form completed by the Applicant and even if the Applicant had acted upon such information and earlier applied for an extension of time or exemption from the residence requirement, since, as aforementioned, the circumstances of the Applicant had not changed, I find it unlikely that there would have been grounds for an extension of time or good reasons for exemption from the residence requirement to have been granted. As submitted by the Commissioner, it was open to the Applicant to comply with the residence requirement within time. It was the Applicant's decision not to do so. 60 I find that the Applicant has not established "good reasons" to warrant favorable exercise of the Commissioner's discretion under s12 (1A)(b) of the FHOG Act. 61 For reasons similar to those referred to above, I find that it would not be fair or appropriate for the Commissioner to approve a period of 2 years and 8 months (or longer, according to when the Applicant actually commenced occupation of the home), by way of an extension of 20 (or more) months on the original period of 12 months, under s 12 (1B) of the FHOG Act in the circumstances of this case. Decision on Penalty 62 In a recent decision of the Tribunal in Morris and anor v Chief Commissioner of State Revenue [2007] NSWADT 110 ("Morris' Case") the following was stated [at 60]: "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". 63 The same position as pertained in Morris' Case existed in this matter. That is, in this case, there was also virtually no discussion during the hearing regarding the penalty imposed in respect to repayment of the Grant. 64 However, for the following reasons, I find that the Commissioner should have reduced the penalty to 10%: (1) the original penalty of 20% which was originally imposed in Morris' Case was imposed in respect to a grant paid on 7 May 2004, a date close to the date of payment of the grant in this case. Such penalty was subsequently reduced by the Commissioner to 10% for the applicants in Morris' Case. I do not find anything in the circumstances of this matter as compared to the circumstances in Morris' Case, to warrant a higher penalty being imposed on the Applicant in this case as compared to the applicants in Morris' Case; (3) a reduction of the penalty from 20% to 10% is in accord with a number of earlier decisions of the Commissioner as recorded in previous decisions of the Tribunal such as Spresian v Chief Commissioner of State Revenue [2006] NSWADT 239, Harvey & anor v Chief Commissioner of State Revenue [2006] NSWADT 240 and WM v Chief Commissioner of State Revenue [2006] NSWADT 199; (4) similar to the finding in Greig v Chief Commissioner of State Revenue [2006] NSWADT 146, where the Tribunal reduced the penalty under s 45(3) of the FHOG Act from 20% to 10%, I do not see this case as involving a complete disregard of or indifference to the Applicant's responsibilities as a grant recipient. I find that the Applicant overlooked and did not deliberately intend to fail to comply with the conditions of the Grant referred to in s 20(3) of the FHOG Act; and (5) in light of the foregoing and on the basis of consistency and fairness in treatment of persons liable to the Crown under the FHOG Act, the Commissioner should have reduced the Penalty to 10%. Compliance 65 At the hearing, the Applicant indicated that if the Commissioner's decision is affirmed by the Tribunal, he may have difficulty making repayment of the Grant and paying the penalty. 66 Under s 46 (6) of the FHOG Act, the Chief Commissioner may enter into an arrangement (which may include provision for the payment of interest) for payment of a liability outstanding for repayment of a grant and payment of a penalty, by instalments. 67 At the hearing, Mr S Benjamin for the Commissioner recited the name of a contact person at the Office of State Revenue and a telephone number for that person, for the Applicant to contact to request payment by instalments according to the capacity of the Applicant to pay, in the event that the Commissioner's decision was affirmed by the Tribunal. The Applicant indicated that he had noted that contact name and number. Conclusion 68 For the foregoing reasons, the correct and preferable decision having regard to the material before the Tribunal is to make the orders below. Orders 1. The decision of the Commissioner to require repayment of the Grant is affirmed. 2. The decision of the Commissioner to impose a 20% penalty is set aside and substituted with a penalty of 10%. 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.