Avitaia and ors v Chief Commissioner of State Revenue [2008] NSWADT 65

CITATION: Avitaia and ors v Chief Commissioner of State Revenue [2008] NSWADT 65

DIVISION: Revenue Division

APPLICANTS Elaine Therese Avitaia Felice Avitaia Colin Wayne Brown Jennifer Mary Brown Irwin Lloyd Kent PARTIES: Moresaco Pty Ltd

RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 076076

HEARING DATES: 12 November 2007

SUBMISSIONS CLOSED: 12 November 2007

DATE OF DECISION: 4 March 2008

BEFORE: Needham J SC - Deputy President

CATCHWORDS: Land tax exemption - principal place of residence

MATTER FOR DECISION: Principal matter

Conveyancing Act 1919 LEGISLATION CITED : Land Tax Management Act 1956 Taxation Administration Act 1996

Bagust v Rose [1964] NSWR 5 at 8 Forgeard v Shanahan (1994) 35 NSWLR 206 CASES CITED: Glenn v Federal Commissioner of Land Tax [1915] HCA 57; (1915) 20 CLR 490 Pascoe v Swan (1859) 27 Beav 508; 54 ER 201 Tittman v Traill (1957) 74 WN (NSW) 284 at 287

APPLICANTS R Richards, solicitor REPRESENTATION: RESPONDENT M England, barrister

ORDERS: The decision under review is affirmed.

REASONS FOR DECISION 1 The applicants seek to review assessments for land tax in relation to land owned by them as co-owners in Terrey Hills. The land the subject of the assessments under review in this matter would normally not be exempt from Land Tax under the Land Tax Management Act 1956 ("the Act") given that it is part-owned by a company, and thus the owners are not entitled to the exemption granted for a principal place of residence. However, the owners have arranged their affairs so that each co-owner has rights to parts of the land and not to other parts. 2 The question in this matter is whether, where land is owned partly by a company and thus the owners would normally not be entitled to the principal place of residence exemption ("the PPR exemption"), those owners may arrange their occupation of the land so that they each have exclusive possession of portions of the property and so may claim the PPR exemption in relation to that part of the land on which their homes are built. The land, the assessments and the objections 3 The applicants, Elaine Therese Avitaia, Felice Avitaia, Colin Wayne Brown, Jennifer Mary Brown, Irwin Lloyd Kent and Moresaco Pty Ltd are co-owners as tenants in common of property known as 313 Mona Vale Road, Terry Hills (also referred to as 28 Myoora Road, Terrey Hills), being land described in Certificate of Title Folio Identifier 29/752017 ("the property"). Moresaco Pty Ltd did not appear at the hearing and does not press any application for review of the assessments as they relate to that company. 4 The shares in which the various owners hold their interest in the properties is as follows: (i) Mr Kent: 51912/236550 shares (ii) Mr and Mrs Brown: 25955/236550 shares as joint tenants (iii) Mr and Mrs Avitaia: 25955/236550 shares as joint tenants (iv) Moresaco Pty Ltd: 132728/236550 shares. 5 Thus, Moresaco Pty Ltd's allotment under the Deed is approximately 56 percent of the total. The applicants who appeared thus seek to review 44 percent of the assessed total. 6 Assessments for land tax were issued in relation to the property on 16 June 2004 for the 2000, 2001, 2002, 2003 and 2004 tax years. A further assessment was issued on 24 May 2006 for the land tax years 2005 and 2006. The sum sought by the respondent, the Chief Commissioner for State Revenue, in the 24 May 2006 assessment for the land tax alleged to be outstanding, including interest and penalties, was $157,711.45. That total is now of course higher given the time elapsed since that assessment. 7 Mr Richards, solicitor for the applicants, lodged an objection against the 2005 and 2006 years on 21 July 2006. The basis of the objection was that the owners of the land (except Moresaco Pty Ltd) each used a particular portion of the land, reflected in the shares allotted to them by deed of December 1995, as their principal place of residence and were thus entitled to claim the PPR exemption. In the objection, Mr Richards noted that: "Each of the owners has exclusive possession of a separate part of the land. The reason why the Owners acquired the land as joint owners rather than individually was because of zoning restrictions". 8 Mr Richards further provided an objection by the owners (including Moresaco Pty Ltd) that their liability for land tax should each be assessed on the portions of land, which they have internally allotted themselves, by the Deed of December 1995, and not as part-owners of the whole of the land being jointly liable for the whole of the land tax. 9 Mr Richards' letter of 21 July 2006 and the objections noted that while Moresaco Pty Ltd claimed the exemption relating to primary production, nothing was known about that claim and that the Office of State Revenue should deal directly with Mr Wilfred Kelvin, the director of Moresaco Pty Ltd. 10 On 31 August 2006 Mr Richards wrote a further letter to the Commissioner in which he stated: "The owners now which to lodge objections against assessments of land tax issued by you for the 2000, 2001, 2002, 2003 and 2004 years. It is appreciated that these objections will be lodged other than within 60 days of receipt by the owners of the assessments. Notwithstanding that the owners request that you grant them additional time in which to lodge those objections …" 11 The explanation for the delay was that a director of the corporate co-owner, a Mr Kelvin, was unwell and had been the person dealing with land tax objections. The personal applicants say that they had no knowledge of the assessments until quite late in the piece. Mr Kelvin had suffered a stroke and was "unable to communicate". The objection to the earlier assessments was on the same basis as for the 2005 and 2006 years. 12 On 5 March 2007 Mr Richards wrote again to the Commissioner requesting some response to their enquiries. On 13 March 2007 the Office of State Revenue replied to Mr Richards. The objections the subject of the letter were "2000 to 2006 Land Tax Assessments". No point was taken in that letter as to the delay in objecting to the 2000-2004 land tax years. The letter noted that: "the principal place of residence exemption under Schedule 1A of the Land Tax Management Act 1956 does not apply to the land referred to in the notice of assessment as 28 Myoora Road, Terrey Hills (Lot 29 DP 752017) because the land is jointly owned by a company. The exemption is precluded by Clause 11, Part 4 of Schedule 1A (2004 to 2006 tax years) and the repealed Section 10AA (2000 to 2003 tax years)." 13 Mr Richards wrote to the Chief Commissioner once more on 21 March 2007 stating: … Whilst you stated that the land the subject of your letter was not eligible for the principal place of residence exemption you did not determine those objections lodged by [the applicants] (in respect of the years 2000-2006)." 14 The Office of State Revenue replied on 2 April 2007 in the following terms: "… Your objection to the 2000 to 2004 tax years was lodged out of time. However, we have treated your letter as a request for a review of those assessments under section 9 of the Taxation Administration Act 1996. Your objection to the 2005 and 2006 tax years was lodged within time. ... If you are not satisfied with our decision to the 2005 and 2006 tax years, you can ask the Administrative Decisions Tribunal or the Supreme Court to review it …" 15 Mr Richards again urged the Commissioner to accept the objections for the 2000-2004 tax years in a letter of 17 April 2007. He further urged the Commissioner to make a decision whether to accept the objections and to give notice of and reasons for that decision. 16 On 24 April 2007 the Commissioner wrote to Mr Richards noting that: "We have not accepted your objection to the 2000 to 2004 tax years as lodged within the prescribed time because your request was received more than two years after these assessments were issued and the reasons you have provided do not warrant an extension of time. However, we have treated your letter as a request for a review of these assessments under section 9 of the TAA." 17 The letter of 24 April 2007 further noted that the objection to the 2005 and 2006 tax year assessments had been disallowed. Accordingly, on 24 May 2007 Mr Richards caused an application to be lodged with this Tribunal seeking a review of the decision(s) contained in the 24 April 2007 letter on the basis that "the decision is incorrect". That application was filed within time. 18 On 30 July 2007 the Chief Commissioner gave reasons for the disallowance of the objections to the 2005 and 2006 assessments. Those reasons can be summarised that the property was jointly owned by a company, and thus the land is precluded from obtaining the principal place of residence exemption. The reasons went on to say: "The applicant has not provided any facts that would contradict the position taken by the Chief Commissioner. The land is a parcel of residential land and there is no provision in the Act to notionally subdivide the land into smaller lots". 19 In his submissions, the Commissioner takes the view that: "the Respondent is content for the reassessment (of the 2000-2004 tax years) to be treated as an objection that is now under review. If the Tribunal is minded to deal with the reassessment in that way, the Respondent neither consents to nor opposes an extension of time for the review of the 2000-2004 assessments". 20 Given the Commissioner's view, and the fact that the factual situation does not differ over the range of time of the assessments, and no prejudice arises in relation to an extension of time, the appropriate course is to accept the reassessment as an objection and for the Tribunal to review each of the years from 2000 to 2006 in these proceedings. The hearing proceeded on that basis. Principal Place of Residence Exemption - the Legislation 21 A number of different statutory regimes have existed between 2000 and 2006. The legislation provisions are summarised in the Commissioner's submissions. Citing those submissions (paragraphs 15-18) with footnotes incorporated into the text in brackets, and references standardised: "15. The statutory provisions concerning the PPR exemption have changed over the tax years the subject of the disputed assessments. (For the 2000 – 2002 tax years, sub-section 10(r) and 10(1D)(a) of the Act applied. For the 2003 tax year, section 10(r) continued to apply but section 10(1D)(a) was replaced by section 10AA. For the 2004 – 2006 tax years, section 10(r) continued to apply but clause 11 of Schedule 1A replaced section 10(AA.) Section 10(r) of the Act, which sets out the exemption, remained relevantly the same throughout the 2000 – 2003 land tax years. (There were minor changes to section 10, for example to the section numbers for the excluded categories of owners, but these changes are not relevant.) Section 10 provided as follows: Section 10 – Land Exempt From Land Tax Except where otherwise expressly provided in this Act the following lands shall, subject to [specified sections, concerning exclusions], be exempted from taxation under this Act: … (r) with respect to taxation leviable or payable in respect of the year commencing on 1 January 1998 or any succeeding year, land that has a land value in respect of the year of less than the premium land tax threshold and that is used and occupied as the principal place of residence of the owner of the land (or, if there are joint owners, as the principal place of residence of one or more of them) and for no other purpose (except as provided by subparagraph (iii)), being: i) … ii) a parcel of residential land, or iii) a parcel of residential land on which there is also one of the residential occupancies referred to in subsection (1D)(b)(ii)(A)-(F), unless the owner or all of the joint owners who so used and occupied the lot or parcel (as appropriate) is such an owner by reason only of being a trustee." 16. For the 2004 – 2006 land tax years, section 10 and schedule 1A provided as follows: Section 10 – Land exempted from tax Except where otherwise expressly provided in this Act the following lands shall, subject to [specified sections, concerning exclusions], be exempted from taxation under this Act: … (r) land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A, … Schedule 1A Principal place of residence exemption Part 2 Principal place of residence exemption 2 Principal place of residence exemption (1) Land used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose, is exempt from taxation under this Act, in respect of the year commencing 1 January 2005 or any succeeding year, if the land is: (a) a parcel of residential land … 17. Schedule 1A, which was in force for the 2004 – 2006 land tax years, continues on to set out the exclusions to the principal place of residence exemption for certain categories of owners. Schedule 1A is representative of the exceptions to the principal place of residence exemption for the previous years also. That is, for each of the 2000 – 2006 land tax years, the principal place of residence exemption was not available if the land was jointly owned by a company. (Although for the 2003 – 2006 tax years this exclusion did not apply to land owned by a trustee company acting in its respective capacity or a company acting in its capacity as trustee of a concessional trust. …) 18. Schedule 1A provides as follows: Part 4 Restrictions 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, or jointly owned, by a company, unless the land is owned or jointly owned by a trustee company acting in its representative capacity or a company acting in its capacity as trustee of a concessional trust …" 22 Mr Richards, for the applicants, relied upon the sections set out above and further relied upon the definition of "owner" in section 3 of the Act which provides: " Owner includes: (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 … Joint owners means person who own land jointly or in common, whether as partners or otherwise … Person includes a company" Evidence 23 At the hearing, significantly more information about the property and the relationships between the co-owners was provided. Mr Kent is the father of Mrs Avitaia and Mrs Brown. He gave evidence that he has a hobby of horse breeding and he uses sheds and paddocks on the land in pursuance of that hobby. Mrs Avitaia is separated from her husband and while he is a co-owner of the property, he does not live there. Mrs Avitaia and her children reside on the property. Mr and Mrs Brown are married and reside on the property. It appears that there was at some point an unsuccessful application to subdivide the land to give each family a portion of their own, and so the Deed of December 1995 was entered into to effect, as it were, an equitable subdivision. Moresaco Pty Ltd is an entity not related to the Kent/Avitaia/Brown families and, as noted above, did not appear in the proceedings. 24 Mr Kent, Mr Brown, Mrs Brown and Mrs Avitaia all gave evidence by affidavit. The Deed and a sketch of the areas of the land occupied by each owner was attached to each affidavit. Doing my best to describe the allocated areas of the property, the layout is as follows: (a) The block (as I shall refer to the total land holding for the purpose of this description) is 264.38m long and 71.215 m wide, and is thus a long rectangular shape. (b) The block is bordered by Myoora Road on the left of the sketch (no compass points are given) and Mona Vale Road on the right. The long sides of the block stretch between Myoora Road and Mona Vale Road, and the short sides of the block are street frontages. (c) Moresaco Pty Ltd occupies a "battleaxe" strip running the whole length of the top boundary of the block. The "handle" of the axe is 18.25m wide, roughly a quarter of the width of the block, and has access to Myoora Road. The handle extends for 157.88m, or about 2/5 of the length of the block. The balance or "head" of the "axe" takes up the entire width of the block and extends for a further 108.5 metres and has access to the entire Mona Vale Road frontage for the block. (d) As to the balance of the land, which is bordered on the top and right hand sides by the Moresaco land, on the left side by Myoora Road, and on the bottom, presumably, by neighbouring land ("the sub-block"), it is bisected by a driveway. The various portions of the sub-block are marked out (presumably by fences, given the use of some of the land for horse purposes). The driveway ends at a portion allocated to Mr Kent. That portion extends the width of the sub-block, and is used by Mr Kent as a horse paddock. (e) As one progresses up the driveway from Myoora Road, there is land forming the sub-block on either side and at the end of the driveway. The various parts of the sub-block are allocated as follows: (i) Mr Kent has two grass paddocks on the left and two areas on the right of the driveway, forming a workshop and a horse riding arena. (ii) the next two portions opposite each other on the left and the right of the driveway are allocated to the Browns. They have a horse paddock on the left of the driveway and a residence on the right. (iii) Past the Browns' portion there is a horse paddock on the left and a residence on the right, allocated to the Avitaias and occupied by Mrs Avitaia and her family. (iv) The driveway ends here; Mr Kent's horse paddock extends the whole width of the sub-block, and to the right of that, adjacent to the Moresaco block, there are stables and sheds used by the Avitaias. 25 The Deed is dated December 1995 (the day is not filled in on the Deed) and the parties to the Deed are the current co-owners of the property and Mr Kelvin. It appears that Mr Kent and Mr Kelvin had a previous arrangement in relation to occupation of the land from 5 December 1980. That Deed is not in evidence. The December 1995 Deed revokes that Deed. The Deed recites Mr Kent's wishes to sell 25,999 shares of the total 236,550 of the property to the Browns and the Avitaias, and the wishes of the parties to borrow moneys on mortgage to purchase their shares and the various indemnity and mortgage requirements arising out of the multi-party mortgage. 26 As to the operative provisions of the Deed: (a) the December 1980 Deed is revoked; (b) the sketch of the property (described in paragraph [24] above) was annexed and by clause 2 the parties were each given "exclusive possession use and enjoyment of that part of the property … and save such rights as are modified enhanced or varied by this deed the parties hereto shall enjoy and be subject to all restrictions and benefits recognised by law as attaching to tenure as tenants in common or which is inconsistent with this agreement". (c) the parties agreed that they would not disturb the others' exclusive possession of their respective areas; (d) clause 4 of the Deed required that "all rates and taxes or other charges assessed upon the subject property shall be paid promptly when due by the parties in the proportions in which they hold an interest in the subject property …" (e) the balance of the deed deals with issues such as insurance, the procedure if a party wished to sell its interest, the carrying out of improvements of the property and the like, not being issues relevant to these proceedings. 27 Mr Kent gave evidence that he is a director of Aircop Air Conditioning Pty Ltd ("Aircop"), which he and Mrs Brown operate as shareholders in equal shares. There is a small office located on the land, which is used as Aircop's office for "purely administrative purposes". Mr Kent says that the substantive work of Aircop is undertaken by contractor's offsite and that "no income is derived by the company from the provision of services from the office". Mr Kent says that at all times since December 2005 ( sic - 1995) he resided at the house constructed on the property. 28 Mr Brown says that he and his wife and children have since December 2005 (sic - 1995) occupied a house and land and some garden sheds on the portion of the land allocated to them by the deed. Mrs Brown, in identical terms to her husband, even as to the errors as to the date in Mr Brown's and Mr Kent's affidavit, gives the same evidence as her husband. 29 Mrs Avitaia notes that the Deed was executed in December 1995 and that from 1995 until 1997 she and her husband lived on the portion of the land allocated to them by the Deed. She and her husband separated in June 1997 and she and her children continued to reside in the house. 30 There is no evidence from Mr Kelvin or from Moresaco Pty Ltd. 31 Some additional documents were tendered by the respondent. They were: (a) Exhibit R4: a copy of Mr Kent's driver licence showing an address in Cooranbong rather than the address of the property; (b) Exhibit R5: a 2004 Sydney Water invoice addressed to the co-owners of the property except for Mr Avitaia and Mr Brown for "residential property"; total usage for 1 October 2004 to 31 December 2004 was $26.30 worth of water (the previous bill being $1,006.25); (c) Exhibit R6: a 2005 Sydney Water invoice addressed to the same persons as R5 for "commercial property" for the period 1 October 2005 to 31 December 2005 for $1,349.60, being $165.35 worth of water and an outstanding amount of $1,184.24 and interest in the sum of $15.56; and (d) Exhibit R7: a 2006 Sydney Water invoice addressed to the same persons as R5 for "commercial property" for the period 1 July 2006 to 30 September 2006 for water in the amount of $1,132.68; the total including outstanding amounts is $3,232.65. Applicant's Case 32 The applicants (with the exception of Moresaco Pty Ltd) argue, in summary: (a) Clause 2 of the Deed of December 1995 (see paragraph [26(b)] above) effected an equitable subdivision of the property, which should have the effect of those parcels being treated as the Commissioner would treat land in separate ownership. (b) The evidence before the Tribunal is sufficient to establish that each of the three sets of applicants (Mr Kent, the Browns and the Avitaias) do indeed use their allocated portions as their principal places of residence. 33 Mr Richards relied upon the definition of "owner" in section 3 of the Act. He submitted that because of the effect of the Deed, each of Mr Kent, Mr and Mrs Avitaia as joint tenants, and Mr and Mrs Brown as joint tenants, is an "owner" of his or their separate allotment of land given that they would, it is submitted, be able to exercise their rights of exclusive possession of the land so that if an individual allotment of the property were rented out, the person entitled under the Deed to occupation of that allotment, rather than all the co-owners, would be entitled to the rents. Put simply, the submission is that the rights of exclusive possession given under the Deed to individual parts of the property result in each individual portion being owned individually, and so each allotment is not co-owned by a company. 34 In support of that submission the applicants referred the Tribunal to Glenn v Federal Commissioner of Land Tax [1915] HCA 57; (1915) 20 CLR 490. While accepting that the facts of that case are not four-square with this, the submission is that the case determined that where a person has no entitlement to a freehold estate in possession, that person has no liability for land tax an as "owner". The definition in the legislation in Glenn's case does not differ in any material way from that in the Act. 35 Mr Richards submitted that the Deed of December 1995 effected an equitable partition, so that each co-owner received "an equitable right of sole tenancy to that part of the land the right of exclusive possession of which was allocated to them". Therefore, the part of the land allocated to them was not in any relevant or beneficial sense co-owned by a company. 36 As to whether the applicants in fact used their properties as their principal place of residence, Mr Richards pointed to the evidence given by each of the applicants and to the provisions of sub-sections 5(1) and (2) of Schedule 1A to the Act which provides, in summary, that a principal place of residence with not more than one room used primarily for business purposes may be disregarded if the use of the business is primarily conducted elsewhere. It is contended on behalf of Mr Kent that the toilet is not used for a business purpose despite the fact it is adjoining the office used by him. The Respondent's Case 37 The Commissioner submits: (a) the land may not fall within the PPR exemption; (b) if it does, it is jointly owned by a company; and (c) the applicants do not have the benefit of any other exemption available to them. 38 As for the factual issue, it is submitted that the evidence on behalf of the Avitaias is, at best, ambiguous, but it is submitted that there is no affirmative evidence except for the water rates exhibits which would point to a conclusion that the various occupants consented to billing at a commercial, rather than a residential, rate. As for the Browns, there is no real evidence that can be pointed to except for the use of the date of 2005 in their evidence for the Deed. 39 It was submitted that Mr Kent's use of the office, which is submitted to be 2-3 rooms, was sufficient to exclude the property as "residential land" for the purposes of the PPR exemption. It was submitted that as the headquarters of a business, it was ludicrous to suggest that the business was in fact located elsewhere, or that no income was derived from the administrative processes which were undertaken at the premises. It was suggested that there was nothing by which it could be concluded that the toilet was not used for business purposes, a matter which was mercifully not further explored. The Issues 40 The issues in this matter are: (a) Did the Deed of December 1995 effect a change in the equitable ownership of the property so that each of the relevant applicants is an owner of a portion of the land rather than of the whole of the land? (b) If yes to (a), is that equitable ownership sufficient to oust the provisions of Schedule 1A clause 11(a) of the Act so that the relevant applicants may seek the PPR exemption? (c) If yes to (a) and (b), do any of the relevant applicants in fact satisfy the PPR exemption criteria? Issue (a) - the effect of the Deed 41 The deed is referred to in paragraph 26 above. The relevant portions read in full: RECITALS E. Kent wishes to sell a 25,995/236,550 share of his interest as a tenant in common to Colin Wayne and Jennifer Mary Brown to be held as a tenant in common and also a further 25,995/236,550 share of his interest as a tenant in common to Felice and Elaine Therese Avitaia also to be held as a tenant in common. … I. The parties have agreed to borrow the total sum of $475,000 from (and here are listed the names of the proposed mortgagees); … M. The parties are desirous of recording in writing the terms and conditions pursuant to which they hold their respective interests in the subject property, and the rights and liabilities, created as a result of the mortgage of the property. OPERATIVE PROVISIONS … (2) The parties shall be entitled to the exclusive use of that part of the property referred to in the sketch annexed and marked "A","B","C" & "D" and shall be entitled to the exclusive possession use and enjoyment of that part of the property marked as an annexure and save such rights as are modified enhanced or varied by this deed the parties hereto shall enjoy and be subject to all restrictions and benefits recognised by law as attaching to tenure as tenants in common or which is inconsistent with this agreement. Moresaco shall be entitled to the use and enjoyment of the area marked "A" Browns shall be entitled to the use and enjoyment of the area marked "B" Avitaia shall be entitled to the use and enjoyment of the area marked "C" Kent shall be entitled to the use and enjoyment of the area marked "D" (3) Each party hereto or its executors administrators or assigns covenant with the other and any successors in title that they shall not use any part of the property herein described and in respect of which another party is entitled to exclusive possession or enjoyment in any manner which would interfere with or disturb the quiet and exclusive possession and enjoyment by any other party and its successors in title of their respective designated areas. … (9) No party to this agreement shall assign its interest or create any further encumbrance of its interest in the property without the prior written consent of all other parties, and such consent shall not be unreasonably withheld. (18) The parties hereto hereby confirm the right of each other party to draw water, gas and electricity over, along, or under the existing pipes or wires on the property together with the right to enter onto the others designated area for the purpose of maintaining, repairing or renewing such pipes, power poles or wires." 42 It was submitted that the Deed, by its recitals and operative provisions, effected an "equitable subdivision" of the property and thereby in equity each party or couple had their rights restricted to the property over and above their allocated portion, and received rights to the allocated portions only except as set out in the Deed. 43 In order to establish whether the Deed in fact had that effect, it is necessary to be reminded of the inherent nature of co-ownership. The various applicants including the corporate applicant are each co-owners as tenants in common; the fact that the two couples co-own their interest as joint tenants may be disregarded for this exercise. The essential right of co-ownership, whether it be tenancy in common or joint tenancy, is to give the co-owners the right of possession and enjoyment of the whole of the land. This right is common to all kinds of co-ownership - see Blackstone's Commentaries on the Laws of England, 2nd edition, Oxford, 1766, Volume 2, pages 180-2. Each co-owner may, for example, lease his or her interest in the land, but that subsidiary interest may not interfere with the rights of co-owners (ie, a co-owner's right to possession trump those of a lessee of the interest of another co-owner). 44 Co-owners generally do not have to pay occupation rent for occupation of property unless they so occupy the property by excluding their co-owner - see Forgeard v. Shanahan (1994) 35 NSWLR 206, Pascoe v Swan (1859) 27 Beav 508; 54 ER 201. 45 Is it possible, as Mr Richards submits, for co-owners to agree to arrange their affairs so that exclusive possession is given of particular areas, thus effecting an equitable partition? The answer, in my view, is yes. In the years before Strata Title legislation was enacted, horizontal subdivision was attempted to be effected by either long leases of jointly owned property (for example, an apartment building) or by recourse to company law and the institution of company title. This was specifically to deal with the difficulties of co-owners having the right to possession of the whole of the land, despite being tenants in common. The holding of shares in the company, which owned the building, was coupled with a lease from the company to the shareholder giving the right of exclusive possession of a particular area; that right of exclusive possession gave the right to exclude the company by its officers from entering the property. See Tittman v Traill (1957) 74 WN (NSW) 284 at 287; Bagust v Rose [1964] NSWR 5 at 8. The analogy is not a perfect one - since the shareholder is not a co-owner and cannot, for example, exercise the rights of an owner such as ejectment - but certainly the owner of the property giving exclusive possession to tenants of particular parts of the premises does give individual rights in those tenants to the particular part of the property. 46 It seems to me that in applying that principle to the Deed in question there are two real difficulties with Mr Richards' submissions. Firstly, the Deed does not, in explicit terms, do anything except allocate portions of the land to be enjoyed in exclusive possession by each of the co-owners. It does not purport to subdivide nor to amend the general rights of co-ownership; in fact, it recognises those rights by the provisions, which deal with payment of "rates and taxes or other charges"; these are to be paid by the parties "in the proportions in which they hold an interest in the subject property as tenants in common. In the event that any party defaults in the payment of any such assessment then any other party shall be at liberty to make such payment and may thereafter recover such amount paid from the defaulting party". Such a provision seems to recognise the joint and several liability of co-owners for charges on the land rather than to effect an equitable partition. 47 The Deed, in terms, has as its purpose purchase of shares in the land by the Avitaias and the Browns, and "recording the terms and conditions pursuant to which they hold their respective interests in the subject property, and the rights and liabilities, created as a result of the mortgage of the property". It does not purport to subdivide the property although it does refer to exclusive possession of particular parts. It does not, and possibly could not, affect the rights of third parties such as the Commissioner. 48 Secondly, the Deed does not affect the status of Moresaco Pty Ltd as a co-owner to the extent which would be required to oust clause 11(1)(a) of Schedule 1A. That section excludes from the exemption "land … if … (a) the land is owned, or jointly owned, by a company, unless the land is owned or jointly owned by a trustee company …". It seems to me that the rights of exclusive possession given to each co-owner are in reduction of, rather than in extinguishment of, their rights as co-owner. 49 As a result, it seems to me that Moresaco remains a "co-owner" of the property, as it both appears on the Certificate of Title and has ownership rights, such as a right to approach the Court for an order for partition or sale under section 66G of the Conveyancing Act 1919 (although such an application may be problematic given the terms of the Deed referring to the regime for sale should all parties not agree). As a result, clause 11(1)(a) of Schedule 1A applies and the land is not able to be subject to the exemption. 50 The answer to question (a) in paragraph 40 is "no". Question (b) therefore does not arise, and is unnecessary to decide in the circumstances. 51 If I am wrong in this, and an Appeal Panel decides in favour of the present applicants, then I should record my view of the facts as they apply to this case. 52 I am not satisfied that Mr Kent uses the property as his principal place of residence. The recording of a different address as his residential address for the purposes of his dealings with the RTA is significant. In addition, it seems to me that his use of a building on the land as the headquarters of his business, comprising at least two rooms (including the toilet) is sufficient to take the occupation outside the "and for no other purpose" provisions. Even if I were wrong on the question of law, I do not consider that Mr Kent's application should succeed. 53 As for the Avitaias (or at least Mrs Avitaia) and the Browns, there is nothing in the evidence which would tend to a finding against the finding that they occupy their respective portions of the property as their respective principal places of residence, and so if I were wrong on the question of law, I am of the view that they should succeed. Order The Commissioner's decision is affirmed.