CITATION: Chapman v Chief Commissioner of State Revenue [2009] NSWADT 207 DIVISION: Revenue Division APPLICANTS Stephen Chapman and Christine Chapman PARTIES: RESPONDENTS Chief Commissioner of State Revenue FILE NUMBER: 096028 HEARING DATES: 15 July 2009 SUBMISSIONS CLOSED: 22 July 2009 DATE OF DECISION: 5 August 2009 BEFORE: Perrignon R - Judicial Member CATCHWORDS: Review of decision declining to extend time under clause 6(4) of Schedule 1A for operation of the 'principal place of residence' exemption. Land Tax Management Act 1956 LEGISLATION CITED : Taxation Administration Act 1996 Interpretation Act 1987 State Revenue Legislation Further Amendment Act 2003 BP Refinery (Westernport) Pty Limited v Hastings Shire (1977) 16 ALR 363 Western Australian Trustee & Executor Agency Co Limited v Commissioner of State Taxation of WA (1980) 147 CLR 1119 Cooper-Brookes (Wollongong) Pty Limited v FCT (1981) 25 ALR 151 Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129 Australian Boot Trade Employees' Federation v Whybrow & Co (1910) 11 CLR 311Gilmour v Chief Commissioner of State Revenue [2007] NSWADT 145; Creamer v Chief Commissioner of State Revenue [2006] NSWADT 272; Mills v Chief Commissioner of State Revenue [2006] NSWACT 189; Sagovac v Chief Commissioner of State Revenue [2005] NSWADT 91; CASES CITED: Tuck v Chief Commissioner of State Revenue [2005] NSWADT 145; BBLT Pty Limited v Chief Commissioner of the Office of State Revenue [2003] NSWSC 1003; Georgoriou v Chief Commissioner of State Revenue [2003] NSWADT 145; Caltex oil Australia Pty Limited v Howard Smith Industries Pty Limited (1973) 2 NSWLR 89 Hiley v Chief Commissioner of State Revenue [2009] NSWADT 133 Sheedy v Chief Commissioner of State Revenue [2007] NSWADT 283 Awan v Chief Commissioner of State Revenue [2009] NSWADT 75 Miller v Chief Commissioner of State Revenue [2009] NSWADT 136 FCT v Swift and others 89 ATC 5101 Waterways Authority v Fitzgibbon (2005) 221 ALR 402 APPLICANT C Chapman, applicant REPRESENTATION: RESPONDENT D Mitchell, barrister ORDERS: The decision made by the Chief Commissioner on 11 September 2008 pursuant to clause 6(4) of Schedule 1A to the Land Tax Management Act 1956, declining to extend time for operation of the 'principal place of residence' exemption, is confirmed. REASONS FOR DECISION 1 On 10 March 2005, Mr and Mrs Chapman purchased a vacant block of land of over 4,000 square metres at Luddenham in Sydney. They hoped to build on it a substantial new home of five bedrooms, with other rooms and garaging for four cars, and to occupy it as their principal place of residence. 2 The land was assessed to land tax. On 16 February 2006, they sought exemption, by lodging a Land Tax Variation Return with the Respondent Chief Commissioner of Taxation, in which they stated that they were 'in the process of building to live there'. 3 On 14 August 2006, the Chief Commissioner reassessed land tax at nil for the 2006 tax year. He issued a notice of reassessment to Mr and Mrs Chapman, indicating in a "Support Schedule" that the land was exempt from land tax for the following reason: "Exemption applied under schedule 1A clause 6 of the Land Tax Management Act, 1956 and assessed under Section 10(1)(r) - unoccupied land intended to be an owner's principal place of residence." 4 Clause 6 of Schedule 1A extended the 'principal place of residence' exemption to land that was 'unoccupied because the owner intends to carry out … building or other works necessary to facilitate his or her intended use and occupation of the land as a principal place of residence', subject to certain conditions: subclause 6(2)(a). The exemption applied only in respect of the '2 tax years immediately following the year in which the person became owner of the land': subclause 6(3)(a). In this case, it applied only to the 2006 and 2007 tax years. 5 The Support Schedule was headed "2006 TAX YEAR". It did not contain an explanation that the exemption applied also to the 2007 tax year by operation of subclause 6(3)(a), or that it would expire on 31 December 2007. Those matters might have been ascertained by consulting clause 6 itself. 6 Mr and Mrs Chapman thought, mistakenly, that the exemption was permanent, despite the fact that the notice of reassessment concerned only the 2006 tax year, and - apart from the reference to clause 6 - there was nothing in it to indicate that the exemption applied to any other tax year. They did not seek advice on the duration of the exemption, either from the Chief Commissioner or from any other source. They did not consult the legislation, or ask anyone to do so on their behalf. 7 Clause 6(5) of Schedule 1A provided that the exemption was revoked, 'if the person fails to actually use and occupy the land as his or her principal place of residence by the end of the period in which this clause applies in respect of the assessment of the person's ownership of the land and to continue to so use and occupy the land for at least 6 months'. 8 At midnight on 31 December 2007, the exemption expired, and clause 6 ceased to apply in respect of the assessment of 14 August 2006. Mr and Mrs Chapman had not commenced to use or occupy the land as their principal place of residence. They had not lodged a development application with Council, or finalised their building plans. Subclause 6(5) operated to revoke the exemption. 9 Subclause 6(6) provided that, where an exemption was revoked, it was taken not to have applied for any tax year in which it might otherwise have applied. 10 Having regard to the effect of subclause 6(6), the Chief Commissioner on 3 July 2008 reassessed land tax for the 2006 tax year, and assessed land tax for the 2007 tax year. On the same date, he assessed it to land tax for the 2008 tax year also. He issued a notice of assessment, requiring the owners to pay land tax for all three tax years in the total sum of $20,561.80. 11 By letter dated 29 July 2008, Mr and Mrs Chapman asked the Chief Commissioner to waive the land tax, and to extend time for operation of the exemption, on the basis that there had been 'economic changes beyond our control that have had a major effect on our personal finances'. These were detailed in the letter. 12 By letter dated 11 September 2008, the Commissioner explained that the exemption under clause 6 had been limited to the two tax years following acquisition of the property. He declined to extend time, because construction had not yet commenced, and he was not satisfied that that the delay was due to reasons beyond their control, not being financial reasons. 13 By a further letter dated 28 September 2008, Mr and Mrs Chapman made further submissions to the Chief Commissioner, indicating that their architect had been primarily responsible for the delay. The Chief Commissioner treated this as an objection to his decision of 11 September 2008, and disallowed it on 23 December 2008. 14 Mr and Mrs Chapman seek review of the decision made by the Chief Commissioner on 11 September 2008 to decline their request for an extension of time. 15 The Tribunal enjoys jurisdiction to review that decision pursuant to section 96 of the Taxation Administration Act 1996, because objection was taken to it under section 86 of the Act, and disallowed. Submissions 16 Mr and Mrs Chapman submit that the Tribunal should revoke the decision under review, and replace it with a decision to extend time for operation of the exemption for a further period of five years, because their delay in commencing or completing the building works was 'due primarily to reasons beyond [their] control', as required by subclause 6(4) of Schedule 1A. In their submission, there were three reasons for delay: 1. They did not know that the exemption was temporary only, or that it would expire at the end of the 2007 tax year, as the Chief Commissioner had failed to inform them of that in his notice of assessment dated 14 August 2006. 2. Adverse economic circumstances beyond their control – namely, a downturn in the building industry which depressed their income, falling house and land values, rising interest rates and rising cost of diesel fuel. 3. The inattention of their architect to their requests for changes to his plans, his repeated failure to return calls, and to attend scheduled meetings. 17 Of these, they submit that the first two were the 'primary' reasons, because it was always in their power to control architectural delay, either by changing architects or complaining about the performance of the designer who was looking after their house plans - which, in the end, is what they did. In their submission, they did not do either of these things earlier, for the primary reason that they did not know the exemption would expire. 18 For his part, the Chief Commissioner submits that he lacked power to extend time, because the primary reason for delay was the leisurely manner in which Mr and Mrs Chapman undertook the project as a whole, as evidenced by the time it took to retain an architectural firm, the manner in which they supervised that firm's performance or failed to do so, their changing building plans to suit their choice from time to time, and the considerable length of time it took them to submit a development application to Council, and to seek finance for the project. Because the speed with which they advanced the project was a matter of choice, it was not beyond their control, and therefore did not satisfy the requirements of clause 6(4). 19 In the alternative, if there was power to extend time, the Chief Commissioner submitted that it ought not be exercised as a matter of discretion, because of the long delay in submitting a development application to Council, in obtaining finance for the works, and the fact that, even at the date of hearing on 15 July 2009, works had not yet commenced. 20 At the commencement of trial, he also submitted that there was no power to extend time because that power was attracted only where there was a delay in 'completion' of works, as opposed to their commencement. In written submissions filed after the hearing, he made the opposite submission. Legislation 21 As at the date of the decision under review – that is, 11 September 2008 - the Chief Commissioner's power to extend the operation of the exemption was conferred by clause 6(4) of Schedule 1A, which provided as follows. "(4) The Chief Commissioner may extend the period in which this clause applies if the owner of the unoccupied land demonstrates that: (a) there is a delay in the completion or, in a case referred to in subclause (3) (b), the commencement of the building or other works necessary to facilitate the owner's intended use and occupation of the land, and (b) the delay is due primarily to reasons beyond the control of the owner." 22 Subclause 3(b) referred to situations where 'the land is used and occupied for residential purposes by a person other than the owner at any time after the person became owner'. It is common ground that subclause 3(b) has no application in this case. 23 For that reason, the Commissioner had power to extend time only if each of two preconditions were satisfied: a. There was a delay in 'completion … of the building or other works necessary to facilitate the owner's intended use and occupation of the land': clause 6(4)(a). b. That delay was 'due primarily to reasons beyond the control of the owner': clause 6(4)(b). Issues for determination 24 The issues for determination may be summarised as follows. 1. Whether there was delay in 'completion' of the building or other works, as required by subclause 6(4)(a). 2. What were the primary reasons for the delay. 3. Whether each of those primary reasons was beyond the control of Mr and Mrs Chapman. 4. If so, whether in the circumstances it is appropriate to grant an extension of time, and for what period. 25 As most of the evidence was directed to issues (2) and (3), it is convenient to deal with them first, assuming – without deciding – that there was 'delay in ... completion' of works. Evidence 26 The effect of the oral evidence of Mr and Mrs Chapman may be summarised as follows. 27 Though a qualified fitter and turner, Mr Chapman has for many years practised in the building industry as a roofing plumber. Mrs Chapman is a secretary by profession, and assists him in the roofing business. Their main income is derived from this business. 28 In the 2003-2004 financial year, the business returned a taxable income of about $98,000. On 19 November 2003, Mr and Mrs Chapman contracted to purchase a block of land of over 4,000 sq metres, situated on an estate at Luddenham, for about $830,000 inclusive of stamp duty. They intended to build on it a substantial house of five bedrooms with a four-car garage and other rooms, and to fund the purchase price by selling their home at Hinchinbrook. The estimated cost of building was between $400,000 and $500,000. 29 They also owned an investment property at Green Valley, which they hoped to retain, so that they could continue to enjoy gains from it while living at Luddenham. 30 The purchase of the land at Luddenham was not completed until March 2005. 31 During the financial year 2004-2005, taxable income from the business rose to about $126,000. 32 In November 2004, they sold their home at Hinchinbrook and leased it back from the purchasers, continuing to live there. The sale price was about $40,000 less than expected, due to a fall in housing prices. After applying the proceeds of sale to the debt arising from purchase of the land at Luddenham, they owed about $245,000 to the bank in respect of that purchase. 33 During the financial year 2005-2006, the taxable income from the family business plummeted by over one-third to about $80,000. To supplement it, Mrs Chapman obtained casual secretarial work. Their combined taxable income for that financial year was $103,500 – about mid-way between the previous two financial years. 34 In June 2006, Mr and Mrs Chapman put the architectural work for their proposed new home to tender. They selected and retained an architectural firm in October 2006. From then until May 2008, the designer entrusted by the firm with preparation of the plans would often fail to return phone calls, or to attend scheduled meetings. 35 There is in evidence a schedule evidencing some eighty-four occasions, from 21 October 2006 to 27 March 2008, on which he was unavailable to take phone calls. The employee complained of being busy with other work, both in New South Wales and interstate, and would attend the Chapman's personally outside of office hours when he could. 36 Also in October 2006, Mr and Mrs Chapman sold their investment property at Green Valley, because the rental income was insufficient to meet the interest cost of borrowings in respect of that property. The sale price was about $75,000 less than expected, due to a deterioration in the housing market. After retiring the debt owing in respect of the Green Valley property, net proceeds of about $40,000 were realised. This included a capital gain of about $16,000. The proceeds were applied in reduction of the outstanding $245,000, leaving a debt of about $205,000 owing in respect of the Luddenham purchase. 37 On 17 November 2006, a surveyor was retained to produce a contour plan of the Luddenham land, to enable the architects to design a home. 38 During the financial year 2006-2007, the fortunes of the business deteriorated again, returning a taxable income of about $63,000. This was supplemented by about $22,000 from Mrs Chapman's casual secretarial work, and by the capital gain of about $16,000 from the Green Valley property, making a total family income of about $101,000 – similar to the previous financial year. 39 In January 2008, interest rates rose, as did the price of diesel fuel, which Mr Chapman relied on for his business. Mr and Mrs Chapman continued to consider it imprudent to borrow the money needed to build the substantial home they intended, and did not approach any financial institution for a loan. They had not done so previously. 40 They considered selling the Luddenham land, but decided against it, because similar blocks were selling for about $550,000, and a sale at that time was expected to crystallise a substantial capital loss. 41 Though they reduced the size of their intended garage to a three-car garage, at no stage did they elect to build a house of more modest dimensions. They chose to persevere with their plans for a substantial one of five bedrooms and other rooms, though with only a three-car garage, until the submission of the Development Application to Council in April 2009. 42 In May 2008, Mr Chapman complained to the owner of the architectural firm about continued delays in finalising the house plans, due to the inattention of the employee who had carriage of them. 43 The Tribunal accepts that substantial delays in finalising the designs were caused by this inattention, even though Mr and Mrs Chapman from time to time requested alterations to the plans as a matter of choice, as was their right. As a result of the complaint, the head of the architectural firm took over the conduct of the plans personally, and from May 2008, the plans progressed in a satisfactory manner. 44 In the financial year 2007-2008, the fortunes of the family business deteriorated further, returning a taxable income of about $56,000. This was supplemented by Mrs Chapman's casual wage of $24,000, leaving a taxable income for the family of about $80,000 – the lowest figure for any financial year of which there is evidence before the Tribunal. 45 The figures for 2008-2009 are not before the Tribunal. There is no evidence of any material change in the Chapmans' financial circumstances during that year. 46 In July 2008, Mr and Mrs Chapman received the Chief Commissioner's notice of assessment for the 2006, 2007 and 2008 tax years, and became aware that their tax exemption had expired and was revoked. In the same month, they approved the plans drawn by their architects. 47 On 16 April 2009, Mr Chapman submitted a Development Application and Statement of Environmental Effects to Penrith City Council. He had retained a firm of certifiers to prepare the necessary documents. The reasons for delay of about nine months between finalisation of the architectural plans in July 2008 and submission of the Development Application are not before the Tribunal. 48 By April 2009, Mr and Mrs Chapman had decided to build the home themselves, in order to save money. On 17 April, the ANZ Bank offered to lend sufficient moneys to retire the existing debt due to the Commonwealth Bank in respect of the Luddenham purchase – which by then had been reduced to about $140,000 - and to build to lock-up stage only, sufficient for occupation. From that offer, the Tribunal infers that Mr and Mrs Chapman had sought finance on that basis in or around April 2009. 49 On or about 25 May 2009, the offer of finance was accepted. 50 Mrs Chapman hopes to convince the Bank to lend more before lock-up stage, by obtaining permanent employment as a secretary. She also hopes to obtain further finance for the completion of the works after lock-up stage, by reason of the expected increase in value of the property as a loan security. 51 Council approved the Development Application in the week commencing 13 July 2009. Notice of its approval had not issued as at the date of hearing on 15 July 2009. Mr Chapman had not by then obtained the necessary licence from the Department of Fair Trading to commence building works as an owner-builder. He had completed an exam necessary for the issue of such a licence, and was awaiting notice of the outcome. If he passed, he would be entitled to the issue of a licence. Once the licence issued, he intended to purchase the necessary building materials prior to commencement of works. He had retained a firm of certifiers to apply for and obtain a construction certificate. 52 For these reasons, building works had not yet commenced by the date of the hearing. 53 Mrs Chapman gave evidence that, had she known the exemption would expire at the end of 2007, she would have expedited the project by changing architects, and choosing to build a more affordable home of more modest proportions. She would have occupied the Luddenham property with her family as their principal place of residence by December 2007. She did not do so, because the Chief Commissioner failed to warn her of the temporary nature of that exemption. 54 The Tribunal makes findings of fact in accordance with the evidence of Mr and Mrs Chapman. To the extent it is summarised above, their evidence was unchallenged. 55 In cross-examination, Mr Chapman conceded that it was reasonable to expect Penrith City Council to take about three months to consider and approve a Development Application of the kind submitted by him, and that it would take a further twelve months from development consent to complete the building project to a stage fit for occupation. 56 From this, the Tribunal was invited by the Chief Commissioner to infer that, even if there had been no delay by the architects, and the Development Application had been lodged promptly after their retention in October 2006, it is unlikely that the Chapman family would have occupied the Luddenham property before expiry of the exemption in December 2007. For the reasons given below, it is unnecessary to decide the issue. Meaning of "delay" 57 The Chief Commissioner submits that the only delay which the Tribunal may take into account for the purposes of clause 6(4) is a delay which has occurred between the granting of the exemption in August 2005 and its expiry in December 2007. He submits that reasons for delays occurring after that time, even if beyond the control of the owner, cannot attract the power to extend time. In effect, he submits that clause 6(4)(a) should be read as if the phrase "prior to expiry of the exemption" were inserted before the word "delay". 58 It is considered 'a strong thing' to construe the provisions of a revenue statute by interpolating words which are not there: BP Refinery (Westernport) Pty Limited v Hastings Shire (1977) 16 ALR 363 at 374. Where there is an ambiguity in a revenue statute, it is often – though not always – resolved in favour of the taxpayer: Western Australian Trustee & Executor Agency Co Limited v Commissioner of State Taxation of WA (1980) 147 CLR 1119 at 126. Nevertheless, the primary object in construing legislation - including revenue statutes - is to ascertain the intention of the legislature, even if that does not favour a literal interpretation of benefit to the taxpayer: Cooper-Brookes (Wollongong) Pty Limited v FCT (1981) 25 ALR 151, per Mason and Wilson JJ at 171. 59 For present purposes, the word "delay" in clause 6(4)(a) means a delay in "completion … of the building or other works necessary to facilitate the owner's intended use and occupation of the land". There is nothing on the face of the provision to limit the time in which the delay must occur, save that it must have occurred, if at all, before completion. Nor is there any express requirement that the delay must have occurred, if at all, prior to expiration of the exemption, or that reasons for delays occurring after that time are incapable of enlivening the power to extend time. 60 In construing any legislative provision, a construction which promotes the underlying purpose or object of the relevant Act is to be preferred to one which does not: section 33, Interpretation Act 1987. Consistently with section 7(2) of the Taxation Administration Act 1996, the purpose of the Land Tax Management Act 1956 - though not stated in the Act - is to impose tax upon land in New South Wales, and to provide for certain concessions and exemptions, of which the 'principal place of residence' exemption is one. 61 The statutory purpose of Schedule 1A, and clause 6 in particular, is to provide for exemptions from land tax. This purpose is promoted by interpreting subclause 6(4)(a) as amply as is consistent with its literal meaning, and without interpolating the words urged by the Chief Commissioner. Those words would restrict the scope of the exemption for which clause 6 provides, by restricting the power to extend time for its operation. Such a restriction would not promote the object or purpose of clause 6, or of Schedule 1A. 62 The same result flows from ascertaining the parliamentary intention from the 'natural and ordinary meaning' of the words used: Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129; Australian Boot Trade Employees' Federation v Whybrow & Co (1910) 11 CLR 311. There is no express limitation of the kind urged by the Chief Commissioner. In context, no absurdity results from a literal interpretation. 63 That being so, there is no compelling reason to 'read down' the provision in the manner suggested. Properly construed, 'delay in ... completion' includes any delay occurring prior to completion. 64 It follows that a failure to demonstrate delay prior to expiry of the exemption will not necessarily deprive the Chief Commissioner of power to extend time, at least where delay is demonstrated prior to completion, and the requirements of subclause 6(4) are otherwise satisfied. Reasons for delay 65 The Tribunal accepts that the delays which occurred were contributed to by each of the three matters put forward by Mr and Mrs Chapman. They were: a. not knowing that the exemption would expire or had expired, b. adverse economic circumstances, and c. architectural delay. 66 To the extent that each contributed to the delay, directly or indirectly, it can be said to have been a 'cause' of delay. 67 There were also at least two other reasons for delay. The first was the choice made by Mr and Mrs Chapman not to build an affordable house of more modest proportions, within their budget. The second was their choice not to seek limited finance earlier than they did to build to lock-up stage only. 68 The Chief Commissioner has suggested a sixth reason for delay - namely, the leisurely manner in which Mr and Mrs Chapman proceeded, also described in argument as a lack of urgency. This was the result of the two decisions referred to above, coupled with adverse financial circumstances, and ignorance of the true nature of the tax exemption, rather than their cause. It is more apt to describe the delay itself than a reason for it. 69 The Tribunal finds that there were five reasons for delay: 1. Not knowing that the exemption would expire or had expired. 2. Adverse economic circumstances. 3. Architectural delay. 4. The choice not to build a more modest house within budget. 5. The choice not to seek limited finance for the purpose of building to lock-up stage. 'Primary' reasons 70 It is necessary to decide to which of these five reasons the delay was 'due primarily'. 71 The contribution of architectural delay up to its cessation in May 2008 was comparatively small and indirect. The failure of Mr and Mrs Chapman to control that delay, by acting earlier to put an end to it, resulted from, rather than caused, their decision not to proceed for the time being. In those circumstances, Mrs Chapman submitted that the inattention of the architect was not a primary reason for delay. The Tribunal accepts that submission. 72 The adverse economic circumstances faced by Mr and Mrs Chapman - that is, the falls in house prices which led to their realising less than expected on sale of the Hinchinbrook and Green Valley properties, adverse trading conditions causing falls in business income, and after January 2008, the rising cost of finance and diesel fuel – were of more serious consequence. They caused Mr and Mrs Chapman not to seek finance for the full amount of estimated construction works between $400,000 and $500,000. 73 However, on the evidence, the first real progress was made just after the 2007-2008 financial year – the worst of the financial years for which figures are available – with the finalisation of architectural plans in July 2008. It was during this same month that Mr and Mrs Chapman became aware their exemption had expired, and had been revoked. This was followed by the submission of a Development Application in April 2009, by the obtaining of finance in May 2009, and the grant of development consent in July 2009. 74 There is no evidence that the 2009 financial year has been any more profitable than the preceding financial year. The proper inference to be drawn is that the greatest progress has occurred during the worst economic climate the family has seen in recent years. The financial conditions merely made it imprudent to borrow the sums originally envisaged, in one transaction. They did not preclude borrowing on a more limited basis to enable construction to lock-up stage. Nor did they preclude the building of a more modest home, which Mrs Chapman properly admitted was always within their capability. 75 To determine whether adverse economic circumstances constituted a 'primary' reason for delay, it is necessary to compare it with the remaining three causes – namely, the decision not to build a more modest home, the decision not to seek limited finance to lock-up stage on an owner-builder basis, and the fact that neither Mr nor Mrs Chapman realised the exemption was only temporary. 76 The two choices referred to above were direct and proximate causes of the failure to seek and obtain finance before 2009, to finalise house plans before July 2008, and to lodge a development application before April 2009. But for these two choices, and the fact that Mr and Mrs Chapman did not know the exemption would expire at the end of 2007, the evidence of Mrs Chapman establishes that the project would have proceeded to lock-up stage by about December 2007. 77 The two choices referred to, and the fact that Mr and Mrs Chapman were unaware that the exemption was to expire on 31 December 2007 or had done so, constituted primary reasons for the delay, because they each informed the decision not to proceed for the time being. For that reason, they were the most direct and proximate causes of delay. 78 None of these three causes resulted from the adverse economic circumstances described. The decision not to build a more modest home, for instance, was made despite those circumstances. As the Tribunal has found, adverse economic circumstances did not prevent the progress of building works generally, or the occupation of the site as a principal place of residence. It only contributed to delay, by making building works of the kind proposed, and in the manner proposed, beyond the means of Mr and Mrs Chapman, if financed all at once. 79 On the evidence, it was not essential to finance the works all at once, nor was it beyond the means of the Applicants to build a more modest house. For these reasons, the Tribunal finds that, though adverse financial circumstances contributed to the delay - at least to the extent that they informed the decision of Mr and Mrs Chapman not to seek finance earlier in the full amount – the delay was not 'due primarily' to those circumstances. 80 For these reasons, the three primary reasons for delay were the two choices referred to above, and ignorance of the temporary nature of the exemption. Beyond control of owners 81 To enliven the power to extend time unde clause 6(4), the Applicants must show that each of the three primary reasons for delay was beyond their control. 82 The meaning of the phrase 'beyond the control of the owner' has been considered on a number of occasions, both as it appears in subclause 6(4) of the Schedule, and as it formerly appeared in section 10T(5) of the Act: Gilmour v Chief Commissioner of State Revenue [2007] NSWADT 145; Creamer v Chief Commissioner of State Revenue [2006] NSWADT 272; Mills v Chief Commissioner of State Revenue [2006] NSWACT 189; Sagovac v Chief Commissioner of State Revenue [2005] NSWADT 91; Tuck v Chief Commissioner of State Revenue [2005] NSWADT 145; BBLT Pty Limited v Chief Commissioner of the Office of State Revenue [2003] NSWSC 1003; Georgoriou v Chief Commissioner of State Revenue [2003] NSWADT 145; Caltex oil Australia Pty Limited v Howard Smith Industries Pty Limited (1973) 2 NSWLR 89. 83 Generally speaking, where delay results from a choice made by an owner, the reason for delay is not considered to be beyond the owner's control: Gilmour; Creamer; Mills. 84 In this case, the first reason for delay was the choice not to build a more modest home. According to Mrs Chapman, it was within their capability to do so, and to occupy the home by December 2007. As this was a matter of choice, it was not beyond their control. 85 The second reason was the choice not to seek finance on a limited basis, enabling construction to lock-up stage only. Mr and Mrs Chapman sought this kind of finance only after they had become aware that the tax exemption had expired. In April 2009, they succeeded. In the absence of any evidence to show that their economic fortunes had improved by that time, the Tribunal infers that they could have obtained such finance earlier, despite the adverse economic circumstances which faced them. They chose not to seek it. As this also was a matter of choice, it was not beyond their control. 86 The third reason was ignorance of the temporary nature of the exemption. It was always open to Mr and Mrs Chapman to consult the legislation themselves, to seek legal advice, or even to make enquiries of the Chief Commissioner. They did not do so, because they mistakenly inferred from the notice of reassessment that the exemption was permanent. There was nothing in the notice to suggest that was the case. The notice referred explicitly to the legislative provision pursuant to which the exemption applied. Mr and Mrs Chapman chose not to examine that legislation, to seek advice on it, or to enquire about it to the Chief Commissioner. For that reason, their lack of knowledge was not beyond their control. 87 Even if the inattention of their architect had been a primary reason for delay, it was not beyond their control, because - as Mrs Chapman properly admitted - they were at all times able to afford to change architects if they wished. They could also have complained to the head of the firm and demanded better attention earlier than they did. 88 The Tribunal accepts that each of the adverse economic circumstances described above, of which the Applicants gave evidence, was beyond their control. However, for the reasons given, the delay which occurred was not 'due primarily' to those circumstances. Failure to advise 89 Mr and Mrs Chapman submit that the Chief Commissioner ought to have advised them of the length of the exemption, and that it would expire on 31 December 2007. They say that his failure to do so caused them not to proceed with the project more urgently than they did, and that had he properly advised them, they would have been in occupation by December 2007. 90 Even if the Commissioner had a duty to advise, and had failed to do so, it would not render ignorance of the law a matter beyond the control of Mr and Mrs Chapman, as it was always within their power to examine the legislation or make enquiries. 91 Even if the Commissioner had misadvised the Applicants, he would not be estopped from assessing land tax in accordance with his statutory duties: see Hiley v Chief Commissioner of State Revenue [2009] NSWADT 133 and the cases there cited. This is not a case where the Chief Commissioner has wrongly advised the Applicants. 92 In any event, the Tribunal has not been referred to any statutory provision requiring the Chief Commissioner to give advice in the nature of legal advice, or to do anything more than he did when he gave notice of his reassessment to land tax on 14 August 2006. In the circumstances, the Tribunal does not find that the Chief Commissioner had a duty to disclose anything more than he did in that notice of reassessment. Power to extend time 93 For the reasons given, the Applicants have not demonstrated that 'the delay [was] due primarily to reasons beyond the control of the owner', as required by clause 6(4)(b). It follows that neither the Chief Commissioner, nor the Tribunal on review of his decision, enjoys or enjoyed power under clause 6(4) to extend time for operation of the exemption. That is so, even assuming – without deciding - that the delays which have occurred may be characterised as delays in 'completion' for the purposes of clause 6(4)(a). Meaning of 'completion' in clause 6(4)(a) 94 As the requirements of clause 6(4)(b) have not been met, it is strictly unnecessary to determine whether those of clause 6(4)(a) have been satisfied. However, for the reasons enunciated by Kirby and Heydon JJ in Waterways Authority v Fitzgibbon (2005) 221 ALR 402, it is appropriate to consider that issue. 95 In Sheedy v Chief Commissioner of State Revenue [2007] NSWADT 283, the Tribunal found that the power to extend time under clause 6(4) was available even where – as here - works had not commenced. Its reasoning was expressed as follows. "22 The Chief Commissioner's principal contention before the Tribunal ... is that upon a proper construction of subclause 6(4) the expression "delay in completion" is confined to cases where the owner has commenced construction but has not completed the construction of the new residence. …. 23 The Tribunal does not accept that contention. Such an approach places an unduly restrictive interpretation upon the provisions found in subclause 6(4). The Tribunal has not been persuaded by the respondent's submissions to construe the expression "delay in completion" in subclause 6(4) otherwise than according to the plain, ordinary and natural meaning of the words of the expression, in particular the term "completion". 24 The Shorter Oxford Dictionary defines "completion" as "accomplishment, fulfilment". The word "completion" when used in subclause 6(4)(a) should have a similar meaning. In the context of the provisions found in clause 6, it is used to refer to the "building of the residence" and what the provision merely states is that if the building of the residence has not been accomplished within the 2-year period allowed and the delay was primarily due to reasons beyond the owner's control the respondent may extend the period. There is no requirement that some work has to be carried out to build the residence within the initial 2-year period to entitle the owner to fall within the provisions of subclause 6(4). If no work has begun, it would simply mean that the owner has not accomplished building the residence and would be entitled to an extended period if he or she can demonstrate that the delay was due primarily to reasons beyond his or her control. 25 The draftsman in drafting subclause 6(4) may have been influenced by the use of the term "completion" in building contracts. When used in a building contract the term means actual completion (Richards v Pryse [1927] 2 K.B. 76). Where a builder is to be paid on the "completion" of a building, such completion is generally a question of fact. The term is used in subclause 6(4)(a) in that sense and refers to the actual construction of the residence to a stage when it can be used and occupied by the owner as his or her residence. 26 The Chief Commissioner's suggested approach would also create an inequitable outcome for an owner purchasing vacant land as against an owner acquiring an existing residence that requires refurbishment. In the latter case the provisions in subclause 6(4) in relation to subclause 6(3)(b) merely states that the respondent may extend the period if there is delay in commencement of the building or other works necessary to carry out the refurbishment. It is difficult to accept that the legislature was intending to place some special restriction on an owner acquiring vacant land. The interpretation suggested by the Tribunal would be in harmony with the position of an owner carrying out refurbishment work. 27 The approach suggested by the respondent, if adopted, could also lead to some fairly absurd outcomes. For example, would just digging some part of the vacant land to install underground drainage system be taken as the commencement of the building of the residence to entitle the owner to the extension under subclause 6(4) if he or she can demonstrate the required reasons for the delay in completing building the residence." 96 In that case, the Applicants had purchased vacant land but, due in part to disagreements arising on the breakdown of a de facto relationship, had not commenced works on it, and were not immediately in a position to do so. They had neither finalised their building plans, nor obtained finance, nor lodged a development application with Council. The Tribunal described the facts as constituting 'an unusual and special case', and remitted the decision under review to the Chief Commissioner for further consideration. 97 The decision in Sheedy was not cited in argument before the Tribunal in Awan v Chief Commissioner of State Revenue [2009] NSWADT 75. In that case, as in Sheedy, works had not commenced on the subject land. The Tribunal, constituted as it is in this case, considered whether there was power to extend time for the operation of the exemption conferred by clause 6. Unlike the situation in Sheedy, some years before the hearing, the Applicant in Awan had abandoned any intention of using or occupying land at Bella Vista as his residence, and had built and occupied a home for his family elsewhere. He had failed to complete the dwelling at Bella Vista, or to commence it. The Tribunal found as follows: "57 Subclause 6(3)(b) did not apply to the … property, because it had not been occupied by any person other than the owner. It follows that a delay in commencement of works – as occurred here - could not enliven the Chief Commissioner's power to extend time. 58 That power could only be enlivened by a delay in completion of the works. As the works were never commenced, there can have been no delay in their completion. The words "delay in their completion" in subclause 6(4) ought not be read as including delay in commencement, because the Parliament has in the same clause specified that delay in commencement enlivens the Chief Commissioner's power in situations where subclause 6(3)(b) applies." 98 Those findings should be read in the context of the particular facts of that case. In this case, the Tribunal respectfully adopts the meanings attributed to the word 'completion' in Sheedy. However, the phrase 'delay in … completion' must be construed in its context, and in light of the history of clause 6 in which it appears. History of clause 6 99 Section 10T of the Land Tax Management Act 1956 was replaced by Schedule 1A on 31 December 2003, by operation of the State Revenue Legislation Further Amendment Act 2003. Just before its repeal, section 10T provided relevantly as follows. "10T Concession for unoccupied land intended to be owner's principal place of residence (1) If the Chief Commissioner is satisfied that the owner of land (or, if there are joint owners, any one or more of them) intends to use and occupy the land solely as his or her principal place of residence, that intended use and occupation of the land is to be regarded as its actual use and occupation for the purposes of section 10(1)(r). ….. (4) This section applies to a person's ownership of land only for the 2 tax years immediately following the tax year in which: (a) the person became owner, or (b) the person, whose land was eligible for an exemption from tax under section 10(1) (r) in that tax year, ceased to be able to use and occupy the land as his or her principal place of residence because of damage to or destruction of the residence on the land by an event such as fire, earthquake, storm, accident or malicious damage, unless the Chief Commissioner extends or further extends its operation in a particular case on the basis of an acceptable delay in that case. (4A) This section does not apply in respect of land referred to in subsection 4(b) unless the land concerned was the principal place of residence, for the purposes of section 10(1)(r), of the person referred to in subsection (4)(b) immediately before the relevant damage or destruction occurred. (5) An acceptable delay is a delay in the commencement or completion of the building or other work necessary to enable the intended use and occupation of the land to become its actual use and occupation that the Chief Commissioner is satisfied is due primarily to reasons beyond the control of the owner." 100 Subsections 10T(4) and (5) were replaced by subclauses 6(3) and (4) of Schedule 1A, which provide as follows: "(3) This clause applies in respect of the assessment of a person's ownership of land only in the period of: (a) 2 tax years immediately following the year in which the person became owner of the land, or (b) if the land is used and occupied for residential purposes by a person other than the owner at any time after the person became owner, 2 tax years immediately following the tax year in which the building or other works necessary to facilitate the owner's intended use and occupation of the land are physically commenced on the land. (4) The Chief Commissioner may extend the period in which this clause applies if the owner of the unoccupied land demonstrates that: (a) there is a delay in the completion or, in a case referred to in subclause (3) (b), the commencement of the building or other works necessary to facilitate the owner's intended use and occupation of the land, and (b) the delay is due primarily to reasons beyond the control of the owner." 101 One difference between the current and former provisions is immediately apparent. Previously, section 10T(4)(b) applied the exemption for further tax years following a tax year in which a home-owner, entitled to the 'principal place of residence' exemption, was forced to leave his or her home by reason of damage or destruction caused by accident, malice, or act of God. Subclause 6(3), which replaced section 10T(4), makes no such provision. Instead, it applies the exemption to situations where the land is occupied by a person other than the owner – as might occur, for instance, if a purchaser of a house lets it to prior to refurbishment or rebuilding. 102 The wording and structure of subclause 6(4) also differs significantly from that of subsections 10T(4) and (5), which it replaced. Subsection 10T(5) provided, in effect, that power to extend time for operation of the exemption was attracted by 'delay in the commencement or completion of the building or other works necessary to enable the intended use and occupation of the land' (emphasis added). 103 By using the two terms, 'commencement' and 'completion', parliament indicated that it understood them to have different meanings, and that delay in either case could attract the power to extend time, whether the fact situation in subsections 10T(4)(a) or (b) applied. It did not, as it would later do, differentiate between fact situations, indicating that delay in commencement would suffice for one, but that delay in completion was necessary for the other. 104 When it replaced subsections 10T(4) and (5) with subclause 6(4) of Schedule 1A, parliament retained the two words, 'commencement' and 'completion'. In doing so, it indicated that it continued to understand them to have different meanings. However, it drafted the provision differently, indicating that delay in commencement of works would suffice for situations in which the land was occupied by persons other than the owner, but that 'delay in … completion' was necessary in other cases. 105 It was argued by the Applicants in Miller v Chief Commissioner of State Revenue [2009] NSWADT 136 that, in the absence of any manifest parliamentary intention to restrict the power to extend time by virtue of the repeal of section 10T, subclause 6(4) should be construed as having the same effect as its predecessor. That effect was, that delay in either commencement or completion was sufficient to enliven the power, whether or not the residence had been damaged or destroyed by act of God. 106 However, parliament's intention is expressed in the words which it has used. The words used in the new provisions differ markedly from those of the previous provisions, in the manner described. Effect must be given to those differences. To ignore them would be more likely to obscure the parliamentary intention than to ascertain it. 107 Observing those differences, it is apparent that parliament intended that the kind of delay necessary to attract the power to extend time should differ, depending on whether or not the land had been occupied by someone other than the owner. Context 108 Such an interpretation of subclause 6(4) is consistent with the distinction which parliament has made between the facts described in subclauses 6(3)(a) and (b), which echoed the distinction previously made – albeit in relation to a different fact situation – between subsections 10T(4)(a) and (b). 109 In subclause 6(3), parliament has indicated a desire to distinguish between situations where land is occupied by persons other than the owner, and situations where it is not, in determining from which date the two-year period of the exemption should run. To make the same distinction in determining what sort of delays attract the power to extend time is consistent with the scheme of clause 6. 110 That the parliament intended to draw a distinction between the two fact situations described in subclause 6(3) is beyond doubt. The policy reason for doing so is not specified, either on the face of the statute, or in the second reading speech, which is extracted in the Chief Commissioner's submissions reproduced in Sheedy [at para 13]. Nevertheless, it is possible to infer a policy reason from context. 111 Clause 6(3) provides, in effect, that time for operation of the exemption runs from a different date, depending on whether or not the land is occupied by persons other than the owner. Where the land is so occupied, the exemption does not operate until physical commencement of the 'works necessary to facilitate the owner's intended use and occupation of the land': subclause 6(3)(b). This provides an incentive to owners who have let their properties to commence refurbishment or rebuilding as soon as possible. Unless and until they do so, there can be no exemption. Once works are commenced, the exemption applies for the next two tax years, but will be revoked if the land is not used and occupied by its owner as a principal place of residence by that time: subclause 6(5). This provides an incentive also to complete the works within the two tax years. 112 Where an owner intends to build on vacant land, the exemption commences from the next taxing date after purchase, and continues for two tax years: subclause (3)(a). It is not necessary to commence the works for the exemption to apply. It is, however, necessary to commence occupation by the end of those two tax years, or the exemption will be revoked: subclause (5). This provides an incentive to complete the works within two tax years of purchase. 113 To the extent that commencement of works is not necessary for commencement of the exemption, builders of homes on vacant land are treated more favourably than refurbishers of existing homes. To the latter, this might seem inequitable, but the provision of incentives or concessions for the building of new homes on vacant land in a State which needs them is not surprising. 114 This distinction in treatment is mirrored in subclause 6(4) by the requirements for enlivening the power to extend time. Where land has been occupied by persons other than the owner, the power to extend time arises if the owner demonstrates reasons for delay in 'commencement' of works beyond his or her control – such as a delay by Council in considering or approving a development application: subclause 6(4)(a). As 'commencement' is the event which triggers the exemption in this case, it is appropriate that power to extend time should depend on demonstrating a delay of the requisite kind in that commencement. 115 Where land is not so occupied, the exemption is not dependent on commencement of works. It operates from the next taxing date after purchase. It is only revoked if, by the end of the next two tax years, the owner has failed to occupy the land as his or her principal place of residence. To occupy it, the owner must complete the works necessary for occupation. Thus, the only temporal factor limiting the scope of the exemption is failure to complete the works within two tax years. For that reason, it is appropriate that the power to extend time should depend on showing that completion of works – as distinct from their commencement – has been delayed by reasons beyond an owner's control. The words chosen by parliament in subclause 6(4)(a) express this requirement with precision. 116 How an owner demonstrates 'delay in … completion' is, to an extent, an evidentiary issue. The owner might, for instance, demonstrate that the time between commencement and completion was lengthened by the necessity for works not foreseen prior to commencement – such as extra excavation, more difficult excavation (on discovery of underlying rock, for instance), an unforeseen need for hydraulic works, rain or other act of God, or delay in sourcing construction materials. Where, on the other hand, the time between commencement and completion has not been lengthened, an owner might demonstrate that delay in completion was caused by a delay in commencement causing a postponement in the date for completion – for instance, where a Council delays in considering or granting development consent. This is distinct from merely demonstrating a delay in commencement. Failure to complete works 117 Whatever the evidentiary method chosen, a 'delay in … completion' cannot be construed so as to include a failure to complete. Otherwise absurdity would result, because an extension of time under subclause 6(4) could facilitate application of the 'principal place of residence' exemption to land which has never been used or occupied by the owner as a principal place of residence, and never will be. A failure to complete will occur, for instance, where the land has been sold prior to commencement of works. It will also occur where, before commencement of works, an intention to build a home on the subject land has been abandoned for lack of finance, and the owner has built and occupied elsewhere. That was the situation in Awan. In either of those circumstances, no 'delay in … completion' can be demonstrated, because there has been a failure to complete. The power to extend time cannot be enlivened. 118 On the other hand, where completion has occurred, and the owner demonstrates that it was delayed by events beyond his or her control, occurring either during the works or prior to their commencement or both, then the power to extend time is attracted. That was the case in Miller. For those reasons, the facts in Miller are distinguishable from those in Awan. 119 Intermediate fact situations can also occur – for instance, where an owner continues to own the land, and would be entitled to the exemption under clause 6 if it were extended, but has either commenced the works and not completed them, or has failed to commence them at all. The latter has occurred in this case, as it did in Sheedy. Depending on the facts, it might be possible to show that completion is likely even if it has not occurred – though that inference can be drawn more easily where works have commenced than where they have not. Where completion is likely, it might also be possible to show that, whenever it occurs, it will have been delayed for reasons beyond the owner's control. The onus of proof rests with the Applicant: section 100(3), Taxation Administration Act 1996. 120 In Sheedy, the Tribunal essentially decided that, on the facts before the Tribunal, the failure to commence works did not necessarily preclude the power to extend time. To that extent, the decision is consistent with the principles outlined above. 121 In this case, it has not been shown that the works are likely to be completed, because neither an owner-builder licence, nor a construction certificate, has yet been obtained, and there is insufficient evidence before the Tribunal to assess the likelihood of either occurring. It follows that, on the particular facts of this case, the power to extend time is not attracted. Meaning of 'works' 122 As the Tribunal proposes to consider the issue of discretion, and the commencement of works or failure to commence them is relevant to that issue, it is appropriate to consider whether works have been commenced. 123 The only work carried out on the subject land of which there is evidence before the Tribunal is a contour survey, which was conducted in November 2006 for design purposes. "Works" can only have been commenced if this survey falls within the meaning of that term in subclause 6(4)(a). 124 "Works" is not defined in the Land Tax Management Act 1956, or in the Taxation Administration Act 1996. "Work" and "works" are defined in the Macquarie Dictionary (Fourth Edition) in many different ways, which include the following: '1. Exertion directed to produce or accomplish something; labour; toil. 2. that on which exertion or labour is expended; something to be made or done, a task or undertaking. 3. productive or operative activity. …. 7. materials, things etc., on which one is working, or is to work. 8. the result of exertion, labour or activity; a deed or performance. 9. a product of exertion, labour, or activity: … 10. an engineering structure, as a building, bridge, dock, or the like. 11. ( usually plural ) a building, wall, trench, or the like, constructed or made as a means of fortification.' 125 In the context of clause 6(4), "works is used in the context of building, including repair, renovation or refurbishment. There is no requirement that works be a means of 'fortification'. In context, "works" probably includes a physical activity which effects a change to the land or its surface, and the placing of something upon the land in a way that is more than ephemeral or transitory – such as a concrete slab. 126 Subclause 6(4)(a) distinguishes between building works and 'other works necessary to facilitate the owner's intended use and occupation of the land'. Thus, the concept of "works" is not confined to building works. However, applying the ejusdem generis rule of construction, the term should at least be confined to works which are ancillary to, akin to or connected in some meaningful way with building works. They must also be 'necessary to facilitate the owner's intended use and occupation of the land'. It is unnecessary to decide whether excavation or drainage works preparatory to building fall within the scope of 'works', though the Macquarie Dictionary definition lends support to such an interpretation. 127 In any event, it seems unlikely that the word was intended to include a contour survey which, as here, has no physical effect on the land, and is performed for design purposes only. For those reasons, the Tribunal finds that, on the facts of this case, works have not commenced. Discretion 128 Even if, contrary to the Tribunal's finding, there was power to extend time, such an extension would have been inappropriate, for the following reasons: 1. As at the date of the hearing on 15 July 2009 – more than four years after purchase of the land – no building or other works necessary to facilitate the occupation of the land as a residence had commenced, and Mr and Mrs Chapman were not in a position to commence them, as the necessary licence had not been obtained, construction materials had not been sourced, and no construction certificate had been obtained. 2. As it is not clear when works will commence, it is not possible to determine how long an extension of time is necessary to take the project to completion and occupation. 3. To extend the exemption to the 2010 tax year – the earliest time at which completion may reasonably be expected, even if works were commenced immediately – it would be necessary to grant an extension of a further three tax years in addition to the three tax years for which the exemption initially applied. To justify so great an extension, the applicants would need to demonstrate compelling reasons for the delay, and that those reasons were beyond their control. For the reasons given, of the three most proximate and direct causes, none was beyond their control. 4. There is no satisfactory explanation before the Tribunal for the substantial delays which occurred in the retaining of architects for the project in October 2006, more than eighteen months after purchase of the land. 5. There is no satisfactory explanation before the Tribunal for the delay of about nine months between finalisation of the plans in July 2008 and the lodgement of a development application in April 2009. 6. In all the circumstances, such an exercise of discretion would defeat the object of the legislation: FCT v Swift and others 89 ATC 5101 at 5118. Determination of issues 129 For the reasons given, the Tribunal determines the issues as follows. 1. No delay in 'completion' of the building or other works has been demonstrated. 2. The delays which have occurred were 'due primarily' to: -not knowing that the exemption would or had expired, -the choice not to build a more modest house within budget, and -the choice not to seek limited finance for the purpose of building to lock-up stage. 3. None of those primary reasons was beyond the control of Mr and Mrs Chapman. 4. Even if they had been, an extension of time would not have been appropriate in the circumstances. Order 130 The Tribunal orders as follows: The decision made by the Chief Commissioner on 11 September 2008 pursuant to clause 6(4) of Schedule 1A to the Land Tax Management Act 1956, declining to extend time for operation of the 'principal place of residence' exemption, is confirmed. 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.