CITATION: Mytilinios v Chief Commissioner of State Revenue [2010] NSWADT 310 DIVISION: Revenue Division APPLICANT Greg Mytilinios PARTIES: RESPONDENT Chief Commissioner of State Revenue FILE NUMBER: 106009 HEARING DATES: 2 July 2010 SUBMISSIONS CLOSED: 2 July 2010 DATE OF DECISION: 30 December 2010 BEFORE: Perrignon R - Judicial Member CATCHWORDS: Land tax, principal place of residence exemption, whether use and occupation sufficient to qualify for principal place of residence exemption, whether family member could elect which of two properties was his principal place of residence, whether applicant failed to resume use and occupation of property as his principal place of residence within a 6-year period, whether pegging survey constituted physical commencment of works facilitating use and occupation as a principal place of residence Land Tax Management Act 1956 LEGISLATION CITED : Taxation Administration Act 1996 Environmental Planning and Assessment Act 1979 Aldridge v Chief Commissioner of State Revenue [2003] NSWADT 120 Cameron v Chief Commissioner of State Revenue [2009] NSWADT 64 Carey v Chief Commissioner of State Revenue [2010] NSWADT 78 Chapman v Chief Commissioner of State Revenue [2009] NSWADT 207 Chief Commissioner of State Revenue v. Ferrington [2004] NSWADTAP 41 CASES CITED: Chief Commissioner of State Revenue v McIlroy [2009] NSWADTAP 21 Downie v Chief Commissioner of State Revenue [2003] NSWADT 233 Flaracos v Chief Commissioner of State Revenue [2003] NSWSC 68 Hunter Development Brokerage Pty Limited v Cessnock City Council; Tovedale Pty Limited v Shoalhaven City Council (2005) 63 NSWLR 124 Mesiti v Chief Commissioner of State Revenue [2003] NSWADT 99 White v Chief Commissioner of State Revenue [2007] NSWADT 241 Yeng-Cheng Chuang & anor v Chief Commissioner of State Revenue [2009] NSWADT 160 APPLICANT In person REPRESENTATION: RESPONDENT M Carpenter, barrister ORDERS: The Chief Commissioner's assessments of Mr Mytilinios' land tax liability for the tax years 2005, 2006, 2007 and 2008 are confirmed REASONS FOR DECISION 1 The applicant, Mr Mytilinios, owns a home at Kogarah Bay in Sydney. The Respondent Chief Commissioner assessed his liability to land tax for the tax years 2005, 2006, 2007 and 2008 in respect of the home. Mr Mytilinios says his home was exempt from land tax, because he used and occupied it as his principal place of residence. He seeks review of the assessments. 2 Objection to each assessment was made by Mr Mytilinios, and disallowed by the Chief Commissioner. For that reason, the Tribunal enjoys power to review them under section 96 of the Taxation Administration Act 1996. Mr Mytilinios bears the onus of proving his case: section 100, Taxation Administration Act 1996. Applicant's case 3 Mr Mytilinios submits that his Kogarah Bay home attracted the principal place of residence exemption provided by Schedule 1A to the Land Tax Assessment Act 1956. His reasons may be summarised as follows. 1) Even though he lived in his parents' home at Kogarah, and rarely slept at his property at Kogarah Bay, the possession and control which he exercised over the latter property from 2003 constituted a use and occupation of it as a principal place of residence, within the meaning of clause 2 of Schedule 1A. His interpretation of clause 2, he says, is supported by paragraphs 5 and 6 of Land Tax Ruling 20. 2) By a Variation Return in 2004, he exercised his right under clause 12 of Schedule 1A to elect which of the two properties in which he resided was his principal place of residence. This obliged the Chief Commissioner to apply the exemption to the Kogarah Bay property. 3) Subclause 8(3) of the Schedule – which removes the benefit of an exemption for a former principal place of residence where the owner fails to resume use and occupation of it for a period of six months, commencing six years after the end of the last 6-month period when it was last used and occupied by the owner as a principal place of residence - did not apply, because he ceased to reside at Kogarah Bay in 1999, and resumed his use and control of the property as his principal place of residence in 2003. 4) Clause 6 of the Schedule exempted the Kogarah Bay property from land tax, because at all relevant times Mr Mytilinios intended to use and occupy it as his principal place of residence, even when he did not live there. Respondent's case 4 In summary, the Chief Commissioner responds as follows: 1) Mere possession and control of land, in the manner in which Mr Mytilinios possessed and controlled the Kogarah Bay property from 2003, did not constitute use and occupation as a principal place of residence. When all the circumstances are taken into account, the Tribunal would not be satisfied that he used and occupied the property as his principal place of residence until August 2009, when he commenced to reside there. 2) Clause 12 of the Schedule did not empower Mr Mytilinios to elect which of two residences would attract the principal place of residence exemption. That clause applies only where more than one member of the same family own more than one residence used and occupied by any of them as a principal place of residence. Only one family member owned the Kogarah Bay property – Mr Mytilinios himself. He did not use and occupy it as his principal place of residence at any relevant time. 3) Mr Mytilinios was initially entitled to the benefit of clause 8 of the Schedule, because he remained the owner of the Kogarah Bay property while living in his parents' home. However, that exemption was removed by operation of clause 8(3), because he had failed to use and occupy it as his principal place of residence within the six-year period – that is, by July 2005. 4) Clause 6 of the Schedule initially operated to exempt the land from land tax, because Mr Mytilinios intended to use and occupy it solely as his principal place of residence, even though it was tenanted until 2003. That exemption was confined to the tax years immediately following the commencement of the building or other works necessary for his intended use and occupation of the land: clause 6(3)(b). Works physically commenced with demolition in July 2008. That entitled him to exemptions for the 2009 and 2010 tax years, but not for any earlier tax year. The pegging survey of July 2007 did not constitute physical commencement of the works. Issues for determination 5 The issues for determination may be summarised as follows. 1) Whether the nature of Mr Mytilinios' possession and control of the property from 2003 was sufficient to constitute use and occupation as a principal place of residence. 2) Whether clause 12 of the Schedule entitled him to elect the Kogarah Bay property as his principal place of residence. 3) Whether Mr Mytilinios was entitled to the exemption provided by clause 8 of the Schedule, even though he had not moved in to the property by July 2005. 4) Whether the survey of November 2007 constituted physical commencement of works attracting the operation of clause 6 of the Schedule, entitling him to an exemption for the 2008 tax year, even though demolition works did not commence until 2008. Facts 6 The facts are not in dispute. My Mytilinios purchased his home in 1987. Initially, he let it to tenants, but in 1993 moved in and lived there on his own. In July 1999, after the home was broken into, he moved into his parents' home at nearby Kogarah, with two suitcases of clothes and his toiletries. He stored his furniture and other belongings, including recorded music, in a room at the Kogarah Bay house, which he locked. 7 He tenanted the Kogarah Bay property. He paid land tax on it during the years that it was tenanted. 8 Mr Mytilinios had no interest in his parents' property. He did not pay them rent. They were glad to have him. Even when he lived with his parents, Mr Mytilinios considered his Kogarah Bay property to be his principal place of residence. 9 In July 2003, his tenants vacated the property at Kogarah Bay. From then on, he took possession and control of the property. He set up his furniture in the house, regularly mowed the lawns, harvested lemons, oranges and olives from the garden, collected the newspaper twice a week, and used the toilet occasionally. He did minor repairs, including replacing the shower curtain and toilet seat, and maintained the property generally. He even slept overnight there on two occasions. He insured the building. He also insured the contents, though not for the entire period that he was absent. 10 He did not connect either gas or electricity to the property, for safety reasons. 11 He slept at his parents' house, except when he travelled to a holiday house which he owned jointly with his brothers at Callala Beach. He generally ate at his parents' house, when not eating out. The Tribunal infers that he could not and did not cook at the Kogarah Bay home, because the gas and electricity were disconnected. 12 For four weeks in March 2004, Mr Mytilinios' father was admitted to hospital, undergoing quadruple heart bypass and other surgery. Mr Mytilinios decided to remain at his parents' home for the time being, out of concern for his father's health. 13 His father was discharged from hospital on 11 April 2004, which was his 75th birthday. The house at Kogarah Bay was in need of significant renovation. Mr Mytilinios was considering whether to renovate or rebuild it. His father observed to him, 'you only live once'. 14 At that point, in April 2004, Mr Mytilinios decided to rebuild. When complete, he intended to use and occupy the new home as his principal place of residence. He started to cost the development. He attended home shows and showrooms, looking at designs and comparing costs. He estimated that his preferred form of construction would cost in the vicinity of $600,000. 15 In October 2004, he lodged a Variation return with the Chief Commissioner, seeking the 'principal place of residence' exemption in respect of his Kogarah Bay property. This was granted. There is in evidence a series of assessments issued on 7 July 2006, assessing Mr Mytilinios to nil land tax in respect of the property, applying the 'principal place of residence' exemption. It seems the Chief Commissioner applied the exemption under clause 8 of Schedule 1A to the Land Tax Management Act 1956, on the basis that the land has been used and occupied by its owner as a principal place of residence, who then resided elsewhere in a home owned by someone else. 16 Mr Mytilinios observed that, because the principal place of residence exemption had been applied in his favour, he did not think there was any rush to complete the building works. He was unaware of the provisions of subclause 8(3). Its effect (discussed below), was to remove the benefit of the exemption where an owner fails to use and occupy the home as a principal place of residence within six years of the end of the last period during which he did so – in Mr Mytilinios' case, by July 2005. 17 In his statement, Mr Mytilinios indicated that he had to sell his share in the Callala Beach property to afford the development. Before the Tribunal, he candidly admitted that he had sufficient net worth to complete the development without relying on that sale. He said he sold as a matter of financial prudence, to reduce the amount of his borrowings. The sale took about six months, from June or July 2006 to 10 January 2007. He also sold an investment unit in March 2008, and took out a loan to finance the new development. 18 In June 2007, he engaged an architect to design and execute the building works. 19 On or just before 29 November 2007, a survey of the land was completed. The next day, Mr Mytilinios observed about three pegs placed in the ground – two on the boundaries, and one in the middle of the property. His evidence on that point was given on oath, at the request of the Chief Commissioner. He was cross-examined, but not challenged. The Tribunal found him to be a witness of truth, and makes findings in accordance with his evidence. 20 Architectural drawings were produced in December 2007. Development consent and a construction certificate were issued on 16 May 2008. Demolition of the existing house commenced in July 2008. The footings were completed by 12 August 2008, and a concrete slab laid by 12 September 2008. 21 In August 2009 the new home was completed. Mr Mytilinios moved in and resided there from 22 August 2009. He still occupies it as his home. 22 Mr Mytilinios produced statements signed by his father and by his architect. They were consistent with the evidence given by him, and summarised above. The Tribunal makes findings of fact in accordance with the evidence of Mr Mytilinios, his father and his architect. Legislation 23 Land tax is levied and payable on the taxable value of all land in New South Wales, except land which is exempted from taxation under the Act: section 7 of the Act. For each calendar year, tax is charged on land as owned at midnight on 31 December the previous year: section 8. For the calendar years 2004 to 2008 inclusive, section 10(1)(r) provided that land attracting the 'principal place of residence' exemption under Schedule 1A was exempt from land tax. 24 Schedule 1A came into effect on 31 December 2003. Clause 2 of the Schedule provided: (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 on 1 January 2004 or any succeeding year, if: a. the land has a land value in respect of the year of less than the premium tax threshold, and b. the land is ... a parcel of residential land .....' (2) Land is not used and occupied as the principal place of residence of a person unless: a. the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purpose since July in the year preceding the tax year in which land tax is levied, or b. in any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the person's principal place of residence. 25 'Principal place of residence' was defined in section 3(1) of the Act to mean: 'the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the principal place of residence of the person.' Whether land used and occupied as principal place of residence 26 The first issue for determination is whether Mr Mytilinios, in the way that he possessed and controlled the property from the time when his tenants left in July 2003, satisfied the test for the principal place of residence exemption. 27 In Chief Commissioner of State Revenue v. Ferrington [2004] NSWADTAP 41, the Appeal Panel of this Tribunal formulated the tests for determining whether a person occupied a property as a 'principal place of residence' in satisfaction of the conditions of the First Home Owner Grant. The Appeal Panel said [at paras 41-42]: '41 Care must be taken in applying the principles discussed in these diverse cases to the meaning of "principal place of residence" under the First Home Owners Grant Act 2000 because each of them occurs in the context of differing legislation where that phrase has been used. There are, however, a number of common principles which are apparent from the approach taken in each case. 42 First, the words "principal place of residence" should be given their ordinary meaning in the context in which they appear: …. Secondly, consideration of whether a person has been residing or occupying premises as their principal place of residence is to be assessed objectively, in the light of the circumstances relating to the actual occupation of the dwelling: …. Thirdly, the intention of the person concerned, gauged objectively, is relevant but not determinative of the issue: …. Fourthly, to occupy a home as his or her principal place of residence a person's occupation must have a degree of permanence to it: a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor is occupation for some other purpose: …. Fifthly, the short length of a person's residence, while relevant, is not determinative of the issue: …. This is so since a recipient's occupation of a home, while short, may have the requisite degree of permanence to it. But that will not happen if, when considered objectively, the occupation was transient, temporary, contingent or of a passing nature, or for some other purpose. One may occupy premises for a short time on a transient, temporary, or contingent basis, but one can also occupy for a short time as one's principal place of residence. It is the nature of that occupation which provides the element of permanence. The fact that a period of actual occupation is short, as in the present case, will in practice make it harder for a recipient to show that the occupation was as his or her principal place of residence, but it will not make it impossible, …. Sixthly, the reasons for a person's departure from the home must be both reasonable and adequately explained when considered objectively in the light of their personal circumstances: …. there are circumstances, peculiar to the individual concerned, which may, objectively viewed, adequately and reasonably explain a person's decision to move out of a property, but which are not entirely out of the person's control.' 28 These factors have since been adopted by the Appeal Panel in determining whether an owner of land is entitled to the 'principal place of residence' exemption from land tax: Chief Commissioner of State Revenue v McIlroy [2009] NSWADTAP 21. The principles for determining whether property is used and occupied as a principle place of residence were usefully summarised in Yeng-Cheng Chuang & anor v Chief Commissioner of State Revenue [2009] NSWADT 160 [at 19-22]: '19 … A person's place of residence is usually understood as "the place where he eats, drinks and sleeps" (per Ridley J in Stoke-On-Trent Borough Council v Cheshire County Council [1915] 3 KB 699 at 706). The use of the term "principal" in the expression suggests that a person may use and occupy more than one residence but that the exemption is only available for the principal place of residence of the person. 20 In ascertaining whether a particular residence of a person is the principal place of residence of that person it is necessary to use an objective test and the conclusion is determined by considering the extent and quality of use and occupation of the residence in each case (per Fryberg J in Dean v Commissioner of Stamp Duties (Qld)(No 2) [1996] 2 Qd R 557 in considering the meaning of the expression "principal place of residence" found in the Stamps Act 1894 (Qld)). 21 The onus to establish one's principal place of residence is usually discharged on the basis of various matters. It is important to note, as observed by the Victorian Civil and Administrative Tribunal in Re Ziino and Commissioner of State Revenue [2004] VCAT 1707 that: "… while sleeping by itself in a place can be an indication of a principal place of residence, it is not the sole matter to be taken into account. One needs to look at a whole indicia of matters … One needs to look as well at where the applicant ate; his use of electricity and the furniture and fittings and other matters such as entertainment of friends in the house… Sleeping in a place does not make a residence. It has got to be the whole indicia of things that are done in a home which are described in the cases…" 22 Other indicia … would include evidence of an applicant's use of the address of the property as the residential address for purposes of his or her mail, driving licence, on the electoral roll, in immigration records, income tax returns and telephone bills.' 29 Except for two occasions, Mr Mytilinios never slept at the property throughout the period in question. There is no evidence that he ate there. He told the Tribunal that he ate at his parents' house, except when eating out. He could not cook at the Kogarah Bay property, because neither gas nor electricity were connected. He could not turn on a light. Though he used the toilet on occasion, there is no evidence that he showered there. In the absence of an energy source, it is unlikely that hot water was available. He set up his furniture in the house, but rarely seems to have used it, if at all. He maintained the property, like any prudent owner, by mowing the lawns, carrying out minor repairs, and collecting the paper. However, merely maintaining a property does not constitute 'residence' in the normal sense of the word. A landlord or his agent might maintain a tenanted property by arrangement with tenants, or maintain it (as here) while untenanted, without residing in it. 30 Mr Mytilinios did utilise the produce of the garden. That is an act often associated with residence. Alone, however, without the usual attributes of residence such as eating, sleeping and otherwise living at the property, utilising its natural produce is insufficient to establish residence. 31 In support of his argument that he used and occupied the property as his principal place of residence, Mr Mytilinios drew the Tribunal's attention to the decisions in Flaracos v Chief Commissioner of State Revenue [2003] NSWSC 68, Mesiti v Chief Commissioner of State Revenue [2003] NSWADT 99, Aldridge v Chief Commissioner of State Revenue [2003] NSWADT 120, and White v Chief Commissioner of State Revenue [2007] NSWADT 241. The facts in each of those cases were materially different from the facts of this case. They do not assist the Applicant. In Flaracos and Mesiti, the Tribunal was satisfied that the applicants actually resided in the property at all relevant times. In White, the applicants had physically commenced renovation works prior to the tax year in question – a situation which, for reasons discussed below, does not apply here. The decision in Aldridge was overturned on appeal: Chief Commissioner of State Revenue v Aldridge & Anor (RD) [2003] NSWADTAP 50. The Appeal Panel found that the principal place of residence exemption did not apply where a home had been let to tenants from December of the year immediately preceding the relevant tax year, even though it had been continuously occupied by the owners for the preceding five months. That decision did not favour the taxpayer, and is not capable of assisting Mr Mytilinios. 32 In all the circumstances, the Tribunal cannot be satisfied that Mr Mytilinios resided in the property between July 2003 and 22 August 2009. As he did not reside there, it cannot have been his principle place of residence. 33 Even if Mr Mytilinios had resided in the property, contrary the Tribunal's finding, he would need to establish that it was his 'principal' place of residence to qualify for the exemption. It is common ground that he resided at his parents' home in Kogarah. Construed in accordance with its ordinary meaning, 'principal place of residence' denotes the 'primary' or 'main' residence. Among the meanings ascribed to it in The Macquarie Online Dictionary are: 'first or highest in rank, importance, value, etc; chief; foremost'. 34 The question as to which of two or more residences is the 'principal' one is to be determined objectively, having regard to the extent and quality of its use and occupation: Cameron v Chief Commissioner of State Revenue [2009] NSWADT 64 at [46]. The issue has been described as one of 'fact and degree': Downie v Chief Commissioner of State Revenue [2003] NSWADT 233 at [26]. The respective amounts of time which an owner spends in each residence is a relevant factor: Chief Commissioner of State Revenue v McIlroy [2009] NSWADTAP 21 at [41]. Though the subjective intention of the owner is relevant, it is not determinative of the issue: Ferrington [at 42]. 35 On the evidence, Mr Mytilinios spent most of his time at his parents' house, where he ate and slept. That is so, even though he visited his house at Kogarah Bay regularly, and maintained it assiduously. Even if he had resided there, it would not have been his 'principal' place of residence. 36 Mr Mytilinios argued that paragraphs 5 and 6 of Revenue Ruling LT 20 provided, in effect, that an absent owner remains entitled to the 'principal place of residence' exemption so long as he 'maintains' the property as his principal place of residence. He says that he 'maintained' the property while living at his parents' house, that this satisfied the requirements of the Ruling, and that the Tribunal should therefore be satisfied that he was entitled to the exemption. 37 Paragraphs 5 and 6 of the Ruling provided as follows. 'Use and occupation by the owner 5. As noted above, the owner must use and occupy the land in order to qualify for the exemption. The primary element of 'occupation' is 'possession'. However, 'possession' must extend beyond mere legal possession, to include actual control over the land. If the land has been leased to another person, the owner would not have sufficient control to satisfy the test of 'occupation'. 6. An owner need not be continuously resident on the land to meet the 'use and occupy' test. Provided the land is maintained as the owner's principal residence whenever the owner wishes to use it, the exemption will apply. This would be so even though the land may not be physically occupied by the owner at any time during a particular year.' 38 Paragraphs 5 and 6 did not appear in isolation. They must be read in context. In particular, they must be read together with paragraph 4 of the Ruling, which provided: 'Ruling 4. These [sic] are three basic requirements specified in section 3(3)(a) [the predecessor to clause 2(2) of Schedule 1A] namely: (a) The land must have been continuously used and owned by the occupier since 1 July preceding the commencement of the tax year; (b) It must be used for residential purposes and for no other purpose; and (c) The owner must not have used any other land as a principal place of residence since 1 July preceding the tax year.' 39 The last of these requirements expressly disqualified Mr Mytilinios from the exemption, because he lived with his parents. Properly construed, paragraph 6 did not suggest that an absent owner could maintain his exemption merely by maintaining the property, in circumstances where he occupied another property as his principal place of residence. The Ruling does not support Mr Mytilinios' argument. 40 Even if it did, it could not overcome the effect of the legislation. Even if its contents mis-stated the true effect of the legislation – which is not the case – it would neither prevent nor estop the Chief Commissioner from assessing land tax in accordance with the legislation, nor would it compel him to concede an exemption to which a taxpayer was not otherwise entitled: see Carey v Chief Commissioner of State Revenue [2010] NSWADT 78 [at 49], and the cases there cited. Clause 12 - election of property as principal place of residence 41 Mr Mytilinios argued that, by a Variation Notice in 2004, he exercised a right under Clause 12 of Schedule 1A to elect to treat his property in Kogarah Bay as his principal place of residence, and that the election was binding on the Chief Commissioner. Clause 12(1) and (2) provided: '(1) For the purposes of the principal place of residence exemption, only one place of residence may be treated as the principal place of residence of all members of the same family. (2) If members of a family own (whether jointly or separately) more than one residence used and occupied by any of them as a principal place of residence, the Chief Commissioner is to treat the one place of residence elected as the principal place of residence of the family as the principal place of residence of all members of the family in respect of a tax year.' 42 Clause 12(2) is attracted only where: 1) members of a family own more than one residence, and 2) more than one of the residences is used and occupied by any of them as a principal place of residence. 43 In this case, Mr Mytilinios and his parents were members of the one family. They separately owned more than one house: Mr Mytilinios owned one at Kogarah Bay; his parents owned one at Kogarah. Assuming (without deciding) that the Kogarah Bay house was a 'residence' for the purposes of the clause, they satisfied the first requirement. 44 However, the second requirement was that more than one of the residences be used and occupied by any of the family members as a principal place of residence. The Tribunal has found that Mr Mytilinios did not occupy the Kogarah Bay property as a principal place of residence. There is no evidence that any other family member did so. In those circumstances, the second requirement was not satisfied. Clause 12 did not apply, and Mr Mytilinios did not enjoy any right to elect to treat Kogarah Bay as his principal place of residence. 45 Clause 12 permits the election of one residence as a principal place of residence, out of two or more residences which are so used and occupied by family members. It does not entitle an owner, by a process of election, to render a property a principal place of residence, where that property is not already used and occupied as a principal place of residence. Clause 8 – exemption for absent owner intending to occupy residence 46 Mr Mytilinios argued that he was entitled to the exemption provided by Clause 8 of the Schedule. Clauses 8(1) to (3) provided: 'Concession for absences from former residence (1) If the Chief Commissioner is satisfied that: (a) a person is the owner of land ( the former residence ) that has been used and occupied by the person as his or her principal place of residence for a continuous period of at least 6 months, and (b) the person uses and occupies other land (whether or not in New South Wales), that is not owned by the person, as his or her principal place of residence, the person is taken, for the purpose of the principal place of residence exemption, to continue to use and occupy the former residence as his or her principal place of residence. (2) The maximum period for which a person may be taken, under this clause, to continue to use and occupy a former residence as a principal place of residence is 6 years starting at the end of the last period (of at least 6 months) during which the former residence was used and occupied by the person as a principal place of residence (not including any period for which the person may be taken, under clause 7 or this clause, to have used and occupied the former residence as a principal place of residence). (3) If the principal place of residence exemption applies to the former residence of a person by operation of this clause, the exemption ceases to have effect if the person is the owner of the former residence at the end of the 6-year period referred to in subclause (2) and fails: (a) to resume actual use and occupation of the residence as a principal place of residence by the end of that period, and (b) to continue that use and occupation for at least 6 months.' 47 Until vacating it July 1999, Mr Mytilinios had lived in his Kogarah Bay property as his home. He then lived in his parents' house. For those reasons, he was 'taken, for the purpose of the principal place of residence exemption, to continue to use and occupy the former residence as his … principal place of residence'. For so long as that continued, he was entitled to the exemption provided by Clause 8(1). By operation of clause 8(2), that could only continue for a maximum of 6 years, commencing in July 1999 – that is, up to July 2005. 48 If, by July 2005, Mr Mytilinios had failed to resume his use and occupation of the property as a principal place of residence, the exemption would cease to have effect, by operation of Clause 8(3). On the evidence, Mr Mytilinios did not resume his use and occupation of the Kogarah Bay property as his principal place of residence until August 2009. It follows that, by July 2005, the exemption initially provided by Clause 8(1) had ceased to have effect. Clause 6 – exemption for unoccupied land intended to be principal place of residence 49 Mr Mytilinios argued that he was entitled to the exemption provided by Clause 6(1) of the Schedule, because at all relevant times, he intended to use and occupy the Kogarah Bay property solely as his principal place of residence. 50 As at 31 December 2007, clause 6 provided relevantly as follows: '(1) An owner of unoccupied land is entitled to claim the land as his or her principal place of residence, if the owner intends to use and occupy the land solely as his or her principal place of residence. In such a case, the owner is taken, for the purpose of the principal place of residence exemption, to use and occupy the unoccupied land as his or her principal place of residence. … (2) This clause does not apply unless: (a) the land is unoccupied because the owner intends to carry out, or is carrying out, building or other works necessary to facilitate his or her intended use and occupation of the land as a principal place of residence, and (b) if those building or other works have physically commenced on the land, no income has been derived from the use and occupation of the land since that commencement, and (c) the intended use and occupation of the land is not unlawful. (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.' 51 The Tribunal is satisfied that, in April 2004, Mr Mytilinios decided to demolish and rebuild the Kogarah Bay house, and intended to live in it when it was ready. It follows that the exemption provided by clause 6(1) was attracted in respect of the 2005 and 2006 tax years, subject to clause 6(3). 52 Because the house had been tenanted until July 2003, clause 6(3)(b) applied. This confined the operation of the exemption to the '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'. On or shortly before 29 November 2007, a survey was carried out on the land, involving the placement of at least three pegs. Architectural plans were produced in December 2007. Development consent and a construction certificate were issued on 16 May 2008. Demolition of the house commenced in July 2008, and concrete footings were completed within the next month. 53 Mr Mytilinios sought exemption for the 2008 tax year, on the basis that the survey of November 2007 constituted physical commencement of the 'building and other works' required by clause 6(3). If the 2007 survey constituted physical commencement of the works, the exemption applied to the 2008 tax year and following, because he had had the requisite intention since at least April 2004. If physical commencement did not begin with the survey, it must have occurred with demolition works in July 2008, entitling him to the exemption for the 2009 tax year. The Chief Commissioner applied the exemption from the 2009 tax year. The issue is whether it applied to the 2008 tax year. That depends on whether the survey constituted physical commencement of the works. 54 The concept of physical commencement was considered by the Court of Appeal, in the context of sections 95 and 99 of the Environmental Planning and Assessment Act 1979, in Hunter Development Brokerage Pty Limited v Cessnock City Council; Tovedale Pty Limited v Shoalhaven City Council (2005) 63 NSWLR 124. In that case, the issue for determination was whether development consent for certain subdivisions of land had lapsed. Section 95 provided that consent would not lapse if, by a specified date, 'building, engineering or construction work relating to the building, subdivision or work is physically commenced'. The terms of section 99 were not materially different. 55 Only survey work had been carried out prior to the relevant date. It involved clearing of vegetation, digging holes, placement of permanent marks on or under the surface, and placement of pegs or stakes to act as recovery marks. The Respondents argued, successfully, that this constituted physical commencement of engineering works. Tobias JA, with whom Santow JA and Stein A-JA agreed, found at 142: 'But once consent is granted for a subdivision, the implementation of that consent ultimately resulting in the construction of the subdivision of roads, drainage and sewer lines as well as the laying out of the allotments in accordance with the approved layout, requires as a necessary first step in the engineering or construction of that subdivision, including the physical works contemplated thereby, the setting out by survey upon the land of each of the component elements of the subdivision in accordance with the approved plan. This would accord with common sense and industry practice …. The carrying out of survey work to establish the correct location of these elements, in my opinion, is capable of constituting a first step in the performance of the engineering and/or construction work involved in the creation of a subdivision. Accordingly, it follows that the natural and ordinary meaning of the expression "engineering work" in the context relevant to the present issue is capable of including physical survey work of the nature and extent of that the subject of these appeals. That is not to say that any survey work, albeit of a physical nature, would so qualify. Simply entering land in respect of which a subdivision has been approved and knocking in one or two pegs would not, in my view, necessarily qualify. There is an element of fact and degree in each case. Although in Besmaw Pty Limited [v Sutherland Shire Council (2003) 127 LGERA 413] Talbot J (at 436 [112]) observed that once Parliament had decided to delete the requirement of substantiality, there was little room for an argument that the works must not be de minimus, and that it was therefore reasonable to exclude any test of the degree and extent of the work under the present statutory regime, nonetheless the requirement that the relevant work relate to the approved subdivision requires a real nexus between them. In particular, the concept that the work must be "physically commenced", requires physical activity which involved an appearance of reality and which is not merely a sham. In other words, the relevant work must be more than merely notional or equivocal in that it must truly be work relating in a real sense to that which has been approved: cf Besmaw Pty Ltd (at 436 [111]). …. Given the obvious difference between the expressions "substantially commenced" and "physically commenced", in my opinion the only statutory requirement is that the relevant work is commenced upon the land in a physical sense (as was clearly the position in the present cases). What is to be distinguished is work which is not physically commenced on the relevant land but is off-site work such as design and planning work. In my respectful opinion, Cowdroy J went too far [in Bizawu Pty Limited v Cessnock City Council [2004] NSWLEC 411] when he held that the engineering work must result in a material change to the physical nature of the land. The statutory provisions contain no such requirement.' 56 In this case, clause 6(3)(b) of the Schedule confines the exemption to the period following physical commencement of 'building or other works necessary to facilitate the owner's intended use and occupation of the land'. It expressly requires a nexus between the works and the intended use and occupation. The phrase, 'other works' is not defined. Adopting the ejusdem generis rule, its construction should be confined to works 'which are ancillary to, akin to or connected in some meaningful way with building works': Chapman v Chief Commissioner of State Revenue [2009] NSWADT 207 [at 126]. Engineering works would fall within the scope of such a construction. 57 Tovedale is authority for the proposition that an on-site survey can constitute an engineering work, at least where (1) it is not a sham, and (2) it truly relates to the works already designed and the subject of Council approval. It also establishes that mere design work would not qualify as 'physical commencement' of engineering work. 58 In this case, there is no evidence that the peg-out survey of 2007 was a sham. On the contrary, it related directly to the proposed building works. It involved some physical activity upon the land – that is, the driving of three pegs into the ground. However, the survey was not an execution of plans already drawn up and approved, as was the case in Tovedale. It was a survey preparatory to drawing up architectural plans. The design work itself could not have constituted physical commencement of building or other works, for the reasons enunciated in Tovedale. It would be an extraordinary result if survey work preparatory to design work would qualify as physical commencement. In my view, it does not. To that extent, the facts in this case are similar to those in Chapman, where a contour survey was conducted prior to design work and Council approval. 59 The facts in Tovedale are distinguishable, because in that case the survey work was done in execution of plans already drawn up and approved by Council. They were the equivalent, in this case, of pegging out the position of the house, after architectural designs had been drawn up and approved. That is not what occurred. The evidence establishes that three pegs were driven into the ground – two at the boundaries and one in the middle – prior to architectural plans being finalised, and prior to Council approval. There is no evidence that plans had been submitted to Council for approval by the time the survey occurred. As architectural plans were not yet complete, that seems highly unlikely. The survey was preparatory to design work. Unlike the situation in Tovedale, it was not performed in execution of existing, approved plans for the building work. 60 For those reasons, I am not satisfied that the survey of November 2007 constituted physical commencement of building or other works, attracting the operation of clause 6(3)(b). It follows that the exemption commenced in the 2009 tax year. It was not available for the 2008 tax year. Determination of issues 61 For the reasons given, each of the issues are determined as follows: 1) Mr Mytilinios did not use and occupy the Kogarah Bay property as his principal place of residence during any of the relevant taxing dates – namely, the six months preceding the 2005, 2006, 2007 and 2008 tax years. 2) Clause 12 of Schedule 1A did not entitled him to elect the Kogarah Bay property as his principal place of residence. 3) The exemption provided by clause 8 of the Schedule had ceased to operate by July 2005, because he had not resumed his occupation of the property as a principal place of residence. 4) The exemption provided by clause 6 of the Schedule did not extend to the 2008 tax year, because the survey of November 2007 did not constitute physical commencement of 'building or other works necessary to facilitate [his] intended use and occupation of the land' within the meaning of clause 6(3)(b). Order 62 The Chief Commissioner's assessments of Mr Mytilinios' land tax liability for the tax years 2005, 2006, 2007 and 2008 are 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.