Delmege v Chief Commissioner of State Revenue [2009] NSWSC 1052

New South Wales Supreme Court

CITATION : Delmege v Chief Commissioner of State Revenue [2009] NSWSC 1052

HEARING DATE(S) : 1 October 2009 JUDGMENT OF : Gzell J

EX TEMPORE JUDGMENT DATE : 1 October 2009

DECISION : Application refused. Application for adjournment to raise the issue by amended assessment granted upon payment of indemnity costs on assessment or agreement and undertaking to serve amended assessments within seven days.

CATCHWORDS : TAXES AND DUTIES - Land Tax - at hearing of a review the Chief Commissioner sought to justify his rejection of the plaintiffs' notice of objection on the basis that there were other occupants of the premises thereby excluding intended use of as deemed actual use of a principal residence under the Land Tax Management Act 1956, s 10T(2)(c) - s 10T(2)(c) not relied upon in objection decision - Chief Commissioner sought leave to call further evidence of occupation

LEGISLATION CITED : Land Tax Management Act 1956

CASES CITED : McNally and Anor v Commissioner of State Revenue (NSW) [2003] NSWSC 1118; 2004 ATC 4007 Commissioner of Taxation v Jackson (1990) 27 FCR 1

Maxwell Philip Delmege (First Plaintiff) PARTIES : Narelle Patricia Delmege (Second Plaintiff) Chief Commissioner of State Revenue (Defendant)

FILE NUMBER(S) : SC 3603/08

COUNSEL : C J Bevan (Plaintiffs) I Young (Defendant)

SOLICITORS : Evangelos Patakas & Associates (Plaintiffs) Crown Solicitor's Office (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

GZELL J

THURSDAY 1 OCTOBER 2009

3603/08 MAXWELL PHILIP DELMEGE & ANOR v CHIEF COMMISSIONER OF STATE REVENUE EX TEMPORE JUDGMENT 1 I have before me a review of the Chief Commissioner of State Revenue's decision that land at 1758 Pittwater Road, Bayview was not the principal place of residence of the plaintiffs, Maxwell Philip Delmege and his wife, Narelle Patricia Delmege. 2 The matter was the subject of direction through the ECM court. On 29 May 2009 the solicitors for the Chief Commissioner said that, on the basis that no further evidence was filed and no further subpoenas for production were issued on behalf of Mr and Mrs Delmege, the Chief Commissioner did not propose to adduce any evidence and, therefore, did not seek a court direction in that regard. 3 On 4 June 2009, consequent upon that indication, I set the matter down for hearing before me for two days to commence today. I made orders that Mr and Mrs Delmege deliver an outline of argument by 16 September 2009, the Chief Commissioner deliver his outline by 23 September 2009 and Mr and Mrs Delmege deliver any reply by 28 September 2009. 4 Mr and Mrs Delmege lodged their outline and in response to the Chief Commissioner's outline, they lodged a reply. 5 Without the leave of the Court, counsel for the Chief Commissioner served a supplementary submission on 29 September 2009. It stated that the Chief Commissioner relied on an exclusion under the Land Tax Management Act 1956, s 10T to the principal place of residence exemption based on intended use. That provision, so far as is material, was in the following terms: "(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). (2) This section does not apply unless: (a) (Repealed) (b) the Chief Commissioner is satisfied that the intended use and occupation of the land is not unlawful, and (c) while the owner is the owner, the land is not used or occupied except as his or her principal place of residence." 6 The supplementary submission stated that the Chief Commissioner contended that other persons had resided in the premises and he intended to use the Land Tax Management Act, s 10T(2)(c) to exclude the principal place of residence exemption with respect to the 2002 and 2003 land tax years, which are not the subject of this review, as well as with respect to the 2004, 2005 and 2006 land tax years, which are the subject of this review. 7 Counsel for the Chief Commissioner has said, however, that the Chief Commissioner will not seek to displace the granting of the principal place of residence exemption to Mr and Mrs Delmege for the earlier years. 8 The Chief Commissioner, while being aware of some use and occupation by persons other than Mr and Mrs Delmege, seeks to adduce evidence to establish further incidence of occupation by another person or persons. The Chief Commissioner did not rely upon the Land Tax Management Act, s 10T(2)(c) in making his assessment nor in his decision upon the notice of objection lodged on behalf of Mr and Mrs Delmege. 9 In my view, the operation of the Land Tax Management Act, s 10T(2)(c) may be raised by the Chief Commissioner subsequent to this review, thereby entitling Mr and Mrs Delmege to lodge an objection to a new assessment based on that ground, but, the matter not having formed part of the objection decision under review, it is not appropriate for the Chief Commissioner to raise it now, nor to adduce evidence to support it. 10 In McNally and Anor v Commissioner of State Revenue (NSW) [2003] NSWSC 1118; 2004 ATC 4007 at [29] I said so much. I went on to say as follows: "30. The Taxation Administration Act 1996, s 101(1)(b) empowers the court to make an assessment or other decision in place of the assessment or other decision to which the application relates. Since the application relates to the assessment of the taxable value of the Noraville property, that provision does not enable the court, in my opinion, to make an assessment of the taxable value of the Greenwich property. 31. The structure of the Act is to require the Chief Commissioner to consider a notice of objection under the Taxation Administration Act 1996, s 86 and either to allow the objection in whole or in part or to disallow it under s 91(1) and give his reasons for the determination on the objection in terms of s 93(2). 32. The analogous structure under the former provisions of the Income Tax Assessment Act 1936 (Cth) were the subject of discussion by the High Court in FCT v ANZ Savings Bank Ltd (1994) 181 CLR 466; 29 ATR 11; 94 ATC 4844. It was held that the taxpayer bore the onus of establishing that an assessment was excessive and there was nothing confining the Commissioner of Taxation to matters in the notice of objection and once the decision on the objection was before the court it was seised of the decision in its entirety and the Commissioner was entitled to justify his assessment by arguing that some deductions which had been allowed by the assessment were in law not allowable so that the whole or part of the tax payable was still payable and the assessment was, accordingly, not excessive. 33. The structure of the Land Tax Management Act 1956 (NSW) and the Taxation Administration Act 1996 (NSW) is different. Assessments are confined to taxable values of discrete parcels of land.