Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Hayward v Chief Commissioner of State Revenue (RD) [2011] NSWADTAP 17 Hearing dates: 17 November 2010 Decision date: 15 April 2011 Jurisdiction: Appeal Panel - Internal Before: J Needham SC, Deputy President S Frost, Judicial Member C Bennett, Non-Judicial Member Decision: 1.Leave to extend the time for the filing of the appeal up to and including 25 June 2008. 2.Leave to extend the appeal to the merits of the decision. 3.The appeal is dismissed. 4.The decision of the Chief Commissioner of 12 November 2008 (as to land tax and to interest) is confirmed. Catchwords: Land Tax - principal place of residence exemption - concession for unoccupied land - time for which concession available Land Tax - concession for absence from former principal place of residence - whether former occupation required to be lawful occupation Extension to the merits of the appeal - desirability of deciding all matters in issue on appeal Legislation Cited: Land Tax Management Act 1956 Administrative Decisions Tribunal Act 1997 Local Government Act State Revenue Legislation (Further Amendment) Act 2003 Taxation Administration Act 1996 Cases Cited: Chapman v. Chief Commissioner of State Revenue [2010] NSWADT 124 Sagovac v. Chief Commissioner of State Revenue [2005] NSWADT 91 Gilmour v. Chief Commissioner of State Revenue [2007] NSWADT 145 Trust Co Aust v. Chief Commissioner of State Revenue [2002] NSWADT 21 Snow v. Chief Commissioner of State Revenue [2005] NSWADT 224 Pearse v. Chief Commissioner of State Revenue [2007] NSWADT 14 Reuman v. Chief Commissioner of State Revenue [2004] NSWADT 96 Creamer v. Chief Commissioner of State Revenue [2006] NSWADT 272 Category: Principal judgment Parties: Brian Hayward (First Appellant) Rochelle De Marco (Second Appellant) Chief Commissioner of State Revenue (Respondent) Representation: Counsel C Burnett for respondent R De Marco (Second appellant in person/agent for appellants) State Crown Solicitor (Respondent) File Number(s): 109041 Decision under appeal Citation: Hayward & anor v. CCSR [2010] NSWADT 117 Date of Decision: 2010-05-04 00:00:00 Before: Revenue Division File Number(s): 096045 Reasons for Decision 1The appellants filed a notice of appeal in relation to the decision of Judicial Member Hole in Hayward & anor v Chief Commissioner of State Revenue [2010] NSWADT 117 published on 19 May 2010. The notice of appeal was dated 18 June 2010 but noted as filed on 25 June 2010. Accordingly, the appeal is prima facie out of time. 2The appeal relates to land tax levied on land owned by the appellants, Mr Hayward and Ms De Marco, at Arcadia, for the years 2004 to 2008 inclusive. An objection to land tax levied for the relevant years was disallowed on 12 November 2008 and the appellants sought a review from the Tribunal. The review was filed two weeks out of time. Judicial Member Hole, in her reasons for decision of 19 May 2010:- a) allowed the extension of time; b) confirmed the decision of the Chief Commissioner of 12 November 2008; and c) confirmed the imposition of market interest rate. 3The facts were uncontested and we set out below the facts as found by the learned Tribunal Member:- Facts 2 The applicants purchased the property subject ("the subject property") of the assessment on 5 August 1999 and development approval was given for the construction of a small timber dwelling on the subject property on 1 September 1999 on a particular site on the subject property. 3 The applicants decided to attempt to build on a different site on the subject property which would require a new application to the Local Council and, due to the topography, an extensive driveway both in length and construction. 4 A new application was made to the Local Council for approval to build the dwelling on the alternate building site. This application was made on 6 April 2000 and the Local Council granted that application on 9 October 2001. This approval was for "erection of a dwelling for use as a dwelling house and a bitumen driveway and associated retaining walls". The applicants sought a further amendment which was consented to on 8 April 2002. This further amendment was deemed necessary by the Local Council for the provision of extended environmental statements. 5 The applicants resided on the subject property from the time that they purchased the property until December 2002, initially a mobile home was rented and placed on the property followed by the purchase of a caravan. All services were available to the property although not connected. 6 In December 2002 bushfires destroyed the caravan and the applicants were not able to continue to live on the subject property and it was necessary for them to obtain rental property elsewhere. 7 A driveway was being constructed on the subject property and a massive storm event which occurred in October 2003 caused damage to the property and in particular to the driveway construction works. 8 A neighbour commenced legal proceedings on 20 July 2005 and as a result the prolonged and costly legal proceedings which resulted in a verdict against the neighbours also caused serious and unexpected delays to the completion of the residence. 9 The applicants sold their previous family home, which they had lived in for five years, to establish themselves within the district of the subject property and their child attended the local preschool for the kindergarten intake of 2003. 10 Following the massive storm event in October 2003, which caused severe damage to the surfacing of the drive and to the property, the Local Council issued a "post storm cleanup notice" to the applicants. This notice was dated 27 October 2003. A further notice was issued which was then withdrawn and further requirements imposed on the applicants by way of a "sediment stabilisation plan". Prior to the massive storm event the applicants had provided for the cost of building the dwelling and constructing the driveway. 11 Following the litigation commenced by the neighbour the cost of the litigation caused the applicants financial hardship. The compliance with the Local Council requirements also imposed financial hardship. 12 The applicants sought to sell the property in April 2005 and they appointed a real estate agent. This was not successful and was due to the Local Council notice and the litigation continuing between the applicants and the neighbour in the opinion of the applicants. 13 The driveway was approved in April 2006 by the Local Council and by 19 July 2006 the driveway was sprayed with bitumen. 14 The litigation commenced by the Local Council against the applicants was finalised on 23 August 2006 resulting in a verdict for the applicants. 15 The applicants have not resided at the property since December 2002. 16 The applicants were forwarded a questionnaire by the respondent which was completed and returned to the respondent on 26 August 2008. The applicants claimed an exemption from land tax in that questionnaire on the basis that the land was intended to be used as the applicants' principal place of residence. 17 The respondent issued a Land Tax Notice of Assessment on 12 November 2008 in respect of land tax years from 2004 to 2008 inclusive and it is from that assessment that this application is brought. 18 The assessment issued on 12 November 2008 also included an imposition of interest which was remitted to being market rate interest only on 12 January 2009. .... 21 From shortly after the date of purchase of the subject property, 5 August 1999, the applicants commenced living in a mobile home on the subject property until October 2000 when the mobile home was moved. They then lived elsewhere between October 2000 and January 2001 when another mobile home was placed on the subject property and they lived there until May 2001. In May 2001 a caravan was placed on the subject property and they lived in that until it was destroyed by bushfire in December 2002." The decision below 4The question before the learned Tribunal member was whether, in the above factual scenario, the appellants were entitled to a concession for unoccupied land intended to be the owner's principal place of residence (clause 6, Schedule 1A, Land Tax Management Act 1956 ("LTMA")) or for an absence from a former residence (clause 8, Schedule 1A, LTMA). Those sections as they read as at the 2008 tax year are set out at paragraphs [28] and [29] of the decision below. Th ose paragraphs provide:- "28 Section 10T Land Tax Management Act 1956 (LTMA), now repealed, was replaced by Clause 6 Schedule 1A LTMA. This Clause provides a concession for unoccupied land intended to be the owner's principal place of residence in respect of the period from date of purchase: "Clause 6 Schedule 1A LTMA: 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. (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 . (5) If the principal place of residence exemption applies by operation of this clause to land not actually used and occupied by a person as his or her principal place of residence on a taxing date, that exemption is 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. (6) The effect of the revocation is that the principal place of residence exemption is taken not to have applied to the land in respect of any tax year to which, but for the revocation, it would have applied. Land tax liability is to be assessed or reassessed accordingly. (7) ..... (8) For the purposes of this clause : "unoccupied land" means land that is not being used or occupied for any purpose." 29 The provisions of Clause 8 Schedule 1A LTMA are also relevant: "8 Concession for absences from former residence 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. 4) Any period during which a person is in full time care is not to be counted toward the maximum period referred to in subclause (2). Accordingly, a person who is in full time care may continue to be taken to use and occupy his or her former residence as his or her principal place of residence during any period in which he or she is in full time care. ...." 5Before the Tribunal below, the appellants argued that they were entitled to a concession from land tax for the relevant years because the delay in building the house on the land was caused by factors beyond their control - they cited a need to lodge a new DA which was only granted in 2002, a fire in 2002, a flood in 2003, litigation commenced by Council in 2003 and litigation commenced by a neighbour in 2005. They were delayed both by these factors and the financial strain placed upon them by the building of the driveway and continuing litigation (see pars [30]-[32] of the decision below). 6The respondents argued that in order to qualify for the cl 6 concession, the appellants must have intended building to facilitate the intended use and occupation as their principal place of residence, that the delay must have occurred and been beyond their control, and that the extension of time was reasonable in the circumstances. The respondent argued there was uncertainty as to the intent of the appellants, that the delay was not beyond their control as they had changed their minds about where to build after having received development consent, and it was this change of plans that caused the delay beyond the two-year period, and required a further Development Approval. The first event outside their control, it was argued, was the bushfire of 2002 which was over three years from the purchase. 7In relation to the clause 8 concession, the respondent argued that the property must have been actually used as a principal place of residence, and that in this case the occupation had not been properly approved, being in a series of mobile homes and a caravan which had not been the subject of any Council approval, and so it was not occupation as a "principal place of residence" within the terms of the concession. 8The learned Tribunal member determined that:- a) the decision to seek approval for construction on an alternative site was a choice made by the appellants; b) the development consent for the alternative site was obtained on 9 October 2001; c) the appellants resided on the property in mobile homes and a caravan, but there was no evidence of either Council approval or of connection to the available services. it was found that the occupation was without formal consent; d) a series of disasters affected the property in 2002 and 2003 which had serious consequences for the appellants; d) in 2003 through to 2006 the appellants were engaged in litigation with the Council requiring a clean-up of storm damage; the appellants were successful; e) in 2005 through to 2006 a neighbour instituted litigation against them for flow-off from the storm in 2003 onto the neighbours' property; the appellants were successful; f) in 2005 they attempted to sell the property; g) since 2002 they lived away from the property; and h) the residence was not built at the date of the hearing in 2010. 9In the circumstances, the exemption from land tax provided for in the former s 10T of the LTMA was available to the appellants up until August 2001, being two years after the date of purchase. That exemption "had expired long before" the fire and the flood in 2002 and 2003 (see par [56]). Likewise, the financial hardship caused by the two litigations occurred after the expiry of the two years. 10The learned Tribunal member dismissed the application for review and confirmed the decision of the Chief Commissioner, on the bases set out in paragraphs [57] and [58] of the decision:- "57 The delay after August 2001 was caused by the applicants' decision to move the site for the house which then required a new development application to be made to the council. This was a decision entirely within the control of the applicants and was the cause of the delay. 58 The mobile homes and caravan were not approved by the Council to be used and occupied as a residence and accordingly Clause 8 Schedule 1A does not apply for the purposes of residing in." 11The rate of interest was found not to be varied as no part of the delay was the fault of the respondent, and "there are no exceptional circumstances that would warrant it" (par [59]). Extension to the merits 12The appellants relied on the Notice of Appeal, a bundle of documents with a version of Written Submissions filed on 6 October 2010 (Ex A) and their final submissions (Ex B). The respondent relied on an affidavit of Simon Evans sworn 28 October 2010 (Ex 1) and written submissions (Ex 2). 13The Notice of Appeal originally sought only an appeal on a question of law, but it was clear from the content of Ex A and from the terms of the submissions that an extension to the merits was sought. The respondent did not consent to the extension of the appeal to the merits, and set out a number of cases which it was submitted represented the current law on this issue. 14Section 113(2) of the Administrative Decisions Tribunal Act 1977 provides that:- "An appeal under this part: may be made on any question of law; and with the leave of the Appeal Panel, may extend to a review of the merits of the appealable decision". 15The appellants referred to Lloyd v. Veterinary Surgeons Investigating Committee (2005) 64 NSWLR 245; [2005] NSWCA 456 in noting that no error of law need be demonstrated prior to the grant of an extension of an appeal to the merits (see also Chapman v. Chief Commissioner of State Revenue [2010] NSWADT 124). 16It was correctly submitted by the respondent that the discretion is at large, and should not be granted in order to blur the distinction between the appellate and the original jurisdictions. The respondent pointed to a number of cases which indicated that various factors could be relevant. In this case, the factor most applicable would be the determination of the appeal by reference to the entirety of the decision, thus relieving the Tribunal of the requirement of having to distinguish between questions of fact and questions of law; a difficult and often invidious process. 17Among the evidence sought to be provided by the appellants by way of new evidence was some information about mobile homes and caravans, and the seeking of approval to occupy a caravan or mobile home on the site in the recent past (around 2 months before the hearing). The respondent sought in response to rely upon the affidavit of Mr Evans, a manager in the relevant Local Council's Planning Division. The submissions of the appellants were squarely made on the basis of questions of mixed fact and law (see par REF _Ref289782974 \r \h After reading and hearing the submissions from both sides, it appears that the questions for determination on this appeal are:- below). 18The best way to proceed in this matter is to consider the proposed further evidence and the areas in which that evidence is sought to be relied upon, and then, at the conclusion of this matter, determine whether matters identified by the appellants fall within the appropriate range for an extension to the merits. The Appellants' contentions 19The areas of appeal covered the following issues:- a) whether the appeal should be extended to the merits; b) whether the appellants were entitled to the two year exemption (as well as an extension of that period) from land tax pursuant to Clause 6 of Sch 1A on the ground that the decision to amend the DA was not the cause of the delay; rather, it was contended, it was the conduct of the local Council in taking over 18 months to return a decision; c) whether the appellants were entitled to the concession for absences from their principal place of residence for up to six years, pursuant to Clause 8 of Sch 1A, on the basis that there is no requirement for lawful use in determining whether land is used and occupied as a principal place of residence. 20It was submitted by the second appellant that the decision did not give adequate consideration to the reasons for the various delays, nor did the learned Tribunal member consider whether the delays were out of the appellants' control or not. It was submitted that no attention was paid to the Local Government Act and the requirements thereunder that a decision on a development approval be provided within a particular time. 21It was agreed by the appellants in oral argument that there was no evidence of any formal consent for them to occupy the premises in a mobile home or a caravan. However, it was submitted, that "Council gave verbal consent" by telling the appellants that it was an option for them to live in the mobile homes or caravan while the DA was being considered. It was submitted that a lack of formal consent did not mean that the occupation was unlawful. The appellants submitted that the Council, by not pointing out to them that they were occupying an unapproved dwelling, were in breach of s 77 of the Local Government Act which requires that policies and regulations be brought to the notice of "intending applicants" for development approval. 22Alternatively, it was submitted that clause 8 of Sch 1A did not require their occupation to be "lawful" in the sense of having been subject to formal Council approval. 23The reason for the change in location of the house (and thus the reason for the requirement for an amended DA) was a dispute with a neighbour. The original DA had the appellant's house to be constructed in close proximity to the neighbour, but after the dispute and a deterioration in the relationship the decision was taken to locate the house at the rear of the property; that is, away from the neighbour. It was submitted that this was necessary due to the adverse relationship between the appellants and their neighbour and thus the delay caused by the need for a new DA was also out of their control. 24The appellants relied strongly on the Office of State Revenue's Confidentiality Statement - an internal document which was prepared after the receipt of the appellant's objection to the original Land Tax decision. It focused on an exemption pursuant to s 10T of the LTMA and asked:- "Are the clients entitled to an exemption under s 10T of the [LTMA] for the property .... If so, are they further entitled to an extension of time for the construction of their intended principal place of residence? 25That document set out the terms of the former s 10T, noted that the appellants had not resided on the land, and noted that they were "entitled to an intended PPR on the subject property for two years immediately following the purchase ... This period covers 27 August 1999 to 27 August 2001". The document then noted that there was no entitlement to any extension of time under s 10T in the circumstances. 26The appellants contended that the matter should be dealt with under s 10T, as "the OSR declare 10T to be THE ISSUE " (see page 3, Appellants' Final Submissions). In addition, the written Final Submissions contended that clause 6 of Sch 1A was ambiguous, and so should not be applied as against the appellants. 27In relation to interest, the appellants said that it was a penalty. It was further submitted that interest should not be charged until the determination of these proceedings. The respondent's contentions 28The respondent relied on his written submissions and also made oral submissions. The respondent also sought to rely on an affidavit of Simon Evans as to the question of whether the occupation of the mobile homes and caravan was subject to the Council consent. 29The respondent submitted that there were "three key facts" which were not disputed, and which were decisive in the respondent's favour. They were:- a) eleven years after the purchase of unoccupied land, there was still no house built on the property; b) the appellants received a DA in September 1999 for the house in the original location, but chose to move the location of the house to the back of the property, on the other side of a gully, necessitating a new DA and the building of a long driveway on the property; and c) the caravan and mobile homes on the property were not approved by Council for occupation by the appellants. 30Apart from the word "chose" (which is disputed by the appellants insofar as it connotes the taking of a personal choice of one of a number of options), the appellants do not dispute those "three key facts". 31The submission by the respondent centred on clause 8 being applicable only in circumstances of "authorised occupation", and clause 6 being applicable where there were "delays beyond the control" of the appellants. In neither case, it was said, did the appellants succeed. 32It was conceded that occupation of a mobile home or caravan could satisfy the requirements of a principal place of residence exemption, if that occupation were lawful. However, the informal approval and/or waiver which seemed to be alleged by the respondents was insufficient to show lawful occupation. In addition, clause 8 of Sch 1A imported the definition of "residential land" in clause 2 of Sch 1A; because clause 8 deems a continuation of a previous, actual principal place of residence during a period of absence, clause 2 must also be satisfied as to the nature and terms of the occupation of land prior to the absence. 33The respondent noted that the Confidentiality assessment was part of the OSR's determination, not the basis of the decision by the Tribunal below. It was submitted that any entitlement to a s 10T exemption was irrelevant, given that:- a) the property was below the land tax threshold until 2004; and b) the section had been repealed by the State Revenue Legislation (Further Amendment) Act 2003 and by the 2004 Land Tax Year Sch 1A was the relevant law. 34It was submitted that the process of land tax assessment was on the basis of the legislation which applied at the taxing date of 31 December in each year, and that the relevant legislation was not that when the property was purchased, but that in force at the relevant taxing date. 35It was submitted that the further evidence sought to be brought by the appellants - of an application for an approval to occupy a temporary dwelling, and information as to mobile homes and caravans - was not relevant to whether there was approval of the actual mobile homes and caravan occupied by the appellants at the relevant time. Nor was any alleged "verbal approval" by a council officer relevant as the indisputable fact was that no formal approval had been granted. 36The respondent submitted that "land that can be resided on" is different from the statutory definition of "residential land". It was submitted that a matter which is out of the control of the appellants should be something that was truly beyond their control, an external occurrence - see Sagovac v. Chief Commissioner of State Revenue [2005] NSWADT 91 at [27]. 37The respondent argued that the "intended principal place of residence" exemption was not an open-ended exemption to enable a party to finalise their "dream home". The purpose and intent of the legislation was to allow a reasonable time to finalise building works but not to allow the concession to go on forever. Sagovac and Gilmour v. Chief Commissioner of State Revenue [2007] NSWADT 145 were each examples of ambitious developments in which personal choices, rather than events beyond the control of the owners, dictated the delays, and in which the discretion to extend the two year exemption was not granted. 38In the written submissions, the respondent submitted that clause 6 of Sch 1A was not ambiguous in the manner contended for by the appellants. 39As to interest, the respondent submitted that the market rate interest was applicable, and noted that both the premium rate of interest and the late lodgement interest had been remitted. The respondent pointed to the fact that taxpayers who pay their tax on time would be disadvantaged were interest to be waived in these circumstances. Only in "exceptional circumstances" would market rate interest be remitted: see Trust Co Aust v. Chief Commissioner of State Revenue [2002] NSWADT 21; Snow v. Chief Commissioner of State Revenue [2005] NSWADT 224. 40Interest was not premature; the respondent pointed to s 21 of the Taxation Administration Act 1996 which provided that interest accrued from a default in payment. The Appellants' contentions in reply 41In reply, the appellants sought to distinguish the decisions of Pearse v. Chief Commissioner of State Revenue [2007] NSWADT 14 (in which a sandstone cottage approved as a boat house and which was subject to an express condition it not be used as a residence) and Reuman v. Chief Commissioner of State Revenue [2004] NSWADT 96 (in which a "substantial structure", similar in size to a garage, was built without Council consent). Each of those decisions is in favour of the Chief Commissioner but the appellants pointed to specific factors in each decision to ground their argument that the requirement for legal occupation was obiter or not fundamental to each Tribunal decision. 42The appellants said in reply that the relevant point of time to be examined was August 2001; ie, two years after purchase. At that point the second DA was not yet determined, and the property was still their "intended principal place of residence". 43As to the submissions on Sagovac and Gilmour , the appellants said that these should be distinguished, as in Sagovac construction had not commenced and in Gilmour the construction was delayed for five years. The decision to change the location and seek a new DA was "not a whim" and it was not an "ambitious project"; it was important for the safety and well-being of the appellants' family that the property location be changed. Consideration 44After reading and hearing the submissions from both sides, it appears that the questions for determination on this appeal are:- a)does clause 8 of Sch 1A of the LTMA require "lawful occupation" in order to ground the concession? If not, did the learned Tribunal member err in finding that the occupation was unlawful? and b)did the learned Tribunal member err in finding that clause 6 of Sch 1A did not apply because the principal cause of the delay was not out of the appellants' control? 45It seems to us that both grounds set out in sub-paras REF _Ref289781469 \r \h a)does clause 8 of Sch 1A of the LTMA require "lawful occupation" in order to ground the concession? If not, did the learned Tribunal member err in finding that the occupation was unlawful? and and REF _Ref289781472 \r \h b)did the learned Tribunal member err in finding that clause 6 of Sch 1A did not apply because the principal cause of the delay was not out of the appellants' control? involve mixed questions of fact and law. In order properly to consider the real questions at the heart of the appeal, it is appropriate to extend the hearing to the merits of the decision. However, the new evidence sought to be relied upon by each party does not have any significant relevance to the determination of the appeal, as will be seen below, and except where expressly noted, the Appeal Panel did not take the further evidence into consideration. 46The way in which the "principal place of residence exemption" was structured in the relevant tax years is as follows. Section 7 of the LTMA provides that land in New South Wales is subject to land tax. In each version of s 7 which was current in the tax years 2004-2008, there is provision to exempt land from taxation. The relevant date (in all relevant years) was 31 December. The land needs to be examined as at that date to establish whether an exemption existed. Section 9 provides for the payment of land tax on land which is not exempt from taxation. 47Section 10 provides for exemptions from land tax. Sub-s (1)(r) exempted land from taxation if it was "exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A". 48There are slight differences in the provisions of Schedule 1A between the version current for the 2004 and 2005 tax years, and the 2006-2008 inclusive tax years (that cited by the learned Tribunal member and quoted above in par REF _Ref289783747 \r \h The question before the learned Tribunal member was whether, in the above factual scenario, the appellants were entitled to a concession for unoccupied land intended to be the owner's principal place of residence (clause 6, Schedule 1A, Land Tax Management Act 1956 ("LTMA")) or for an absence from a former residence (clause 8, Schedule 1A, LTMA). Those sections as they read as at the 2008 tax year are set out at paragraphs [28] and [29] of the decision below. Th is the later version, but no relevant or substantial differences in text between the two versions affects this decision). Clause 2 provides for the principal place of residence exemption, being land "used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose". 49It is clear that the land was not so "used and occupied" by the appellants as their principal place of residence, as at 31 December, in each of the relevant tax years, as it was vacant land. It is undisputed that they were living elsewhere. Accordingly, any "use and occupation" needs to be a deemed one, by reason of it falling within one of the statutory exemptions. 50Clause 6 provides a "concession for unoccupied land intended to be owner's principal place of residence". The full text of the clause is set out in par REF _Ref289783747 \r \h The question before the learned Tribunal member was whether, in the above factual scenario, the appellants were entitled to a concession for unoccupied land intended to be the owner's principal place of residence (clause 6, Schedule 1A, Land Tax Management Act 1956 ("LTMA")) or for an absence from a former residence (clause 8, Schedule 1A, LTMA). Those sections as they read as at the 2008 tax year are set out at paragraphs [28] and [29] of the decision below. Th above. The requirements are:- a) an intention to use and occupy the land solely as principal place of residence; b) that the land be unoccupied because the owner intends to, or is, carrying out building works; and c) the intended use and occupation of the land is not unlawful. 51It is undisputed that the appellants did intend to construct a dwelling and to use and occupy the land for that purpose (with the exception of a period when they considered selling; that period is not relied upon by the respondent to any relevant degree). Nor is it contended by the respondent that the use and occupation of the land would be unlawful. 52This "deemed occupation" granted by cl 6 is (relevantly here) available for two years after the date of purchase (cl 6(3)(a)), or for such period as the Chief Commissioner may extend if there is a delay in commencement or completion of the building works and "the delay is due primarily to reasons beyond the control of the owner" (cl 6(4)(b) - the wording is the same for each of the relevant tax years). 53The question here is whether the learned Tribunal member erred in finding that the delays were not "primarily [due] to reasons beyond the control of the owner". As we have granted leave to the appellants to extend the appeal to the merits, we are able to look at this question afresh. 54The chronology of events is compelling. Two years after the appellants purchased the property, they had changed their minds about building at the front of the property and lodged a DA for a building at the back of the property. Their contention was that this was not a choice; the appellants sought to rely on correspondence by the neighbours objecting to the new DA and evidence that the relationship was difficult to the extent that the second appellant did not feel safe going to the property. 55The learned Tribunal member took into account that a number of the factors relied upon by the appellants (starting with the fire in 2003) were factors which affected the appellants well after the 2 year limit in cl 6(3)(a). 56We are of the view that the change of location of the property was a choice by the appellants and not something "primarily beyond their control". It was one of many reactions to a difficult neighbour; one would have been to sell, another to build under the original DA and seek to mend (or ignore) the difficulties, and other reactions may also spring to mind. There was nothing which compelled the appellants to take that particular course. 57We are of the view that the learned Tribunal member made no error in finding as at August 2001, when the two years expired, that it was not the case that the appellants were not able to commence building for reasons "primarily out of their control". At that point the vacant land remained vacant land because they sought a different approval which had not yet been granted. 58The appellants further argued that the Council had delayed the matter so significantly that that delay was "out of their control". The evidence reveals that there were objections to the second proposed development and also significant environmental issues arising out of the need to build the driveway through a bushland gully. 59The decisions in Sagovac and Gilmour assist the Appeal Panel in determining that the concession should not be applied to the current facts. In Sagovac the applicants were owner/builders who wished to build as much of the house as possible so as to save money. They needed to change the design of the house at one point to take into account Council requirements and the natural features of the land. They were, similarly to this case, faced with bushfire damage, and had financial difficulties resulting in their not being able to finish the house by the time of the hearing. The decision of Gilmour , also involved a change of development approval; the "beyond control" factors were said to be extensive requirements of the local Council and the birth of a child. 60We were also taken to the decision of Creamer v. Chief Commissioner of State Revenue [2006] NSWADT 272 in which the delays were said to be related to the applicant's mother's (with whom he resided) medical difficulties, and also to the desire to build a "dream home"; with the result that the property lay unoccupied and the house unconstructed for nine years. 61In each of these cases, the various decisions taken by the applicants were held not to be "primarily" out of the owner's control; while alternatives may be unpalatable, each applicant in those cases had alternatives, and made a choice. 62Accordingly, there was no error in the learned Tribunal member's decision to dismiss that part of the application which relied on clause 6 of Sch 1A. Nothing in the evidence presented to us at the Appeal leads us to conclude otherwise than the learned Tribunal member did after considering the merits of the appeal in the light of the decided cases. 63Clause 8 (wrongly referred to in par [54] of the decision below as "clause 6(8)", although from the context and the balance of the decision the error is clear) is headed "Concession for absences from former residence" and provides a different concession from that in clause 6. It applies when the owner of the land actually occupies the relevant property for "a continuous period of at least 6 months", and then moves to other land and occupies that land as the principal place of residence. The concession there applies to deem the owner as continuing to use and occupy the former residence as the principal place of residence (cl 8(1)). 64The concession for an absence for a former residence is available for six years (cl 8(2)), and is not available if, at the end of the 6 year period, the owner fails to resume "actual use and occupation" (as distinct from a deemed occupation) and fails to continue that use and occupation for at least six months (cl 8(3)). 65There are no relevant differences between the two versions of cl 8 in the legislation applicable for the relevant tax years. 66On one view the appellants were always doomed not to fulfil the terms of this concession; they vacated the property in December 2002 and did not return to it as their principal place of residence by December 2008 and use it for a period of at least six months (or at any time thereafter before the hearing). However, the matter was argued principally on the basis of the requirement of "lawful" occupation. 67The decisions of Reuman and Pearse are relevant here. In Reuman , the learned Tribunal member said in paragraph [20]:- "Is the structure capable of being described as a residence or as a dwelling house? To be a residence it must be capable of being resided in, that is a person must be able to live there. To be able to live in the structure, it would be necessary to satisfy the requests of the State and local governments in respect of a structure that is to be lived in as a residence. This would include provision of bathroom facilities in these circumstances." 68The learned Tribunal member then expressly said that "The issues referred to in this paragraph (ie par [20]) do not impact on the matters for consideration in relation to this application" and in this regard the appellants are correct in saying that the quoted passage is obiter . However, the logic by which the conclusion is reached is compelling and we would come to the same conclusion in these current circumstances. 69In Pearse , the consent relating to the sandstone cottage (a former boathouse) made the occupation of the cottage impermissible as being in breach of the zoning certificate. In para [40] the learned Tribunal member said, after examining the zoning requirements:- "'in this case the use of the construction, being the sandstone cottage, as a residence was specifically precluded by the local Council. For the applicant to live there and claim it as his principal place of residence it would have been necessary to satisfy the requirements of the local Council. This requirement is as referred to in Reuman ". 70Again, this passage is not fundamental to the decision given that the applicant in that case failed to discharge his onus to demonstrate that the cottage was, in any event, his principal place of residence. Again, though, the logic that an actual occupation (as required by cl 8) be a lawful one is sensibly imported into the definition of "principal place of residence". It would be rather astounding if the legislature were to provide an exemption from land tax for illegal or unlawful occupancies. 71The appellants sought to argue that their occupation was not actively illegal but that if it were, that they were not aware that that was the case. Neither of these grounds are sufficient to remove themselves from the clear words of the exemption in clause 8 of Sch 1A. There is no relevant waiver of any requirement; it would not indeed be possible for a Council officer verbally to waive a requirement of consent to occupy land in the way in which the appellants did at the outset of their ownership of the property. 72The Appeal Panel is of the view that the learned Tribunal member did not err in her finding that the mobile homes and caravan were not a lawful occupation which amounted to "use and occupation" within the terms of Sch 1A. After having considered the merits of the application, and in particular the fact that any application was bound to fail due to a lack of compliance with the requirements of clause 8(3), we uphold the decision below on this point. 73As to the question of interest, no circumstances have been shown which would require us to remit the market interest rate. There has been no penalty interest imposed, nor late lodgement interest, and there has been no error shown in the learned Tribunal member's decision in relation to interest. 74No point was taken in relation to the late filing of the Notice of Appeal. It is not part of the evidence as to when the appellants received the appeal. Accordingly, leave is granted, if such leave be necessary, to the appellants to file the appeal out of time. Orders 1.Leave to extend the time for the filing of the appeal up to and including 25 June 2008. 2.Leave to extend the appeal to the merits of the decision. 3.The appeal is dismissed. 4.The decision of the Chief Commissioner of 12 November 2008 (as to land tax and to interest) 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. Decision last updated: 15 April 2011