Note: These written reasons consist of an edited transcription of reasons given orally at the conclusion of the hearing.

1. This is an application to review a determination of the respondent made 20 December 2011. In that determination the respondent refused to allow an objection in relation to an earlier decision to require the repayment of a First Home Owner's Grant of $7000 and a bonus of $3000 in respect of a property situated at 45 Carlton Road, Dandenong North (the property).
2. The circumstances of this application are that the applicants (who are now married) purchased the property on 25 September 2007. They applied and were granted a First Home Owner's Grant in the sum to which I have referred. Settlement of the property took place on 23 November 2007. The applicants were married on 27 November 2007 and went on their honeymoon soon after that to Noosa Heads, Queensland. They remained there until 2 December 2007 when they returned to Melbourne.
3. It is submitted by the applicants that the property was occupied by one of them, ie Mr Andrew Alexander, from 27 November 2007 until the property was finally rented out on 30 May 2008. That would mean, on those facts and if the submission was accepted, that he occupied the property in excess of six months.
4. The situation is that the applicants say that Mr Alexander moved furniture into the property after they obtained possession of the same, ie settlement, on 23 November 2007. It was admitted by the applicants that nobody slept in the premises until after they returned from their honeymoon on 2 December 2007. Clearly, if the property was occupied from 2 December 2007 to 30 May 2008, that is not six months. That is less than six months. I will deal with those matters shortly. The furniture that was moved into the premises was very meagre indeed. It was a mattress, a pillow, a blanket, a doona cover, some tools, overalls, dirty clothes, some cups and one chair which Andrew Alexander used to stand on when he was painting and he said that he sat on that chair. I note that there was no refrigerator, washing machine or television in the premises. The applicants' wedding presents were also moved to the property but not used.

1. The relevant legislation is contained in the First Home Owner Grant Act 2000 (the Act). Section 7 of the Act sets out the criteria which needs to be satisfied. That is known as "eligibility criteria". The relevant criteria for this proceeding is referred to in s 12, which states as follows:

(1) An applicant for a first home owner grant must occupy the home to which the application relates as the applicant's principal place of residence for a continuous period of at least 6 months (or the lesser period approved by the Commissioner) commencing within the 12 month period immediately after completion of the eligible transaction or within a longer period approved by the Commissioner.

1. Thus, what I must decide is whether the property was occupied as a principal place of residence within the meaning of s 12(1) by Andrew Alexander for a period of six months in the first 12 months after settlement. I note that pursuant to s 32 of the Act, on review, it is the objector, ie the respondent in this proceeding, that has the onus of proving its case.
2. The first question that I need to decide as a matter of fact is when did the applicants move into the property, if at all? As I have said, the applicants stated that they moved into the premises on 27 November 2007. In the applicants' sworn material, they said they moved their wedding gifts into the property on 25 November 2007. They also said that they commenced improvements and renovation works straight away to make the house habitable for them. In his witness statement, Mr Alexander stated -

I spent most days at the house but continued to sleep at my mother in law's house until we left for our honeymoon on 28 November, 2007.

Thus it is clear that there was no sleeping at the premises until the parties returned from their honeymoon on 2 December 2007.

When we returned from our honeymoon on 2nd December 2007, I moved into the house and slept there most nights but my wife continued to sleep at her mother's house as she was pregnant and needed assistance from her mother.

I would add to that, that evidence was given by Mrs Alexander that she was very unwell during the pregnancy and it was a very difficult time for her. In fact they even returned early from their honeymoon as a result.

1. However, I note that the electricity was not turned on at the premises until 19 December, 2007. That is, some 17 days after Andrew Alexander said he was sleeping at the premises. I find it quite extraordinary that he would have waited that long to have the electricity turned on. I also note that even after he moved into the premises, his electricity usage was quite meagre. It was about 0.487 kwh per day, while the average use of electricity for a normal household is 13.1 kwh per day. I also note that when the applicants finally moved into the premises in January 2008, the usage was 13.78 kwh per day.
2. More telling is the water usage. From 23 November 2007 until some time after 26 January 2008, there was approximately 3L of water per day and between 14 February and 4 June 2008, there was no water usage at the premises whatsoever. These figures would suggest that the toilet was not even flushed. I find it quite extraordinary that somebody could have been sleeping at the premises and not used any water at all.
3. In any event, in my view, it is unlikely that Mr Alexander stayed at the property at all prior to 2 December 2007. Taking into account the fact that there was only a bed in the premises, that hardly any electricity or water was used, and that, even on Mr Alexander's own evidence, he moved into the premises prior to 2 December. In my view, simply moving wedding gifts and a mattress with some accompaniments into the premises in no way can be considered to be living in a residence. That in itself means that even if residence was taken up on 2 December 2007, and it is clear that residence was given up on 30 May 2008, that would not be six months; it would be a period of just less than six months. That in itself is sufficient to dismiss the application in relation to the decision to review the repayment of the First Home Owner's Grant and I affirm that part of the decision.
4. However, because it has been argued before me, it is important that I should deal with whether the residency by Mr Alexander is sufficient to come within the meaning of "principal place of residence" in s 12 of the Act.
5. Many authorities of this Tribunal and the New South Wales courts have dealt with the criteria that is necessary to establish whether there has been residency or otherwise. It is clear from a number of cases that merely sleeping at the premises is insufficient for there to be residency. There needs to be more.
6. The principles which need to be decided in this case have been extracted from Chief Commissioner of State Revenue v Ferrington (2004) 57 ATR 157. There were six principles in that case. As I have said, those principles have been followed by this Tribunal in a number of cases. Those cases include Boots v Commissioner of State Revenue [2004] VCAT 2549; Mauro v Commissioner of State Revenue [2010] VCAT 1207; D'Amelio v Commissioner of State Revenue [2012] VCAT 265 and Gravina v Commissioner of State Revenue [2013] VCAT 347. Those principles are as follows :
   • (a) the words 'principal place of residence' should be given their ordinary meaning in the context in which they appear;
   • (b) 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;
   • (c) the intention of the person concerned, gauged objectively, is relevant but not determinative of the issue;
   • (d) to occupy a home as his or her place of principal 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;
   • (e) 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. The fact that a period of actual occupation is short 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; and
   • (f) the reason 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.
7. In D'Amelio's case, which I have previously mentioned, Judge Macnamara at paragraph 15 of that case stated that the first three general principles referred to in Ferrington's case were commentaries on how the inquiry should be approached. The other three principles were substantive. I upheld that point in Gravina's case which I have previously mentioned.
8. In this particular instance, I must consider those six principles to decide whether the applicant occupied the premises as his principal place of residence.
9. Mr Alexander said that at the relevant time, he was working as a prison guard that required him to sleep a number of nights per week at the prison because he was working overtime. He also had many of his meals at the prison. One can well understand that. However, most of the weekends were spent at his mother-in-law's residence where he slept and where his wife was living. But he said when he was not sleeping at the prison or at his mother-in-law's residence, he slept at the property. He also said that at the time he was carrying out renovations at the property which required restumping, the floorboards were squeaky and there were broken tiles.
10. Mr Horan, who appeared for the respondent, tendered a copy of a pamphlet from the agent from whom Mr and Mrs Alexander purchased the property. The property is pictured in the pamphlet and it looks to be in very good condition. However, Mr Alexander said those pictures were two years old when the document was published. The agent described the property as:

Extensively renovated approx 2 years ago, this gorgeous 3 bedroom home has all the current luxuries you would come to expect from a new home ...

Featuring huge renovated kitchen with stainless steel appliances, granite tiles which you will also find in the updated bathroom. .... If you are looking for a new home which is completely updated and awaiting only your personal touch then an inspection of this property is a must.

1. Mr Alexander said that he was able to purchase the property for $287,500 because it was in a run down condition. He said that he spent a lot of time renovating the property which was not safe for his wife to live in. I find it hard to understand how the property could be safe for him to live in and not safe for his wife. That does not make sense although I do understand that the wife had difficulty with her pregnancy.

1. The first principle is "the words 'principal place of residence' should be given their ordinary meaning". In my view, that means what an objective person would think as to whether someone was living there as their principal place of residence or not. In this particular instance, the furniture at the premises was very sparse. The fact that wedding gifts may have been at the premises, in my view, takes the matter no further. They were in a room, they were unused and they remained unused. This property at the relevant time had none of what people in this country would consider the creature comforts of a residence, viz, a refrigerator, a television or perhaps a washing machine. None of those existed.
2. The second principle is that the residence should be assessed objectively. In doing so, I come to the view that any outsider looking in would come to the opinion that this was not a principal place of residence. It was not occupied every night of the week and did not, as I said, have any creature comforts which one would expect of a principal place of residence. Also one would think that it would be quite incredible for a husband to be living in different premises to his wife, even if the premises was being renovated. The wife was living with her mother which was only a 4 minute drive away. It is hard to understand why they would live in separate premises. Mr Alexander said he did so because he was aware of the requirements in s 12 of the Act. That may be so and it may well be that he thought just sleeping at the premises was sufficient. It is not.
3. The next principle is "the intention of the person concerned, gauged objectively". In my view, Mr Alexander thought that by sleeping at the premises he was complying with s 12. That is not compliance with s 12. There were no proper facilities in this case. Mrs Alexander said that on occasions she brought her husband meals to the premises. There was no furniture other than one chair to sit on and a mattress to sleep on. Very rudimentary indeed.
4. Principle 4 requires that there should be a "degree of permanence" in connection with a place of residence, not temporary, transient, contingent or of a passing nature. In this particular instance, there does not seem to be any great permanence in the occupation of the premises at all. In D'Amelio's case regarding principle 4, at paragraph [15], it was stated by Judge Macnamara as follows:

This is the principle which requires a degree of permanence in connection to a place rejecting as adequate for the purposes an occupancy which is not transient, temporary, contingent or of a passing nature. In my view the evidence here demonstrates no occupancy beyond the transient temporary or contingent. Despite bald assertions to the contrary everything that I have heard indicates that these applicants were aware of a need to occupy a premises for six months.

In my view, what Judge Macnamara said in D'Amelio's case equally applies to the applicants in this particular instance.

1. It is said that the place was not fit for Mrs Alexander to live in because it was being renovated. I dealt with a similar matter to this in Mauro v Commissioner of State Revenue. At paragraphs [23] and [24] of that decision, I stated as follows -

Given the term occupy as a principal place of residence as used in section 12 of the Act in my view means that it would be a place of residence that was clearly occupied viewed by somebody from the outside. By somebody looking in from the outside I don't mean outside the windows but an unbiased observer, would think that the applicant was occupying the premises. The fact of sleeping in the premises up to three nights per week with only a bed in the premises as being the furniture, I doubt very much if any reasonable person would think that that was occupation. Further, as the applicant returned to his parents' house for showering in my view that clearly makes it non occupation of the premises.

Further, the fact that the applicant was returning to his parent's house and had very few of his possessions in the Richmond house but they were in the parents' house leads me to believe that an unbiased observer would not regard the property as a principal place of residence.

1. Mauro's case is virtually on all fours with this particular proceeding. Here, all the applicant did at these premises was to renovate the premises and sleep there. None of the other usual incidents of residency occurred.
2. Looking at the length of the person's residency, ie principle (e) to which I have referred, this is a very short length of residency by any means and is not determinative of the issue. However, what is determinative in my view is that the nature of the residency showed no permanence whatsoever. As I have said, there was none of the things that one would expect to find in a residence that would indicate that a person was occupying the property as his principal place of residence.
3. At paragraph [15] in D'Amelio's case in relation to this point, Judge Macnamara said:

It is one thing to intend to occupy a premises as ones principal place of residence for an extended or indefinite period and to change ones mind or to be forced to by changed circumstances. It is another thing altogether to have an intention to connect oneself to the premises in some way for a period of six months and then irrevocably part with possession of them by putting in a tenant. The latter is the situation which in my view has been established here and not the former.

1. In this particular instance, there seems to have been no objective factors in relation with intending to occupy. Apart from the applicants' evidence of what they said they intended, there is no objective evidence that Mr Alexander intended to occupy the property as his principal place of residence.
2. The last principle is "the reason for a person's departure from the home". Here, it is said that the property had to be tenanted after 30 May 2008 because the applicants were extremely short of money, because Mrs Alexander had a baby and she had given up working. I understand they were extremely short of money. However, in my view, that is not sufficient reason in this circumstance together with the fact that there has been insufficient residency to find other than the occupancy did not meet the requirement of the Act.
3. Taking into account all these matters, in my view, it is sufficient to find that the applicants did not reside in the premises at all as their principal place of residence. Thus s 12 is not made out. Under these circumstances, the decision to affirm the decision of the respondent insofar as it relates to ordering the repayment of the grant is affirmed.

1. The next matter is the question of penalty.
2. The respondent has charged a penalty in this matter and has sought to enforce the penalty. The power to require the penalty is in s 48 of the Act. That power relevantly reads as follows:

48 Power to require repayment and impose penalty

(1) The Commissioner may, by written notice, require an applicant (or former applicant) for a first home owner grant to repay an amount paid on the application if -

(b) the Commissioner reverses the decision under which the amount was paid for any other reason.

(2) If, as a result of an applicant's dishonesty, an amount is paid by way of a first home owner grant, the Commissioner may, by the notice in which repayment is required or a separate notice, impose a penalty not exceeding the amount the applicant is required to repay.

(3) If an applicant (or former applicant) for a first home owner grant fails to make a repayment required under this section or the conditions of the grant, the Commissioner may, by written notice, impose a penalty not exceeding the amount the applicant is required to repay.

1. It is under s 48(3) of the Act that the Commissioner has imposed a penalty in this particular instance. The amount of the penalty is $1000 which is 10% of the amount of the grant. In my view, that is a reasonable amount of penalty and there has been no argument as to the actual quantum of that sum. Ten percent has been found to be a reasonable amount in a decision by Member Glover in Baklis v Commissioner of State Revenue [2012] VCAT 1980 and by myself in Gravina's case to which I have already referred.
2. The question is whether a penalty should be imposed in this particular instance. Mr Horan referred me to s 31 of the Act which makes it obligatory for the objector to challenge in his notice of objection any matters that he wishes to challenge. The question of the penalty was not challenged in the notice of objection. However, s 31 does give the Tribunal power to otherwise order. Mr Horan said that there was no prejudice to his client. There was no argument put to me on penalty by the applicants at all. However, I think that it is important that I consider these matters in a proper manner.
3. In Baklis v Commissioner of State Revenue [2012], to which I have already referred, at paragraphs [45]-[46], the principles which I should consider in relation to penalty have been set out. They were digested for me by Mr Morgan of counsel in Gravina's case. At paragraph [33] in Gravina's case, the matters to be considered are set out. They are -
   • (a) truthfulness of the original statements made by the applicant in his or her application for grant;
   • (b) the surrounding circumstances including the intention of the applicant in relation to the occupation and use of the property as his or her principal place of residence at the time when seeking the grant;
   • (c) the reasons for failure to comply with the conditions of the grant;
   • (d) whether the applicant has occupied the property as his or her principal place of residence;
   • (e) the candour of the applicant in his or her responses to inquiries;
   • (f) whether the grant has been refunded;
   • (g) the deterrent effect of the penalty; and
   • (h) penalty decisions in previous cases involving similar circumstances.
4. I will consider these matters individually.
5. In regard to the truthfulness in the original statement, there has been no submissions made to me that untruths were made. Certainly, I am not satisfied that the applicant was telling untruths in their original statement.
6. In regard to (b) above, in my view, certainly when the original grant was made, the applicants intended to occupy the premises. Circumstances changed because of Mrs Alexander's pregnancy and the difficulty of her living in the premises.
7. As far as "the reasons for failure to comply with the conditions of the grant" are concerned, I have some doubt about the matter as far as the applicants are concerned. In my view, they were well aware that they were required to occupy the premises for six months. They took the view that sleeping at the premises was occupancy but, as I have already said, even if sleeping at the premises was occupancy, one would have thought that they would occupy the premises until at least after 2 June 2008, or more likely after 19 June. It was stated in the Notice of Objection that Mr Alexander moved into the property on 19 December which, bearing in mind the electricity was not connected until that date, seems very likely. Thus, I am of the view that failure to comply with the conditions is blatant.
8. Principle (e) is "whether the applicant has occupied the property as his or her principal place of residence". I have dealt with that and, in my view, the property was never occupied as a principal place of residence.
9. In relation to "the candour of the applicant in his or her responses to inquiries", in my view, the candour is mixed. However, I take that view in part, as a result of the applicants believing that they have occupied the premises for the relevant period.
10. Principle (f) "whether the grant has been refunded". Clearly, it was not refunded when requested. Mr Alexander said he could not refund it because he did not have the money to refund it. That may be so, but there was no evidence given of any attempt to make an arrangement with the respondent to refund the money. It was clear that Mr and Mrs Alexander did not believe the money should be repaid. However, once a demand is made, it can be repaid and then if the applicants are successful in the review or the objection, that money can be refunded. However, they did not attempt to repay any money at all.
11. Mr Horan stressed the point regarding the deterrent effect. He said it was very important to send a message to other people in the community who were in a similar position where the money should have been repaid and did not. He said penalties should be imposed to deter others from breaching the Act. I take that into account.
12. Penalty decisions in previous cases involving similar circumstances. I have already mentioned two of those cases where a 10% penalty was imposed. The only matter that gives me some ground for caution as to whether a penalty should be imposed was that in 2010 Mr and Mrs Alexander in fact moved into the house. There is no question that after 2010 until the applicants sold the property some time later, the property was used as their principal place of residence. This to some extent goes to show that their intention when they purchased the property was to have it as their principal place of residence, not as an investment property, as is the situation that the Tribunal has found in many situations. However, weighing up all these factors, I have come to the view that the penalty should be imposed. Therefore, the decision as a whole will be affirmed and I make the order accordingly.