Principal place of residence
81The definition of "principal place of residence" in section 3 LTMA acknowledges that a person may reside at more than one place during the relevant land tax years. It provides that only one of those places however can constitute the "principal" place of residence: Aronstan v Chief Commissioner of State Revenue [2008] NSWADT 8; Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 at [19], Chief Commissioner of State Revenue v Mesiti [2003] NSWADTAP 56 at [37]; Carey v Chief Commissioner of State Revenue [2010] NSWADT 78.
82In Chief Commissioner of State Revenue (RD) v McIlroy [2009] NSWADTAP 21, the Appeal Panel at [44] set out a useful summary of factors that might be considered in relation to this matter as originally referred to in CCSR v Ferrington [2004] NSWADTAP 41, albeit in the context of the First Home Owner Grant Act 2000:
The factors referred to in Ferrington have been widely adopted in decisions under the First Home Owner Grant 2001. They may be summarised as follows (at [42], with dot points added for clarity and case references removed for ease of reading):-
..First, the words "principal place of residence" should be given their ordinary meaning in the context in which they appear ... Thus the Commissioner's reference to the provisions of the Land Tax Management Act 1956 is of no assistance. 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 ... In Bates the Tribunal said that "whether the reasons for not residing at the property were as a result of matters entirely out of the control of the applicant" was a factor to be considered. While that is undoubtedly correct, it should not be read as stipulating a requirement that the reasons for departure must be entirely out of that person's control. The facts in Gaines illustrate that 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.
45 Because the Appeal Panel in Ferrington was reviewing a decision made under the First Home Owner Grant 2001, it did not consider it appropriate to adopt the meaning of the words "principal place of residence" as used in the Land Tax Management Act . However, this Appeal Panel considers that the factors in Ferrington , while not formulated for applying the specific legislation relevant here, are nevertheless of assistance in construing that legislation. They are not necessarily determinative, and do not displace the developed case law on the meaning of the phrase where it is used in the Land Tax Management Act.
83In Carey v Chief Commissioner of State Revenue [2010] NSWADT 78, Judicial Member Perrignon usefully summarised some other authorities in relation to "principal place of residence":
The word 'principal' is not defined in the Act. Construed in accordance with its ordinary meaning, it 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'.
31 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 the taxpayer spends in each residence is a relevant factor: Chief Commissioner of State Revenue v McIlroy [2009] NSWADTAP 21 at [41].
84The Respondent usefully referred in submissions to a number of principles to be derived from the decided cases as to the objective factors that might be taken into account as follows:
a. the amount of time that the residence is occupied and the pattern of occupation ( McIlroy (supra) at [46]-[47]);
b. the listing of the address of the person, for official purposes such as on a licence or on an electoral roll (although it is noted by the Tribunal that these are not necessarily conclusive evidence that the address is the principal place of residence) ( Chief Commissioner of State Revenue v Mesiti [2003] NSWADTAP at [50], McIlroy (supra) at [47].)
c. respective rights in respect of the two properties ( Mesiti (supra) at [61]).
d. relative location of clothing, furniture and possessions ( Mesiti (supra) at [61]; Yen-Cheng Chuang v Chief Commissioner of State Revenue [2009] NSWADT 160 at [21]).
e. where family members reside ( Mesiti (supra) at [61], McIlroy (supra) at [46]).
f. the strength of ties and connection with the residence ( Mesiti (supra) at [61], McIlroy (supra) at [46]).
g. utilities usage ( Tobin v Chief Commissioner of State Revenue [2009] NSWADT 188 at [49], Yen Cheng (supra) at [21].
h. the address to which bills are sent ( Tobin (supra) at [48]).
i. the nature of insurance held for each property ( Tobin (supra) at [18]).
j. where the person eats, drinks and sleeps ( Yen-Cheng ( supra ) at [19]-[21]).
k. where a person entertains friends ( Yen Cheng (supra) at [21]).
85Having regard firstly to the matters mentioned in Ferrington's case (supra) and assessing the evidence before it, the Tribunal notes the following:
a. The subjective evidence of the Applicant that he intended to and indeed did move into the Caringbah property and live in it as his principal place of residence between the long weekend in October 2008 and 31 December 2008 is relevant but does not determine the issue. The evidence as to the actual occupation of the Caringbah property must be examined in order to assess, objectively, whether or not that property was the principal place of residence of the Applicant.
b. The Tribunal notes firstly that the evidence was that the Applicant's residence of the Caringbah property was reasonably short (i.e. less than 3 months). This does not, of itself, however necessarily mean that that property was not the principal place of residence of the Applicant. Indeed in some of the decided cases, a shorter period than 3 months has been sufficient having regard to all the facts and circumstances.
c. Secondly, the Applicant's own evidence was that significant amounts of time continued to be spent by the Applicant in the Cronulla property during the above three month period. The Applicant said that his usual routine was to visit the Cronulla property most days after work feeding the cats (which he explained were not pets but essentially adopted stray cats), to work on the house at Cronulla, (by painting and redecorating it) and then to work in his studio at night as well as working on weekends.
The Applicant said that he worked very late at night and indeed in the early hours of the morning on his screen plays at the Cronulla property whilst he was suffering from insomnia. He would then drive to the Caringbah property to try to sleep before getting up for work and would follow the same procedure the next night etc. Whilst this evidence appeared to the Tribunal to be adduced in order to account for the use of electricity at the Cronulla property (in the invoices that had been summonsed by the Respondent discussed further below), it did seem to establish that the Applicant continued to spend the majority of his "non-working" time at the Cronulla property rather than the Caringbah property.
This does not, of course, conclusively demonstrate that the Cronulla property was his principal place of residence rather than Caringbah, but it can be taken into account in all the circumstances as a strong indication that his principal place of residence continued to be in Cronulla ( Chief Commissioner of State Revenue v Mesiti [2003] NSWADTAP 57 at [57]).
d. Third, the occupation of the Caringbah property during the above three month period appears to have had something of a "contingent" nature about it in so far as the Applicant's evidence was that one of his properties would ultimately have to be sold to pay his outstanding land tax bill. The occupation of the Caringbah property (whilst "redecorating" the Cronulla property) was a course decided upon by the Applicant in case the Caringbah property could not be sold - the market for waterfront properties having recently slumped. If the Caringbah property could not be sold then the Applicant said that the Cronulla property might be sold instead. For the first time in cross-examination, the Applicant claimed there was a third option of obtaining a line of credit from his family trust. This option was not referred to in his original evidence. There was no other evidence about the nature of the trust and/or line of credit that might have been available.
As it turned out, contracts for sale were exchanged in relation to the Caringbah property during the 3 month period on 5 December 2008 (i.e. only 2 months, 1 week after the Applicant moved in).
In assessing the Applicant's evidence, it appeared to the Tribunal that the occupation of the Caringbah property was brought about for the contingent / temporary purpose of keeping the Applicant's options open depending on what occurred with the property market and the Global Financial Crisis rather than as a result of any conscious choice by him to permanently "relinquish" the Cronulla property as his principal place of residence and to instead adopt the Caringbah property as his permanent principal place of residence ( Mc Nally & Anor v Chief Commissioner of State Revenue (NSW) 2004 ATC 4007 per Gzell J).
e. Fourth, it appears from the since 4 August 2008 (i.e. during the entire time that the Applicant said he was living at the Caringbah property) there was in existence an exclusive agency agreement with Abode Property Agents for the sale of the Caringbah property. The Applicant agreed in cross-examination that he had signed the agreement and that it super-ceded any prior agency agreements. It was clear that the Caringbah property was advertised for sale during the relevant three month period and could potentially be sold at any time. The Applicant agreed in cross-examination that there were no advertisements for the Cronulla property in the same period. The Tribunal infers from the evidence that during the three month period, the primary motivation of the Applicant remained to sell the Caringbah property and his occupation of it was for the temporary purpose of redecorating the Cronulla property in order to "keep his options open" rather than any adoption of the Caringbah property as his permanent principal place of residence.
f. By 5 December 2008, contracts had been exchanged for the sale of the Caringbah property with settlement to occur in January 2009. Accordingly, at the particular point in time that the Tribunal must consider (i.e. midnight on 31 December 2008) a reasonable person would likely consider that the use and occupation of the Caringbah property as a place of residence would now be "temporary", that is, until such time as settlement of the sale contract that was expected to occur in mid-January 2009.
86In terms of the matters listed at paragraph REF _Ref289167128 \r \h The Respondent usefully referred in submissions to a number of principles to be derived from the decided cases as to the objective factors that might be taken into account as follows: that arise from other decided cases in this area, the Tribunal notes the following emerged from the evidence:
a. In relation to the amount of time that the residence is occupied and the pattern of occupation, on the basis of the Applicant's own evidence the occupation was for a 3 month period and his routine was to spend the majority of his "non-working" time at the Cronulla property. The Applicant said in his witness statement that he slept at the Caringbah property and had all his meals there. It is unclear to the Tribunal as to how he could have had his dinner there every night in light of his other evidence that his usual pattern was to return to the Cronulla property each day after work to feed the cats, work on the house and then write his screen plays into the evening (sometimes until the early hours of the morning) and then drive home. This was not clearly explained by the Applicant. The Tribunal notes other decided cases in this area that have held that merely sleeping at a property does not make the property a "principal place of residence".
b. The Applicant did not change the listing of his address on the electoral roll when he moved into the Caringbah property (although it is noted that this is not necessarily conclusive evidence that the address that does appear is the principal place of residence). The Applicant explained that both the Caringbah and Cronulla properties were in the seat of Cook and no election was imminent and this was the reason that no change was made. The Tribunal has taken into account this matter but has not placed considerable weight upon it in light of the Applicant's explanation.
c. In relation to the Applicant's driver's licence (which showed the Caringbah property as his address), he explained that he had resided at the Caringbah property during January-June 2005 and at that time had renewed his licence for 5 years, which period covered the three month period in question. The Applicant admitted in cross-examination that he did not update his records to show that he had moved back to the Cronulla property after June 2005 and resided there until October 2008. Accordingly, in light of this evidence, the Tribunal has not placed a great amount of weight on the fact that the licence showed the Caringbah property as his residential address in the period from October 2008 to 31 December 2008.
c. In relation to the Applicant's respective rights in respect of the two properties, these appeared to be largely the same in that the evidence showed that he had continuous control and possession of both properties during the 3 month period and as at 31 December 2008. The Applicant's evidence was that some of the bedrooms in the Cronulla property (it is noted that his evidence did not extend to "all" of the bedrooms) could not be used/occupied during the three month period due to a "bowing" of the walls that had occurred. The Tribunal notes that there was no evidence to the effect that the bathrooms and kitchen of the Cronulla property could not and were not used/occupied during the 3 month period. The Tribunal infers that these rooms, together with any bedrooms not affected by the "bowing" of walls and the studio were capable of being used by the Applicant during the 3 month period in question and were so used during the same period.
d. In relation to the relative location of clothing, furniture and other possessions, the Applicant's evidence was that from the time of the long weekend his furniture and personal effects were located at the Caringbah property. The items in his studio at Cronulla were not moved (the Applicant explained this was because he was too busy to relocate it as he had too many other jobs and could not afford the interruption to his work but that he had intended to do so during the Christmas break (presumably in 2008). The evidence of Mr Richardson was that he helped the Applicant move out "outdoor cupboards and other furniture". He could not categorically recall if there were "personal affects" (sic) and the nature of these nor that they were owned by the Applicant. Mr Richardson did not provide any specific corroborative evidence that the Applicant's bed, clothes, personal items etc. were at the Caringbah property as at 31 December 2008 (or indeed before or after this). Although it was in his power to do so (and was questioned by the Respondent) the Applicant did not explain the specific nature of the items that he said he moved from Cronulla to Caringbah in October 2008.
f. From the evidence, it appeared that the Applicant had strength of ties and connection to both the Caringbah and Cronulla properties. The evidence was that he had resided at the Caringbah property at various times since 1997 including in 1997 and 1998 and from January to June 2005. The more recent ties of the Applicant were of course to the Cronulla property, which he lived in until the October long weekend in 2008 and then returned to live in January 2009. The ties to the Cronulla property continued in the relevant three month period in so far as the Applicant retained his writing studio there and spent significant amounts of time there as already discussed above.
g. In relation to utilities usage, the Tribunal notes that the electricity usage for the Cronulla property for the 3 month period in question was generally consistent with the quarters before and after. This is consistent with not much having changed in terms of the Applicant's general routine. He was still spending the majority of his non-working time at the Cronulla property. It seems clear that the Applicant did spend time at the Caringbah property in the 3 month period but the electricity bills were significantly less than the Cronulla property. This is also consistent with the Applicant spending more of his non-working time at the Cronulla property.
In relation to water usage, there is clearly a very large discrepancy in water usage between the Caringbah and Cronulla properties in the relevant period. The Tribunal does not consider the explanation as to differing garden watering between the two properties and the hosing down of the fibro walls at the Cronulla property provides a complete explanation for the discrepancy. The water usage invoice for 20 August 2008-24 November 2008 (where for at least 6 weeks the Applicant says he was residing in the Caringbah property as his principal place of residence) was $1.61 and 1 kL of water was used. By contrast, the water usage at Cronulla remained broadly the same between October 2008-December 2008 as it had been in quarters before and after.
h. In respect of the address to which bills were sent, it is noted that some of the utilities bills for the Caringbah property were sent to the Applicant's post office box in Cronulla. The Tribunal accepts the explanation of the Applicant that there were concerns over these bills being sent to the Caringbah address due to the situation between the tenant and the Applicant.
i. In the cross-examination by the Respondent's counsel, the Applicant, when confronted with a copy of the insurance policy for the Caringbah property (which premium was paid on 8 October 2008 at a time when the Applicant was living at the Caringbah property) was forced to concede that he had paid a premium for "Landlord's Fixtures and Fittings". As highlighted in cross-examination, this was somewhat inconsistent with the property being the "home" of the Applicant as opposed to a rental property at that time. The Applicant said that he had not paid any particular attention to this and thought that the premium would be the same anyway. Nevertheless, he conceded to the cross-examiner that he was aware of his duty of utmost good faith to the relevant insurer.
A further matter that was the subject of similar cross-examination was a letter that the Applicant had written to the CTTT on or about 15 April 2010. In that letter the Applicant represented to the CTTT that the tenant had only vacated the premises on 17 June 2008 and the premises were "damaged and full of junk that took months to clean out and repair; during this time the property could not be re-let and substantial loss was incurred. I need to claim the costs of cleaning the property and the loss time when it could not be rented due to the damaged and filthy state it was left in".
As highlighted in cross-examination, the claims in this letter were somewhat inconsistent with the case advanced by the Applicant in the Tribunal, that is, at all times after the tenant vacated, the Applicant intended to move into the property to live in it as his principal place of residence but was prevented from doing so due to the state that the tenant left the property in. It was not part of the Applicant's case before the Tribunal that he was precluded from "renting" the Caringbah property during the above period. Instead the case was that the state of the property meant that the Applicant could not move into the Caringbah property as soon as he wanted. In other words, the "loss" to him (if any) was the cost of him continuing to reside at Cronulla for a longer period as opposed to the "loss" claimed in the letter of lost rental income for the Caringbah property. The Tribunal did not find the explanation from the Applicant (that is, the "impost" as far as the CTTT was concerned was only that the property could not be re-let or occupied) as particularly compelling in the circumstances.
j. The Applicant's evidence was that he slept at the Caringbah property and had his meals there. In further evidence, it was clarified that the Applicant had his lunch on weekdays at the office and he also had a liquid breakfast. The Tribunal has already explained its difficulty in accepting the evidence of the Applicant that all evening meals were had at the Caringbah property in light of the Applicant's other evidence that he spent most days after work at the Cronulla property where he remained until late at night and early in the morning working on his screen plays. The Tribunal has also already explained above its reasons for its conclusion that not all bedrooms were unable to be occupied at the Cronulla property and there was no evidence that the kitchen and bathroom could not and were not used by the Applicant during the above period. On the evidence that was before it, the Tribunal has drawn the inference that the Applicant continued to have some meals at the Cronulla property and most likely slept there on some occasions when he was working very late at night and early into the morning on his screen plays.
k. In relation to the relevant place where the Applicant entertained friends, there was no evidence before the Tribunal from the Applicant himself. The Applicant was clearly best placed to either give this evidence himself or to call other witnesses to do so. He did not do this and the Tribunal is therefore placed in the position to consider the evidence before it and to draw inferences from it. In cross-examination, the Respondent's Counsel asked his friend Mr Richardson where he had met with the Applicant and the Tribunal notes that Mr Richardson replied immediately and without hesitation that it was at the Cronulla property. The Tribunal has taken this evidence into account in relation to assessing the "main" residence of the Applicant as at 31 December 2008.
87The Applicant cited a judgement of the Land Court of Queensland in Jackman v Commissioner of Land Tax [2010] QLC 3 (per Member RS Jones) that he said supported his case.
88In that case, the Land Court examined the case of Mr and Mrs Jackman who owned a property in Hedges Avenue at Mermaid Beach which had, up until the relevant land tax year (i.e. the 2008 year), been their principal place of residence. In May 2007, the Jackmans entered into a construction contract in respect of refurbishment and renovation of the Hedges Avenue property.
89For a short period of time the Jackmans resided in the Hedges Avenue property but this soon became impracticable and uncomfortable. By July 2007 the Jackmans split their living arrangements between the Hedges Avenue property and another property they owned (and referred to in the case as the "Blue House"). Personal items were moved to the Blue House and by August 2007, they were spending more time at the Blue House than at Hedges Avenue.
90Sometime between August and September 2007, the Jackmans decided that the Blue House was not suitable accommodation. They went on a holiday and returned and entered into a tenancy of another property (referred to in the case as "La Sabia"). It commenced on 31 October 2007 and expired on 31 April 2008. The Jackmans remained in occupation of La Sabia following the expiry of the tenancy until the renovations of the Hedges Avenue property were complete in November 2008 (i.e. after the end of the 2008 land tax year).
91In that case it was conceded by Counsel for the Jackmans at [18] that section 3E(1)(a) of the Land Tax Act 1915 (being the equivalent provision to clause 2(2)(a) of the LTMA) could not be satisfied and the Jackmans could only rely on section 3E(1)(b) (being he equivalent provision to clause 2(2)(b) LTMA). It is clear that this was because the Jackmans did not use the Hedges Avenue property continuously for a 6 month period prior to 30 June 2008. The same result occurs in the present case because the Applicant did not continuously use and occupy the Caringbah property from 1 July 2008 to 31 December 2008.
92In relation to the application of section 3E(1)(b), the Member took account of the subjective evidence of the Jackmans that they always considered the Hedges Avenue property to be their "home" and the other places as temporary accommodation. They did not part with physical possession and control of the Hedges Avenue property and that address remained their mailing address and address for the electoral roll.
93In the present case, the Tribunal notes that on balance the evidence was to the effect that Caringbah property was accommodation for the Applicant whilst the Cronulla property was redecorated and was contingent on whether or not the Caringbah property was sold. The Applicant likewise did not part with physical control or possession of the Cronulla property at any time and indeed, unlike the Jackmans, continued to spend large amounts of his time there. The Cronulla property remained the mailing address for utilities/water for that property as well as the Applicant's address on the electoral roll.
94In the Jackman decision, the Member took account of the fact that the land telephone lines were still kept connected at the Hedges Avenue property. There was no evidence of a similar nature in the present case so the Tribunal cannot make similar findings.
95The Tribunal in considering the decision of Jackman has concluded that (although it is not binding on the Tribunal) it is consistent with the view that has been reached in the present case, that is, that the Cronulla property remained the principal place of residence of the Applicant as at 31 December 2008 and the residence at Caringbah was both temporary and contingent on whether and how quickly that property sold to a buyer.
96In considering all of the abovementioned factors, the Tribunal has concluded that the Applicant's principal or "main" place of residence as at 31 December 2008 was the Cronulla property.
97The Cronulla property was indisputably the principal place of residence of the Applicant up to October 2008 and, on the evidence before it, the Tribunal has concluded that the Applicant did not "relinquish" this property as his principal place of residence and adopt the Caringbah property in its stead. His strength of ties and connection to the Cronulla property remained strong throughout October 2008 to 31 December 2008 and the evidence indicated that he continued to spend most of his non-working time at the Cronulla property. The Applicant's occupation of the Caringbah property appeared on balance to be for the temporary purpose of re-decorating the Cronulla property in order to keep his options open whilst all the time the Caringbah property was on the market to be sold. This conclusion is supported by a consideration of all the factors above including the relatively unchanged electricity and water usage at the Cronulla property and the significantly lower water usage at the Caringbah property in one of the invoices mentioned above.