REASONS FOR DECISION
Background
1 This is an appeal by Daniel Paul Calarco against decisions made on 8 December 2003 by the Chief Commissioner of State Revenue (the Administrator) to dismiss Mr Calarco's objection to a decision to:
a) reverse a previous decision made under the First Home Owner Grant Act 2000 to pay Mr Daniel Calarco a grant of $7,000.00 with respect to his purchase of the premises at 27 Pine Avenue, Bradbury, on the basis that Mr Calarco did not occupy the premises as his principal place of residence within 12 months of settlement;
b) require, pursuant to s.45(1) of the First Home Owner Grant Act 2000, Mr Daniel Calarco to repay the grant of $7,000.00; and
c) impose a penalty of 100 per cent of the grant ($7,000.00) for non compliance with the conditions of the grant.
2 On 13 January 2004 Mr Calarco lodged this appeal against the decisions stating that, "27 Pine Avenue, Bradbury was my principal` place of residents (sic) for some time (over two months within the year)."
The Legislation
3 The First Home Owner Grant Act 2000 establishes a scheme to assist persons buying or building their first home by providing them with a grant. To be eligible for a grant, an applicant must satisfy the five eligibility criteria that are contained in Division 2 of Part II of that Act, and the purchase of the property for which the grant is sought must be an "eligible transaction".
4 The eligibility criteria in issue in this application is the fifth criteria, which is set out in s.12(1), which relevantly provides:
"s.12(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 within twelve months after completion of the eligible transaction or a longer period approved by the Commissioner."
It is not disputed that the contract for the purchase of the property, by Mr Calarco, was an "eligible transaction" under the Act.
5 Subsection 13(5) provides that where the transaction relates to a contract for the purchase of a home, that transaction is completed when the purchaser becomes entitled to possession of the home under that contract.
6 S.20(1)(b) provides that the Commissioner may authorise the payment of a grant in anticipation of compliance with the resident's requirement, if the Commissioner is satisfied that the applicant intends to occupy the home as his or her principal place of residence within twelve months after completion of the eligible transaction, or a longer period allowed by the Commissioner. The sub-section also gives the Commissioner power to extend the period within which the applicant must take up occupancy of the property as his or her principal place of residence.
7 Where a grant is paid in anticipation of compliance with the "resident requirement", ss. 20(3) of the Act provides that:
"(3) If a first home owner grant is paid in anticipation of compliance with the residence requirement, the payment is made on condition that, if the residence requirement is not complied with, the applicant must within 14 days after the end of the period allowed for compliance:
(a) give written notice of that fact to the Chief Commissioner, and
(b) repay the amount of the grant."
The term "resident requirement" is defined in s.3 of the Act in similar terms to that contained in s.12. A failure to comply with subsection 20(3) constitutes an offence, which is punishable by a maximum penalty of 50 penalty units.
8 S. 23 gives the Commissioner power, within 5 years of the original decision, to vary or reverse a decision made in respect of an application for a grant where the Commissioner is later satisfied that the decision is incorrect.
9 S. 24(1) provides that where the Commissioner decides to reverse an earlier decision on an application for a grant, the Commissioner is required to give the applicant written notice of the reversal and state in the notice the reasons for the reversal.
10 S.29(3) provides that an Applicant who seeks review of the Commissioner's determination of an objection, has the onus of proving his or her case. That is, the onus of proof rests on the Applicant to establish, on the balance of probabilities, those matters, which he or she contends.
11 Section 45 gives the Commissioner the power to request the repayment of a grant and to impose a penalty for non-compliance with such a request, or with the conditions of a grant. That section provides:
"45(1) The Chief Commissioner may by written notice require an applicant (or a former applicant) for a first home owner grant to repay an amount paid on the application if:
(a) the amount was paid in error, or
(b) the Chief 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 Chief 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 a former applicant) for a first home owner grant failed to make a repayment required under this section or the conditions of the grant, the Chief Commissioner may, by written notice, impose a penalty not exceeding the amount the applicant is required to repay.
(4) If an amount is paid in error on an application for a first home owner grant by a third party, the Chief Commissioner may, by written notice, require the third party to repay the amount to the Chief Commissioner".
The Application for the Grant
12 The Administrator received the application for a first home owners grant on 12 July 2001. In the application Mr Calarco disclosed that was purchasing the home at 27 Pine Avenue, Bradbury for $210,000.00 pursuant a contract dated 25 May 2001. Completion was due on 20 June 2001. Mr Calarco indicated in the application that he expected to occupy the home on that date. As part of the application Mr Calarco signed a declaration which, in part, said:
…
I will be occupying the home as my principal place of residence within 12 months of the date of settlement …
…
I have read and understood the information provided by the Office of State Revenue relating to the conditions of eligibility. I accept that if those conditions are not met, I will not be entitled to receive or retain the grant.
…
I declare that the above information, contents of this application and information provided in support of this application are, to the best of my knowledge, true and correct.
I acknowledge that, under the First Home Owner Grant Act 2000, penalties will apply for making false or misleading statements in or in connection with a first home owner grant.
13 There is no dispute that the home at 27 Pine Avenue, Bradbury was Mr Calarco's family home, and that he was purchasing it from his parents who had purchased a new home at Glen Alpine. Similarly there is no dispute that Mr Calarco received a first home owner grant of $7,000.00.
The Administrator's Documentary Evidence
14 Much of the Administrator's case before the Tribunal rested on documentary evidence about which there was no dispute. While I do not intend to discuss all of that evidence in these reasons it is necessary to for a proper understanding of the issues to discuss a number of those documents. They are:
a) a stamped copy of the front page of a contract of sale of the property at 27 Pine Avenue, Bradbury, dated 25 May 2001, between Mr Calarco and his parents, Joseph and Rose Calarco.
b) a Management Agency Agreement dated 1 May 2001 between Joseph and Rose Calarco and Starr Partners, Campbelltown, whereby they engaged Starr Partners to exclusively let and manage the property at 27 Pine Avenue, Bradbury from that day on.
c) a Residential Tenancy Agreement commencing 23 June 2001 with respect to the property at 27 Pine Avenue, Bradbury for a fixed term of 26 weeks, and continuing unless otherwise terminated, between Joseph and Rose Calarco as landlords and named tenants for a rental of $200.00 per week.
d) a stamped transfer of the property from Joseph and Rose Calarco to Mr Calarco dated 27 June 2001.
e) a statutory declaration by Mr Calarco declared on 13 February 2003 in response to a written request from the Administrator, dated 30 January 2003, that he provide a statutory declaration confirming when he lived at the property together documentary evidence in support. In that statutory declaration Mr Calarco declared:
"27 Pine Avenue Bradbury 2560 was my principal place of residence since I was 2 years old which was 1982. Then in October 2002 I moved out permanently due to financial difficulty in repayments and paying bills etc. However during the time I owned the property it was my principal place of residence for 4 - 6 months during the 12-month period after settlement. If I was told before to keep documentation I would have but I haven't lives there for months so they have been thrown out. However I have my last rates that I lived there for."
A quarterly rate notice for the property payable on 31 May 2002 accompanied the statutory declaration.
f) Electricity search details showing that electricity was connected to the property in the names of the tenants from 18 June 2001 to 15 April 2002, and in the name of the purchaser from Mr Calarco from 19 July 2002 onward. There was no record of a connection in Mr Calarco's name.
g) a letter from Mr Calarco to the Administrator dated 10 September seeking a review of the decision to require repayment of the grant and impose a penalty. In that letter Mr Calarco wrote:
"Before the decision was made to reverse the grant I was contacted to provide a statutory declaration and any evidence I could find to prove I was living there within the 12 month period. I provided the statutory declaration and a water bill, if this was not enough I would have quite happily provided Gerard with more information including statutory declarations of at least 10 other people including tradesman. a justice of the peace, a minister etc to verify I was living there for a period of time after the property was rented and within the 12 months of settlement. I was very honest with Gerard in my statutory declaration and on the telephone I felt that the statutory declaration by self and the water bill would be enough, as I told him that it was 2 years after selling my home that you are now investigating I would not have any other bills. At the time of living at my home I however did not have a telephone line installed as I have a mobile phone on a business plan and yes I definitely used electricity however it was not under my name at that time because of money troubles thus also being the reason for selling my home. Please do not hold that against me, I struggled for money as most first home owners so!"
h) a invoice from REI Insurance brokers dated 31 May 2001 addressed to Mr Calarco care of Starr Partners for GCU Landlords Insurance in the sum of $542.00.
i) a ledger report from Starr Partners showing the history of rental payments with respect to the property showing that the tenants vacated on 14 April 2004.
j) a transfer of land relating from Mr Calarco to the purchaser of the property dated 19 July 2002.
The Applicant's Evidence
15 Mr Calarco provided a written statement to the Tribunal in which he set out his position. With respect to the time he lived at the premises Mr Calarco wrote:
"… in stating that I did live there immediately after the tenants moved out and prior to that there was confusion about when they were to move out as I expected them to move out when the lease expired in December. However they did not move out until March which is when I moved in (my tradesman say they were in there at the end of March but the chief commissioner says April ). During the period I was waiting to move into 27 Pine Ave Bradbury which was the end of 2001 around middle of December until March/April I was not living with my parents at 58 Abington Cres, Glen Alpine. I moved in with Ross Phillips who is also my carpenter … from the middle of December when tenants lease had expired till March/April until the tenants finally moved out.
Once moving in I believe it was my principal place of residency from at least the start of April if not March until moving out in July. However within the year I believe I was living there for 3 months (April - May - June 27) and maybe some of March. The Statutory Declarations from the other people clearly shows I lived there for that period as I also lived there with Ross Phillips for a 2 month period as he would help me at nights after work renovating the place.
The reason for not knowing all the dates when I was writing my statutory declarations, as you can see I wrote very vague time ranges, is the same reason I told Gerard Weedmore is because it has been a very long period of time since me being there and I was not sure on settlement dates, as my solicitor at the time Jeff Dunn did not reply with settlement dates even after many phone calls, as well as Starr Partners the real estate not being able to find the documentation I needed, and letters that were exchanged for the move of the tenants early 2001.
16 Mr Calarco told the Tribunal that he has been self-employed since he left school. At all relevant times he had been in the process of establishing and running a restaurant business.
17 Mr Calarco told the Tribunal he came to buy the house when his parents purchased a new home in Glen Alpine. He said he purchased the old family home from them with the idea of living there himself. He said that when the purchase was made, he knew his parents had rented the house to tenants. The rent went straight to his parents' account, "only until I bought it."
18 Mr Calarco said that the tenancy was due to expire at some time in December 2001. He said that the tenants did not move out at the end of the tenancy, and that it was only when he discovered this that he gave them a notice to vacate. This was done, and the tenants vacated in March or April 2002. He then moved in. He said that at that time his business was, "doing OK". He then said that it was April when he moved in.
19 Mr Calarco said that when he moved in his business was "still struggling", and he was having trouble meeting the mortgage. He had rung the Office of State Revenue to find out how long he had to live in the house before he could sell it. He said he was advised that there was no defined limit.
20 "Around May" he engaged a real estate agent to sell the house. He could not recall who the real estate agent was. He said that he was hoping for a quick sale, and commented that if he had sold the house within a year of purchasing it, he thought he would have to pay back the First Home Owners Grant.
21 Mr Calarco said that the house had been sold in July or August. The Tribunal asked when settlement had occurred. After consulting a copy of the transfer of land it was established that it was dated 17 July 2002. The Tribunal asked what the length of the contract had been. Mr Calarco could not recall.
22 Mr Calarco then said that when he moved into the house in April he had done some renovation work, so that it was fit to occupy. He had replaced the rotting timber on the porch, which the tenants had been complaining about. The tiles in the bathroom were fixed, and some rotting trees were cut down. In May he started repainting the house to get it ready for sale.
23 While the house was rented Mr Calarco lived at his parent new home for five months, and then spent two to three months with his friend Ross Phillips. When the house was sold he had moved back to his parents, because of his financial difficulties.
24 Mr Calarco said that when he sold the house he thought he had lived there long enough to satisfy the terms of the First Home Owners Grant.
25 In cross examination Mr Calarco:
agreed that he had signed the declaration accompanying the First Home Owners Grant application and that he had said he would be moving into the house on 20 June 2001;
said that when he had signed the application he had not yet decided whether or not he wanted to rent the house out when he purchased it;
said that that his solicitor had assisted him to prepare the application and had sent the application to the State Revenue Office;
agreed that his parents had signed a management agreement with Star Partners, Real Estate Agents, on 1 May 2001 engaging them to find tenants for the house;
said that his parents "probably" would have told him about the management agreement, but said that he knew he could have broken that agreement when he decided to buy in May;
agreed that landlord insurance in his name had been effected around 31 May 2001;
said that he did not think he had requested the agents to take landlord insurance for him with CGU: he did not know how that request happened, but said it must have been his parents doing;
agreed that the house had been rented to tenants on a 26 week lease which commenced on 23 June 2001, but said that he had only been advised or this a couple of days before that date by his solicitor or his parents;
said that when the tenancy agreement was signed he was still living at the house, and that he had then moved to his parents; and
said that he had accomplished that move himself by a couple of trips in his vehicle.
Mr Joseph Calarco's Evidence
26 Mr Joseph Calarco swore a statutory declaration in support of his son, in which he said:
"My son Daniel Calarco moved out of home in around December to move into his own home. But by circumstances out of his control he had to move into Ross Phillips home for a short period until his home was vacated about March/April. Daniel's intentions were to live longer at 26 Pine Grove but because of financial constraints was forced to sell his home later that year."
27 Mr Joseph Calarco told the Tribunal that he understood that the Administrator had reversed the decision to pay Mr Daniel Calarco the grant because Daniel Calarco had not moved in within 12 months of purchasing the property. He said this was incorrect.
28 When asked about the circumstances out of Daniel Calarco's control, referred to in his statutory declaration, Mr Joseph Calarco said that there were two. First, Daniel Calarco's financial circumstances, which meant he could not afford to move in because his business was not going well. Secondly, his discovery that the tenant's had to be given notice to vacate at the end of the fixed term tenancy.
29 Mr Joseph Calarco said that he and his wife had purchased their new home in March or April of 2001. He said that they decided to sell their old home to Daniel "almost straight away". When pressed on the timing of this he said that, "at least by the start of May the deal was done to sell to Daniel". He agreed that the availability of a first home owners grant was discussed in the course of the family discussions about the sale and purchase.
30 Mr Joseph Calarco agreed that his wife and himself had rented the property out before the sale to Daniel was completed. He said that, "Daniel told me to have it leased out - so he could work hard on his business and make money."
31 Mr Joseph Calarco said he and his wife moved to their new home about a week or two before the property was let to tenants. Daniel moved at the same time. He said that they used a removalist in the move. He could not remember Daniel moving later.
32 Mr Joseph Calarco agreed that all rental payments were paid into his joint account with his wife. He did not know how the funds were given to Daniel. He explained that his wife manages all his financial affairs, and he does not concern himself with them.
33 Mr Joseph Calarco said that when Daniel was living at the new house in Glen Alpine, they talked, all the time, about his moving into the Bradbury property in December 2001 when the tenants were due to leave. Mr Joseph Calarco said that when the tenants did not vacate he had rung Starr Partners and asked them to move the tenants out.
34 Mr Joseph Calarco said that he had got the date "March/April" referred to in his statutory declaration from Daniel. He said that when Daniel did move into the property, "we were renovating all the time." The electricity was on. He could not identify the time when Daniel decided to sell the property, saying that Daniel had wanted to keep the property. He thought they had, "probably had a conversation at some stage" when Daniel had said he needed to sell. Mr Joseph Calarco said that he had been of the view that Daniel would have to sell the property "all the time", because the business was not making enough to pay for the house. This was the case in June 2001, and April and May 2002. As it was the family assisted Daniel in meeting his mortgage payments in April and May 2002. Mr Joseph Calarco said that family would have been prepared to continue to support Daniel in that way. It is part of his culture to do so.
Mr Weedmore's Evidence
35 The Respondent called Mr Stuart Weedmore, a compliance officer with the Office of State Revenue. Mr Weedmore gave evidence verifying his file note of 6 August 2003 when Mr Calarco rang in response to a letter from the Office of State Revenue asking him to provide a statutory declaration and documents which prove his occupation of the premises as his principal place of residence.
36 Mr Weedmore said that anonymous inquiries from the public to the Office of State Revenue were not noted. Those where the caller identifies his or herself and has are noted on the callers file.
Findings of Fact
37 In reaching my conclusions of fact I have been compelled to make an assessment of the reliability of Mr Calarco's evidence. All of the evidence before the Tribunal, including his own, points to the fact that Mr Calarco is a poor record keeper. His statements as to the dates when things occurred shifted, were always vague, and at times inconsistent. In relation to the issue of when he moved from the premises to live in his parent's home, his evidence was inconsistent with that of his father. On an examining the documents he submitted to the Administrator I think it can be fairly said that they were sparse on detail and haphazard in their relevance and content. Moreover, the statement made in the application that he intended to take up residence in the property on 20 June 2001 was plainly untrue. When Mr Calarco made that statement he knew that the house had been rented out.
38 Mr Calarco's evidence to the Tribunal was inexact. He displayed very little knowledge of the details of the transactions in which he was involved, details most people engaged in the act of buying and selling a home would have very clear in their own mind. He was willing to make concessions when confronted with evidence rebutting his prior statements, but those concessions were incremental, in the sense that he moved to his next defensible position and would then concede again, if necessary. He did not attempt to clarify his position by clearly stating the facts.
39 I conclude that Mr Calarco's evidence is unreliable and should not be relied on unless corroborated or uncontested. I prefer the documentary evidence and that of his father, where it is inconsistent with his. The Administrator asks that I draw the inference that Mr Calarco's unreliable evidence arises from his active dishonesty, and urged me to conclude that his dealings with the Office of State Revenue were motivated by dishonesty from the start. I am not persuaded that this was the case. Rather, my view is that the evidence shows Mr Calarco to be lackadaisical manager of his own affairs, with little respect for matters of propriety and less attention to detail; rather than a man engaged in the execution of a prepared plan to obtain a first home owners grant when he was not entitled to it.
40 I find that:
Mr Calarco agreed to purchased the house from his parents, knowing it had been rented under a six month tenancy agreement;
at the time he applied for the grant Mr Calarco intended to move into the house at the end of the tenancy;
the purchase of the house by Mr Calarco was settled on 27 June 2001;
Mr Calarco wrongly declared that he intended to occupy the house from 20 June 2001, knowing that he could not occupy it as it was rented;
Mr Calarco moved from the house with his parents and went to live in their new home with them;
the tenants vacated the house on 14 April 2002;
during the course of the tenancy it became apparent that Mr Calarco would be unable to meet the mortgage commitments on the house when the tenancy ended and he moved in (this was something his father had always known);
Mr Calarco moved back into the house in the later half of April 2002 and embarked on an immediate process of renovation for sale;
in May or June 2002 Mr Calarco engaged agents to act on the sale of the house;
the house was sold and settlement took place on 19 July 2002.
Did Mr Calarco reside in the premises as his principal place of residence?
41 At best Mr Calarco resided in the house for three months, from late April until the sale in July 2002. I have accepted that throughout that period he was engaged in renovations for the purpose of sale.
42 What is required for a person to be occupying a home as their principal place of residence has been the subject of considerable discussion in this Tribunal: McKellar v Chief Commissioner of State Revenue [2004] NSWADT 22; Bates v Chief Commissioner of State Revenue [2004] NSWADT 13; Tomasian v Chief Commissioner of State Revenue [2004] NSWADT 37; and Yucel v Chief Commissioner of State Revenue [2004] NSWADT 53. In Bates Judicial Member Higgins having reviewed a series of relevant authorities expressed the view that:
"[T]he following principles of general application also apply in this application:
(a) The terms "occupy" and "principal place of residence" should be given their ordinary meaning having regard to the objects and purposes of the Act. That purpose being similar to the abovementioned tax rating cases in that the legislative scheme of the Act is to provide first home owners some relief towards the cost of purchasing their first home. Accordingly, in the context of this Act, in my opinion, "occupy" means to reside in the property. However, that residence must also be such that it is the person's "principal" place of residence or to use the terms of the title of the legislation, the persons "home". This in my opinion, requires the occupation to be ongoing and involves an element of permanence;
(b) Whether an applicant has "occupied" the property as his/her "principal place of residence", as prescribed under the Act, is a question of fact that is to be assessed objectively having regard to all the circumstances. The intention of the applicant is relevant but it is not determinative of the issue. Nor is the fact that the applicant resided in the property for a short period of time during the relevant period. These matters, if established, must be considered in light of all the evidence including, where the applicant resided otherwise during the relevant period, the reasons given by the applicant for not residing or continuing to reside at the property, whether the reasons for not residing at the property were as a result of matters entirely out of the control of the applicant and the nature of the applicant's residence at the property. This list is by no means exhaustive as each case must be considered in the context of its own particular facts."
In Tomasian Judicial Member Montgomery also reviewed the authorities and concluded that he agreed with the approach outlined in Bates. In McKellar Judicial Member Needham expressed a somewhat different view with respect to the length of occupation, or degree of permanence, required:
"23 It does not matter if the resident is for a short period of time as long as the occupation is as a principal place of residence; that is, a person's main residence (see Zakariya v. Chief Commissioner, Office of State Revenue [2003] NSWADT 26).
43 In this case I do not have to reconcile those differing views as to the time required for a person to demonstrate they have occupied premises as their principal place of residence. This is so because I have concluded that when Mr Calarco occupied the home during the 12 months after settlement, he did not do so as his principal place of residence. Throughout the time he was in occupation, after 17 April 2002, Mr Calarco was conducting renovations of the property for the purpose of sale. As a result I am satisfied that his occupation of the premises was temporary, for the specific purpose of readying the premises for sale. He was not occupying the home as his principal place of residence.
44 As a consequence, it is my opinion that the Administrator made the correct and preferable decision when it was determined to reverse the decision to pay Mr Calarco the first home owner's grant of $7,000 and to require Mr Calarco to repay that grant.
Factors Affecting the Imposition and Amount of the Penalty
45 In determining the level of penalty the Administrator submitted:
43. While this Tribunal, has in some cases, reviewed the penalty imposed pursuant to s.45(3) of the Act, there has been no detailed consideration of the principles which should apply to the review of this discretion. See, for example, Bates v Chief Commissioner of State Revenue [2004] NSWADT 13 at [49]-[51] and Tomasian v Chief Commissioner of State Revenue [2004] NSWADT 37 at [36]- [39].
44. It is submitted that the following principles should apply when this Tribunal reviews decisions both as to the imposition and quantum of penalty:
(a) first, the Tribunal's task is to decide what the correct and preferable decision is having regard to the material then before it: s.63 of the ADT Act;
(b) secondly, the Applicant bears the onus of establishing that the Respondent's decision on penalty is not the correct and preferable decision: s.28(3) of the Act;
(c) thirdly, due recognition should be given to the fact that the Respondent's discretion to impose a penalty and to select its quantum (provided it does not exceed the value of the Grant) pursuant to s.45(3) of the Act is entirely at large;
(d) fourthly, a penalty of up to 100% is appropriate in certain cases because s.45(3) expressly provides that the Respondent can impose a penalty of such a quantum;
(e) fifthly, it is irrelevant to consider an applicant's attempts (or lack thereof) to comply with the requirements of the Act;
(f) sixthly, where an applicant for a grant has not been candid with the Respondent in response to a "show cause" letter or has been actively dishonest, it is appropriate that the maximum penalty be imposed in order to deter others from engaging in such behaviour.
45. The Applicant has made no submissions as to why a 100% penalty is not appropriate in the circumstances of this case. It is submitted that the imposition of the maximum penalty was appropriate in view of the facts that:
(a) the Applicant had misled the Respondent in response to the "show cause" letter issued to him on 30 January 2003. Further oral submissions will be addressed to this point at the hearing.
(b) further, the Applicant's representations to the Respondent lacked candour.
(c) in breach of s.20(3) of the Act, the Applicant failed to give written notice to the Respondent that he had not complied with the residence requirement. In itself, this failure constitutes an offence under s.20(4);
(d) the Applicant failed apply for an extension of the time in which to occupy the Property as his principal place of residence either at the time of making their application for the Grant or at any time afterwards."
46 The Administrator did not refer to any decided cases considering factors to be taken into account in the assessment of similar penalties, nor point to any established (or accessible) policy or guidelines addressing the assessment of penalties under s.45.
47 The Administrator is correct in asserting that in considering the issue of the imposition of an administrative penalty under s.45, the Tribunal's task is to make the correct and preferable decision on the basis of the information before it, while having regard to the fact that applicant bears the onus of proving his her own case. The Administrator's third and fourth suggested principles highlight the discretionary nature of a decision by the Administrator to impose a penalty, and to determine it quantum. As with all discretions, they are to exercised only in circumstances authorised by the relevant legislation, which in the case of the First Home Owner Grant Act 2000 means that to impose a penalty the Administrator must be satisfied that one or more of the three circumstances set out in s.45 exist.
48 If so satisfied, then the threshold enabling the Administrator to consider whether or not to exercise the discretion to impose a penalty is satisfied. As Judicial Member Higgins pointed out in Bates, the fact that the criteria are satisfied does not ipso facto mean that the discretion to impose a penalty must be exercised. In Bates Judicial Member Higgins found that the efforts by the recipient of the grant to comply with her obligations under the Act were sufficient to persuade her not to exercise discretion to impose a penalty. She said:
… in my opinion having regard to the material before the Tribunal, this was not a case which warranted the imposition of any penalty. Ms Bates clearly did not wish to avoid her obligations under the Act and she endeavored to ascertain what her position was by contacting the Office of the Commissioner at the time she decided to move back to her parents' home. I accept that she understood the advice she had received to be that she met the resident requirements of the Act and this was a basis on which she made her decision to again continue to reside with her parents .
49 It is apparent from this passage that Judicial Member Higgins was clearly of the view that a recipient's attempts to comply with the requirements of the Act are relevant to the exercise of the discretion to impose a penalty. In my view, Judicial Member Higgins was correct in adopting this view. The Administrator has a discretion to impose a penalty, and, in my view, for that discretion to be properly exercised the Administrator, and the Tribunal when reviewing such decisions, is required to exercise the discretion to impose a penalty in the light of all the relevant circumstances, including the recipient's attempts to comply with his or her obligations under the Act. Accordingly, I consider the fifth principle advanced by the Administrator to be incorrect and unsustainable.
50 Having determined to impose a penalty, the Administrator then has discretion as to the amount of that penalty up to 100% of the amount of the grant. Once again that discretion is to be exercised taking into account all the relevant circumstances. In Tomasin Judicial Member Montgomery thought regard should be had to the opportunity cost afforded to the recipient of the grant, by having the use of funds which were not properly his or hers, when exercising the discretion to impose a penalty under s.45. I agree that opportunity cost is one of the factors to be taken into account in considering the circumstances relevant to the assessment of penalty.
51 A useful list of relevant factors which a court might take into account in determining the amount of a civil penalty was proposed by the Australian Law Reform Commission in Principled Regulation: Federal Civil and Administrative Penalties in Australia (2002) ALRC 95 in recommendation 29-1. These factors concern the discretionary imposition of civil penalties under Commonwealth Legislation, which given the non-discretionary nature of Commonwealth administrative penalties, are more akin to the discretionary imposition of penalties under the First Home Owners Grant Act. The recommendation said:
"Unless unsuitable to a particular provision, in determining the amount of a civil penalty, the courts should take account of all relevant factors, including:
(a) the deterrent effect of the penalty;
(b) the nature and extent of the contravention;
(c) any loss or damage suffered, or gain made, as a result of the contravention;
(d) the circumstances in which the contravention took place, including the deliberateness of the conduct and the period over which it extended;
(e) whether professional advice had been obtained in relation to the contravention, prior to the breach;
(f) whether the person has previously been found by a court to have engaged in any related or similar conduct;
(g) the degree of cooperation with the authorities; and
(h) in the case of a natural person, the attitude of the offender."
52 These factors were developed following a detailed analysis of considerations adopted by the Courts in imposing civil penalties under the Trade Practices Act and Company Law: Trade Practices Commission v CSR Ltd (1991) 13 ATPR 41-076, 52,152-3 per French J; ASIC v Adler [2002] NSWSC 483, para 125-141 per Santow J; Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited (No 2) [2002] FCA 559 per Finkelstein J; Australian Securities Commission v Forem-Freeway Enterprises Pty Ltd (1999) 30 ASCR 339 and Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited (No 2) [2002] FCA 559. The ALRC pointed to the dearth of cases outside these areas, but considered that there are a number of principles to be born in mind when quantifying a penalty (at paras 30.20 to 30.61). These include deterrence, proportionality between the facts of the contravention and the penalty, achieving consistency and parity in the imposition of penalties, the seriousness of the contravention, mitigating factors and the capacity of the contravener to pay.
53 Opportunity cost would conveniently be considered as part of the rubric encompassed in the nature and effect of the contravention. Similarly, facets of the Administrator's suggested sixth principle, such as the honesty and candour displayed by the recipient, fit within a consideration of both the circumstances of the contravention and the attitude of the offender. While not exhaustive of the considerations relevant to determining the amount of a penalty, this recommendation of the ALRC provides a useful outline of the factors to be taken into account when determining penalty.
54 The Administrator is correct in submitting that there will be cases in which it is appropriate to impose the maximum penalty. I do not accept, however, that a lack of candour or active dishonesty by the recipient alone should necessarily result in the imposition of the maximum penalty. While they are undoubtedly circumstances that would normally weigh towards the imposition of a higher penalty, the discretion must be exercised in the light of all the circumstances, including those in which the dishonesty or lack of candour arose. For example, there is a difference between the significance to be attributed to a recipient who never intended to live in the home for which the grant was paid, and actively misled the Administrator about that fact from start to finish, and a recipient who receives the grant with the honest and reasonable intention of living in the home, but who attempts to deceive the Administrator when unexpected circumstances intervene to make that impossible. While both have been dishonest, the actions of the former are planned and deliberate throughout, while the actions of the second are a dishonest reaction to a change in circumstances, and not undertaken in fulfilment of a preordained plan. There is a difference in the degree of dishonesty between the two. In my opinion the former calls for greater censure and penalty than the later. When considering the nature and effect of a contravention, such an approach is a proper implementation of principles of parity and proportionality.
The Penalty
55 Mr Calarco told the Tribunal that, if he was not entitled to the grant, the imposition of a penalty of 100% was unfair and "too much". He had intended to live in the house, but had been unable to afford it. He cannot afford to pay the penalty.
56 The penalty imposed by the Administrator was imposed under s.45(3) of the Act. The notice, dated 26 August 2003, under s.45, relevantly, said:
"Section 45(1) of the First Home Owner Grant Act 2000 (the Act) authorises the Chief Commissioner of State Revenue by notice in writing, to require all applicant (or a former applicant) for a first home owner grant to repay an amount paid on the application if:
(a) the amount was paid in error, or
(b) the Chief Commissioner reverses the decision under which the amount was paid for any other reason.
Based on the information now available, and in accordance with section 23(1) of the Act, I have reversed the decision under which the grant was paid to you as you did not occupy the premises as your principal place of residence within 12 months of settlement of the property.
Accordingly, I require you to pay to the Chief Commissioner the amount of $7000 for repayment of the grant. A penalty of $7000 (100% imposed on the amount of the grant) has also been imposed for the following reasons:
You failed to occupy the property as your principal place of residence within 12 months from the settlement date.
You failed to advise the Office of State Revenue that you would not reside in the grant property within the required time period.
You failed to repay the grant within 14 days of the 12 months elapsing."
57 It is to be noted that this notice specified Mr Calarco's failure to comply with a condition of a grant (specifically that in s.20(3)) as a ground for imposing the penalty. That sub-section provides:
(3) If a first home owner grant is paid in anticipation of compliance with the residence requirement, the payment is made on condition that, if the residence requirement is not complied with, the applicant must within 14 days after the end of the period allowed for compliance:
(a) give written notice of that fact to the Chief Commissioner, and
(b) repay the amount of the grant
58 It should also be noted that the notice is confusingly drafted. A notice for repayment cannot simultaneously impose a penalty based on the failure to comply with that notice (s.45(3)). What this notice does, however, is require repayment and simultaneously impose a penalty based on the failure to comply with the conditions of the grant. The combination of the requirement to repay and the imposition of the penalty in the one paragraph is confusing, and initially led me to question whether the penalty was being imposed for a failure to repay or a failure to comply with conditions. On balance, I concluded that the penalty was originally imposed on the basis of Mr Calarco's failure to comply with the conditions of grant.
59 In Mr Calarco's case the question as to under which provision the penalty was imposed is further complicated by the statement of the Review Officer in disallowing Mr Calarco's objection that:
Once the residence requirement was not complied with, and no longer period has been allowed by the Chief Commissioner, then the original decision to pay the grant cannot stand. The Chief Commissioner has power to require an applicant to repay the grant, with penalty, if he reverses the decision under which the grant was paid. The Chief Commissioner has so reversed the original decision.
The Chief Commissioner has imposed a 100% penalty due to the misleading nature of the information provided. On examination of all the information disclosed and that not disclosed, together with the records of telephone conversations with Daniel Calarco I am satisfied the correct level of penalty tax has been imposed.
60 If one considers this statement in the light of the wording of s.45, it appears that decision to impose a penalty made by the review officer was made on the basis that the Administrator had reversed the decision to pay the grant because the residence requirement has not been met, and then required Mr Calarco to repay. If this is indeed the basis for the imposition of the penalty, then that imposition was not authorised by s.45(3), because a penalty may not be imposed in those circumstances until the recipient has failed to comply with the notice to repay. The notice to repay and imposition of a penalty for failure to repay cannot occur at the same time.
61 In my opinion, the correct and preferable decision was to exercise the discretion to impose a penalty on Mr Calarco for non-compliance with the conditions of grant. His is not a case like Bates where his attempts to comply with his obligations satisfy me that the discretion to impose a penalty should not be exercised. Nor does his evidence of a phone call to the State Revenue Office, at an unspecified time, in which he was told that there was no specified length of time he was required to remain in residence, persuade me that the discretion should be exercised in his favour. This is so as Mr Calarco's attempts to comply showed little respect for matters of propriety, little candour and less attention to detail. In any case it is clear that this is not a situation in which the principles of estoppel would operate in Mr Calarco's favour.
62 The question that then arises is one of the amount of the penalty. Applying the criteria discussed above, the factors relevant to the determination of penalty in Mr Calarco's case are:
a) the need to deter others from not complying the conditions of grant;
b) the fact that Mr Calarco provided incorrect information as to when he would be occupying the premises in his application to grant;
c) the fact that (as I have found) Mr Calarco's initial intention was to live in the premises as his own home at the end of the tenancy;
d) the fact that Mr Calarco's original intention was frustrated by his own financial circumstances;
e) the opportunity cost factor;
f) the fact that Mr Calarco showed little respect for matters of propriety and less attention to detail in his dealings with the Administrator;
g) Mr Calarco's failure to be candid with the Administrator and the Tribunal;
h) Mr Calarco's straitened financial circumstances.
63 In my opinion the circumstances of this case require the imposition of a substantial penalty reflecting the need to censure Mr Calarco for his lack of candour. At the same time an imposition of the maximum penalty is not appropriate because I accept that Mr Calarco did have the intention to live in the premises as his home, and did not set out to obtain the grant with no intention of residing in the premises. Having considered all these factors, it is my view that a penalty of $3,500, or 50% of the maximum grant, is appropriate in these circumstances.
64 As a result the Tribunal
a) affirms the decision of the Administrator to :
i) reverse a previous decision made under the First Home Owner Grant Act 2000 to pay Mr Daniel Calarco a grant of $7,000.00 with respect to his purchase of the premises at 27 Pine Avenue, Bradbury; and
ii) require, pursuant to s.45(1) of the First Home Owner Grant Act 2000, Mr Daniel Calarco to repay the grant of $7,000.00; and
b) varies the decision of the Administrator to impose a penalty of 100 per cent of the grant ($7,000.00) and in its place imposes a penalty of 50 per cent of the grant ($3,500.00)