Fallaw v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 199

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 the respondent's determination dated 12 June 2010 which determination disallowed the applicants' objection dated 30 September 2011 to a decision dated 1 December 2011 reversing an earlier decision made on 13 July 2007 to pay the first home owner's grant on an application by the applicants and to impose $1,000.00 penalty.
2. The issue before me is whether the applicants were entitled to a first home owner's grant in respect of a property which they purchased at 39 Austin Street, Newtown. The purchase was made on 8 June 2007 and the applicants settled that purchase on 19 July 2007 when the property was transferred to them. This question of penalty is also a live issue.
3. The relevant time is the six month period which is between 19 July 2007 and 18 January 2008. In that time the applicants did not have a great deal of furniture in the home. The furniture and appliances were described to me as a bed, a couch, a coffee table, a small kitchen table, two chairs, a deck chair and an outdoor umbrella. There was also a shed which was really a double garage. The only electrical appliances in the home were a kettle, a toaster, a bar fridge, a hand blender and a bedside lamp. There was no television, there was no washing machine or dryer, and it appears from that that there does not appear to have been any saucepans, pots or pans.
4. In any event, the applicants say that the house was sparsely furnished because just prior to them purchasing the house they had returned from living in the United Kingdom where they both had worked. They said they returned to Australia with only three tea chests of goods. They said at the time they could not afford to have more furniture in the house because they had borrowed from their parents to purchase the house and they were also saving up for their wedding which occurred in November 2002 and for which they had to borrow money. It is also noted that there was minimal use of utilities, which I will return to later.
5. It is also noted that Loretta Fallaw, the second applicant, was a leasee of a house premises at Gladstone Street, Prahran. The lease was in her joint name with a Ms Williams and the water bill came in her name. She paid half the expenses of this house where she stayed on occasions together with Mr and Mrs Williams. Ms Fallaw and her husband described this as a "crash pad" on the basis that Ms Fallaw was working at the St Kilda end of St Kilda Road, Melbourne at the time as an environmental engineer and that it was very difficult for her to commute between Melbourne and Geelong. She also says that during this time there was a great deal of travel which meant that both her and her husband did not stay very much in the Austin Street house. They spent many nights away from the premises and when the female applicant was away from the premises the male applicant Mr Fallaw stayed nights with his parents. They also say that as a result of spending such little time at the premises they did not use a lot of utilities. They say that every morning before work Mr Fallaw would go to gym and he would shower either at gym or work and Mrs Fallaw would walk around Albert Park Lake and she would shower at work.
6. They refer to the fact that there were three social parties in the house, one on 4 August and one on 29 September and one on 27 September. They said they entertained in the house. There is a long list of work commitments of Mr Fallaw between 22 July and 28 January 2008 which show that he was overseas or interstate at that time. I have not counted them but they are very substantial. There is also a long list of when Mrs Fallaw and occasionally Mr Fallaw was away for wedding commitments. Those wedding commitments were in Albury, Melbourne and Daylesford. They were away on honeymoon between 19 November and 30 November. Also there were a number of social engagement which is also quite a long list when they say they did not stay at the premises.
7. It is significant that the power to the Newtown premises was disconnected on 17 January 2008 which is prior to the six month period. It is also significant that on 14 December 2007 the applicants entered into an agency agreement with an agent to lease the premises. The premises appears to have been leased from 30 January 2008.
8. It is also noted that the rent paid for the Prahran premises was $1,300.00 per month. That money was taken out of Mrs Fallaw's bank account but she has said in evidence that she was repaid half by her co-tenant Mrs Williams. I accept that and do not have any reason to disbelieve what she has said. However, given people of meagre circumstances which they would have us believe, some $750.00 per month for rent for a spare house or "crash pad" as it was put, in my mind is a very substantial figure indeed. I also note that in January 2008 Mrs Fallaw took over the lease as sole lessor when Mr and Mrs Williams moved out of the Prahran premises.
9. In deciding this matter, s.12(1) of the First Home Owner Grant Act 2000 (the Act) is the important provision. There are a number of criteria for the first home owner's grant to be found in ss.8 to 12 inclusive. There are five in number. In this case, I am only concerned with s.12(1). That section reads 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 six 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, the question that I must answer is whether the applicants occupied the Austin Street property as their principal place of residence for a continuous period of six months. In this particular instance, it is six months beginning on 19 July 2007.
2. The applicants rely on a number of statutory declarations. The first statutory declaration they rely on is one of Simon John Sweetten who is a neighbour of theirs in Austin Street, Newtown. He says that he met the applicants after they purchased the property and had occasional neighbourly discussions between them between July 2007 and January 2008. He was also aware that they had some large social events during the period. I note that there are no particulars of those discussions.
3. For most of December and January of 2008 the applicants were not at the property on their own omission. They spent a considerable period of time in Deniliquin and they also spent time at Mr Fallaw's parents' holiday property in Airey's Inlet. There is also two statutory declarations, one by Thomas Charles Fallaw and another by Kristopher Mervyn Ian Daff. Those statutory declarations are identically worded. They state:

"I visited Barnes and Loretta at their home at 39 Austin Street, Newtown between July 2007 and January 2008. My visits were occasional social visits as well as for larger social events including Barnes' 30th birthday party, grand final day and Barnes' bucks day. I am also aware that Barnes and Loretta's hectic work and life schedule during this period."

1. I note that the deponents to those declarations were not available for cross-examination. On the basis that they were not available for cross-examination, Ms Neskovcin did not object to the statutory declarations being tendered in evidence but she submitted that I should give them little weight on the basis that the deponents were not made available for cross-examination and no reason was given as to why they could not be made available for cross-examination. On that basis, I will accept Ms Neskovcin's submission that little weight should be given to what is said by the deponents. In any event these documents appear to lack a considerable amount of substance and are not a lot of assistance.
2. There was a further statutory declaration by Nerida Ann Williams declared on 1 May 2012. Ms Williams, it will be recalled, is the co-tenant of the Prahran property and the matters that are referred to do not take the issue in this proceeding any further except that she deposes to the fact that all the furniture and appliances at the Prahran property belonged to her. She also says that they used it as a city residence because her principal place of residence was in the country.
3. The principles that I have to apply in deciding whether the applicants occupied the premises for the relevant six months as their principal place of residence have been stated in Chief Commissioner of State Revenue v Farrington (2004) 57 ATR 157. That decision has been approved by several decisions of this Tribunal, including many of my own. The principles stated there are:
   • Firstly, the words 'principal place of residence' should be given their ordinary meaning in the context to which they appear.
   • Secondly, considerations of whether a person has been residing or occupying a premises as their principal place of residence is to be assessed objectively in the light of 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 place of principal residence, a person's occupation must have a degree of permanence to it, connection to a place of residence and a transient, temporary, contingent or passing nature is not sufficient, nor is occupation for some other purpose.
   • Fifthly, the short length of the person's residence while relevant is not determinative of the issue. This is so since the recipient's occupation of a home while short may have a progressive degree of permanency to it. But that will not happen if we consider objectively the occupation is transient, temporary, contingent or 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 will not make it impossible.
   • Sixthly, the reason for the person's departure from the home must be both reasonable and adequately explained when considered objectively in the light of their personal circumstances.
4. In D'Amelio v Commissioner of State Revenue [2012] VCAT 265 at paragraph 15, Judge Macnamara made it clear that the first three general principles of the Farrington case are commentaries as to how the enquiry should be approached. The other three principles are substantive. This matter as announced by Judge Macnamara has been approved in several other decisions of this Tribunal.
5. In relation to the first principle that the words 'principal place of residence' should be given the ordinary meaning in which they appear. That is, as I said in Alexander v Commissioner of State Revenue (2013) VCAT 868 at [12], what an objective person would think as to whether someone was living in the relevant property as their principal place of residence. This has to be looked at in all the circumstances of the case. The circumstances of this case are as outlined. There was hardly any furniture in the premises and the utility usage was minimal. It is now appropriate I should refer to that utility usage.
6. No gas was used in the period between 23 August 2007 and 18 January 2008. The applicants said that the bills were wrong and some gas must have been used and just not have shown up on the bill. However there has been minimal use of other utilities. If it was just the gas use, that explanation could easily be accepted. However, as there has been minimal use in the water accounts and the electricity accounts, to which I will shortly refer, I accept that the bill shows that there has been no gas use and is probably correct. It is important to note that gas was required for cooking, hot water and heating. From 23 August 2007 to 18 January 2008 there would have been some very cold weather and even the female applicant said that they would have needed heating. That would go show that it is unlikely there would have been occupation or residence of the Newtown premises.
7. The water usage was also minimal. The water accounts from 1 July 2007 to 31 January 2008 for the property show a small amount of usage. It ought to be remembered that it was on 19 July that the applicants took possession of the Newtown premises. From 1 July to 30 September 2007 there were 33 kilolitres of water used. From 1 October to 31 December there were 3 kilolitres of water used and from 1 January to 31 January there was no water used. Ms Neskovcin, counsel for the respondent, has compared this with water usage at the property during other periods. From 12 March 2009 to 5 June 2009 there were 46 kilolitres used. From 5 June 2009 to 4 September 2009 there were 10 kilolitres used and from 4 September to 7 December 2009 there were 53 kilolitres of water used. It is inconceivable in my view that anyone residing in the premises could have used so little water as was used between 1 July and 31 January. Mrs Fallaw said that even leaking taps would have used more water than shown. I do note that the applicants pursuant to the first home owner's grant has the onus of proof (see s.32 of the Act).
8. I note that the electricity use during the relevant period was also minimal. From 19 July to 11 October it was 30 kilowatt hours and from 11 October 2007 to 17 January 2008 was 10 kilowatt hours. Ms Neskovcin has stated this amounts to a total of 40 kilowatt hours over 170 days, an average usage of 0.23 kilowatt hours. By way of comparison, the applicants' electric usage at the property four months between 4 March 2009 and 9 July 2009 was 1,410 kilowatts, or a daily average of 10.14 kilowatts.
9. Thus taking into account all the objective matters including the time spent at the premises I have formed the view that in the ordinary meaning of the word 'residence' objectively speaking it is unlikely that the applicants would have been taken to have been residing in the premises.
10. The second principle is the consideration of whether a person has been residing or occupying the premises as their principal place of residence as assessed objectively in the light of the circumstances of the actual occupation of the dwelling. I have largely dealt with this issue under the first heading, particularly in relation to the use of utilities and in relation to furnishings. I have referred to what furnishings were at the Newtown premises during the relevant time.
11. Also I note the time spent at the property. The applicants say that their working commitments and lifestyle were such that they did not spend much time at the property and indeed Mr Fallaw compared himself to a politician who might be in Canberra spending a long time away from the family home. That might be so when parliament sits but is not necessarily so at other times. Judge Macnamara in the D'Amelio case which I have already referred to stated at paragraph 16:

"I should report also that in my view if she did no more than what is alleged, that is sleep at the property and carry out all of the significant elements of her life elsewhere, that would not in my view objectively amount to occupying the premises as a principal place of residence according to the Farrington principle."

1. In this case, the applicants are not saying that they just slept at the property. They are saying they entertained at the property and they went to the property whenever they could. However it is clear that certainly by mid December or possibly earlier during the honeymoon that they had made a decision that they did not want to live at the Newtown property any longer while Mrs Fallaw was working. It should be noted that when the 12 month lease to the Newtown property expired in January 2009 the Fallaws moved back into the property at Austin Street and have remained there ever since. That is not contested.
2. It is also noted that the Fallaws did not change their drivers licences which remained at the residence of another property.
3. There was something said about the marriage certificate containing the address of the Prahran property, however I accept Mrs Fallaw's explanation that it was more convenient to do that because she was expecting some registered mail and it would have been difficult to get the registered mail in Geelong than the post office relating to the Prahran property which was very close to her work. Looking objectively I find the applicants were not residing at the Newtown property during the relevant period.
4. Principle three is the intention of a person concerned gauged objectively is relevant but not determinative. In matters relating to intention I have already referred to the low utility use. It is also said that there is no evidence that the Fallaws did the sort of things that one would normally anticipate property owners would do to the home. However they did allegedly work in the garden, install a rain water tank and hang a picture on the wall, and undertake some minor alterations. However these seem to have been bare necessities in the property apart from the water tank.
5. I also note as I have mentioned previously that on 15 March 2007 there was an agreement signed by Mrs Fallaw to co-lease the property in Prahran and on 22 June she agreed to be responsible for the water to that property. By 16 January 2008 she took over the responsibility for the entire rent and electricity payments at the Prahran property. I have mentioned the rental payments that she made and I do not need to go into that further.
6. There is also the exclusive leasing authority relating to the Newtown property which I have already referred to on 14 December, which in particular shows that by that stage the applicants had intended to not reside in the property. It is also my view, that looking at the amount of time the applicants spent away from the property shows that it was also not part of their intention to spend much time at the property. The applicants knew of the requirements of the first home owner's grant and they decided to use that to the best of their advantage.
7. Also the applicants have referred to the fact that they continue to occupy the property, that is since January 2009, showing that it was their intention to occupy. However in Bailey v Chief Commissioner of State Revenue (2007) NSW ATD 19 it is clear that subsequent use of the property is not relevant in these considerations.
8. Judge Macnamara in D'Amelio's case which I have already referred to at paragraph 15 has stated as follows:

"They were conscious of the six month period. That is why the tenancy was not signed to commence on 13 October 2006. It is one thing to intend to occupy a premises as one's principal place of residence for an extended or indefinite period and to change one's mind or be forced to change the 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 by putting in a tenant."

1. The latter situation in my view has been established here and not the former. In my view the same matters apply in this particular case as applied in D'Amelio's case. While the parties intended to make it look like they were at the premises for a period of six months, it was not their intention to irrevocably stay at the premises at that time.
2. Considering these matters in my view the applicants did not have an intention to remain in that premises as their principal place of residence during the relevant time.
3. Principle four, to occupy a home as his or her principal place of residence a person's occupation must have a degree of permanence to it. Connection to place of residence is transit, temporary, contingent or a passing nature is not sufficient nor is occupation for some other purpose. I agree with Ms Neskovcin's submission that the applicants here lack the necessary degree of intention or permanence in their residence to have it as their permanent place of residence. They did not appear to have adequate purpose for occupying the premises and in my view their occupation was transient.
4. I take comfort and make this finding in the sense that a 12 month lease was signed in relation to the Prahran property and also that it was Mrs Fallaw who was a co-tenant of those premises during the relevant period. Mr Fallaw submitted that if he was the sole owner of the Newtown premises the issue in this proceeding would not have arisen because he had nothing much to do with the Prahran premises during the relevant six month period. He only stayed there occasionally as a visitor. That is putting too much emphasis on the distinction between the applicants. In my view the use of these premises in Newtown was transitory.
5. Principle five, the short length of a person's residence while relevant is not determinative of the issue as a short occupation may still have the requisite degree of permanence. In this particular instance I am not satisfied that looking at the external circumstances of the case that there was anything that would lead a person to think that there was any degree of permanency relating to the applicants' residence at the Newtown property during 2007. That is an objective person considering the whole matter objectively and in particular the lack of furnishings and the lack of use of utilities would form the view there was no permanence in the applicants' residence. I also note that it is incredible that people even on a $9,000.00 income per month, jointly, would not be able to have more creature comforts. I understand that they were borrowing for various things they needed at the time, however their income is a considerable amount of money. Also I take into account their departure from the Newtown premises was premeditated and the applicants probably departed the property in early December rather than in January.
6. Taking all these matters into account I am of the view that the requirements of s.12(1) of the First Home Owner Grant Act 2000 have not been satisfied and therefore the decision will be affirmed in relation to the grant, that is $7,000.00 plus the $3,000.00 bonus.
7. I now deal with the issue of penalty. On the issue of penalty, what the respondent says is that the applicants set out to be able to obtain this grant without the intention to reside in the premises and as a result they have come to the conclusion that the penalty should be imposed. I agree with what the respondent said.
8. I also agree that it is important in these cases that there be a deterrent from people breaching the law and that deterrent should also be imposed. There is a number of cases which have been cited to me where a penalty of $1,000.00 in similar circumstances has been made as to this case and I believe that that is an appropriate penalty.
9. Given that circumstance the whole of the decision of the respondent will be affirmed.