Victorian Civil and Administrative Tribunal|2013-03-26

The applicant, in this particular case, was aware that she needed to occupy the premises for six months. But it is equally clear to me that she did not have an understanding of what the term "occupancy of principal place of residence" meant. In my view, she thought that meant sleeping at the place regularly or every night. She did not realise it meant there was more to having a principal place of residence other than sleeping there. Thus, there is a similarity between the situation here and the situation in D'Amelio's case.
Further, in paragraph 15, his Honour said -

It is one thing to intend to occupy a premises as ones principal place of residence for an extended or indefinite period and to change ones mind or to be forced to by changed circumstances. It is another thing altogether to have an intention to connect oneself to the premises in some way for a period of six months and then irrevocably part with possession of them by putting in a tenant. The latter is the situation which in my view has been established here and not the former. No

The best that one can say is that these applicants were conscious that they had to do something for six months and they did something for six months. Whatever it was it was in my view transient, contingent or of a passing nature.

Exactly the same words can be said of the applicant in this particular instance, that is, whatever it was the applicant was doing at the premises was transient, contingent and of a passing nature.

And, at paragraph 16, his Honour commented about just sleeping at the premises. He stated -

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 occupancy of the premises as a principal place of residence in accordance with the Ferrington principles.

His Honour's statement is particularly apt here. All the applicant did was sleep at the premises. That is not sufficient for occupying the premises as a principal place of residence within the Ferrington principles. Having an occasional gathering with one's friends where they got drunk at the premises, in my view, takes the matter a little further. If there were other things happening there, it may have been of importance but certainly not just an occasional event.
Principle 5 of the Ferrington principles refers to the length of occupancy. In this particular instance, I have already found the length of occupation was six months less two weeks. However, even if it had been the six months, I could not be satisfied that the length of occupation was something that was permanent. It was clearly meant to be passing. There is no other way that the applicant could have bought these premises other in the medium to longer term than having a tenant paying her rent for the use of the premises. Thus, it must always have been intended that the occupancy was of a passing nature. The applicant said that she had previously had better paying employment and she hoped to obtain better paid employment in the future. However, objectively, even the better paying employment which she told me about was still only a modest salary.
Given those circumstance, in my view, clearly the length of the stay indicates that it was of a temporary nature.
The last Ferrington principle was the reason for departure. Here, clearly the reason for the departure was that she could not afford to repay the mortgage payments and other payments except with the assistance of a tenant paying rent. That was always the reason and, in my view, the applicant always intended to rent these premises after six months. Given those circumstances, she intended that the premises was not to be her principal place of residence and thus I find that the decision of the respondent in revoking the FHOG and bonus was a correct decision and I affirm that decision.

The next matter that I must consider is something that has not been put before me and that is the question of penalty. In taxation matters that I have dealt with before, the Commissioner has never pursued the issue of a penalty before this Tribunal. I understand that there were two cases before Member Glover where the issue of a penalty has been pursued. Pursuant to s 22(b) of the Act, the applicant was required to repay the amount of the FHOG and bonus within 14 days if she did not comply with the requirements. If she did not do so, pursuant to s 48(3) of the Act, the penalty was enlivened. Here, there is no question that the respondent failed to repay the amount of the first home owner's grant when it was clear that the residency component was not complied with.
In Baklis v Commissioner of State Revenue [2012] VCAT 1980, Member Glover at paragraphs 45-46 set out principles which should be considered in deciding the question of penalties. They have been conveniently digested by Mr Morgan in his submissions. They are -

(a) truthfulness of the original statements made by the applicant in his or her application for grant;

(b) the surrounding circumstances including the intention of the applicant in relation to the occupation and use of the property as his or her principal place of residence at the time when seeking the grant;

(d) whether the applicant has occupied the property as his or her principal place of residence;

(e) the candour of the applicant in his or her responses to inquiries; and

(h) penalty decisions in previous cases involving similar circumstances.

In digesting those principles, Member Glover had the advantage of the decision in Knight v Chief Commissioner of State Revenue [2008] NSWADT 83 AT [33]. The last two principles he referred to were from his own resources and reference to s 48(3) of the Act.
If these principles are taken one by one, I first consider the truthfulness of the original statement. In my view, looking at the applicant's situation, it was impossible for her to have occupied these premises as a principal place of residence in the true sense of the word. However, I do take into account the fact that the applicant misunderstood the nature of the word "occupy". She thought the word "occupy" simply meant to sleep at the premises.
Again in (b) : the surrounding circumstances, I think they have already been mentioned. The reason the applicant failed to comply with the conditions of the grant, in my view, are that she largely misunderstood what was meant and, of course, there was the two week period which she must have thought she could get away with.
Factor (d) : whether the applicant has occupied the property as his or her principal place of residence. In my view, the premises were never so occupied as a principal place of residence.
In relation to (e) : candour; the applicant was quite candid in giving evidence and there was reasonable candour in relation to inquiries.
In relation to (f) the grant has not been refunded.
In relation to the deterrent effect of the penalty, I understand the grant is still in operation and thus there would be a deterrent effect on people applying for grants and bonuses that they are not entitled to and penalty decisions in cases involving similar circumstances are likely to act as a deterrent in the future.
I was referred to the case of Baklis where there was a penalty of $1000 where there was a grant of $10,000. Mr Morgan said that is a similar circumstance. He also referred to the fact that Member Glover said that the deterrent effect itself is sufficient to justify a penalty. He there referred to Hadad v Commissioner of State Revenue 8 January 2013.
Given all those circumstances, in my view, the penalty of $1000 is appropriate. I am saddened that there should be a penalty in this particular instance because clearly the applicant is a person of very limited means. However, it is important that there should be a deterrent effect to others to stop applying for a grant where they cannot possibly hope to occupy such a place as their principal place of residence. Given those circumstances, I will affirm the decision of the respondent.

Gravina v Commissioner of State Revenue (Review and Regulation) [2013] VCAT 347 (26 March 2013)

The question for the Tribunal today is whether the applicant has occupied the premises for a period of six months as required by s 12. The contract of sale for the premises settled on 19 November 2007. The applicant said that she occupied the premises for a period from settlement until 23 May 2008, that is, a period of six months and two days. It is common ground that on 23 May 2008, the applicant rented the premises to a tenant and the rent was a little over $1000 per month.
The applicant at the time she purchased the premises was working in the mail room of Allens Arthur Robinson, a law firm in Melbourne. She had a meagre salary of $34,000 per annum, which included her superannuation of about $3000. Thus, her nett salary before tax was $31,000 per annum.
The respondent has relied on a number of factors in relation to the issue of the applicant residing at her premises. It is common ground that the only furniture the applicant had at the premises was a bed which converted into a couch or a couch which converted into a bed. She said she slept at the premises on most nights during the period to which I have referred but there were some nights when she slept at her parents' home and some nights when she slept with friends.
She said that during the period when she allegedly occupied the premises, she did all her personal washing and clothes washing at her parents' home, she ate the majority of her meals at her parents' home, she did not eat any meals at the residence in Sunshine Avenue. It is noted that her parents' home was approximately 500m from her residence in Sunshine Avenue. She said she could not afford to purchase items such as a refrigerator or washing machine. Neither could she afford to pay for water and electricity at the premises, that is why she said she kept the usage so low.
She told me that after December 2007 or January 2008, she became unemployed. During the period between 19 November 2007 and May 2008, the applicant did not transfer her driver's licence and that remained at the address of her parents. Both the water and electricity were connected to the premises but very little was used. The water bill was sent to the address of the applicant's parents
Mr Morgan, who appeared on behalf of the respondent, pointed out that the electricity bills show that absolutely no electricity was used at the premises between the period of 26 November to 10 December 2007. The bills also show that between 11 December 2007 and 12 March 2008, only 0.22 kwh of electricity was used per day and between 13 March 2008 and 31 March 2008, 0.21 kwh was used per day. And between 1 April 2008 and 21 May 2008, 0.31 kwh was used per day.
It is also noted that there was water usage during this period of between November 2007 to May 208 was very meagre. That is, between 19 November 2007 and 24 January 2008, 30 litres of water per day was used and between 28 January 2008 and 23 April 2008, 11 litres per day was used.
Mr Morgan has also said by way of contrast in the period between 23 April and 28 July 2008, part of which period was tenanted, there was 115 litres of water used per day. He also pointed out that during the height of difficulties with water shortage in Victoria, the government had a policy of trying to encourage people not to use more than 155 litres per person per day. Thus, the applicant's use of water was far less than the amount suggested by the government.
The applicant said that apart from some occasions when she would have her friends over, she did not entertain at the unit in Sunshine Avenue. There were occasions when her friends would visit and they would get drunk. She certainly did not appear to do anything else at the premises, apart from sleeping there.
In Chief Commissioner of State Revenue v Ferrington [2004] 57 ATR 157 NSW ADTAP, there were six principles distilled to determine whether a principal place of residence was actually being used as a principal place of residence. The six Ferrington principles have been adopted by this Tribunal on many occasions, in particular, Boots v Commissioner of State Revenue [2004] VCAT 2549 and Mauro v Commissioner of State Revenue [2010] VCAT 1207. The six principles are to be found at p 183 of the Ferrington case. They have been properly summarised by Mr Morgan in his submissions. He there states the principles as follows -
- (a) the words 'principal place of residence' should be given their ordinary meaning in the context in which they appear;
- (b) consideration of whether a person has been residing or occupying premises as their principal place of residence is to be assessed objectively, in the light of the circumstances relating to the actual occupation of the dwelling;
- (c) the intention of the person concerned, gauged objectively, is relevant but not determinative of the issue;
- (d) to occupy a home as his or her place of principal residence a person's occupation must have a degree of permanence to it : a connection to a place of residence of a transient, temporary, contingent or passing nature is not sufficient, nor is occupation for some other purpose;
- (e) the short length of a person's residence, while relevant, is not determinative of the issue. This is so since a recipient's occupation of a home, while short, may have the requisite degree of permanence to it. But that will not happen if, when considered objectively, the occupation was transient, temporary, contingent or of a passing nature, or for some other purpose. The fact that a period of actual occupation is short will in practice make it harder for a recipient to show that the occupation was as his or her principal place of residence, but it will not make it impossible; and
- (f) the 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.
I also note that pursuant to s 32 of the Act, it is the objector, that is, the applicant in this proceeding, that has the onus of proving her case.
In D'Amelio v Commissioner of State Revenue [2012] VCAT 265, Judge Macnamara stated at paragraph 15 that the first three general principles referred to in Ferrington are commentaries as to how the inquiry should be approached. The other three principles are substantive.
Mr Morgan has submitted that as no electricity was used at the premises whatsoever in the first two weeks of the alleged occupation following 19 November 2007, that I should find that the applicant did not occupy or use the premises at all. The applicant said she used candles because she could not afford electricity. However, it is clear that in the other period that she allegedly stayed at the premises some electricity was used. It is almost inconceivable that anyone could stay even a night at premises like that without using some electricity, may be not much, but at least some. In this period of two weeks no electricity was used whatsoever.
I also take into account this was the beginning of the period that the applicant had just taken possession of the premises from the vendor. Given those circumstances, I cannot be satisfied that in the first two weeks, the applicant lived or slept at the premises at all. The onus is on her to show occupation of the premises.
Bearing in mind that I have made this finding, that is sufficient to determine this proceeding. A period of six months occupation is required. That would in fact mean that even if all what the applicant has said is accepted, other than the first two weeks, then the period of occupation would have been less than six months.
However, for the sake of completeness, it is desirable that I decide the other points.
Looking at the fact that I must decide the question objectively as to the occupation of the premises, as referred to in the second and third principles, one must look at the home itself. The home only had one piece of furniture there - the bed that converts into a couch. Virtually no electricity was used, no cooking, washing or showering was performed. I have not heard any evidence about cleaning or utensils at the premises. That would suggest that the occupation of the premises, if at all, was of a temporary nature, that is, not permanent.
Judge Macnamara in D'Amelio at paragraphs 15 and 16 commented upon what was meant by principle 4. He there stated as follows :

Gravina v Commissioner of State Revenue

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Judgment (16 paragraphs)

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Cases Cited (2)

Gravina v Commissioner of State Revenue (Review and Regulation) [2013] VCAT 347 (26 March 2013)