The decision of the respondent is varied to reduce the penalty to nil.

1. On 27 June 2017, the Commissioner of State Revenue (Commissioner) referred this application to VCAT at the request of the applicant, Ms Sara-Jayne Green, under the First Home Owner Grant Act 2000 (Vic) (FHOG Act).
2. Ms Green seeks review of the Commissioner's decision[1] to disallow her objection[2] to the Commissioner's determination to reverse the first home owner grant totalling $26,500 paid to Ms Green under the FHOG Act and to impose penalties of $9,750 and interest.
3. The grant related to Ms Green's purchase of a land and house package for a property located at 16 Leura Street, Drouin (Relevant Property).
4. The grant was reversed because, as at the date of the application for the grant, an occupancy permit had not been issued in relation to the Relevant Property and so it was not ready for occupation as a place of residence.[3] Ms Green does not seek to overturn that aspect of the decision, but asks that she be permitted to repay the grant by instalments having regard to her financial position.
5. The Commissioner also imposed a penalty of $9,750, being 50% of the bonus and regional components of the grant on the basis that these components of the grant were paid 'as a result of [the] applicant's dishonesty'.[4] Ms Green denies that she was dishonest, but rather was the victim of a dishonest builder, and seeks to have the penalty waived.
6. Ms Green also seeks to have interest, imposed under section 48(5) of the FHOG Act, waived.

1. The FHOG Act was enacted in 2000 to encourage and assist home ownership, and to offset the effect of the goods and services tax on home ownership through payments of grants to first home owners.[5]
2. An applicant is entitled to a grant if the applicant undertakes an eligible transaction (ie. purchases a residential property) which is completed and complies with the eligibility requirements at the time the transaction is completed.[6]
3. The Commissioner has the power under section 23 of the FHOG Act to vary or reverse a decision in relation to an application, within a period of 5 years after the decision was made. If he does so, he must give notice of that decision and his reasons to the applicant.[7]
4. The Commissioner may then require an applicant to repay the grant,[8] and impose a penalty not exceeding the amount the applicant is required to repay if an amount has been paid as a result of the applicant's dishonesty.[9]
5. An applicant is liable to pay interest on any unpaid amount that is required to be repaid, and on any penalty imposed, at a rate specified in the Taxation Administration Act 1997,[10] subject to the discretion of the Commissioner to remit that interest.[11]
6. An applicant has a right to object to a decision on his or her application, including a decision to reverse an earlier decision, and a decision to require the applicant to pay a penalty.[12]
7. The Commissioner must consider an objection and either allow or disallow it, and give notice of his determination to the objector.[13] It is the objector's dissatisfaction with such determination that is the subject of any referral to VCAT.[14]
8. If a referral is made, the Tribunal must review the matter and 'may confirm or vary the decision on the application for a first home owner grant'.[15]
9. On a review under the FHOG Act, an applicant has the onus of proving his or her case.[16] The standard of proof is the balance of probabilities.[17]
10. For reasons explained below, the only provision in real contention is section 48(2) of the FHOG Act. It seems that this provision has not been the subject of consideration by VCAT or the Courts, and so there is no relevant Victorian guidance on the application of the onus of proof in the context of a review involving an allegation of dishonesty. However, in Nguyen v Commissioner of Taxation,[18] Senior Member O'Loughlin (now Deputy President) of the Commonwealth Administrative Appeals Tribunal had occasion to look at the onus of proof in the context of allegations of fraud or evasion for federal tax purposes. He indicated that in such a case:

... while this Tribunal can re-examine whether, on the evidence before it, there was fraud or evasion, and can substitute its opinion for the Commissioner's, the issue for this Tribunal is whether the taxpayer has discharged the onus of showing that the fraud or evasion opinion should not have been formed. If a taxpayer does not do that, the amended assessments stand.[19]

1. I agree that, as a matter of principle, an applicant for review of a tax decision bears the onus proof, including in relation to an opinion regarding dishonesty.
2. However, in response to a query I raised with Mr Morgan, appearing for the Commissioner, it was conceded by the Commissioner that, in so far as the issue of dishonesty is concerned, the principle in Briginshaw v Briginshaw[20] applies. That is, where serious allegations are made in a civil matter:

... the Tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of mere mechanical comparison of probabilities independently of any belief in its reality.

... The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the Tribunal.

In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences.[21]

1. As previously observed, Ms Green does not contest the Commissioner's decision to reverse the grant or to require its repayment.[22] However, she asks that she be able to repay that amount by instalments given her financial position. In this regard, she said in her oral evidence that the difficulties she encountered with the house, which had numerous defects and is still incomplete, has ultimately resulted in having to enter a debt agreement with her creditors in order to stave off bankruptcy.
2. However, as explained to Ms Green during the hearing, the limits of VCAT's powers on review are set out in section 33 of the FHOG Act, namely to 'confirm or vary the decision on the application for a first home owner grant'. There is no power to order payment terms. Whether, and in what manner, such arrangements should be accepted is a matter for the Commissioner to consider as part of his general administration of the FHOG Act.[23]
3. Accordingly, this ground of review must be rejected.

1. As previously noted, the Commissioner has imposed penalties of $9,750 under section 48(2) of the FHOG Act.
2. The penalty was calculated as 50% of the bonus and regional components of the grant (of $13,000 and $6,500 respectively). The penalty was limited to these components because they were only payable if the contract in relation to the Relevant Property was entered into prior to 1 July 2012. By contrast, Ms Green would continue to be entitled to a base component of the grant irrespective of when the contract was entered into.[24]
3. The penalty was imposed at 50%, rather than the maximum penalty equal to the amount of the grant repayment, because in the Commissioner's view while the dishonesty was significant, it was not the most serious case but rather in the middle range.[25]
4. At the hearing, Mr Morgan identified three 'indicia' of dishonesty on which the Commissioner sought to rely, being:

1. the date of the contract for the land and house package, which the Tribunal should find was not in fact signed in June 2012, having regard to the fact that no deposit was paid until 2013;[26] 2. the application for the grant dated 19 February 2014,[27] which indicated that Ms Green intended to live in Relevant Property as her principal place of residence within 3 months, made at a time where a building permit had not yet been issued and the contract provided that the time for construction of the house was 250 days;[28] and

1. Ms Green's provision to the Commissioner, in the course of his investigation, of a receipt for a deposit of $500, which she now accepts was false.
2. The Commissioner relies on the decision of the High Court in Peters v The Queen[29] for the proposition that:

dishonesty is to be determined by reference to the current standards of ordinary, honest persons, and by asking whether the act in question was dishonest by those standards and whether the accused must have known it was so.[30]

1. In submissions prepared by Ellinghaus Weill for Ms Green, it was contended that the approach taken by the English Court of Appeal in R v Ghosh[31] was applicable, namely:
   • applying an objective test, as to whether the conduct was dishonest according to the standards of reasonable and honest people; and
   • then applying a subjective test, as to whether the person himself or herself realised that what he or she was doing was dishonest by those standards.[32]
2. However, as pointed out by Mr Morgan, the approach in Ghosh was expressly rejected in Peters.[33]
3. The Commissioner also relies on the decision in Derry v Peek[34] for the proposition that dishonesty need not be intentional and is proved 'when it is shewn that a false representation has been made ... recklessly, careless whether it be true or false'.[35]
4. Mr Morgan indicated that Derry v Peek has been accepted in Victoria, by Hayne J. in Pyramid Building Society (in liquidation) v Scorpion Hotels.[36] Relevantly, after referring to Derry v Peek, Hayne J. comments that 'the mere fact that a person might have found out fraud if further enquiries had been made does not of itself prove fraud'.

1. In order to consider whether Ms Green was dishonest in signing a building contract for the Relevant Property which was dated June 2012, it is necessary to take account of the circumstances that led her to signing that contract. Mostly, Ms Green's account of these circumstances was not challenged.[37]
2. Ms Green is a British national. Before coming to Australia, she was in a long term de-facto relationship and had a daughter from that relationship who was born in 1998.
3. As a result of relationship problems between Ms Green and her partner, they decided to emigrate to Australia to make a 'fresh start', with Ms Green to move first and her partner to follow after completing the renovation of his house and selling it. The plan was to use the proceeds of that sale to purchase a house in Australia.
4. Ms Green was offered a job in Melbourne in 2010 and was granted a subclass 857 (regional sponsored migration) visa on 18 April 2011.[38] She moved to Australia with her daughter.
5. Sometime in 2012, she approached Simonds Homes and Mega Homes to purchase a house and land package because they were offering homes with a low deposit requirement. However, she was unable to proceed with purchasing from either of them, due to her lack of funds and inability to raise finance.
6. Without Ms Green's knowledge, Mega Homes passed on her details to Mr John Grezos of Melbourne House & Land Constructions Pty Ltd (MHLC).
7. Mr Grezos 'pursued [Ms Green] persistently to purchase a house and land block in Drouin and would not take "no" for an answer, thus, causing [Ms Green] to eventually "give in".'[39] She signed a contract for the purchase and development of Lot 40 in Leura Street, Drouin (Lot 40 Contract).
8. In July 2012, Ms Green returned to England for a visit and discovered that her partner had been having an affair since the time that she had left for Australia.
9. On the day that the land component of the Lot 40 Contract was due to settle, she received a call from Mr Grezos to advise that that land was no longer available and that she would have to choose another piece of land in the development. As she was new to Australia, she did not realise that MHLC was not entitled to unilaterally cancel the Lot 40 Contract and, as a result of being 'put on the spot to select another property instantly',[40] Ms Green chose the neighbouring land at Lot 41 (being the Relevant Property).
10. Ms Green moved into the Relevant Property prior to the issue of a certificate of occupancy, as Mr Grezos told her that she could do so. However, she soon discovered that there was no retaining wall. Mr Grezos then told her that the construction of a retaining wall was not included in her contract, but that he would build one if she entered a loan agreement with him to fund its construction.[41]
11. Mr Grezos sent tradesmen to drill the footings of the retaining wall, but they did not return to complete its construction. She also received a building notice from the surveyor outlining a long list of defects which would need to be remedied in order to obtain an occupancy certificate.
12. Ms Green sought to have Mr Grezos complete the retaining wall and rectify the defects, but as she was unable to do so, she then obtained finance and arranged those matters herself.
13. Ms Green finally obtained an occupancy certificate for the Relevant Property on 14 August 2017.
14. Ms Green tendered press articles, media releases and an extract from Consumer Affairs Victoria in relation to the practices of Mr Grezos and companies associated with him. While Mr Morgan did not object to their receipt, he said they should be given little if any weight. I accept Mr Morgan's submission. They are not particularly relevant to the extent the materials relate to other companies and other developments and, in so far as they relate to the Drouin estate (and so may be relevant), have not been proven, are highly prejudicial and it would be unfair to Mr Grezos (who was not called by either party) to draw any adverse inference from these materials.
15. In terms of the date of the building contract, there were a number of copies of building contracts in evidence.
16. A copy of the Lot 40 Contract marked "6.1.73" was included in the documents lodged with the Tribunal by the Commissioner (T Documents) at T19. This was dated 12 June 2012. Ms Green admitted in cross-examination that she had signed the document, but said that she had never received the full contract. It appears that this document was provided to the State Revenue Office (SRO) by the ANZ Banking Corporation in the course of the SRO's investigation.
17. Copies of the building contract for Lot 41 (Lot 41 Contract) were included in the T Documents at T12 and T26. T12 is also dated 12 June 2012. T 26 is dated 18 June 2012. In cross-examination, Ms Green said that she did not sign the Lot 41 Contract, she only ever signed the one contract for Lot 40 and that she believes that the Lot 41 Contract was a 'doctored' version of the Lot 40 Contract.
18. Having reviewed both the Lot 40 Contract and the Lot 41 Contract, I find that the Lot 41 Contract is a doctored version of the Lot 40 Contract. This is apparent from:
    • The front page of the Lot 41 Contract where, in the reference to the lot in the Job Location, the "4" is typed, but the "1" appears to be handwritten.
      • In the Particulars of Contract, apart from the lot details in the description of the land and the date of contract (in the T26 version), all other handwritten amendments are the same, and all those amendments and signatures appear to be exactly the same in style and location on the page.
19. Ms Green's evidence on this point under cross-examination was credible. There is no other evidence to suggest that Ms Green was involved in the doctoring of the Lot 41 Contract.
20. As such, while it is quite probable that the Lot 41 Contract was not entered into until sometime after June 2012, I do not find that the Lot 41 Building Contract, of itself, evidences any dishonesty on the part of Ms Green. The references to the building contract in Ms Green's grant application fall to be considered with the date of occupation, being the second indicia of dishonesty relied upon by the Commissioner.

1. Ms Green gave evidence that she had originally submitted an Application for first home owner grant in relation to Lot 40, but that this was cancelled when the lot was changed.
2. A copy of the Application for first home owner grant in relation to Lot 41 dated 19 February 2014 was included in the T Documents at T10 (Lot 41 Application).
3. The Lot 41 Application was completed by hand and specifies the date of contract to build being 15 June 2012 and the date of completion of the building as 20 May 2014. The latter date is also the date specified as the 'date when occupation as a principal place of residence commenced or is intended to commence'.
4. Under cross-examination, Ms Green confirmed that she signed the document and accepted that it was clearly incorrect to suggest that she would be living in the Relevant Property by 20 May 2014. However, she said that all of the details in the Lot 41 Application (including those referred to in the preceding paragraph) were completed by a mobile banker who assisted with her loan application and who witnessed her signature on the Lot 41 Application.
5. Ms Green said that she couldn't recall if the Lot 41 Application was completed before or after she signed it. In any event, she said that she didn't read it or think deeply about it because it was a direct duplicate of the first application, except for a different block.
6. Mr Morgan in closing submissions said that, based on the decision in Derry v Peek, a statement can still be dishonest if it is made recklessly, without care whether it is true or false. He submitted that this would include signing a document that is blank and allowing others to complete it.
7. In closing, Ms Green rejected that she was dishonest, but accepted that she had failed to do her due diligence because she trusted Mr Grezos and the mobile banker. She also noted that she had not profited from the grant because the funds had gone to Mr Grezos.
8. There is no doubt that the details provided as to the date of the building contract and the date on which she was to commence occupation in the Lot 41 Application were false.
9. If Ms Green had completed the Lot 41 Application herself, it would be clear that, having regard to the decision in Peters v The Queen, she was dishonest by the 'current standards of ordinary, honest persons', and would 'have known it was so'.
10. The question is whether the circumstances in which Ms Green signed the Lot 41 Application mean she was reckless in the sense used in Derry v Peek, such that she is still to be regarded as dishonest.
11. While Ms Green is not blameless in this saga, the evidence taken as a whole does support the view that she was taken advantage of by others that knew what they were doing, but kept her in the dark except to the minimum extent necessary.
12. In Giudice v Legal Profession Complaints Committee,[42] cited with approval by VCAT in Victorian Legal Services Commissioner v O'Brien,[43] Martin CJ commented that:[44]

A reckless disregard or indifference involves, at the least, a subjective element of actual conscious disregard of or indifference to the risks created by the conduct.

1. In the absence of any evidence that she knew that a false grant application was being made or intended to be made, I am not 'reasonably satisfied' that Ms Green was dishonest in signing the Lot 41 Application.

1. During the course of the SRO investigation, Ms Green produced a receipt issued by MHLC dated 18 June 2012 for the sum of $500 paid in 'cash' by way of 'deposit to secure contract', relating to Lot 41.[45]
2. The receipt was provided in response to a letter from the SRO asking her to provide 'evidence of yourself paying a deposit to the Vendor on the purchase of the property' and 'evidence of yourself paying the deposit to the Builder'.[46]
3. In cross-examination, Ms Green accepted that the receipt is false
4. She explains the provision of the receipt to the SRO on the basis that she was petrified when she was notified of an investigation and she knew she had given MHLC money and had forgotten when this was.
5. However, she also accepted in cross-examination that the amount of $500 she later paid to MHLC was not paid in cash.[47]
6. There is little doubt that the provision of the receipt in response to the SRO queries was dishonest by the 'current standards of ordinary, honest persons', and that Ms Green would 'have known it was so'.
7. However, as Mr Morgan conceded, it is not strictly relevant to the imposition of a penalty under section 48(2) because the act of dishonesty occurred after the payment of the grant, so the grant cannot have been paid 'as a result' of that dishonesty.
8. To the extent that the Commissioner seeks to rely on this act of dishonesty to support a finding that the first or second indicia were also dishonest, this is descending into the realm of drawing inferences, which is inconsistent with the approach set out in Briginshaw v Briginshaw in relation to such matters.
9. Accordingly, while I find Ms Green was dishonest in providing the receipt, it was not causally connected with the payment of the grant.
10. Therefore, the conduct does not enliven the penalty provision.

1. Having regard to the foregoing, it is unnecessary to consider the rate of penalty.

1. A review is undertaken by the Tribunal where an objector is dissatisfied with the Commissioner's determination of his or her objection.[48] Any objection is limited to the matters set out in section 26 of the FHOG Act, being the decision to reverse an earlier grant decision or to require the payment of a penalty.
2. Once a decision is made to require repayment of a grant and impose a penalty, the imposition of interest under section 48(5) of the FHOG Act is automatic. While the failure to remit interest under section 48(6) may be a decision which the Commissioner expressly or implicitly makes when charging interest, such a decision cannot be objected to. It follows that such a decision does not form part of any determination and is not a matter that can be referred to VCAT for review.
3. Accordingly, this ground of review must be rejected. However, it is noted that any decision to reduce the penalty imposed would have a consequential impact on the interest payable.

[1] By letter dated 22 November 2016, being T9 in the folder of documents lodged with the Tribunal pursuant to clause 89(1) of Part 19 of Schedule 1 of the Victorian Civil and Administrative Tribunal Act 1998 (T Documents).

[2] By letter dated 10 March 2017, being T Documents T5 and T6.

[17] Sprod v Commissioner of State Revenue [2017] VCAT 621 [10].

[18] [2016] AATA 1041.

[20] [1938] HCA 34; (1938) 60 CLR 336.

[22] Applicant's Statement of Legal Contentions dated 8 January 2018, [1].

[24] In response to a query from me, Mr Morgan confirmed that, in fact, the base component increased from $7,000 to $10,000 from 1 July 2012, but that the bonus and regional components were not replaced.

[25] Respondent's Statement of Legal Contentions dated 5 February 2018 (RSLC) [37].

[28] Ibid [26(b)]. As this indicia was not raised in the determination of the objection, to the extent the indicia are 'grounds', the Commissioner sought leave to raise it under section 31 of the FHOG Act. I do not consider it necessary to grant leave as I accept the Commissioner's submission that the identified indicia are just particulars of the ground of dishonesty.

[29] [1998] HCA 7; (1998) 192 CLR 493.

[30] Ibid at [15] (Toohey and Gaudron JJ).

[31] [1982] EWCA Crim 2.

[32] Applicant's submissions In Reply to the Respondent's Statement of Legal Contentions (Reply Submissions) [8].

[33] [1998] HCA 7; (1998) 192 CLR 493, at 504 (Toohey and Gaudron JJ).

[34] [1889] UKHL 1; (1889) 14 App Cas 337.

[36] [1998] 1 VR 188 at 194.

[37] Much of what follows is drawn from the Applicant's unsworn witness statement dated 8 January 2018 (AWS), supplemented by her oral evidence.

[41] A copy of the loan contract dated 8 May 2015 was included as one attachment in the email from Ellinghaus Weill dated 8 January 2018 forwarding the AWS. For convenience, the Commissioner collated all the attachments to that email in a folder entitled 'Applicant's Materials' (AM), with the loan agreement at Tab 7.

[42] [2014] WASCA 155.

[43] [2016] VCAT 1064.

[44] [2014] WASCA 155 [87].

[45] The receipt is included in the T Documents at T24 and was provided to the SRO under cover of a handwritten letter from Ms Green dated 28 January 2015 (T38).

[47] Ms Green's bank statements record an electronic funds transfer of $500 to 'MelbHouseLandC' on 21 May 2015: T22 at p 120.