Kakoz v Chief Commissioner of State Revenue

Application to adjourn the hearing

1. The Tribunal heard the application to adjourn the hearing at the commencement of the hearing on 18 August 2021. At the conclusion of the hearing of that application, the Tribunal indicated that the application was refused and that reasons for that refusal would be provided as part of these Reasons. The reasons for refusing the application are as follows.
2. The applicants submitted that the hearing date should be vacated for the reasons described the affidavit of the third applicant.
3. The first such reason was that Bundle had been received on the afternoon of 16 August 2021 and this provided insufficient time for the third applicant to read and understand the contents of the Bundle and to discuss it with the first and second applicants.
4. The Tribunal does not accept that the service of the Bundle provides a reason for the vacation of the hearing date, whether by reason of the timing of its service, or its contents.
5. As to timing, the Bundle was created in response the applicants' indication on 12 August 2021 that the first and second applicants would be unavailable for cross examination and the service of the medical certificates on 15 August 2021, and thus there can be no valid criticism of the timing of its service. Further, the respondent was under no obligation to provide any part of the Bundle to the applicants in advance of the hearing and was entitled to simply make the objection at the hearing without prior notice. The provision of the Bundle to the applicants in advance of the hearing was a courtesy provided by the respondent to the applicants.
6. As to its contents, whilst the Bundle contained more than 500 pages, as noted above, it concerned principally the objection to be made by the respondent and the bulk of the bundle comprised copies of cases referred to in a three page submission. The affidavit described some history of the proceedings and attached correspondence with which the applicants should have been familiar.
7. The second reason provided by the third applicant was that the first and second applicants are elderly and computer illiterate, and an adjournment would allow time to investigate whether a support person could attend upon them to assist them to participate in the hearing by video. The Tribunal does not accept that this provides a valid reason for the vacation of the hearing date for several reasons. First, the medical opinion of Dr Wassif and the statement made by Mr Hage on 11 August 2021 suggests that the condition of the first and second applicants is such that they would not be in a position to participate in a hearing "virtual or otherwise" even if the hearing were to be adjourned. Secondly, the desire of the third applicant to investigate the possibility of a support person being made available to assist the first and second applicants in the use of a computer for the purpose of participating in a hearing is of little weight in circumstances where it is likely that the third applicant was aware since 25 May 2020 both of the hearing date having been set for 18 August 2021 and that his parents had difficulties in using a computer. There is no evidence of any earlier attempt to provide a support person to assist them.
8. The third reason provided by the third applicant was the respondent's objection to the evidence of the first and second applicants if they are unable to be cross-examined meant that their evidence might be excluded, and that given the importance of the case the hearing should be vacated so that the applicants could explore the possibility of attending in person at the Tribunal at a later date, or of obtaining the assistance of a support person to assist them during the hearing. The Tribunal accepts that the hearing is a matter of importance to the applicants however, as noted above, the evidence suggests that the first and second applicants would be unable to participate regardless of the date or the mode of the hearing. Further, as also noted above, there has been ample time for to explore the availability of a support person.
9. The fourth reason provided by the third applicant was that as a consequence of the receipt of the Bundle he had formed the view that it would be necessary to brief counsel. The third applicant's affidavit annexed an email exchange between Mr Hage and counsel in which counsel indicated that he had some capacity to take on the matter but would be unable to be ready for the hearing on 18 August 2021. That view of counsel appears to have been based upon an indication from Mr Hage as to the size of the Bundle, without an understanding of the contents of the Bundle or that it related almost exclusively to the question of the reception of the statutory declaration of the first applicant and the affidavit of the second applicant into evidence. The Tribunal does not regard the receipt of the Bundle as providing a reason to adjourn the hearing so that counsel could be briefed given the true nature of the Bundle.
10. The Tribunal is required to observe the guiding principle in s 36 of the NCAT Act, namely that the Tribunal is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. An adjournment of a hearing date that was set on 25 May 2021, in response to an application served on the eve of the hearing and made at the commencement of the hearing in circumstances where the medical evidence upon which the applicants rely suggests that a vacation would be futile and where the applicants have had ample time to make arrangements for a support person would not be consistent with that guiding principle.

Reception into evidence of the statutory declaration of the first applicant and the affidavit of the second applicant

1. The respondent submitted that the Tribunal should not receive into evidence the statutory declaration of the first applicant and the affidavit of the second applicant, for the following reasons.
2. The respondent's first submission was that Tribunal should not accept the medical certificates of Dr Wassif. In this regard, the respondent relied upon the statement of Macfarlan JA (Gleeson and Leeming JJA agreeing) in AHB v NSW Trustee & Guardian [2014] NSWCA 40 at [4] that the Court will not ordinarily act on a formulaic document and will require an explanation on oath from the medical practitioner of the illness and the reasons for the inability of the affected person to attend Court.
3. To the extent that this submission is a submission that the medical certificates should not be accepted into evidence, it is rejected. Those medical certificates were part of the evidence contained in the affidavit of Ms Springer and are thus part of the evidence adduced by the respondent.
4. To the extent that this is a submission that the Tribunal should place no weight upon the medical certificates, it is also rejected. The present case is distinguishable from AHB v NSW Trustee & Guardian. In that case, the medical certificate simply stated that AHB "is receiving Medical Treatment and is unfit for work/school from 5/03/2014 to 6/03/2014 inclusive due to a medical condition" and was, as Macfarlan JA described it, a formulaic document. In contrast, the medical certificates provided by Dr Wassif provided reasons for the inability of the first and second applicants to participate in a hearing. Further, the Tribunal does not regard the fact that Dr Wassif's evidence was not provided in the form of an affidavit as determinative, particularly in view of the dictates of s 38 of the NCAT Act.
5. The respondent's second submission was that the nature of the evidence in the statutory declaration and the affidavit is such that it should not be received without the respondent having the opportunity to cross examine upon it. In particular, the respondent submitted that the applicants, who bear the onus of proof, have chosen to advance their case the solely on the basis of the evidence of the first and second applicants and that evidence: was crafted for the purpose of these proceedings; goes to the ultimate issue; represents a factual position not previously advanced; is inconsistent with previous representations made on behalf of the applicants; is unsupported by corroborating evidence; and is general, lacking in detail and in the form of bare statements as to contentious factual matters. The respondent submitted that such evidence requires testing by cross examination and that it would be unfairly prejudicial to the respondent for the Tribunal to receive it. The respondent also submitted that the evidence should be rejected as a matter of procedural fairness.
6. The respondent referred to various cases, principally in the Supreme Court of New South Wales. The Tribunal has considered those and other cases and makes the following observations.
7. First, there is no absolute right to cross-examine and it is a matter of discretion: see Clyne v Law Society (NSW) (unreported, NSWCA, 4 September 1987 at p10).
8. Secondly, the Tribunal's discretion is to be exercised in a different context to the discretion exercised by the courts. In particular: 1. a number of the decisions relied upon by the respondent relate to the exercise of the discretion under UCPR r 35.2 (3) (or a similar provision), which provides that if reasonable notice of a requirement that a deponent attend for cross-examination has been given and the deponent does not attend for cross-examination, then "the affidavit may not be used unless the deponent is dead or unless the court orders otherwise". In other words, the prima facie position is that the affidavit may not be used but there is a discretion to otherwise order. There is no equivalent provision in the NCAT Act or the Civil and Administrative Tribunal Rules 2014; 2. Section 38 of the NCAT Act provides that the Tribunal may determine its own procedure in relation to any matter for which the Act or procedural rules do not otherwise provide, and that the Tribunal is not bound by the rules of evidence and may inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice; and 3. if the rules of evidence were to be applied, then s 63 of the Evidence Act 1995 ("Evidence Act") may exclude the operation of the hearsay rule to the statutory declaration and the affidavit on the basis that the first and second applicants would not be available within the meaning of that term in cl 4 of the Dictionary to the Evidence Act. It would also be necessary to consider the operation of other exclusionary rules.
9. Thirdly, the exercise of the discretion in a particular case is informed by the facts of that case.
10. Fourthly, the discretion is more likely to be exercised in a manner which excludes the affidavit evidence in question where that evidence goes to matters central to the issues to be decided than where the evidence is peripheral.
11. Fifthly, where the discretion is exercised in a manner which allows the evidence to be adduced despite the absence of an opportunity for cross examination, it may be appropriate to afford less weight to that evidence than it would have been afforded had it been the subject of cross examination.
12. The Tribunal accepts that the evidence in question goes to an issue which is central to the proceedings. Nevertheless, the appropriate exercise of the discretion is to admit that evidence, particularly as: (1) the non-attendance of the applicants is the product of their age and medical conditions rather than a refusal to attend, or an unexplained absence; (2) the matters raised by the respondent as to the nature of the evidence (for example, the submissions that it represents a factual position not previously advanced, is inconsistent with previous representations made on behalf of the applicants, is unsupported by corroborating evidence, and is lacking in detail) can all be (and indeed have been) relied upon by the respondent in its submissions; and (3) the Tribunal may take into account the absence of examination in considering the weight to be attributed to that evidence.
13. For the above reasons, the Tribunal takes into account the evidence of the first applicant in his statutory declaration and the evidence of second applicant in her affidavit in the analysis below.

Issues requiring resolution

1. The issues requiring resolution are: 1. whether the PPR exemption is available for the 2020 tax year with respect to both Unit 8 and Unit 10 on the Property; 2. whether the assessments issued to the first applicant for the 2016 to 2020 land tax years should be set aside on the basis that, in issuing those assessments, the respondent acted in a manner which was harsh, unconscionable, unfair or inequitable; and 3. whether the Tribunal should order a review of the amounts owed under the assessments.

Onus of proof and evaluation of evidence

1. Prior to considering these issues, the Tribunal notes that the applicants have the onus of proving their case: s 100(3) of the TA Act. In Levitch Designs Associates Pty Ltd atf Levco Unit Trust v Chief Commissioner of State Revenue [2014] NSWCATAD 215 at [27], Senior Member Sorenson said the following as to what is required for an applicant to prove their case: "In a review application under Part 10 of the Act, the applicant "has the onus of proving the applicant's case" (s 100(3)). This requires the applicant to prove or establish on the balance (preponderance) of probabilities all matters necessary to enable a tribunal to answer the statutory question in the applicant's favour, and all the facts on which the applicant relies to claim any exemption. The legislation does not place any onus on the Chief Commissioner to show that the assessments were correctly made. Nor is there any statutory requirement that the assessments should be sustained or supported by evidence. The burden on the applicant is not necessarily discharged by showing an error by the Chief Commissioner in forming a judgment as to the amount of the assessment. It is for the taxpayer to discharge the burden of proof by establishing what the correct amount of an assessment should be. See Cornish Investments Pty Ltd v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [5-7], [29-36] and cases there cited; see also Lend Lease Development Pty Ltd v Commissioner of State Revenue (Vic) [2012] VSC 108 at [51], Conder Tower Pty Ltd v CSR [2012] VSC 107 at [46], Wesfarmers General Insurance Ltd v CSR [2009] VSC 599 at [14], Theophilas v Chief Commissioner of State Revenue [2014] NSWCATAD 100 at [41-42]. However, the taxpayer's evidence is not to be regarded as prima facie unacceptable and "must of course be considered on its merits, in the circumstances of the case, without any prepossession, favourable or unfavourable": McCormack v FCT (1979) 143 CLR 284 at 302 per Gibbs J. (emphasis added)
2. Proof on the balance of probabilities requires that the Tribunal feel an actual persuasion that the relevant event occurred: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361.
3. When the Tribunal weighs or assesses competing evidence concerning a particular issue it must bear in mind the extent to which it was in the power of one party to produce and in the power of the other to contradict evidence bearing on the fact in issue: Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 at 65,970, per Lord Mansfield CJ; Ho v Powell (2001) 51 NSWLR 572 at 576 [13]-[16] per Hodgson JA (Beazley JA agreeing).

First issue: is the PPR exemption is available to both the first applicant with respect to Unit 10 and the second applicant with respect to Unit 8?

1. As noted above, the first issue is whether the PPR exemption is available for the 2020 tax year with respect to both Unit 8 and Unit 10.

The legislative scheme

1. Sections 7 and 8 of the Land Tax Management Act 1956 ("LTMA") provided that land tax was to be levied and paid on the taxable value of all lands situated in New South Wales that was owned by taxpayers as at midnight on 31 December immediately preceding the year for which the land tax was levied.
2. Section 7 also provided that land tax was not payable on land that was exempt from taxation under the LTMA. Of present relevance is the PPR exemption in s 10(1)(r) of the LTMA which provided an exemption for: "Land that is exempt from taxation under the principal place of residence exemption as provided by Schedule 1A".
3. The central provision within Schedule 1A for present purposes is cl 12, which provided insofar as is presently relevant: 12 Only one principal place of residence for all members of same family (1) For the purposes of the principal place of residence exemption, only one place of residence may be treated as the principal place of residence of all members of the same family. (2) If members of a family own (whether jointly or separately) more than one residence used and occupied by any of them as a principal place of residence, the Chief Commissioner is to treat the one place of residence elected as the principal place of residence of the family as the principal place of residence of all members of the family in respect of a tax year. … (6) For the purposes of this clause, a "family" consists of the following-- (a) a person and his or her spouse (if any), (b) any dependent child or dependent step-child of the person and his or her spouse (or of either of them) who ordinarily resides with the person or his or her spouse. (7) A person is the "spouse" of another person if-- (a) they are legally married, or (b) the person is the de facto partner of the other person. (8) However, if the Chief Commissioner is satisfied that a person-- (a) is legally married to or is in a registered relationship or an interstate registered relationship, within the meaning of the Relationships Register Act 2010, with another person but not cohabiting with that other person, and (b) has no intention of resuming cohabitation with that other person, the person is not to be regarded as the spouse of that other person ...
4. Clause 12 (1) provided that only one place of residence could be treated as the principal place of residence of all members of the same family. Sub-clauses (6)-(8) concerned as to whether persons were part of the same family.
5. It is common ground that the first and second applicants were married as at 31 December 2019. As such, each was "spouse" of the other (cl 12(7)). As each was a spouse of the other, together they were a "family" (cl 12(6)) and as such only one place of residence (i.e. either Unit 8 or Unit 10 but not both) could be treated as a principal place of residence (cl 12(1)) unless cl 12(8) was satisfied.
6. The satisfaction or otherwise of cl 12(8) is the critical issue. That clause provided in so far as is presently relevant as follows: However, if the Chief Commissioner is satisfied that a person-- (a) is legally married to … another person but not cohabiting with that other person, and (b) has no intention of resuming cohabitation with that other person, the person is not to be regarded as the spouse of that other person …
7. Thus the applicants have the onus of satisfying the Tribunal that as at 31 December 2019 the first and second applicants: 1. were legally married but were not cohabiting with each other; and 2. had no intention of resuming cohabitation with the other.

Evidence

1. The evidence relevant to the resolution of these questions is set out below.

Uncontroversial evidence

1. The following facts (as distinct from the inferences to be drawn from those facts) are uncontroversial and taken from the documentary evidence before the Tribunal.
2. As at 21 January 2011, 9 August 2018 and 21 January 2021, the New South Wales electoral roll recorded Unit 8 as the address for the first applicant.
3. As at 21 January 2011, 9 August 2018 and 22 January 2019 the New South Wales electoral roll recorded Unit 8 as the address for the second applicant.
4. Prior to May 2019, the ownership of the Property comprised the ownership of two parcels of land in a deposited plan. One parcel was owned as tenants in common by the first applicant (as to 50%) and the third and fourth applicants (as to 25% each), and the second was owned by the first and second applicants as tenants in common in equal shares.
5. In May 2019, a strata plan was registered with respect to the Property. As a result of the strata plan, the Property was divided into 10 lots. The 10 lots are owned by the applicants in various combinations. Of particular relevance is that the first and second applicants were, and as at 31 December 2019 remained, registered as owning a 90 per cent interest in lots 6 and 7 as joint tenants.
6. As at 27 February 2020, the records of Sydney Water with respect to: 1. Unit 8 recorded the name of the first applicant and the name of the second applicant; and 2. Unit 10 recorded the name of the first, second, third and fourth applicants.
7. On 24 May 2020, the first applicant's individual tax return for the year ended 30 June 2019 year was lodged. Relevantly, it included: 1. his home address as Unit 10; 2. details of a private health insurance policy bearing the same number as the policy referred to in the taxation return of the second applicant lodged on 25 May 2021; 3. the name of the second applicant as his spouse for the year ended 30 June 2019 and details of the second applicant's taxable income for that year; 4. interest income from a joint bank account of the first and second applicants; and 5. a distribution received from a partnership between the first and second applicants and others.
8. On 24 May 2020, the second applicant's individual tax return for the year ended 30 June 2019 was lodged. Relevantly, it included: 1. her home address as Unit 10; 2. the name of the first applicant as her spouse for the year ended 30 June 2019 and details of the first applicant's taxable income for that taxation year; 3. interest income from a joint bank account with the first applicant; and 4. distribution received from a partnership between the first and second applicant and others.
9. This return did not identify a private health insurance policy number, as the question asking whether there was such cover was answered in the negative.
10. On 25 May 2020, the respondent issued the assessments the subject of these proceedings.
11. On 26 May 2020, the respondent sent an email to the third applicant and the applicants' accountant indicating that the assessments had been made on the basis that a PPR exemption was available with respect to Unit 8 because evidence available to the respondent recorded that both the first and second applicants were residing at Unit 8.
12. As at 28 May 2020, the address held by the Commonwealth Bank of Australia for the first applicant was Unit 10.
13. As at 11 June 2020, the first applicant held a drivers licence which recorded his address as Unit 10.
14. On 1 July 2020, an objection was lodged on behalf of the applicants to the assessments. The objection included a statement that Unit 10 should be exempt as the primary residence of the first applicant, included evidence which purported to show that Unit 10 had been the first applicant's "primary residence for several years". It did not refer to Unit 8 or suggest that cl 12(8) of Sch 1A applied.
15. On 27 August 2020, the respondent wrote to the third applicant and the applicants' accountant in response to the objection. The respondent's email referred to the respondent's 26 May 2020 email and noted that the objection had provided evidence that the first applicant was residing in Unit 10. The respondent then asked: "Are the lot numbers within the strata the same as the door numbers for the units? What is the relationship with [the first and second applicants], are they married? When you say "several years" please provide a timeline from the 2016 calendar year as to the residence history for both [the first and second applicants]"
16. On 10 September 2020, the third applicant responded to the 27 August 2020 email from the respondent. That response included: "[the first and second applicants] are married. They have lived in unit 8 & 10 since October 2014… We have evidence that can date back to October 2014 or near there confirming that both units are used as principle (sic) place of residence". The requested timeline was not provided in this response.
17. On 4 November 2020, the respondent wrote to the applicants' accountant, seeking further information. On 17 November 2020, the third applicant responded to that email and his response included: "1. Documentary evidence by way of utilities and drivers licenses have already been provided to confirm that the units are occupied separately by Eddie and Mabel. Eddie being unit 10 and Mabel in unit 8. 2. Unit 10 and Unit 8 are located on the same level and are adjacent to one another with approximately being 3 mtrs from each others door. The reason for Eddie and Mabel to have this living arrangements is due to personal reasons and to accommodate their ageing lifestyles. Eddie is 86 years of age and Mabel is 76 years of age."
18. On 9 December 2020, the respondent determined the applicants' objection. The letter notifying the determination of the objection indicated that the respondent was satisfied that Unit 10 was used by the first applicant as his residence but that the respondent was not satisfied that the first and second applicants were entitled to a PPR exemption for both Units 8 and 10. The respondent also issued some fresh assessments, reflecting the change from Unit 8 to Unit 10 as the principal place of residence.
19. As at 21 January 2021, the records of Sydney Water with respect to: 1. Unit 8 recorded the name of the first applicant and the name of the second applicant; 2. Unit 10 recorded the names of the first, second, third and fourth applicants.
20. On 28 January 2021, the applicants lodged their application for review of the assessments. The application was signed by the third applicant. The "Grounds for Application" in the Application were as follows: "We disagree with the non granting of the PPR exemption for Unit 8 for Mrs Mabel Kakoz. Mrs Kakoz suffers from medical and personal conditions which prevents her from residing in the same place as Mr Eddie Kakoz and therefore both individuals live separately. We disagree with the re-assessment of Mr Eddie Kakoz and Mrs Mabel Kakoz for extra land tax. All land tax which was assessed in previous years was paid and settled with Revenue NSW. The re-assessment for extra land tax is not acceptable as the land ownership did not changed at all over the years."
21. On 25 May 2021, the first applicant's taxation return for the year ended 30 June 2020 was lodged. It included: 1. his home address as Unit 10; 2. details of a private health insurance policy bearing the same number as that referred to in the second applicant's taxation return lodged on the same date; 3. the name of the second applicant as his spouse for the year ended 30 June 2020 and details of the second applicant's taxable income for that taxation year; 4. interest income from a joint bank account with the second applicant; and 5. a distribution received from a partnership between the first and second applicant and others.
22. On 25 May 2021, the second applicant's taxation return for the year ended 30 June 2020 was also lodged. Relevantly, it included: 1. her home address as Unit 10; 2. details of a private health insurance policy bearing the same number as that referred to in the first applicant's taxation return lodged on the same date; 3. interest income from a joint bank account with the first applicant; and 4. a distribution received from a partnership between the first and second applicant and others.
23. This return included the second applicant as her own spouse and her own income as her spouse's income. This appears to have been a mistake.

Controversial evidence: the evidence of the first and second applicants

1. The evidence of the first applicant in his statutory declaration is to the following effect: "2. I currently reside on my own at [Unit 10]. 3. I have provided evidence to the Chief Commissioner of State Revenue including my driver's license that reflect my current residential address. 4. Due to my wife's incapacity and illness we have been estranged for at least 5 years. 5. Previously we have tried to reconcile but her medical condition and attitude makes it impossible."
2. The evidence of the second applicant in her affidavit is to the following effect: "2. I currently reside solely and on my own at [Unit 8]. 3. I have been residing at that address since 2013 when I had surgery and have been separated from my husband Eddie Kakoz for medical, inter alia, who to my knowledge currently resides at [Unit 10]. 4. Attached is a medical certificate from my current physician outlining my condition. (Attachment A) 5. It has been many years, since 2014, I have been estranged from Eddie Kakoz and do not see any notion of reconciliation in the near future. Unfortunately, my physical condition is getting worse."

Submissions

1. The applicants' submissions in chief may be summarised as follows: 1. the Tribunal should be satisfied that the first and second applicants did not cohabit as at 31 December 2019 because: 1. the evidence demonstrates that although the first and second applicants were legally married, they had been estranged and living separately and apart, with the first applicant in Unit 10 and the second applicant in Unit 8, for approximately seven years; 2. family and friends of the first and second applicants had been aware of their separation, since its occurrence; 3. firm religious beliefs had resulted in the first and second applicants deciding "not to make public such disrepute and their marital instability" and were the reason why the second applicant had not sought a divorce; 1. the Tribunal should be satisfied that the first and second applicants had no intention to resume cohabitation as at 31 December 2019 because: 1. this is the effect of their evidence; 2. it was unlikely that they would resume cohabitation in view of their advanced age and poor health; and 1. thus, clause 12 (8) of Sch 1A applied and the PPR exemption was available with respect to Unit 10 for the first applicant and Unit 8 for the second applicant.
2. The respondents' submissions may be summarised as follows: 1. "cohabitation" and "cohabiting" are not defined in the LTMA: 2. there does not appear to have been any consideration by the Tribunal or a court of cl 12(8) or the meaning of the phrase "no intention of resuming cohabitation" in a land tax context; 3. however, the meaning of "cohabitation" has been the subject of extensive consideration in a family law context and in particular and in particular with respect to s 48(3) of the Family Law Act 1975 (Cth) ("Family Law Act") which provides that a divorce order is not to be made if the court is satisfied that there is a reasonable likelihood of a resumption of cohabitation; 4. in Clift v Clift (1976) 2 Fam LR 11,369, Sangster J stated: "'cohabitation' means, literally 'living together', or, when used in such a context as a statute dealing with matrimonial relationships,' living together as man and wife'"; 5. in a family law context, cohabitation involves more than merely residing together and involves a relationship as man and wife and it follows that the cessation of cohabitation involves more than physical separation or living apart and requires severance of the marital relationship (citing Todd (No 2) (1976) 1 Fam LR 11,186 at 75,079; In the marriage of Clarke (1986) 11 Fam LR 364, Price v Underwood [2008] FamCAFC 46; and In the marriage of Pavey (1976) 1 Fam LR 11,358; 6. the only evidence that the first and second applicants do not intend to resume cohabitation are their statutory declaration and affidavit respectively, each of which was prepared for the purpose of these proceedings; 7. the following matters cast doubt on the veracity of the applicants' evidence: 1. following the registration of the strata plan in May 2019, the first and second applicants were registered as joint tenants rather than tenants in common with respect to lots 6 and 7, with the attendant right of survivorship, at a time when according to the evidence of the first and second applicants they had been separated for a number of years; 2. the first and second applicants are partners in a family partnership referred to in their individual taxation returns; 3. the inclusion in their individual taxation returns of references to the other as their spouse and of the other's income; 4. the fact that they held a joint bank account during the 2020 financial year; 5. the fact that they held the same private health insurance membership number; 6. the absence of any prior advice in correspondence from the applicants to the respondent that the first and second applicants were separated and instead the assertions in that correspondence that they resided separately because of the second applicant's medical issues. In particular the respondent relies upon the emails from the third applicant to the respondent dated 10 September 2020 and 17 November 2020, details of which are set out above; and upon the "Grounds for Application" set out in the applicants' application for review; 1. in circumstances where the evidence in the statutory declaration of the first applicant and the affidavit of the second applicant is inconsistent with the previous position put by the applicants to the respondent and with objective facts, the Tribunal should be cautious in accepting such evidence, which should be regarded self-serving statements shaped to the ultimate issue in the proceedings; 2. as a result, the Tribunal should not be satisfied that the applicants have discharged their onus of proving that the first and second applicants were not cohabiting and that they had no intention of resuming cohabitation with each other; and 3. cl 12(8) is not satisfied and cl 12(6) and (7) operate so as to preclude the applicants from claiming the PPR exemption with respect to Unit 8 for the 2020 land tax year.
3. The applicants' submissions in reply may be summarised as follows: 1. there is no definition of "cohabiting" or "cohabitation" in the LTMA; 2. dictionary definitions of: 1. "cohabit" include "… live together as husband and wife" and "…to live together and have a sexual relationship without being married"; 2. "cohabitation" include "the act of living and having a sexual relationship with someone, especially someone you are not married to"; 1. as the dictionary definitions define the concept of cohabitation in terms which include a relationship between an unmarried couple the dictionary definitions should be treated with caution; 2. in Campbell v Cade [2012] FMCA Fam 508 it was held (at [25]) that there are three elements needed for a finding that separation has occurred namely: 1. an intention to separate; 2. action upon that intention; 3. communication of that intention to the other party; 1. s 49 of the Family Law Act contemplates that parties may be held to have separated and to have lived separately and apart notwithstanding that they continued to reside in the same residence or that one provided some household services to the other; 2. the matters recorded in contemporaneous documents are not adverse to the applicants and in particular: 1. the ownership interest in Lots 6 and 7 by way of joint tenancy is consistent with the first and second applicants' legal status as a married couple and is not relevant to and does not provide any indication as to their living arrangements. Further, the registration of this interest as a joint tenancy was an error; 2. the partnership referred to in the taxation returns has been in existence since 2000 and does not represent a new endeavour by either of the first and second applicants. As they have not legally divorced, they have elected for personal reasons not to amend such documents; 3. the inclusion in the taxation returns of the first and second applicants of references to the other as their spouse should be regarded as reflecting upon their honesty in circumstances where they are not divorced and the answer is truthful. Further, it is not relevant to and does not provide any indication as to their living arrangements; 4. the inclusion in the taxation returns of the first and second applicants of income from a joint bank account is of little weight in circumstances where that account has been open since 1986 and is not a new endeavour; 5. similarly, the inclusion in the taxation returns of the first and second applicants of the same private health fund membership number is of little weight in circumstances where that membership has been held since 1986 and is not a new endeavour; and 6. the failure on the part of the third applicant in his communications with the respondent to provide details of the relationship between his parents was due to his belief that such matters were private and personal and he was hesitant to divulge the nature of the relationship and the degree of the degree of illness of the second applicant.

Consideration

1. The applicants bear the onus of satisfying the Tribunal that cl 12(8) of Sch 1A to the LTMA applied and this requires that the Tribunal feels an actual persuasion that as at 31 December 2019, the first and second applicants: (1) were legally married but not cohabiting with each other; and (2) had no intention of resuming cohabitation with each other.

Were the first and second applicants legally married but not cohabiting with each other?

1. It is common ground that the first and second applicants were legally married as at 31 December 2019. The parties are at issue as to whether despite being legally married, the first and second applicants were not cohabiting with each other.
2. "Cohabiting" is not defined in the LTMA. There are competing dictionary definitions of "cohabit" and cognate expressions. The simplest definition is "dwelling or living together".
3. However, in the context of a section which posits that persons are spouses, the expression "not cohabiting" may suggest a legislative intention that the spouses are not only not living together, but that there has also been a severance of the marital relationship. In this regard, in In the marriage of Clarke, Lindenmayer J (Fogarty and Nygh JJ agreeing) said at 369-370: Although the expression "the parties separated and thereafter lived separately and apart for a continuous period of not less than 12 months" used in s 48(2), is nowhere defined by the Act, it is clear from a reading of that section with s 49(1) that what that expression requires is a cessation of cohabitation and a continuation of that state of non-cohabitation for the requisite period. It is also clear from many reported judicial pronouncements on the subject, that what is involved in a cessation of cohabitation is a severance of the marital relationship or the consortium vitae. Such a severance involves both a physical element (that is a physical separation) and a mental element (that is an intention on the part of at least one of the parties to terminate the marital relationship): In the Marriage of Todd (No 2) (1976) 1 Fam LR 11,186; [1976] FLC 90-008; In the Marriage of Pavey (1976) 1 Fam LR 11,358; [1976] FLC 90-051; and In the Marriage of Falk (1977) 3 Fam LR 11,238; [1977] FLC 90-247. However, it is also clear from s 49(2) that a separation (that is a cessation of cohabitation or a severance of the marital relationship) may be found to exist notwithstanding that the parties continue to occupy the same residence or to perform household duties, one for the other. Conversely the absence of residence under one roof and/or the performance by either party for the other of household duties do not necessarily establish a separation or a state of non-cohabitation. It follows, in my view, that once a state of "separation" (that is non-cohabitation) is shown to have existed between spouses, it must continue until brought to an end by acts of the spouses sufficient to constitute a restoration of the marital relationship, that is a resumption of cohabitation. As a cessation of cohabitation involves both a physical and mental element, a resumption of cohabitation must also involve both of those elements, that is an intention to resume the marital relationship and a physical coming together of the parties, or at least some overt action on their part to carry their intention into effect: In the Marriage of Todd (No 2) (1976) 1 Fam LR 11,186 at 11,188. (emphasis added)
4. The present case does not require a decision be made as to which construction is to be preferred. This is because even on the narrower construction, which is the construction most favourable to the applicants, the applicants have not made out their case, for the reasons set out below.
5. The evidence which is supportive of the proposition that the first and second applicants were not living with each other is the statutory declaration of the first applicant and the affidavit of the second applicant, which state in bald terms that the first applicant was living in Unit 10 and the second applicant was living in Unit 8.
6. The evidence which raises doubt as to the proposition that the first and second applicants were not living with each other is as follows: 1. the proximity of Units 8 and 10, which the third applicant described as "located on the same level and … adjacent to one another with approximately being 3 mtrs from each others door"; 2. the second applicant's taxation returns for the years ended 30 June 2019 and 30 June 2020 each record that her home address was Unit 10 and not Unit 8; 3. the first applicant's taxation returns for those years record his home address as Unit 10; 4. the electoral roll records which record Unit 8 as the address for both the first and second applicants; 5. the taxation returns recording that the first and second applicants were spouses having a joint bank account, an interest in the same partnership and a common health fund membership; 6. the registration of title for lots 6 and 7 in 2019 in the names of the first and second applicants as joint tenants; and 7. the third applicant's email dated 10 September 2020 in which he wrote: "[the first and second applicants] are married. They have lived in Unit 8 & 10 since October 2014 … We have evidence that can date back to October 2014 or near there confirming that both units are used as principle (sic) place of residence". This suggests that the first and second applicant were both living in both units.
7. In evaluating the competing evidence, the following considerations are relevant.
8. First, the evidence of the first and second applicants is minimalist and consists of little more than their assertions. There is no detail provided of matters such as their activities on a day-to-day basis, including the extent of contact they had with each other.
9. Secondly, their evidence has not been able to be tested by cross examination.
10. Thirdly, there is no evidence before the Tribunal from the third or fourth applicants addressing the question of cohabitation. Each is a party to the proceeding and it is to be expected that, as sons of the first and second applicants, they would be in a position to give evidence of their observations of the relationship between the first and second applicants, including their living arrangements. In this regard, the submissions made on behalf of the applicants included a submission that "family and friends have been aware of the separation, since its occurrence".
11. The absence of evidence from the third applicant in particular is striking, in circumstances where the third applicant: (1) provided an affidavit on behalf the applicants for the purpose of the application to adjourn the hearing; (2) corresponded on behalf of the applicants with the respondent concerning the assessments; and (3) provided instructions to Mr Hage during the course of the hearing.
12. Fourthly, the absence of evidence providing an explanation for matters which, unexplained, are more consistent with the proposition that the first and second applicants were living together than with the contrary proposition. These matters include in particular the electoral rolls records showing Unit 8 as the address for both the first and second applicants; the taxation returns (which record Unit 10 as the address for both the first and second applicants, as well as matters such as the relationship of the first and second as spouses; a joint bank account; each having an interest in the same partnership and a common health fund membership); and the registration of title for lots 6 and 7 in 2019 in the names of the first and second applicants as joint tenants.
13. It may be that there are explanations for these matters consistent with the proposition that the first and second applicants were not living together, however such explanations do not appear in the evidence before the Tribunal. In this regard, various explanations provided in the applicants' submissions, namely: 1. that firm religious beliefs have meant that the applicants have not made public the details concerning their separation; and the second applicant has not taken steps to initiate a divorce from the first applicant; 2. as to the longevity of the joint bank account, the partnership and the health fund membership shown in the taxation returns; 3. that the joint tenancy interest in Units 6 and 7 was an error, are not supported by evidence.
14. Similarly, there is a lack of evidence supporting the applicants' submission that the failure on the part of the third applicant in his communications with the respondent to provide details of the relationship between his parents was due to his belief that such matters were private and personal and he was hesitant to divulge the nature of the relationship and the degree of the degree of illness of the second applicant.
15. Taking all of the above into account and bearing in mind that the evidence on this issue is to be weighed taking into account that the power to produce evidence that first and second applicants were not living together was overwhelmingly with the applicants and that the power of the respondent to contradict such evidence as produced was limited, the Tribunal does not feel an actual persuasion that the first and second applicants were not living together as at 31 December 2019.

Did the first and second applicants have no intention of resuming cohabitation with each other?

1. As the Tribunal is not satisfied that the first and second applicants were not living together as at 31 December 2019, it is not necessary to consider this issue.
2. It follows that the assessments issued to the applicants for the 2020 land tax year should be confirmed. As noted above, the respondent issued fresh assessments in December 2020, which reduced the amount payable by the applicants and provided a credit for tax already paid. In these circumstances, and taking into account that s 63 of the ADR Act requires the making of the correct and preferable decision as at the time it is considered by the tribunal and on the material before the Tribunal, the appropriate order is to vary the assessments so that they reflect the subsequent reductions made by the respondent to the amounts assessed.

Second issue: should the assessments be set aside on the basis that their issue was harsh, unconscionable, unfair or inequitable?

1. The second issue is whether the assessment issued to the first applicant for 2016 to 2019 land tax years should be set aside on the basis that their issue was harsh, unconscionable, unfair or inequitable.

Submissions

1. The applicants' submissions may be summarised as follows: 1. the assessments issued to the first applicant for the years 2016 to 2019 were validly issued in accordance with s 9 of the TA Act; 2. however, the issue of the assessments is harsh, unconscionable unfair and inequitable in circumstances where: 1. the first applicant is an elderly gentleman who has contributed to Australian society; 2. the first applicant could have disposed of the units in the building that he erected at the Property many years ago, paid the taxation and pursued his own endeavours but instead has elected to retain the properties for the benefit of his children and this should be recognised as admirable; and 1. in these circumstances there should be a reduction in the number of years for which the assessment were issued.
2. The respondent's submissions may be summarised as follows: 1. in circumstances where the applicants have acknowledged that the assessments were validly issued, there is no statutory basis to challenge the validity of the assessments; 2. the Tribunal cannot set aside assessments on the basis of consideration such as fairness and equity, because: 1. liability to land tax is created by the direct and mandatory operation of the LTMA, rather than by the exercise of any discretion by the respondent: see Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218 and Bretaniec v Chief Commissioner of State Revenue [2013] NSW ADT 65 at [23]; 2. in such circumstances, there is no room for the operation of concepts such as fairness and equity: see Commissioner of Taxation v Ryan (2000) 201 CLR 109 at 123; Volpatti v Commissioner of State Revenue [2007] NSW ADT 222; Gunasti; Rajan v Commissioner of State Revenue [2013] NSW ADT 125; Hashim v Commissioner of State Revenue [2020] NSWCATAD 67 at [82]-[83]; 3. there is no general discretion in the LTMA enabling the respondent to take into account circumstances, for example financial considerations, arising out of a late assessment of liability that may apply in respect of a landowner, which circumstances are not the subject of an exemption under the LTMA: Volpatti at [27].

Consideration

1. The applicants have provided no evidence in support of their submissions and this is sufficient to dispose of this issue. Even if those facts were to established, it would not follow that the issue of the assessments was harsh, unconscionable, unfair or inequitable.
2. In any event, the legal position is as spelt out by the authorities cited by the respondent. The Tribunal has no discretion to interfere with a valid assessment on the basis that it is harsh or unconscionable, unfair or inequitable.

Third issue: should the Tribunal order a review of the amounts owed under the assessments?

1. The third issue is whether the Tribunal should order a review of the amounts owed under the assessments to allow the applicants' accountant to ascertain the accuracy of the figures used in those assessments

Submissions

1. The applicants have submitted that the Tribunal should order a review of the amounts owed under the assessments to allow the applicants' accountant to ascertain the accuracy of the figures used in those assessments.
2. The respondent submitted that: 1. the Tribunal does not have power to make such an order. The Tribunal's powers are set out in s 101 of the TA Act and those powers do not include a power to make an order of the type sought by the applicants; 2. the notices of assessment are prima facie evidence that the amount and all particulars of the assessment are correct: s 119 of the TA Act, and the onus is upon the applicants to displace that prima facie position, with the respondent bearing no onus with respect to the amounts assessed; 3. the amount assessed were assessed in accordance with the relevant provisions of the LTMA and are properly payable.

Consideration

1. The Tribunal's power on the review of a decision to issue an assessment are set out in s 101 of the TA Act. That section provides: 101 Powers of court or tribunal on review (1) The court or tribunal dealing with the application for review may do any one or more of the following: (a) confirm or revoke the assessment or other decision to which the application relates, (b) make an assessment or other decision in place of the assessment or other decision to which the application relates, (c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid, (d) remit the matter to the Chief Commissioner for determination in accordance with its finding or decision, (e) make any further order as to costs or otherwise as it thinks fit. (2) Nothing in this section limits the application of the following provisions in respect of an application for review before the Civil and Administrative Tribunal: (a) Division 3 of Part 3 of Chapter 3 of the Administrative Decisions Review Act 1997, (b) section 60 (Costs) of the Civil and Administrative Tribunal Act 2013. …
2. Section 101 (1)(e) is expressed in broad terms and empowers the Tribunal to "make any further order as it thinks fit". Thus it would be open to the Tribunal, for example, to confirm the assessments and to make a further order of the nature sought by the applicants. Thus, the respondent's submission that the Tribunal lacks power is not accepted.
3. Section 119 of the TA Act operate as an evidentiary provision but does not limit the power of the Tribunal in s 101(1)(e).
4. The question for determination is whether the Tribunal should exercise the power that it has so as to make an order of the type sought by the applicants. The Tribunal is not prepared to make such an order in circumstances where the applicants have not identified in the evidence before the Tribunal any basis as to why such an order is necessary and such an order would seem to be inutile when the assessments have been confirmed subject only to the making of variations reflecting the subsequent assessments.

Orders

1. The orders of the Tribunal are: 1. The Land Tax Assessment Notice issued to the first to fourth applicants and dated 25 May 2020 is varied by replacing the amount due of $47,699.20 with an amount due of $21,751.20; 2. The Land Tax Assessment Notice issued to the first applicant and dated 25 May 2020 is varied by replacing the amount due of $9,883.00 with an amount due of $9,926.00; 3. The Land Tax Assessment Notice issued to the second applicant and dated 25 May 2020 is varied by replacing the amount due of $975.85 with an amount due of $834.70.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 September 2021