Ms Neskovcin of Counsel instructed by the Solicitor of State Revenue

1. Mr and Mrs Kyriakou senior were the owners of a property at 20 Springfield Drive, Narre Warren. They were registered as joint proprietors of the property which was comprised in Certificate of Title Volume 9790 Folio 259 on 27 April 1989.
2. On 11 June 2003 their son, Mr George Kyriakou who was in his late 20s at this stage paid $100,00 by way of deposit for the purchase of the Narre Warren house. Mr Kyriakou said that he was looking to purchase 'an investment property'. Subsequently Mr Kyriakou senior instructed his solicitors, Dellios West & Co to prepare a terms contract of sale for the Narre Warren property to his son, Mr George Kyriakou. This contract provided for a price of $225,000. It recorded the payment of the $100,000 deposit leaving a $125,000 residue for payment. Special Condition 4 authorised Mr & Mrs Kyriakou senior during their lifetime to give a 14 day notice to pay the whole of the residue. Unless this was done Special Condition 5 provided for annual instalments in payment of the residue of the purchase price, the first due 30 June 2004 and on the 30th of June of each succeeding year until the residue was paid. Special Condition 9 provided for the payment of interest at the rate of 5% per annum on the residue from time to time outstanding 'adjusted on a quarterly basis'. According to the particulars of sale the settlement date was:

The date upon which receipt of the rents and profits of the property and the chattels shall be given namely upon their acceptance of title and payment of the price.

1. This appears to be a drafting error because it is plain that the parties intended Mr Kyriakou to be entitled to possession of the Narre Warren property before he paid the whole of the residue. The words quoted are appropriate to a cash contract but not to a terms contract. Mr Kyriakou senior set out the day of sale in the particulars as '10/12/03'. Whilst there may be some debate as to the precise legal affect of the contract both Mr Kyriakou senior and Mr Kyriakou junior were agreed that Mr Kyriakou junior became entitled to possession of the Narre Warren property as soon as contracts were exchanged, namely on the 10th of December 2003. At that time Mr Kyriakou junior lived at his parents' house in Andrew Street, Mt Waverley. He was the second of three sons of the family.
2. Mr Kyriakou said that he moved into possession of the Narre Warren property on 26 March 2004. He says he was keen to establish his own independent residence but that there was some delay in his moving in because a number of items of repair and maintenance needed to be carried out to the house. This had previously been rented by his parents to a Mr Mackie.
3. Once he moved in Mr Kyriakou says he brought some items of furniture and possessions with him to the house. He bought some and others were gifted to him by his parents. He was working on the afternoon shift at that stage. As a result he said he took advantage of offers of breakfast from his mother which he ate at the family home before travelling to work to commence his shift. He ate lunch at work and showered at work. His overalls were kept at his place of employment and laundered there. His private clothes were laundered by his mother. He spent a lot of time visiting his parents and socialising with other member of the family.
4. According to a notice of objection filed on Mr Kyriakou's behalf by Dellios West & Co, his time at the Narre Warren house was characterised by the following:

(d) He worked afternoon shift and was not home in the evenings to use electricity on lighting, television etc;

(e) He worked regular overtime which resulted in him going to bed upon arrival at home after work;

(f) On working days he showered at work at the end of each shift; and

(g) He went out for all meals and entertainments on weekend evenings.

1. Mr Kyriakou said that after some months he missed the support given to him by his parents and felt lonely. As a result, on 2 October 2004 he vacated the property and returned to live in Andrew Street, Mt Waverley with his parents. On 4 December 2004 the Narre Warren property was leased to Lairissa Zaia who stayed in occupancy of the property until 2 May 2006 when she moved out. Mr Kyriakou says he moved back in again on 10 June 2006 but vacated after a few months with the property leased to Brett and Nikola Lawson.
2. The contract of sale entitled Mr Kyriakou to make advance payments in excess of the $5,000 annual instalment provided for in reduction of the residue of the purchase price. On 22 June 2005 he paid a $55,000 instalment. Mr Kyriakou's parents gifted the balance of the residue to him and on 12 July 2007 they executed a transfer to him showing $225,000 as the sale consideration. Mr Kyriakou was registered as sole proprietor of the property on 3 August 2007.
3. Brett & Nikola Lawson vacated the property on 22 May 2008. Mr Kyriakou now resides at Narre Warren.
4. Meanwhile on 1 October 2004 Dellios West & Co acting for Mr Kyriakou wrote to the respondent Commissioner of State Revenue. This letter covered a First Home Owner Grant application signed by Mr Kyriakou. The application was shown as having been signed by Mr Kyriakou on 10 July 2004. Also included in the package was a declaration made by Mr Kyriakou on 14 August 2004 in which he declared inter alia:

I took possession of the property situated at and known as 20 Springfield Drive, Narre Warren on 26 March, 2004.

1. The letter from Dellios West referred to 'your letter dated 6 September 2004 addressed to our client'. That document was not produced to me. The letter also included a copy of a certificate of investment from Esanda Finance Corporation Limited which showed $105,000 invested in trust by Mr Kyriakou senior for Mr Kyriakou junior and a bank statement from the ANZ Bank recording a payment of $100,000 on 11 June 2003 into the account of Mr & Mrs Kyriakou senior. The letter is stamped as having been received at the State Revenue Office the same day. The grant of $7,000 under the First Home Owner Grant Act 2000 was paid to Mr Kyriakou on 6 October 2004.
2. On 24 July 2009 a delegate of the Commissioner reversed the decision to pay the grant. Solicitors acting for Mr Kyriakou filed a notice of objection on 22 September 2009 which was disallowed by the Commissioner by notice dated 13 November 2009. On 11 January 2010 Mr Kyriakou's solicitor requested that the objection be referred to the Tribunal for review. The Commissioner referred the proceeding to the Tribunal on 16 November 2010 and it came on for hearing before me on 5 April 2011.

1. Mr Kyriakou says that in the circumstances described he was entitled to receive and retain the First Home Owner Grant. He says he met all the criteria.
2. In particular he says that in the circumstances he met the resident criterion having moved into the Narre Warren property as his principal place of residence within 12 months of the completion of the relevant 'eligible transaction' viz the terms contract between him and his parents.
3. He noted that the Commissioner of State Revenue had raised doubt as to the genuinness of his residence in 2004 based upon what the Commissioner regarded as low charges for utilities such as gas, water and electricity. The type of life which he was leading and the circumstances described above fully accounted for those low charges. In particular he said that the ducted gas heating in the property had broken down and was inoperative. This was a further reason why he had a relatively low consumption of gas. He used a small electric heater in lieu of the ducted gas system. Otherwise the matters referred to by his solicitor in his notice of objection which is quoted above accounted for the low utility usage.

1. The grant which was made to Mr Kyriakou was made pursuant to the First Home Owner Grant Act 2000. Given that it appears to be accepted that Mr Kyriakou became legally entitled to possession of the Narre Warren property in December 2003 the Commissioner took the view that it was the First Home Owner Grant Act 2000 current as at December 2003 which governed the grant which was made to Mr Kyriakou. There were material amendments to the Act which took effect from 1 January 2004. The grant itself was made as previously noted in the course of 2004.
2. Mr Kyriakou did not challenge the Commissioner's view that it was the 2003 version of the Act which applied. Section 7 of the Act creates the entitlement to a grant stating that a First Home Owner Grant is payable on an application if the applicant or each of the applicants complies with the eligibility criteria and the transaction for which a grant is sought is an eligible transaction which has been completed. The Act makes more specific provision as to what transactions are eligible transactions and lays down a series of criteria which applicants must comply with.
3. The Commissioner's position that it is the old version of the Act which applies is based, I assume, on the view that the completion of the eligible transaction and the eligibility of the applicant create a vested entitlement on the part of an applicant for the old legislation to apply. Uninstructed by the Commissioner's interpretation I would have thought that since Section 7(1) of the Act says that the grant 'is payable on an application under this Act if ...' the making of an application is also a necessary component of the entitlement. Since the application in question here was not made until 2004 there might be much to be said for the view that it is the later version of the Act which governs. Nevertheless, since the Commissioner takes the view that the 2003 version applies and Mr Kyriakou did not dissent from that I will proceed on that footing.
4. Mr Kyriakou contended as previously noted that he was entitled to receive and retain the grant. The Commissioner though his counsel conceded that the purchase of the Narre Warren property was an eligible transaction. There are some five eligibility criteria for applicants. The only one which the Commissioner suggested Mr Kyriakou did not meet was Criterion 5, the residence requirement. Section 12 in 2003 provided as follows:
   1. (1) An applicant for a first home owner grant must occupy the home to which the application relates as the applicant's principal place of residence within 12 months after completion of the eligible transaction or a longer period approved by the Commissioner.

(2) The Commissioner may exempt an applicant (the "non-complying applicant") from the residence requirement if -

(a) the applicant is 1 of 2 or more joint applicants for a first home owner grant; and

(b) at least 1 of the applicants complies with the residence requirement; and

(c) there are, in the Commissioner's opinion, good reasons to exempt the non-complying applicant from the residence requirement.

CONTENTIONS ON BEHALF OF THE COMMISSIONER OF STATE REVENUE

1. The Commissioner submitted that the form of the Act is such that compliance with each of the eligibility criteria is mandatory therefore if Mr Kyriakou did not meet the residence requirement he was not entitled to receive and retain the grant.
2. Ms Neskovcin who appeared for the Commissioner as to compliance with the residence requirement referred first to a decision of Senior Member Davis in Boots v Commissioner of State Revenue [2004] VCAT 2549 where the learned Senior Member considered the formulation on consideration of this criterion by the New South Wales Administrative Decisions Tribunal Appeal Panel [2004] NSWADTAP 41; (2004) 57 ATR 170, 183. He extracted the following six principles:
   • the term should be given its ordinary meaning in the context in which it appeared;
   • 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;
   • the intention of the person concerned, gauged objectively, is relevant but not determinative of the issue;
   • to occupy a home as his or her principal place of 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;
   • the short length of a person's residence, while relevant, is not determinative of the issue, as a short period of occupation may still have the requisite degree of permanence to it; although the fact that a period of actual occupation is short will make it harder to satisfy the requirement; and
   • the reason for a person's departure from the home must be both reasonably and adequately explained when considering objectively in the light of the person's personal circumstances.
3. She said these principles had been applied in other Tribunal decisions both in this Tribunal and the New South Wales. Ms Neskovcin referred to Shafer v Commissioner of State Revenue [2011] VCAT 277; Lourie v Commissioner of State Revenue (VCAT 2 February 2011); Mauro v Commissioner of State Revenue [2010] VCAT 1207 and Chief Commissioner of State Revenue v McIlroy [2009] NSWADTAP 21 [44] - [45].
4. As to the first principle she said whilst 'occupy' a 'principal place of residence' are not defined in the Act they should be given their ordinary meaning and 'occupy' means 'to reside in the property' and having the property as one's principal place of residence 'requires the occupation to be ongoing and involve an element of permanence'. She referred to Bates v Chief Commissioner of State Revenue [2004] NSWADT 13 [39] and Calia v Commissioner of State Revenue [2004] VCAT 756; (2004) 22 VAR 171, 173.
5. As to the second of these principles, namely an objective assessment of the matter in light of circumstances, she noted that whilst Mr Kyriakou had gas and electricity connected to the property, the utility accounts show water, gas and electricity consumption during the relevant period. She noted that Mr Kyriakou had the property as his address under the Commonwealth Electoral Act and that his Income Tax Notice of Assessment was addressed to him at the property. Ms Chung, a neighbour, made a statutory declaration in support of his review application and earlier objection. Ms Neskovcin conceded that these matters were supportive of Mr Kyriakou's case. She noted however that water usage at the property was very low. For the period 4 February 2004 to 5 August 2004 it was at a rate of 0.83 kilolitres per month. From 6 October to 8 November it was at a rate of approximately 1 kilolitre and from 9 November to 3 December 2004 it was at a rate of 2 kilolitres. By way of contrast she said that for the period 10 June 2006 to 16 December 2006 'when the applicant claims to have re-occupied the property, water usage from 13 May 2006 to 22 November 2006 totalled 25 kilolitres (approximately 3.142 kilolitres per month)'. The rate from 26 March to 2 October 2004 was she said at most 8 kilolitres or approximately 1.33 kilolitres per month. In 2008 from 7 February to 1 May water usage was 42 kilolitres, 14 kilolitres per month and for the six months from 1 May 2008 to 7 November 2008 water usage was 40 kilolitres or 6.6 kilolitres per month.
6. She said a similar pattern was to be found in the consumption of gas as well as electricity to the extent that the low gas consumption could be attributed to the stated breakdown of the gas ducted heating system. She said it was not reflected in any increase in consumption of electricity.
7. Next she noted that the insurance policy held from 17 March 2004 to 4 December 2004 did not include any contents insurance. When the property was leased to Ms Zaia, Mr Kyriakou obtained a 'landlord building insurance policy'.
8. Next she said that the various explanations as to low utility usage to be found in Mr Kyriakou's objection and quoted above, in themselves told against the Narre Warren property's having been his principal place of residence. She referred to the decision of Senior Member Davis in Ziino v Commissioner of State Revenue [2004] VCAT 1707 at [10] where the learned Senior Member stated:

Sleeping in a place does not make it a residence. It has got to be the whole indicia of things that are done in a home which are described in the cases to which I have referred. The applicant only performed one of the matters in the home here and that was sleep.

1. She said the decision of the New South Wales Tribunal in Nakhoul v Chief Commissioner of State Revenue [2009] NSWADT 103 was to the same effect. She said:

The circumstances of the applicant's alleged occupation of the property, assessed objectively, suggest that the applicant did not occupy the property as his principal place of residence. He did not cook his meals, wash his clothes or shower at the property on working days. In short, he did not treat the property as his home and it could not have been regarded as his principal place of residence during the relevant period.

1. As to the next principle, that the intention of the claimant was not determinative, she referred to Zakariya v Chief Commissioner of State Revenue [2003] NSWADT 26 as requiring actual occupation and not merely an intention to occupy. She said that I should conclude that Mr Kyriakou did not intend to occupy the property as his principal residence having regard to:

(b) The fact that the applicant spent minimal time and undertook no activities at the property - he did not cook, eat or wash his clothes at the property, he did not shower at the property on weekdays and he did not treat the property like a home;

(c) For a significant period after the relevant period, the property was a rental property; and

(d) In notice of acquisition dated 23 March 2004 the applicant answered 'no' to the question 'will the property being acquired be your principal place of residence?'.

1. Next she said the fourth principle which required a degree of permanence was also not met by Mr Kyriakou in this case. The matters referred to in his objection once again pointed away from the necessary permanence. As to the length of occupancy, she said the Commissioner contended that the applicant's 'alleged occupation was not as a principal place of residence, irrespective of the duration'. As to the sixth principle, directing attention to the reasons for the applicant's departure from the home, she said that no proper explanation had been proffered:

However, the subsequent leasing of the property is a factor which suggests that the reasons for the applicant's departure was to lease the property for rental income, a situation which continued for some time afterwards.

1. She submitted that Section 32 of the Act placed the onus of proof in review proceedings on Mr Kyriakou, that onus she said had not been discharged, therefore the Commissioner's determination should be confirmed.

1. There are a number of most unusual matters in this proceeding. The first is that whilst applicants for First Home Owner Grants customarily seek them when they purchase the subject property and use the grant to pay part of the purchase price, this application was made after the event so that on the application the form enquires when the applicant proposes to occupy the relevant premises. When the application was signed in August 2004 and lodged on 1 October 2004 the date when Mr Kyriakou 'proposed' to occupy the premises was already in the past.
2. Secondly, the application was lodged with the Commissioner the day before Mr Kyriakou vacated the premises. The application was lodged on 1 October, Mr Kyriakou vacated on 2 October 2004.
3. The Commissioner drew attention to the fact that in the Notice of Acquisition of Property lodged for Land Tax purposes the solicitors acting for Mr Kyriakou indicated that he did not propose to take up residence in the property. When Mr Kyriakou described the discussion to be had with his father prior to buying the Narre Warren property he said he was looking for 'an investment property'. He mentioned this twice in his viva voce evidence. When I asked him about that in the course of his closing submissions he said that this was merely a slip of the tongue. The timing of the application and his description of what led him to buy lead me to the view that the decision to seek the First Home Owner Grant was made late and after the event. That in 2003 he neither intended to seek a grant nor to use this property as his principal place of residence. That in itself should not be fatal to his application as long as the necessary events happened within the appropriate time frame it remained open to him to change his mind as to applying for a grant of the use to which he intended to put the property.
4. The residence criterion under the First Home Owner Grant Act 2000 was revised with effect from 1 January 2004 as noted above. The present provision in the Act which was the one applicable as from 1 January 2004 is as follows:
   1. (1) An applicant for a first home owner grant must occupy the home to which the application relates as the applicant's principal place of residence for a continuous period of at least 6 months (or the lesser period approved by the Commissioner) commencing within the 12 month period immediately after completion of the eligible transaction or within a longer period approved by the Commissioner.

(2) The Commissioner may approve a lesser period of occupation under subsection (1) if the Commissioner is satisfied that there are good reasons why the applicant cannot comply with the requirement to occupy the home for 6 months.

(3) If an application is made by joint applicants and at least one (but not all) of the applicants complies with the residence requirement, the noncomplying applicant or applicants are exempted from compliance with the residence requirement.

1. It will be seen that this provision is on one view more rigorous than the earlier version, certainly more specific. It requires not only as Section 12 of the previous version of the Act required that an applicant take up residence in the subject property as his or her principal place of residence 'within 12 months after completion of the eligible transaction' but also that the applicant reside 'for a continuous period of at least six months' commencing within that 12 month period. When I enquired of Mr Kyriakou as to why his application made in August and supported by a statutory declaration made in July was not submitted under cover of his solicitor's letter until 1 October, he understood he had to complete the six month residence requirement before lodging the application. In cross-examination he indicated that he believed the residence requirement entailed residence for at least six months.
2. I have to say that the record of utility usage produced by the Commissioner renders me quite sceptical that Mr Kyriakou occupied the Narre Warren property even for sleeping purposes within the period which he claims. If despite those misgivings he did sleep there, I infer that his occupancy such as it was was not the occupancy of someone treating the house as a principal place of residence but merely the completion of some ritual of occupancy for six months which he believed was necessary to qualify for the grant. Occupancy for this purpose and with that limited time frame in view lacks the necessary permanence for someone to be regarded as occupying a house as his principal place of residence. It stands in contrast to someone who moves into a house and makes it his or her home intending to stay permanently or on a long term basis and then changes his or her mind or moves because of a change of circumstances. The fact that at best on his evidence Mr Kyriakou did no more than sleep at the property tends also to point away from its having been his principal place of residence in any real sense.
3. I am somewhat reluctant however to place too much reliance on issues such as where a person ate his meals or washed his clothes as being indicia of where his principal place of residence might be. To give too much attention to those words or to give literal effect to some of the statements in the Tribunal decisions relied on by the Commissioner might lead to the conclusion that an individual who worked long hours ate his meals in restaurants and cafes and had his clothes laundered at work or at a commercial laundry would be a person without any principal place of residence.
4. Nevertheless this is not the situation for Mr Kyriakou in this case. His connection with the Narre Warren property in the 12 months after the completion of the eligible transaction was not such that it was his principal place of residence.
5. The respondent's determination should be confirmed.