Li v Chief Commissioner of State Revenue

Background facts

1. The Applicant purchased the Property in 2015 for the sum of $4,325,000. The transfer was registered on 30 April 2015. On the same date, a mortgage to the National Australia Bank was registered on the Property with the Applicant named as mortgagor.
2. On 3 August 2016, the Respondent wrote to the Applicant advising that she may have a potential land tax liability in respect of properties she owned. Shortly after, Sharon Gong (on behalf of the Applicant) lodged a Land Tax Registration Return claiming that the principal place of residence exemption was applicable from 18 August 2016.
3. On 18 August 2016, a land tax notice of assessment was issued to the Applicant for the 2016 land tax year, assessing her as liable for land tax for that year (ie as at 31 December 2015).
4. On 8 February 2017, a land tax notice of assessment was issued to the Applicant for the 2017 land tax year. The property was treated as exempt from land tax as a PPR exemption was applied.
5. On 23 August 2019, the Respondent again wrote to the Applicant advising that she may have a potential land tax liability and a surcharge land tax liability in respect of properties she owned.
6. On 18 October 2019, a land tax notice of assessment issued to the Applicant for the 2017 to 2019 land tax years which treated the Property as exempt from land tax. However, the Applicant was assessed as liable for surcharge land tax for the 2017 to 2019 land tax years.
7. There was no dispute that the Applicant was in China when the COVID-19 pandemic commenced in January 2020 and was prevented from leaving China until January 2023.
8. On 28 February 2020, the Respondent issued a land tax notice of assessment to the Applicant for the 2020 land tax year, again treating the Property as exempt from land tax. The Applicant was assessed as liable for surcharge land tax for the 2020 land tax year.
9. On 25 March 2020, the Respondent issued the Assessment, which reassessed the Applicant as liable for land tax for the 2016 to 2020 land tax years. The Applicant remained assessed as liable for surcharge land tax for the 2017 to 2020 land tax years.
10. Mr Zhang communicated with the Respondent in March and April 2020 about the land tax liability.
11. On 16 October 2020, RBW Accountants in Sydney lodged an objection to the Assessment on behalf of the Applicant and requested that it be accepted despite being outside the 60 day period for consideration. The explanation for the delay in lodging in an objection was said to be that the Applicant had recently changed advisors and that there had been difficulties as a result of the COVID-19 Pandemic.
12. On 16 March 2021, the Respondent disallowed the Applicant's objection.
13. On 23 September 2022, the Respondent wrote to the Applicant about the unpaid land tax in the amount of $752,158.58. The Respondent also had a telephone conversation with Mr Zhang on the same date.
14. On 28 September 2022, Auyeung Hencent & Day Lawyers (lawyers located in Sydney), wrote to the Respondent on behalf of the Applicant requesting an extension of time to pay the land tax and advising that the Applicant was obtaining advice on an appeal in relation to the Assessment.
15. In October 2022 and March 2023, the Respondent had conversations with the Applicant's solicitor about the payment of the outstanding liability.
16. On 31 May 2023, Auyeung Hencent & Day Lawyers, on behalf of the Applicant, wrote to the Respondent requesting reconsideration of the objection decision on the basis that the Applicant's husband, Mr Zhang, was also an "owner" of the Property and used and occupied it as his principal place of residence.
17. On 7 June 2023, the Respondent advised the Applicant's lawyers that, as the objection had already been disallowed, it could be not reconsidered.
18. The Application for Review was lodged with the Tribunal on 12 July 2023.

Jurisdiction

1. The Tribunal's jurisdiction to review the Assessments is pursuant to the Taxation Administration Act 1996 (NSW), s 96 (TA Act) and the Administrative Decisions Review Act 1997 (NSW), s 9 (ADR Act). It is the decision to issue the Assessment, not the decision on the objection, which is the subject of the review: see Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 at [28]; Ferella v Chief Commissioner of State Revenue [2014] NSWCA 378; 96 ATR 875 at [10].
2. In conducting that review, the Tribunal is required to determine the correct and preferable decision having regard to the materials before it and the applicable law: ADR Act, s 63.
3. The Applicant relies on the following material before the Tribunal: 1. Submissions filed 28 August 2023; 2. Statutory Declaration of Chenyang Yan dated 27 August 2023; 3. Statutory Declarations of Jisheng Zhang dated 27 August 2023 and 27 October 2023; 4. Statutory Declarations of Xiaoju Li dated 27 August 2023 and 27 October 2023; and 5. Statement of Jiahuan Ku dated 27 October 2023.
4. The Applicant's counsel made oral submissions at the hearing. The Applicant appeared from China via AVL and was cross-examined with an interpreter present in the Tribunal hearing room.
5. I note that at about 10pm on the night before the hearing, the Applicant served on the Respondent a further statement of Mr Zhang and a statement from a translator, which was said by the Applicant to fill gaps in the evidence that the Respondent had identified in his submissions. The Applicant requested leave to file those statements at the hearing and the Respondent objected. After hearing from each of the representatives I refused leave including on the basis that there had been a strict timetable in place for evidence including reply evidence; and that the Applicant (who was legally represented for the entire period these proceedings were before the Tribunal) had filed evidence in accordance with that timetable but at no stage prior to the hearing sought consent or approached the Tribunal for leave to rely on further evidence. Had the Respondent been given sufficient notice of that evidence, he may have elected to cross-examine Mr Zhang or seek leave to rely on further evidence. The directions of the Tribunal for the efficient conduct of proceedings ensure the overriding objectives of the Civil and Administrative Tribunal Act 2013 (NSW) ("CAT Act") are upheld: they should not be treated by parties as flexible or easily circumvented.
6. In any event, the evidence sought to be filed late at the hearing was of the same generalised nature as his previous evidence and in my view did nothing to advance the proposition that money was provided by Mr Zhang for the purchase of the Property or that during the relevant period his principal place of residence was the Property. This will be addressed further below.
7. The Respondent relies on documents filed pursuant to s 58 of the ADR Act; a tender bundle of further materials; written submissions dated 15 September 2023 and oral submissions at the hearing.
8. The applicable law includes the TA Act, the LTMA and the Land Tax Act 1956 (NSW). On the application for review in the Tribunal, the Applicant has the onus of proving, on the balance of probabilities, that she is entitled to an exemption from land tax and that her surcharge land tax liability should be reduced. She must prove all matters necessary to enable the Tribunal to answer the statutory questions in her favour. In the absence of that evidence the Assessments will prevail: TA Act, s 100(3); Cornish Investments Ply Limited v Chief Commissioner of State Revenue [2013] NSWADTAP 25.

Relevant principles concerning applications for extensions of time

1. Section 96 of the TA Act provides a right of review of a decision of the Respondent that has been the subject of an objection.
2. Section 99 of the TA Act provides the time limits for making an application for review to the Tribunal or the Supreme Court as follows: (1) An application for review following a determination by the Chief Commissioner of an objection must be made not later than 60 days after the date of issue of the notice of the Chief Commissioner's determination of the objection. The court or tribunal to which the application is to be made may allow a person to apply for a review after that 60-day period...
3. (emphasis added)Section 41 of the CAT Act provides that the Tribunal may extend the period of time for the doing of anything under any legislation in respect of which the Tribunal has jurisdiction.
4. In Daoud v Chief Commissioner of State Revenue [2015] NSWCATAD 53 ("Daoud"), the Tribunal stated: "[13] Section 41 of the Civil and Administrative Tribunal Act 2013 (NCATA) provides that the Tribunal may by application extend the period of time for the doing of anything under any legislation in respect of which the Tribunal had jurisdiction despite anything to the contrary under that legislation. Such an application may be made even though the relevant period of time has expired. [14] Accordingly, the discretion to extend time is broad and unfettered. However, it must be exercised judicially and having regard to s 36 of the Act and the need 'to facilitate the just, quick and cheap resolution of the real issue in the proceedings'. [15] The grant of an extension of time is not automatic. The discretion to extend time is given for the sole purpose of enabling the Tribunal to do justice between the parties. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time. It is also necessary to consider the prospects of the Applicants succeeding in their application. In order to justify the Tribunal extending the time, there must be some material upon which the Tribunal can exercise its discretion: see Gallo v Dawson [1990] HCA 30, 93 ALR 479 at [2] per McHugh J. and the authorities referred to therein. See also Opera Australia Ltd v Carr [1999] NSWADTAP 6 at [16] and Chand v Rail Corporation of New South Wales No 3 [2010] NSWADTAP 11 at [20]. [16] Time limits are set to promote the orderly and efficient conduct of proceedings in the Tribunal, to provide certainty for the parties to proceedings, and to achieve finality in litigation. For these reasons, time limits should generally be strictly enforced unless the interests of justice require that the extension be granted."
5. I note that the principles set out in Daoud were affirmed in DW Tolson Management Pty Ltd v Chief Commissioner of State Revenue [2016] NSWCATAD 113 and Giammarco and Giammarco v Chief Commissioner of State Revenue [2019] NSWCATAD 77.
6. The Tribunal in Daoud referred to the Appeal Panel's decision in Jackson v Land and Housing Corporation [2014] NSWCATAP 22 ("Jackson") which set out some of the general principles relevant to the exercise of the discretion to grant an extension of time under s 41 (although in that case in the context of an appeal). The Appeal Panel stated at [22]: "(1) The discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the appellant - Gallo v Dawson [1990] HCA 30, 93 ALR 479 at [2], Nanschild v Pratt [2011] NSWCA 85 at [38]; (2) The discretion is to be exercised in the light of the fact that the respondent (to the appeal) has already obtained a decision in its favour and, once the period for appeal has expired, can be thought of as having a 'vested right' to retain the benefit of that decision - Jackamarra v Krakouer (1998) 195 CLR 516 at [4], Nanschild v Pratt [2011] NSWCA 85 at [39] and, in particular, where the right of appeal has gone (because of the expiration of the appeal period) the time for appealing should not be extended unless the proposed appeal has some prospects of success - Jackamarra at [7]; (3) Generally, in an application for an extension of time to appeal the Appeal Panel will be required to consider: (a) The length of the delay; (b) The reason for the delay; (c) The appellant's prospects of success, that is usually whether the applicant has a fairly arguable case; and (d) The extent of any prejudice suffered by the respondent (to the appeal), - Tomko v Palasty (No 2) [2007] NSWCA 369; (2007) 71 NSWLR 61 at [55] (per Basten JA) but note also [14], Nanschild v Pratt [2011] NSWCA 85 at [39] to [42]; and (4) It may be appropriate to go further into the merits of an appeal if the explanation for the delay is less than satisfactory or if the opponent has a substantial case of prejudice and, in such a case, it may be relevant whether the appellant seeking an extension of time can show that his or her case has more substantial merit than merely being fairly arguable - Tomko v Palasty (No 2) [2007] NSWCA 369; (2007) 71 NSWLR 61 at [14] (per Hodgson JA, Ipp JA agreeing at [17]) and Molyneux v Chief Commissioner of State Revenue [2012] NSWADTAP 53 at [58]-[59]."
7. These principles similarly apply in determining whether, under s 41 CAT Act, an extension of time to lodge the application for review should be granted.
8. Generally speaking, a party which seeks to have the Tribunal exercise a discretion in their favour will bear the onus or burden of establishing why the discretion should be exercised in that way. That would tend to suggest that the Applicant would bear the onus of demonstrating that it would be appropriate in all the circumstances for the Tribunal to grant an extension of time to lodge the application for review.

Submissions on extension of time application

1. The Applicant submitted that the reason there was a delay in filing an application for review in the Tribunal was that she was unable to leave China until January 2023 because of restrictions associated with the COVID-19 pandemic. She was also therefore: 1. unable to meet with her lawyers in Australia to take legal advice; all she could do was have her daughter act as "the go-between to help deal with the issues in this case"; and 2. unable to access bank statements or historic records in relation to the Property.
2. The Respondent does not assert that he has suffered any prejudice as a result of the Applicant's delay in lodging the Applicant for Review, nor does he oppose leave being granted to the Applicant to lodge the Application for Review out of time. However, the Tribunal must still be satisfied that an extension of time should be granted having regard to the above matters.

Consideration

1. I am not satisfied on the evidence that I should exercise my discretion to grant an extension of time for the following reasons.

Length of delay

1. First, it is notable that an application for review should have been filed within 60 days from the date of the objection decision which was 16 May 2021. Yet the application was not filed until 12 July 2023. This is a substantial period of delay.

Reasons for delay

1. The Applicant's reasons for the delay are set out above at [41]. However, there is insufficient explanation in the evidence about why the Applicant (or her daughter) were unable to obtain access to documents from banks electronically or why, even when she returned to Australia in January 2023, steps were not taken immediately to obtain the documents and file an application in the Tribunal. Further, there is an absence of evidence about why the Applicant's husband was unable to assist the Applicant to file an application before the Tribunal at an earlier time or obtain records that relate to joint bank accounts particularly in the light of the fact that he contends he was in fact an "owner" of the Property and that he did communicate with the Respondent in 2020 after the Assessment issued.
2. I note that at all times since at least 2020 when the objection to the Assessment was lodged, the Applicant has had a representative in Australia: first, RWB Accountants based in Sydney and then from September 2022, Auyeung Hencent & Day Lawyers in Sydney. There is no evidence before me that those representatives were unable to progress the giving of advice (whether by telephone or video or otherwise), nor that they were unable to assist the Applicant to file an application for review in the Tribunal. I do not accept Mrs Li's assertion that she was unable to receive advice from them. Indeed it appears that those lawyers corresponded with the Respondent on numerous occasions in 2022 and early 2023 presumably on the instructions from their client. It is not the case that the Applicant did not have legal representation or assistance and it is entirely unsatisfactory for such a long period to have elapsed before filing an application in this Tribunal in that circumstance.
3. I was generally dissatisfied with the evidence relied upon by the Applicant. The Applicant's statutory declarations (and similarly those of her husband) were replete with generalised assertions and submissions and had all the hallmarks of self-serving evidence which the Courts and Tribunals have cautioned against: Rowntree v Commissioner of Taxation [2018] FCA 182; 107 ATR 498 at [49]; Leach v Comcare (2021) 285 FCR 326 at [145]. In addition, noting that the Applicant appeared via AVL from China with an interpreter present in the hearing room, shortly after taking her affirmation I directly asked the Applicant whether anyone was in the room with her for the reason that I could see someone's shoulder and arm next to her on the screen. I saw that the Applicant kept turning to look at the person next to her when answering questions as though requiring prompting to answer. The Applicant told me there was no one in the room with her. I then informed the Applicant that I could see someone on the screen and asked that person to step in front of the camera. The Applicant's daughter subsequently introduced herself. I asked Applicant's daughter not to assist the Applicant in answering the questions but that she could assist with the internet connection for the AVL where necessary; that was the extent of the assistance she could give her mother. Despite this warning, and the services of the interpreter, the Applicant continued to turn to her daughter before answering questions. I got the distinct impression from the Applicant's evidence that she did not know the answers to the questions and needed prompting to answer them.
4. As the cross-examination continued on some of the documents in evidence, it became apparent that the Applicant's daughter was using a document translation program to assist the Applicant peruse her and her husband's statutory declarations and that the program was timing out. I explained to the Applicant that she had an interpreter present who could read anything to her from the statutory declarations. The legal representatives agreed with the Tribunal that certain questions be asked again in re-examination, with the interpreter reading relevant parts, including parts of the attachments, to ensure there was no uncertainty about the nature of the questions.
5. The Applicant gave inconsistent answers as to the providence of attachments to her statements which were in the form of tables. The tables purportedly evidenced transfers from her husband to her to pay for the purchase of the Property. She repeatedly said that she and her daughter went into the banks in China and those banks prepared the summaries in the tables for her. Later she said the lawyers prepared the tables.
6. Overall, I found the Applicant's evidence unreliable and she did not present as a truthful witness.
7. Mr Zhang was not required for cross examination. Counsel for the Applicant submitted that as Mr Zhang's evidence was unchallenged, I should accept it. However, for the reasons set out above, while I might generally accept the evidence, I do not consider the evidence was probative of the issues in dispute. In so far as Mr Zhang's evidence related to the reason for a delay in filing an application for review in the Tribunal, his evidence was simply the same as the Applicant's evidence. He did not attempt to explain why he could not take steps on behalf of his wife to ensure an application was filed within the time limits or why he could not obtain bank records or any other documentary evidence that the Respondent had requested or that would have assisted the Tribunal ultimately in determining the application.
8. Overall, I am not satisfied on the evidence that there is a sufficient explanation for the delay in filing the application.

Extent of prejudice to Respondent if extension granted

1. As noted above, the Respondent does not contend there is any prejudice to him by the grant of an extension of time. I note if an extension of time is not granted, the Applicant will suffer a prejudice in that she will be prevented from challenging the Assessments. However, in my view, this prejudice could have been avoided by the Applicant filing an application within the time limits whether during the period her accountants were acting on her behalf or after instructing lawyers to act on her behalf in 2022.

Merits of application: prospects

1. The Applicant's contention on the substantive application for review is that a land tax exemption should apply to the Property for the reason that it was her principal place of residence (even though she mainly resided in China) but also that her husband is in fact an "owner" within the meaning of the LTMA and the Property was his principal place of residence.
2. Section 3 of the LTMA defines "owner" as including: (a) in relation to land, every person who jointly or severally, whether at law or in equity - (i) is entitled to the land for any estate of freehold in possession, or (ii) is entitled to receive, or is in receipt of, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise, (b) (Repealed) (c) in relation to any leasehold estate in land, whether legal or equitable (other than under any lease to which section 21C or 21D applies), a person, or a person who is a member of a class or description of persons, prescribed for the purposes of this paragraph, and (d) a person who, by virtue of this Act, is deemed to be the owner.
3. Section 25 of the LTMA provides as follows: 25 Equitable owner (1) The owner of any equitable estate or interest in land is liable in respect of land tax as if he or she were the legal owner of the estate or interest and land tax is to be assessed accordingly. (2) For that purpose - (a) the owner of the legal estate is taken to be the primary taxpayer and the owner of the equitable estate is taken to be the secondary taxpayer, and (b) there is to be deducted from the land tax payable by the secondary taxpayer in respect of the land such amount (if any) as is necessary to prevent double taxation. (3) This section does not apply in respect of land that is subject to a special trust. (4) This section is subject to the other provisions of this Act, in particular sections 25A and 26.
4. Land is exempt from taxation under the principal place of residence exemption, as provided for by Sch 1A: LTMA, s 10(1)(r).
5. It was claimed that Mr Zhang was an equitable owner of the Property by way of resulting trust or constructive trust. There was no dispute about the relevant legal principles or that if the Applicant could prove that she held part of the Property on trust for Mr Zhang pursuant to either a resulting trust or constructive trust, he would be an equitable owner for the purposes of the LTMA. The Respondent disputed the Applicant's submission that all she needed to do to prove equitable ownership was demonstrate a common intention that part of the property be held on trust for Mr Zhang.
6. It suffices to say that on the application for review the Applicant would have had the onus of establishing, by probative evidence: 1. that Mr Zhang paid part of the purchase price of the Property; 2. that at the time of entry into the contract for purchase of the Property, the Applicant intended that she would hold that part of the Property (for which Mr Zhang had contributed) on trust for him (and that the presumption of advancement does not apply); 3. in respect of the alleged constructive trust, that the Applicant and Mr Zhang had a common intention that Mr Zhang should have an interest in the Property and that he acted to his detriment on the basis of that common intention or agreement (Shepherd v Doolan [2005] NSWSC 42); and 4. in respect of the principal place of residence exemption, that during the relevant period, she and/or Mr Zhang used and occupied the Property as their principal place of residence
7. The Applicant would have had significant obstacles to success in her application for review. This is for the reason that, on the evidence that was before the Tribunal, the Applicant would have not been able to discharge her onus of proof in respect of these matters. In particular: 1. there was insufficient evidence about the purchase of the Property and how it was paid for; 2. the bank statements and summaries of transfers to and from the Applicant's daughter; from a company called Aone International Pty Ltd; and from Mr Zhang, at various times, did not necessarily prove those funds were actually used for the purchase of the Property; 3. while each of the Applicant and Mr Zhang assert that they held an intention that all property was owned jointly by them in conformity with Chinese Marriage law, objectively that is inconsistent with how they held other real property in Australia (sometimes recorded on title as 50:50 tenants in common and at other times 100% solely owned by Mr Zhang) and inconsistent with the conveyancer's evidence which described Mr Zhang's involvement in the purchase of the Property as a representative of the Applicant; 4. the Applicant did not present as a credible witness.
8. Even if the evidence had been sufficient to demonstrate a common intention on the part of the Applicant and Mr Zhang, it was not sufficient to demonstrate that he provided the funds to purchase the Property. Further, there was insufficient evidence to enable the Tribunal to determine any particular proportion that would have been held on trust for him to enable a reduction in the surcharge tax liability.
9. Further, there was insufficient evidence to enable the Tribunal to determine whether the Property during the relevant period, was the principal place of residence of the Applicant or Mr Zhang.
10. As submitted by the Respondent, the objective factors that may have assisted the Tribunal to determine whether the Property in the relevant period was the Applicant's or Mr Zhang's principal place of residence include: 1. the amount of time that the Property is occupied and the pattern of occupation; 2. the listing of the address of the Applicant or Mr Zhang for official purposes such as on a licence or on an electoral roll; 3. the address to which bills are sent; 4. respective rights in respect of the Property and the property where the Applicant resided in China; 5. relative location of clothing, furniture and possessions; 6. where family members reside; 7. the strength of ties and connection with the Property; 8. utilities usage; 9. the nature of insurance held for the Property; 10. where the Applicant and Mr Zhang eat, drink and sleep; and 11. where the Applicant or Mr Zhang entertain friends.
11. Other than an assertion by each of the Applicant and Mr Zhang that the Property was their principal place of residence and a copy of Mr Zhang's driver's licence which expires in 2028 with the address of the Property listed as his residential address, the Applicant has not provided evidence of any of the above matters. As noted above, there were numerous ways to prove the necessary criteria for the principal place of residence exemption for the purposes of the LTMA and the test is objectively determined: Sjarifudin v Chief Commissioner of State Revenue [2021] NSWCATAD 347 at [30]-[31] relying on Chief Commissioner of State Revenue v Ferrington [2004] NSWADTAP 41. The evidence before the Tribunal was deficient in this regard.
12. In my view, even if an extension of time is granted, on the evidence before the Tribunal, the application for review was unmeritorious. This is a direct result of the absence of probative evidence as to each of the relevant questions for determination. The Applicant had an obligation on her application for review to discharge her onus of proving the issues for determination. On the evidence relied on by the Applicant (and even if I had permitted her to rely on the further late evidence of Mr Zhang), she would have been unsuccessful in discharging her onus.
13. Having regard to each of those matters and all of the evidence, I am not satisfied that I should exercise my discretion in the circumstances to permit an extension of time for the application for review.
14. Practically this means the Respondent's Assessments have not been reviewed by the Tribunal and the Assessments remain binding on the Applicant.

Orders 1. The Applicant's application for an extension of time to lodge an application for review in the Tribunal is refused.

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: 20 December 2023