Miljus v Chief Commissioner of State Revenue

The legislative scheme for imposition and assessment of land tax

1. The Land Tax Management Act 1956 ("the LTM Act") establishes the scheme for the imposition and assessment of land tax on land in New South Wales, the liability of landowners for that tax and the objection and review processes which are available to taxpayers in respect of any assessment of land tax by the Chief Commissioner.

The principal place of residence exemption

1. An exemption from land tax liability is provided for in s 10(1)(r) of the LTM Act and the terms of the exemption are set out in clause 2 of Schedule 1A of the Act.
2. For convenience of reference the full terms of clause 2 are set out in the Appendix to these reasons, but essentially the clause provides that land used and occupied by land owners as their principal place of residence and for no other purpose is exempt from land tax for any year commencing 1 January 2005, provided that the land is a parcel of residential land, a strata lot or (subject to further provisions) land comprised of two or more strata lots.
3. Significantly, subclause (2) confirms that land will not be regarded as being used and occupied as the taxpayer's principal place of residence unless: "(a) the land and no other land has been continuously used and occupied by the person for residential purposes and for no other purposes since 1 July in the year preceding the tax year in which the land tax is levied; or (b) in any other case, Chief Commissioner is satisfied that the land is used and occupied by the person as the person's principal place of residence."
4. However, paragraph (b) of the subclause does not grant the Chief Commissioner a discretion to treat the subject property as the taxpayer's principal place of residence: see Chief Commissioner of State Revenue v Aldridge [2003] NSWADTAP 50. In that case, the Appeal Panel of the NSW Administrative Appeals Tribunal held that the clause does not confer a "true discretion" on the Chief Commissioner as to whether the land in question is at the relevant date is used and occupied by the taxpayer as the taxpayer's principal place of residence and that: "(if) the factual circumstances do not support (such a conclusion)…the Chief Commissioner cannot be 'satisfied' of that fact".
5. Aldridge is also authority for the propositions that: 1. it is implicit in the scheme of the LTM Act that the point of time at which the availability of the PPR exemption is to be determined is the moment in time at which land tax can be charged under the Act, namely midnight on 31 December of the year immediately preceding the year for which the land tax is levied (i.e. the relevant tax year); and 2. in order for paragraph (b) of subclause (2) to be attracted, the Commissioner must be satisfied that the land is used and occupied by the person as the person's principal place of residence at that same point of time: midnight on 31 December of the year immediately preceding the relevant tax year: see Aldridge at [12], [22], [26].

The Tribunal's role in conducting a review

1. The role of the Tribunal in determining an application for administrative review under s63 the ADR Act is: "… to decide what the correct and preferable decision is having regard to the material then before it, including the following: (a) any relevant factual material, (b) any applicable written or unwritten law.": s 63(1).
2. For the purpose of making its decision, the Tribunal may exercise all of the functions that are conferred or imposed by any relevant legislation on the administrator who made the decision: ADR Act s 63(2). The effect of these two subsections is often described as requiring the Tribunal to "stand in the shoes" of the maker of the decision under review. As is the case with many such abbreviated statements of principle, that is not entirely accurate. The Tribunal is required to decide what the correct and preferable decision is having regard to the material that is before it at the hearing. The Tribunal's decision must be made "as things stand" at the hearing, not as they stood when the administrator made his or her or its determination. It is clear that the Tribunal may take into account material that was not before the primary decision-maker: Drake v Minister of Immigration and Ethnic Affairs (1970) 2 ALD 60 at 77.

The taxpayer's onus of proof

1. It is of fundamental importance that under s100 (3) of the Administration Act, in a review of his nature by the Tribunal the applicant has the onus of proving his, her or its case and that requires them to prove all matters necessary to enable the Tribunal to answer the statutory question in their favour. The requisite standard of proof is the balance of probabilities: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [31]; B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187; 74 NSW LR 481, per Allsop P at [87] and [104]; Gauci Federal Commissioner of Taxation(1975) 135 CLR 181; (1975) 8 ALR 155.

The guiding principle

1. Under section 36 of the Civil and Administrative Tribunal Act, No.2, 2013 (NSW), I am required to give effect to a "guiding principle", which is that I should facilitate the just, quick and cheap resolution of the real issues in the proceedings. Under that section each of the parties and their respective legal representatives must assist me to do that. In order to facilitate the resolution of the real issues, it is obviously necessary for me to identify the real issue or issues.

Identification of the real issue

1. The ultimate issue here was whether the PPR Exemption was available to Mr Miljus as taxpayer in respect of the Erskineville property, so that that property was exempt from liability for land tax for the 2016 tax year.
2. If the PPR Exemption was not so available, then the Chief Commissioner's decision on 23 May 2019 to issue his reassessment of land tax payable by Mr Miljus must have been the correct decision. I also had to decide whether it was the preferable decision.
3. As discussed above at [9] to [13], the PPR Exemption is not available; that is, land will not be regarded as used and occupied as the principal place of residence of the taxpayer, unless subclause 2(2) of Schedule 1A to the LTM Act is satisfied: see [11]. Subclause 2(2) consists of two paragraphs and if either of them is satisfied the land may be regarded as being used as the taxpayer's principal place of residence.
4. Paragraph (a) of that subclause does not apply here. It appeared to be uncontested that the Erskineville property was not used and occupied by Mr Miljus for residential purposes continuously from 1 July in the year preceding the relevant tax year; that is, from 1 July 2015. Mr Miljus did not assert that that was the case and it seems likely, as discussed at 7 above, that the conveyancing transaction by which the Erskineville property was purchased by Mr Miljus occurred prior to October 2015. Mr Miljus may have been let into possession prior to completion but it seems highly unlikely that the conveyancing transaction for the purchase of the property commenced as early as 1 July and he could not in any sense be said to have "owned and occupied" the property until (at the earliest) that transaction had commenced. There was nothing in evidence to suggest such an occurrence.
5. The effect of paragraph (b) of subclause2(2) of the Schedule, on the authority of Aldridge (discussed at [12] and [13] above), is that the PPR Exemption may be attracted if the Chief Commissioner is satisfied that the land was used and occupied as the taxpayer's principal place of residence as at the effective time for the assessment of liability for land tax generally, being in this case, midnight on 31 December 2015.
6. It followed that the real issue for decision was whether, as at midnight on 31 December 2015, the Erskineville property was used and occupied by Mr Miljus as his principal place of residence.

The Chief Commissioner's case

1. In essence, the Chief Commissioner's case was that Mr Miljus had failed to satisfy his onus of proof to establish to the Tribunal's satisfaction on the balance of probabilities that as at 31 December 2015 he used and occupied the Erskineville property as his principal place of residence.
2. It was confirmed by Counsel for the Chief Commissioner and was not disputed that Mr Miljus purchased the Erskineville property by a transaction which was completed in about October 2015; and see the discussion of the timing of that transaction at 7 above. The Chief Commissioner's general contention was that the evidence shows that between 2013 and May 1919 Mr Miljus used the Horsley property as his principal place of residence, and that, at the least, that was the position as at midnight on 31 December 2015.
3. As I understood the way in which the Chief Commissioner's case was put, it was suggested that in fact the Horsley property continued to be Mr Miljus' main place of residence in Sydney until well after 31 December 2015 and that any case it is highly likely that given Mr Miljus' frequent travel interstate for work, particularly to Melbourne, that he continued to use the "granny flat" at the Horsley property as his principal Sydney residence throughout the relevant period including as at midnight on 31 December 2015.
4. On that basis, in the Chief Commissioner's contention, the Erskineville property could not have been used and occupied by Mr Miljus as his principal place of residence as at that time and date.

Mr Miljus' case

1. In summary Mr Miljus' case was that he has provided substantial documentation and other explanation as to his principal place of residence at the critical time and that, as summarised in his written submission of 1 August 2020: "From the extensive supporting documentation provided I have clearly shown my onus of establishing that the (Erskineville property) was my principal place of residence as at the relevant date for the year 2016. From all the extensive supporting documentation provided relevant to the 2016 year it couldn't be any more blatantly obvious that I have been living and residing at (the Erskineville property) since late 2015 and that this is been my principal place of residence since late 2015."
2. Mr Miljus also asserted that his statutory declaration which confirmed the Horsley property as his principal place of residence from 2016 to 2019: "… was revoked and rescinded and I don't allow my incorrect statement to be used by the respondent against me as it is simply not correct."
3. He went on to assert that "staff at the Office of State Revenue" had received his explanation as to this: "… and they agreed that it was incorrect and was not going to be used any further."
4. Mr Miljus also relied on the statutory declarations provided by two of his neighbours, Ms Rhondda Hollis and Mr Andrew Graham.

Documentary material

1. I considered all the documentary material which was provided as part of the Tribunal's file, including all pleadings and written submissions lodged by the respective parties up to the hearing date and two large bundles of documents filed for the Chief Commissioner respectively on 7 July 2020 and 22 May 2020 pursuant to his obligation under section 58 of the ADR Act (collectively "the section 58 bundle").
2. I also considered the following documentary material: the Application form and its attachments, the statutory declaration of Rhondda Hollis made on 5 June 2020, the statutory declaration of Andy Graham (who was not related to Ms Emily Graham of Counsel who appeared for the Chief Commissioner) made on 8 June 2020, a short written statement by Ms Hollis dated and filed on 22 May 2020, additional correspondence between Mr Miljus and the Chief Commissioner's office attached to Mr Miljus' emails of 13 May 2020 and the Chief Commissioner's List of Authorities received on 5 August 2020.

Oral testimony and submissions

1. At the hearing I heard oral submissions from Mr Miljus, some sections of which fell into the category of "evidence from the Bar table" and to which I gave appropriate weight accordingly, and oral submissions from Ms Graham of Counsel for the Chief Commissioner. I consulted, as necessary, a List of Authorities from the Crown Solicitor, which was provided without objection.

Consideration

1. The starting point is that, as previously noted, the onus is on Mr Miljus to prove all matters necessary to persuade me in his favour in relation to the real issue; that is, whether or not as at 31 December 2015, he used and occupied the Erskineville property as his principal place of residence. As noted above the requisite standard of proof is the balance of probabilities: see the Cornish Investments and B & L Linings, cited at [16].
2. Having considered the documentary material, the oral evidence at the hearing, the written and oral submissions of both parties and (with reduced weight ascribed to it) additional evidence from the Bar table from Mr Miljus, I found that Mr Miljus' case that as at 31 December 2015 his principal place of residence was the Erskineville property was unpersuasive and that it failed to satisfy the onus of proof which Mr Miljus bore to establish that case.
3. I reached that conclusion for the following reasons.

1.The relevance of Mr Miljus' documentary evidence to the 2016 tax year

1. Nearly all of the documentary evidence provided by Mr Miljus in support of his case did not relate to or establish his occupation of the Erskineville property during the 2016 tax year or, critically, that, as at midnight on 31 December 2015 he occupied and used that property as his principal place of residence.
2. For example, the documentation attached to his further objection of 12 September 2019, as described in more detail at 7 comprised Energy Australia bills and AGL gas accounts, the earliest of which was dated 23 May 2016. All of these related to usage during the 2016 year. None of them related to usage during the relevant tax year; that is the year ending on 31 December 2015. Accordingly none of this evidence advanced Mr Miljus' case. The same can be said for the material which he produced to the Chief Commissioner on 14 October 2019 including insurance policy documentation, bank statements and other documentation such as his PAYG summary superannuation statements and related utility notices.
3. There is a letter from Comminsure dated 30 November 2019 which appears to confirm that Mr Miljus insured the Erskineville property for residential building insurance (but significantly not for contents insurance) for $250,000, with a period of cover from 9 December 2015 to 9 December 2016. But that falls well short of satisfying the evidentiary onus: it does not establish Mr Miljus' personal use and occupation of the property as at midnight on 31 December 2015.
4. Another possible exception to my general conclusion above as to that evidence relates to and Energy Australia account for the Erskineville property covering supply from 10 December 2015 to 14 March 2016 (copied in the second section 58 Bundle at page 100).
5. Put at its highest, this document establishes that electricity was used at the Erskineville property during that period and that Mr Miljus was recognised by Energy Australia as its customer. However, it establishes little else. It does not establish Mr Miljus' use and occupation of the property as at 31 December 2015, because: 1. it is not clear from it what respective amounts of electricity were consumed prior to and on and after 31 December 2015; 2. the ATO records, particularly those in the second section 58 Bundle at page 55, show that Mr Miljus received rental income from the Erskineville property commencing on 31 October 2015; clearly a tenant could have been the electricity user; 3. the account, unlike all other Energy Australia accounts produced by Mr Miljus, is headed "Adjustment Note" and in the body of the document under the heading "Adjustments" appear the words "correction of past bill calculation". That and the format of the account generally suggests that it may be a record of an adjustment of electricity rates between two (or more) different users or Energy Australia account holders who occupied the premises in different periods. 4. Be that as it may, the Energy Australia account does not establish that it was Mr Miljus who used the electricity at the property on any particular date during the billing range; and 5. none of these doubts about the persuasiveness of the document has been answered by anything which is in evidence in these proceedings.

2.Mr Miljus' purported revocation and rescission of his declaration 22 July 2019

1. In paragraph 4 of his written submissions Mr Miljus addressed the fact that he had made a statutory declaration which asserted that his principal place of residence as at 31 December 2015 was the Horsley property but now asserted that it was in fact the Erskineville property. He said: "The incorrect statutory declaration by myself was revoked and rescinded and I don't allow my incorrect statement to be used by the respondent against me as it is simply not correct. I have already explained this to the staff at the Office of State Revenue and they agreed that it was incorrect and was not going to be used any further."
2. The statutory declaration referred to was that of Mr Miljus dated 14 June 2019, which I have covered in my description of uncontested facts at 7 above. In it Mr Miljus declared and affirmed that: "I am the owner of (the Horsley property) and this address is my principle (sic) residence since 2014 until 2019 after I purchased the property in late 2012."
3. A similar statement appeared in Mr Miljus' objection form dated 22 July 2019, although there he asserted that the Horsley property was his principal place of residence for the years 2016 to 2019. On 8 August 2019 Mr Miljus appears to have re-sent his objection form of 22 July 2019 to the Chief Commissioner by email and he referred to attached evidence as: "confirming my principle (sic) place of residence at (the Horsley property)".
4. Mr Miljus' attempt, by his written submission, to estop or in any other way prevent the Chief Commissioner or this Tribunal from taking these repeated assertions by him into account is ineffective.
5. Mr Miljus did not address this issue or address his purported reversal of evidence at the hearing, nor did he produce any documentary material in support of his contention that his repeated prior assertions (initially under oath) which clearly and unequivocally identify the Horsley property as his principal place of residence, were somehow mistaken or invalid or how that mistake or invalidity had arisen.

3. The evidence of Ms Hollis and Mr Graham was unpersuasive as to the real issue
4. Mr Miljus provided statutory declarations by two of his neighbours, Ms Rhondda Hollis and Mr Andy Graham, in support of his contention that he used and occupied the Erskineville property as his principal place of residence as at 31 December 2015. Ms Hollis and Mr Graham were required to attend the hearing for cross examination. They did so and were cross-examined by Counsel for the Chief Commissioner. They were not examined in chief or re-examined by Mr Miljus.
5. I accepted that both Ms Hollis and Mr Graham genuinely wished to assist Mr Miljus. However I gave reduced weight to their evidence and found that it was unpersuasive as to Mr Miljus' use and occupation of the Erskineville property as at 31 December 2015, for the following reasons: 1. The two statutory declarations were identical. Ms Hollis was asked in cross examination whether Mr Miljus had written the words in the statutory declaration for her and she responded that he had helped her with the form of the document which she had typed. When asked whether Mr Miljus had dictated the specific words in the declaration Ms Hollis responded to the effect that he had made suggestions as to the wording and she had agreed to them. I understood Mr Graham to indicate that the form of the statutory declaration was presented to him by Mr Miljus and that he had read it through and signed it. When Counsel asked Mr Graham whether he had had any opportunity to change any part of the document prior to signing it, he responded in the negative. All these factors reduced the forensic value, the persuasiveness and the reliability of the statutory declarations. 2. Both Ms Hollis and Mr Graham made observations (which in their statutory declarations were in identical form) that they had frequently seen Mr Miljus at the front of his residence, being the Erskineville property and walking around the neighbourhood and that this had been the case since he purchased the property. However, under cross examination neither of them was able to identify with any precision the date on which they had first observed Mr Miljus' presence. Ms Hollis said she could not remember exactly when Mr Hollis moved into the property but thought that it might have been between Halloween (31 October) and the Christmas holiday period in 1995. However when Counsel suggested that this could have been in early 2016, she responded to the effect that that was "not impossible". Mr Graham commenced by recalling with some certainty that he had seen Mr Miljus in and around the property from late October 2015 but conceded that he would have only seen him about once per week. However he later agreed with Counsel that he did not have an independent recollection that it was in 2015 rather than a later date that Mr Miljus first occupied the property.

Conclusions

1. Ultimately, on the basis of the evidence as a whole as analysed in preceding paragraphs, I concluded that Mr Miljus failed to satisfy the onus which he bore as applicant of establishing that as at midnight on 31 December 2015 he used and occupied the Erskineville property as his principal place of residence.
2. The most plausible interpretation of what actually occurred appears to be the one suggested by the Chief Commissioner and maintained by Mr Miljus himself until about 5 weeks prior to seeking the PPR exemption for the Erskineville property, namely that the Horsley property was his principal place of residence until well after 31 December 2015.
3. But it was not necessary for the purposes of determining this application for me to make a specific finding as to what Mr Miljus' permanent place of residence was as at 31 December 2015. Rather the onus was on him to satisfy me that that place, that is, the place which he used and occupied as his principal place of residence, was the Erskineville property.
4. He failed to do that. It followed that the decision under review was the correct decision.
5. I was also satisfied that the decision of the Chief Commissioner was the proper result of the correct analysis of the information available to him and was in accordance with the relevant legislation and guidelines. It follows that the decision was also the preferable decision.

Orders

1. The decision under review must be affirmed. I ordered accordingly.

63 Determination of administrative review by Tribunal (1) In determining an application for an administrative review under this Act of an administratively reviewable decision, the Tribunal is to decide what the correct and preferable decision is having regard to the material then before it, including the following: (a) any relevant factual material, (b) any applicable written or unwritten law. (2) For this purpose, the Tribunal may exercise all of the functions that are conferred or imposed by any relevant legislation on the administrator who made the decision. (3) In determining an application for the administrative review of an administratively reviewable decision, the Tribunal may decide: (a) to affirm the administratively reviewable decision, or (b) to vary the administratively reviewable decision, or (c) to set aside the administratively reviewable decision and make a decision in substitution for the administratively reviewable decision it set aside, or (d) to set aside the administratively reviewable decision and remit the matter for reconsideration by the administrator in accordance with any directions or recommendations of the Tribunal. 65 Power to remit matters to administrator for further consideration (1) At any stage of proceedings to determine an application for an administrative review under this Act of an administratively reviewable decision, the Tribunal may remit the decision to the administrator who made it for reconsideration of the decision by the administrator. (2) If a decision is so remitted to an administrator, the administrator may reconsider the decision and may: (a) affirm the decision, or (b) vary the decision, or (c) set aside the decision and make a new decision in substitution for the decision set aside. (3) If the administrator varies the decision: (a) the application is taken to be an application for review of the decision as varied, and (b) the person who made the application may either: (i) proceed with the application for review of the decision as varied, or (ii) withdraw the application. (4) If the administrator sets the decision aside and makes a new decision in substitution for the decision set aside: (a) the application is taken to be an application for review of the new decision, and (b) the person who made the application may either: (i) proceed with the application for review of the new decision, or (ii) withdraw the application.

Civil and Administrative Tribunal Act No.2 2013 (NSW)

36 Guiding principle to be applied to practice and procedure 1. The "guiding principle" for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. 2. The Tribunal must seek to give effect to the guiding principle when it: 1. exercises any power given to it by this Act or the procedural rules, or 2. interprets any provision of this Act or the procedural rules. 3. Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal: 4. a party to proceedings in the Tribunal, 5. an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal. 1. In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings. 2. However, nothing in this section requires or permits the Tribunal to exercise any functions that are conferred or imposed on it under enabling legislation in a manner that is inconsistent with the objects or principles for which that legislation provides in relation to the exercise of those functions.

10 Land exempted from tax

1. Except where otherwise expressly provided in this Act the following lands shall, subject to sections 10B, 10D, 10E, 10G and 10P, be exempted from taxation under this Act: ..(r) land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A,

Part 1 - Preliminary 1 Definitions In this Schedule--

"principal place of residence exemption" --see clause 2….

.."taxing date" --means midnight on the thirty-first day of December.

2. Principal place of residence exemption (1) Land used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose, is exempt from taxation under this Act, in respect of the year commencing 1 January 2005 or any succeeding year, if the land is-- (a) a parcel of residential land, or (b) a strata lot or, subject to this Schedule, land comprised of 2 or more strata lots. (2) Land is not used and occupied as the principal place of residence of a person unless-- (a) the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes since 1 July in the year preceding the tax year in which land tax is levied, or (b) in any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the person's principal place of residence. (3) If the owner of land is entitled to the exemption conferred by this Schedule, no other person is liable to be assessed for taxation under this Act in respect of the land during the period of the owner's entitlement to the exemption. (4) The exemption conferred by this Schedule is referred to as the "principal place of residence exemption" .

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

Amendments 09 December 2020 - Name of Counsel inserted in Coversheet. 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: 09 December 2020