Morris v Chief Commissioner of State Revenue

Does clause 8 apply?

Several matters need to be established in order to determine whether clause 8 applies in the present case. These are: 1. whether Mr Morris formerly occupied the Soldiers Point Property as a principal place of residence; 2. whether Mr Morris ceased to use and occupy the Soldiers Point Property as a principal place of residence; 3. whether Mr Morris used and occupied the Soldiers Point Property as a principal place of residence for a continuous period of at least 6 months; and 4. that Mr Morris does not own (in the statutory sense) any other land used and occupied by him as a principal place of residence.
As to the first and third of these matters, it is agreed between the parties that for many years until August 2014 this was the case.
As to the second of these matters: 1. The meaning of a person's "place of residence" is well established, at least for purposes of the Act. It is usually understood as being the place where the person eats, drinks and sleeps. 2. Under section 3(1), a person's principal place of residence is "… the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the principal place of residence of the person …". The words "… the one place of residence.." and "… among the one or more places of residence of the person…" are significant. Even though the word "principal" suggests a ranking as between multiple residences, the definition makes it clear that a sole place of residence can be a principal place of residence. 3. Applying this to Mr Morris' situation, it is clear that as at 31 December 2014: 1. He had a place of residence at the Yachtsman Crescent Property. It was there that he had since August 2014 led the bulk of his day-to-day personal life. He and his wife lived there, and they had moved a selection of their possessions there to assist them in their daily life. It was, quite literally, the place where Mr Morris generally ate, drank and slept. 2. Mr Morris did not have a place of residence at the Soldiers Point Property. The residence on that land had been demolished in November 2014, so that there was no accommodation there in which he could reside. The property was in the possession of the builders, as they undertook their works of demolition and construction. It was simply not a place at which Mr Morris could or did reside. 3. What follows is that, as at 31 December 2014, the Yachtsman Crescent Property was, in the words of section 3(1), "… the one place of residence that is, among the one or more places of residence of [Mr Morris] within and outside Australia, the principal place of residence of [Mr Morris] …". 1. It may well be that at 31 December 2014: 1. it was Mr Morris' intention to return to the Soldiers Point Property to use and occupy it as his principal place of residence once the redevelopment works were complete, and 2. Mr Morris' occupancy of the Yachtsman Crescent Property was temporary only, pending completion of the works at the Soldiers Point Property. 1. However material such considerations may be in deciding whether the criteria in other clauses are satisfied, they are entirely irrelevant in relation to clause 8: 1. The tests in clause 8 do not look to the taxpayer's intention; rather, they look to a number of objective matters, which are summarised in paragraph 14 above. 2. In this respect clause 8 differs from clause 6, which expressly looks to a landowner's intention as to which of multiple properties will be, following the completion of building works, his principal place of residence. 1. Mr Morris referred to the factors which had been identified in the Tribunal's Appeal Panel decision in Spiros Theophilas v Chief Commissioner of State Revenue as distinguishing for purposes of a disentitling provision in clause 6(7), between a mere place of residence, on the one hand, and a person's principal place of residence, on the other. He sought to demonstrate that his occupancy of the Yachtsman Crescent Property was in various respects consistent with the basis on which the successful appellant in that matter had occupied his temporary residence, and that in consequence it should not be treated as his principal place of residence. There are three observations to be made concerning this line of argument: 1. These matters might be relevant if clause 6 were the provision under consideration. It, however, is not the clause at issue here, which is clause 8. 2. Clause 8 does not contain the complexities of clause 6, nor does it - except if clause 12 applies, of which more below - necessitate consideration of the matters raised by Mr Morris in this part of his argument. Rather, clause 8 asks a simple factual question: where is the taxpayer's principal place of residence, within the statutory meaning? 3. Accordingly, the factors which Mr Morris identified are irrelevant to the issue which the Chief Commissioner had to decide, and which is before the Tribunal in this hearing.
As for the fourth: 1. It is clear that Mr Morris was at all relevant times an owner of the Yachtsman Crescent Property, as set out in paragraphs 5 to 7 above. 2. Mr Morris seeks, however, in his submissions to apply a gloss to clause 8(1)(b). He argues that the clause's requirement, that in order to qualify for exemption under clause 8 the taxpayer must not "…own any other land used and occupied by him as a principal place of residence …", must be read as if the words "and owned" were interpolated into clause 8(1)(b), immediately after the word "occupied". The result of this interpolation would be that in Mr Morris' case, because his intention in owning the Yachtsman Crescent Property is to derive rental income from it, his temporary occupation of it during the redevelopment of the Soldiers Point Property would not disentitle the Soldiers Point Property from continuing to be exempted as his principal place of residence. 3. This argument fails, for two reasons: 1. First, the words in question simply do not form part of the clause. 2. Secondly, there is nothing in the context or purpose of the clause which might support such an interpolation. The clause operates clearly and logically without it, and in a way which is consistent with the underlying general objective of the principal place of residence exemption, namely to relieve a taxpayer from land tax in respect of a property which he owns and which he occupies as his principal place of residence. 1. Mr Morris also put the proposition that it was inappropriate for a property which: 1. he co-owned with his sister, and 2. for the occupation to which he paid rent to his sister, to be considered as property owned by him for purposes of the test in clause 8(1)(b). The difficulty with this proposition lies in the Act's definition of ownership of land, which is outlined in paragraph 5 above. This specifically includes as an owner of 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 …". For the reasons outlined in paragraphs 5 to 7 above Mr Morris is clearly an - if not the sole - owner of the Yachtsman Crescent Property for purposes of the Act, and in particular clause 8. The proposition he puts has no legal relevance.
It is, therefore, to the Yachtsman Crescent Property that the exemption under section 10(r) properly applies, subject to one final issue which Mr Morris sought to raise, and which is discussed in the following paragraphs.
Mr Morris argued that clause 12 applies, so as either: 1. To allow Mr Morris to nominate the Soldiers Point Property as his principal place of residence, or 2. To require the Chief Commissioner to treat the Soldiers Point Property, as the more valuable of the two properties, as Mr Morris' principal place of residence. The result would be to reduce Mr Morris' land tax liability, by exempting the more valuable Soldiers Point Property and subjecting the less valuable Yachtsman Crescent Property to land tax.
The difficulty with this argument is that clause 12 is only engaged where "… members of a family own …. more than one residence used and occupied by any of them as a principal place of residence [emphasis added]…" . At the relevant time, being 31 December 2014, Mr Morris may well have owned two properties: he and his wife, however, used and occupied only one of them as their sole - and necessarily principal - place of residence. This was the Yachtsman Crescent Property. The essential pre-condition to the availability of the election provided for in clause 12, namely the use and occupation of multiple properties by family members as places of residence, was not satisfied. Clause 12 is, therefore, entirely irrelevant.

At a glance

Court

Decision date

Source

Judgment (7 paragraphs)

Parties

Cases Cited (2)