Peng v Chief Commissioner of State Revenue

Legal authority :"principal place of residence" and "reside"

1. In the Tribunal's decision in Raissis v Chief Commissioner of State Revenue [2021] NSWCATAD 99 ("Raissis") the Tribunal undertook a review of leading authorities on these two terms. The facts of that case turned on the application of those terms as they appear in the Land Tax Management Act 1956 (NSW) (LTM Act), but the Tribunal also considered authorities on the terms as used for the purposes of the FHOG Act.
2. The Tribunal in Raissis noted that Yen-Cheng Chuang v Chief Commissioner of State Revenue [2009] NSWADT 160 ("Yen-Cheng"), at [19] to [23], provides a useful summary of the considerations applicable to determining a person's principal place of residence. It commenced by noting that the LTM Act does not provide any technical or legal meaning for the expression "principal place of residence", so the expression has its ordinary meaning. That observation applies equally to the use of the term in the FHOG Act. The Tribunal in Yen-Cheng went on to observe: In ascertaining whether a particular residence of a person is the principal place of residence of the person it is necessary to use an objective test and the conclusion is determined by considering the extent and quality of the use and occupation of the residence in each case: Dean v Commissioner of Stamp Duties (Qld) (No 2) [1996] 2 Qd R 557 per Fryberg J.
3. As noted in Yen-Cheng, older cases appear to accept that one formulation of a place of residence is "the place where [the person] eats, drinks and sleeps". (See, for example, Stoke-On-Trent Borough Council v Cheshire County Council [1915] 3 KB 699, at 706.) However, the Victorian Civil and Administrative Tribunal, in Ziino v Commissioner of State Revenue [2004] VCAT 1707 ("Ziino"), added a note of caution in the following terms: …. while sleeping by itself in a place can be an indication of a principal place of residence, it is not the sole matter to be taken into account. One needs to look at a whole indicia of matters… One needs to look as well at where the applicant ate; his use of electricity and the furniture and fittings and other matters such as entertainment of friends in the house... Sleeping in a place does not make a residence. It has got to be the whole indicia of things that are done in a home which are described in the cases...
4. Other indications of a principal place of residence include evidence of the taxpayer's use of the address of the property as the residential address for purposes of his or her mail, and whether that is the address shown on his or her driving licence, on the electoral roll, in immigration records, income tax returns and telephone bills.
5. In Yen-Cheng the Tribunal went on to consider the meaning of "reside". It said at [48]: It is also useful to consider the High Court's observations as to the verb "reside". In Commissioner of Taxation v Miller (1946) 73 CLR 93 at 99, ("Miller") the Chief Justice Sir John Latham thought there was no judicial authority making it impossible to apply the ordinary meaning of the word "reside". He adopted the formulation suggested in Levene v Commissioners of Inland Revenue [1928] AC 217 at 222, where Viscount Cave LC had relied upon the Oxford English Dictionary meaning of the term, being: "to dwell permanently or for a considerable time, to have one's settled or usual abode, to live in or at a particular place."
6. Two principal authorities concerning the scope of these terms for the purposes of the First Home Owners legislation are Bates v Chief Commissioner of State Revenue [2004] NSWADT 14 ("Bates") and Chief Commissioner of State Revenue v Ferrington ("Ferrington").
7. In Bates the Tribunal found that an applicant who had resided for about two months at a property which she had recently purchased had occupied the property for the purposes of section 12(1) of the relevant Act but had not done so as her principal place of residence. The Tribunal confirmed that the intention of the applicant is relevant, but it is not determinative of the issue.
8. In Ferrington, the Appeal Panel of the Administrative Decisions Tribunal suggested certain principles to be applied in determining a taxpayer's "principal place of residence". The principles identified which appear to be pertinent to the present case include the following. 1. The phrase "principal place of residence" should be given its ordinary meaning in the context in which the phrase appears. 2. The issue 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, if considered at all, must be gauged objectively and it is relevant but not determinative of the issue. 3. In order for there to be a finding that a particular person occupied a property as their principal place of residence their 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.
9. Raissis was a case in which the two applicants, who were brothers, jointly owned a partially constructed suburban dwelling which one of the brothers visited and slept at occasionally and for varying periods, even though the construction and renovation work was only partially completed and the property apparently had no electricity or water connection for most of the relevant period. There was insufficient evidence to indicate that he had cooking facilities or ate at the property. The brother who occupied the property asserted that he regarded the property as his principal place of residence for the period under consideration. The brothers as joint owners sought exemption from land tax for the relevant years on the basis that the property was, as at the relevant taxing date, the principal place of residence of one of them.
10. The Tribunal concluded that it was not. In reaching that conclusion the Tribunal considered the authorities mentioned above, including Miller, Yen Cheng, Ziino, Ferrington and Bates and, at [65], identified the following principles and factors governing determination of whether a particular property is the taxpayer's principal place of residence. (1) The taxpayer's intention as to his or her use and occupation of the property is a relevant factor, but significantly it is not determinative: see Bates and Ferrington. (2) The extent and quality of the taxpayer's occupation in each case is a better guide than any expression of intention: see Yen-Cheng citing Dean v Commissioner of Stamp Duties. (3) The fact that the taxpayer has for a period slept in the particular property does not make that property his or her principal place of residence and a whole indicia of matters which are attended to in a home must be considered: Ziino. The extent and quality of the taxpayer's occupation must be assessed objectively and must be such to indicate the requisite degree of permanence, so that an occupation which is transient, contingent or of a passing nature or for some other purpose will not satisfy the statutory requirement (Ferrington). (4) Although temporary or occasional occupation of another property may not, depending on the facts, deprive a particular property from proper characterisation as the principal place of residence… Chief Justice Latham's formulation in Miller is a more authoritative guide, particularly his reliance on the notion of a principal place of residence being a property which is dwelt in permanently or for a considerable time and overall is the person's "settled or usual abode".

Assessment of Mr Peng's account

1. As noted above Mr Peng has adduced a considerable volume of evidence which he contended to support his assertion that the Grant property was his principal place of residence for the period required under the section 12 residence requirement.
2. I have considered that evidence in detail with a view to determining whether, taken as a whole it represents a satisfaction by Mr Peng of his onus of proof on this central issue. Counsel for the Chief Commissioner, in his written submissions and at the hearing invited me to find that there were particular defects in Mr Peng's evidence: see [35] above. Predictably, that was resisted by Mr Peng. In order to resolve the issue effectively I have proceeded to assess that evidence by reference to the parties' contentions on each such issue and also all Mr Peng's documentation and submissions, including those at the hearing.
3. I have adopted the following headings for the purpose of this analysis of the evidence.

(1) Inconsistencies: in evidence of Mr Peng, his wife, acquaintances.

1. The section 12 residence requirement is that Mr Peng should reside in the Grant property as his principal place of residence for a continuous period of 6 months between 7 January 2016 and 17 January 2017. At the hearing, in his oral submissions, Mr Peng strenuously maintained that the property was his principal place of residence for that period.
2. But the evidence as to Mr Peng's earlier assertions as to his period of residence throws doubt on his assurances on this matter at the hearing. It is clear, as asserted by the Chief Commissioner, that Mr Peng himself at various times has described his period of residence as 1 June 2016 to 31 January 2017, May to November 2016, and February 2016 to August 2017. None of those periods satisfies the requirement.
3. The evidence provided at the hearing from Mr Peng's wife, Li Zeng, does not assist him on this issue. Ms Li appeared to me to be a credible witness. Her initial written statement of 7 August 2021 described Mr Peng as residing in the property "between April 2017 and August 2017". That period is outside the required period of residence. At the hearing Ms Li was somewhat vague about the exact dates of Mr Peng's residence at the grant property. Ultimately she agreed with Counsel for the Chief Commissioner that her evidence as to Mr Peng's place of residence during calendar 2016 was based on what she had been told by him. So it was not a matter of independent recollection.
4. It must follow that her evidence as to his principal place of residence during that calendar year is of negligible if any value. As to residence during 2017, particularly until 7 January 2017, significantly Ms Li confirmed that she stayed overnight at the property only after she and Mr Peng were married until late 2017: well outside the required period of residence by application of section 12.
5. I also considered the evidence adduced by Mr Peng from friends and personal and business acquaintances. Although two deponents relied upon by him assert that he appeared to live in the property during the required period of residence, the evidence of other deponents on which Mr Peng relies is quite inconsistent and the basis upon which most of the deponents make their observations is not clear. For example, Chen Li says only that Mr Peng was in residence on about 7 September 2016. For those reasons I give their evidence little weight.

(2) Inadequacy of verification evidence

1. The "verification" evidence produced by Mr Peng, such as electricity bills and car registration documents is of limited value and I give it limited weight.
2. Such documents are often produced by applicants in matters such as this. The obvious and substantial limitation on the weight and reliability of such evidence to establish "permanent residence" is that, as appears to be the case here, the evidence is often based on information provided to the utility providers or motor vehicle and similar registries by the applicant themselves. As Counsel for the Chief Commissioner submitted, for that and other reasons it is possible and indeed common for a bill (and, I would add a government record, for example the record of where a motor vehicle is housed) to record an address at which the person concerned does not permanently reside.
3. For those reasons I find Mr Peng's documentary verification evidence to be unreliable and of limited weight in determining the nature and period of residence at the Grant property.

(3) Was the Grant Property exclusively occupied by tenants?

1. The Chief Commissioner contended that the documentary evidence (included in the section 58 documents) demonstrates that during the required period of residence Mr Peng received regular rent payments from at least two people. The records reveal many of the payments to be described as "rent". I understood Mr Peng initially to claim that this was rent he was collecting for his aunt in respect of a different property. But under cross-examination he confirmed that there was at least one tenant of the grant property. He conceded that he was unable to establish by any documentary evidence that the rent he had received had been for a property other than the grant property.
2. The grant property has two bedrooms. Although it seems possible that Mr Peng may have let out one bedroom and occupied the other bedroom himself, he has provided no verifying evidence of that. Such a possibility is not addressed in the evidence of his wife Li Zeng (even taking into account that, as noted above, they were not married until later) nor is it addressed by any of the friends or acquaintances of Mr Peng who provided statements, including those such as Mr Chen Li and Mr Zhihao Chen, who assert that they visited Mr Peng frequently at the property.
3. Mr Peng confirmed at the hearing that he had no further evidence to support the contention that he slept in one bedroom and the tenant or tenants in the other bedroom. He contended that further evidence on that was unnecessary and I should simply accept that he tells the truth.
4. I find that the account suggested by the Chief Commissioner as to the renting out of the grant property to be plausible and the version provided by Mr Peng, which is for the most part unsubstantiated, to be substantially less plausible. In particular, Mr Peng has failed to persuade me on the balance of possibilities that he continued to reside in the grant property during the period of any tenancy.

(4) Was the Burwood unit Mr Peng's actual place of residence?

1. The Chief Commissioner relies on evidence which supports the proposition that during the required period of residence Mr Peng actually resided in the Burwood unit. The evidence relied upon for that proposition is that in the form of bank account and credit statements submitted by Mr Peng himself for the purposes of the initial investigation by the Office of State Revenue. These show a continuous pattern of expenditure, including expenditure on retail items and domestic necessities in the general area of Burwood in inner western Sydney as opposed to the area in which the grant property in Hornsby, some 20 kilometres or so away.
2. Mr Peng concedes that most of his shopping was done in the Burwood area and, as I understand him, that it was part of his "work lifestyle" to undertake domestic shopping during business hours whenever he had a break.
3. I took that explanation into account. But the credibility of Mr Peng's assertions that he was not living at the Burwood unit is undermined by the existence of Australian Border Force Passenger Declarations which he made on arrival into Australia by air on 13 May, 14 July, and 10 November 2016 (the passenger declarations). The relevant question in the passenger declaration form is: Intended address in Australia?
4. On each of those occasions Mr Peng answered by inserting the address of the Burwood unit.
5. These matters were put to Mr Peng in cross-examination and he was asked whether he had any additional evidence to counter the suggestion that his real place of residence at the time each passenger declaration was made was the Burwood unit. His response, as I understood it, it was that the Burwood unit was owned by his uncle, he having previously lived there, and that the arrangement made with his uncle was that he, Mr Peng, would proceed from the airport to the Burwood unit to collect his car. I understood him to indicate that one of his customers had advised that he should complete the passenger declaration by inserting the address to which he would be proceeding from the airport and so he believed that "intended address" meant the address to which the passenger would proceed from the airport. No evidence from those customers was produced.
6. The passenger declaration at the foot of the card, which was signed by Mr Peng begins: The information I have given is true correct and complete…"
7. The card includes the following statement (albeit in small font): Information required on this form is required to administer immigration, customs, quarantine, health and wildlife…and its collection is authorised by legislation.
8. Even if it be the case that the statement, being in small font at the foot of the card, may not be read by all passengers and may have escaped Mr Peng's notice, it must nevertheless be obvious to any reasonable and truthful passenger from the form itself and in particular from the nature of the questions asked in it that it is essential that the passenger provide an address at which they can be readily contacted by the authorities, if necessary, at any reasonable time after arrival. In the case of a returning resident of Australia such as Mr Peng, that clearly would be the person's usual residential address.
9. I find Mr Peng's explanation as to his insertion of the address of the Burwood unit on the passenger arrival card on 3 separate occasions to be substantially unpersuasive and to strain credibility.
10. In light of the other evidence which suggests that his likely place of residence was the Burwood unit, a far more credible explanation is that in completing the passenger declaration on each of those 3 occasions, Mr Peng did in fact insert his actual residential address, which was the Burwood unit.
11. I record for completeness that in his written submissions and closing submissions in reply Mr Peng relied in part on the Tribunal's decision in Bulgak v Chief Commissioner of State Revenue [2015] NSWCATAD 237 (Bulgak), on the basis that, as he put it to me, in that case the Tribunal took into account the taxpayer's life style and gave weight to energy bills indicating his residential address in determining whether he had established a given address as his principal place of residence. I find that the decision in Bulgak turned on the particular facts of the case and nothing in the Tribunal's decision in that matter (which was substantially in favour of the taxpayer), including the Tribunal's consideration of the relevant principles applying to a determination of a permanent place of residence changes my conclusions as to the facts or my decision in the present matter.

Conclusions as to the section 12 residence requirement

1. For all those reasons I conclude that Mr Peng has failed to discharge his onus of establishing, on the balance of probabilities, that he satisfied the section 12 residence requirement.

Is the penalty properly imposed?

1. On the basis of my findings, particularly as to the credibility Mr Peng's account and the reliability of much of his evidence, which was for the most part similar to the evidence considered at the investigation stage by the Office of State Revenue, I find that it was open to the Chief Commissioner to decide to impose a penalty under section 45 of the FHOG Act and that the quantum of the fine was in the circumstances not unreasonable.

Conclusions

1. It must follow that each of the decisions of the Chief Commissioner which are under review, namely, that Mr Peng was not eligible for a first home owners' grant under the FHOG Act, that the initial decision to pay such a grant to him be reversed, that he be required to repay the grant and to impose a penalty of $4,500, was the correct and preferable decision and that each such decision should be affirmed.
2. I therefore make the following orders.

orders 1. The decisions of the Chief Commissioner that the Applicant was not eligible for a first home owners' grant under the First Home Owner (New Homes) Act 2000 (NSW), that the initial decision to pay such a grant to the Applicant be reversed, that the Applicant be required to repay the grant and to impose a penalty of $4,500 on the Applicant are affirmed. 2. The time for making the application is extended to 3 December 2021.

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: 22 June 2022