Theophilas v Chief Commissioner of State Revenue

Tribunal Decision

1. The Tribunal noted the ruling in First Instance 2013 on the cl 6(3)(b) question. While expressing some reservations, it decided not to revisit that ruling. Instead it dealt with the matter by reference to cl 6(7)(a). In line with previous authority, notably Aronstan v Chief Commissioner of State Revenue [2008] NSWADT 8 (as qualified by the Appeal Panel in Appeal 2013), the Tribunal approached the issue of whether cl 6(7)(a) applied by asking whether Panania (the respondent's view) or Arncliffe (the appellant's view) was being used and occupied as a PPR as at the taxing date, informed by the circumstances surrounding that date. It agreed with the respondent.

The Appeal

1. The appellant now appeals against the Tribunal decision. The appellant has a right to appeal to the Appeal Panel 'on any question of law' and may extend the appeal to 'other grounds' with the leave of the Appeal Panel: Civil and Administrative Tribunal Act 2013, s 80(2)(b).
2. The appellant's original notice of appeal (17 December 2015) was amended (8 February 2016). The respondent's original reply (7 January 2016) was, as a result, amended (1 March 2016).
3. The appeal puts in issue the Tribunal's interpretation and application of cl 6(7)(a). The respondent's reply (as amended) includes a notice of contention putting in issue the Tribunal's failure to uphold the cl 6(3)(b) ground.

Notice of Contention

1. The respondent supports the decision of the Tribunal and the final orders, but, as previously noted, has included in the amended reply a notice of contention in relation to the Tribunal's rejection of the respondent's alternative ground for refusing the claim which was based on cl 6(3)(b), set out earlier in these reasons.
2. In Appeal 2013, the respondent did raise the issue in reply to the appellant's appeal against that decision. The Appeal Panel, having determined the cl 6(7)(a) question in favour of the respondent, declined to deal with the matter: Appeal 2013, [91].
3. In the present case, the Tribunal noted the doubts expressed by the respondent as to the correctness of First Instance 2013, but decided not to revisit the previous finding, given that it favoured the respondent's position on the cl 6(7)(a) question, and that was sufficient to dispose of the case.

Hearing

1. At hearing we had before us, in addition to the amended notice of appeal and the amended reply: a chronology of events prepared by the respondent (and amended in certain respects at the request of the appellant), an agreed tender bundle (setting out the decision-making process of the Commissioner, and material relating to the hearing at first instance), the respondent's two volume bundle of relevant authorities, and a set of authorities relied upon by the appellant.
2. In the original notice of appeal the appellant confined his appeal to questions of law, and did not seek leave to extend the appeal to other grounds. There is no variation in the amended grounds of appeal, as filed 8 February 2016. However we note that the appellant did include an application for leave to extend the appeal to other grounds in the submissions that accompanied the amended grounds (see footnote 3 of the submissions).
3. In notices of appeal prepared by lawyers or with legal assistance, the asserted questions of law should be clearly separated from other grounds within the notice of appeal itself. We accept that it is permissible for the appellant to seek to keep alive grounds that are not regarded as raising questions of law by asking for them to be treated as 'other grounds'. The notice of appeal should contain brief reasons as to why the discretion to grant leave for grounds other than questions of law should be exercised. This did not occur here.
4. We have therefore approached this appeal, in fairness to the respondent, on the basis that it is a question of law appeal only.

Proposed Questions of Law

1. The respondent objected to any further consideration being given to six of the grounds of appeal (grounds 1, 2, 4, 7, 8 and 9) on the basis that they did not raise questions of law. The respondent did not object to grounds 3, 5 and 6. We are satisfied that grounds 3, 5 and 6 do raise questions of law.
2. We will now set out the nine grounds verbatim (we have removed references to street addresses of the properties and used abbreviations). We have underlined the three grounds accepted as raising questions of law. 1. Whether on the primary facts found by the Tribunal it was open to conclude that [Panania] was in respect of the 2014 land tax year the appellant's PPR. 2. Whether on the primary facts found by the Tribunal it was open to conclude that Panania had not ceased to be the appellant's PPR as at 31 December 2013. 3. Whether the Tribunal, in holding, that the appellant had not discharged the onus of proof of proving Panania was not the appellant's PPR that Panania had ceased to be appellant's PPR as at 31 December 2013 answered the correct question, namely what was the appellant's PPR as at midnight on 31 December 2013. 4. The Tribunal erred in placing the reliance it did on the use made by the appellant of the facilities at Panania. 5. While the Tribunal recognised that there is a distinction between use of premises and occupation of premises the Tribunal's reasons fail to pay proper regard to the distinction and failure to recognise that the question of what is one's PPR is to be determined by reference to the definition of 'principal place of residence' in s 3(1) of the Act. 6. The Tribunal erred in its understanding of the phrase 'principal place of residence' in s 3(1) of the Act. 7. On the undisputed primary facts the conclusion that Panania was the appellant's PPR at midnight on 31 December 2013 is not reasonably open. 8. On the undisputed primary facts the only conclusion properly open to the Tribunal was that Panania was not the appellant's PPR as at midnight on 31 December 2013. 9. On the undisputed primary facts the correct and preferable decision as that Panania was not in respect of the 2014 land tax year the appellant's PPR.
3. It will be seen that many of the grounds have a degree of repetition, and some grounds are merely the obverse of the previous ground. In our view, Question 9 is in the form of a conclusion, and does not raise any question of law.
4. At hearing there was a debate as to whether the grounds challenged by the respondent raised 'questions of law'. We were referred to various authorities and the distinctions that have been drawn between 'questions of law', 'mixed questions of law and fact' and 'questions of fact': cases such as Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280; and Collector of Customs v Agfa- Gavaert [1996] HCA 36; (1996) 141 ALR 59. The parties referred to the comprehensive decision of a Full Bench of the Federal Court in Haritos and Another v Federal Commissioner of Taxation [2015] FCAFC 92 that closely reviewed the learning on this subject. The issue there was the meaning to be given to the expression 'question of law' in the provision that gives an appeal right to the Federal Court against decisions of the Commonwealth Administrative Appeals Tribunal (AAT) pursuant to s 44(1) of the Administrative Appeals Tribunal Act 1975. It provides 44 Appeals to Federal Court of Australia from decisions of the Tribunal Appeal on question of law (1) A party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding.
5. We do not think it productive to engage in a close analysis of this body of authority in these reasons.
6. In our opinion, the following questions of law arise (including within that province - mixed questions of law and fact - for the reasons given by the Court in Haritos at [131]): 1. Whether the Tribunal mischaracterised the question before it, and misapplied the taxpayer's onus of proof? (Ground 3). 2. Whether the Tribunal properly understood the meaning to be given to 'principal place of residence', and the relevance or otherwise of the consideration of 'use' and 'occupation'. (This covers, as we see it, the matters properly raised by grounds 5 and 6. We see ground 4 as surplus, in that ground 5, in our opinion, raises the same issue.) 3. Whether the findings of the Tribunal were open to it on the basis of the 'primary facts' and the 'undisputed facts' found by the Tribunal. (This covers the matters raised by Grounds 1, 2, 7 and 8.)
7. Questions (1) and (2) cover the area acknowledged by the respondent as raising questions of law. Question (3) accedes to a degree to the position put by the appellant in response to the respondent's submission that the other questions were solely concerned with questions of fact. In our view it was apparent from his written and oral submissions that the appellant's case was that the Tribunal had erred in law in the way identified in House v R [1936] HCA 40; (1936) 55 CLR 499 (17 August 1936), at 504-5 per Dixon, Evatt and McTiernan JJ, in particular, that the decision on the facts as found was 'unreasonable or plainly unjust', giving rise to a failure by the Tribunal to properly exercise the discretion reposed in it (to make the correct and preferable decision).
8. All the appellant's grounds relate to the Tribunal's finding in respect of cl 6(7)(a).
9. We will deal separately below with the respondent's notice of contention in relation to the Tribunal's finding as to cl 6(3)(b).

Scheme of the Legislation

1. Section 7 provides that tax is payable on all land in NSW, unless exempted. The tax year is the calendar year commencing 1 January; and the date for ascertaining ownership is 31 December of the previous year: s 8. Section 10(1)(r) of the Act provides: (1) Except where otherwise expressly provided in this Act the following lands shall ... 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.
2. 'Principal place of residence' is defined in s 3(1), as follows: principal place of residence of a person means 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.
3. Schedule 1A ('Principal place of residence') begins with definitions (Part 1). The PPR exemption (Part 2) is conferred by clause 2, as follows: 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. (5) The principal place of residence exemption is subject to the restrictions set out in Part 4.
4. Part 2 of Sch 1A goes on to deal with the kind of allotments or holdings that will be regarded as residential land for the purpose of the exemption (Part 2).
5. Part 3 of Sch 1A (cll 4-10B) then provides for a number of 'concessions'. They deal with various residential circumstances that fall outside the primary area of application of the PPR exemption - that of exclusive continuous domestic occupation of a private dwelling on an ordinary sized block of land.
6. As previously noted, cl 6 grants a concession extending the operation of the PPR exemption to land that is presently unoccupied but is intended by the owner to be occupied in due course solely as his or her PPR. A typical situation to which this concession might apply is the couple who have bought subdivided land with the intention of building their home on the vacant lot. As we have previously noted and as this case illustrates, the concession is also available, in principle, to a resident owner who has vacated a dwelling while it is being refurbished or rebuilt.
7. Clause 6(1) describes the 'concession for unoccupied land intended to be owner's principal place of residence' in wide terms, i.e. (1) An owner of unoccupied land is entitled to claim the land as his or her principal place of residence, if the owner intends to use and occupy the land solely as his or her principal place of residence. In such a case, the owner is taken, for the purpose of the principal place of residence exemption, to use and occupy the unoccupied land as his or her principal place of residence.
8. But the later provisions of cl 6 go on to circumscribe its availability in several ways. In this appeal the following findings of the Tribunal below are not in contest: (1) that the appellant intends to return to the Randwick property and occupy it as his PPR (cl 6(1)); that the land is unoccupied because he is carrying out work on the land (cl 6(2)(a)), those works have commenced (cl 6(2)(b)) and the intended use of the land is not unlawful (cl 6(2)(c)).

The Provisions in Dispute

1. As we have noted above, the provisions in dispute are cl 6(3)(b) and cl 6(7)(a), and we have already set them out.

Whether the Tribunal mischaracterised the question before it, and the taxpayer's onus of proof?

Proper Interpretation of cl 6(7)(a)

1. For convenience, we repeat the terms of cl 6(7)(a): (7) This clause does not apply in respect of land owned by a person if: (a) the person or any member of the person's family (within the meaning of clause 12) is entitled to have his or her actual use and occupation of other land taken into account under section 9C or 9D or under this Schedule,
2. The Appeal Panel' decision in Appeal 2013 dealt comprehensively with the issue of the scope of operation of cl 6(7)(a) and its proper interpretation. The Appeal Panel summarised the competing arguments at [42]-[43]: 42. The appellant submits that, properly construed, subclause 6(7)(a) does not disentitle an owner to an exemption from land tax for unoccupied land unless the other land is "the" principal place of residence of the owner. In other words, a land owner will be disentitled to the exemption only if the other land satisfies the definition of principal place of residence in s 3 and clause 2 of Schedule 1A, or is deemed to so satisfy the definition by one of the other clauses in Schedule 1A. 43. On the other hand, the Respondent contends that so long as there is another property that is a contender for the exemption under Schedule 1A, the unoccupied land is not eligible for the exemption. The respondent contends that in order to activate subclause 6(7)(a) all that is required is that an owner has a right for his actual use and occupation of other land to be taken into account. The right to have his actual use and occupation taken into account does not require the other land to satisfy an exemption. In the respondent's submission, whenever an owner of unoccupied land is actually using and occupying as his residence, other land he owns, clause 6(7)(a) is enlivened and the unoccupied land is disentitled from the exemption in clause 6. In other words, the respondent says that the appellant was entitled to have his actual use and occupation of Panania taken into account because he was residing there and that was sufficient to disentitle the Randwick property from the exemption.
3. The Appeal Panel rejected the broader of the respondent's submissions. The concession did not cease to apply simply because the taxpayer owned another property that was a 'contender' for the exemption. The Appeal Panel concluded that it only ceased to apply if the 'contender' was a residence used and occupied to the degree that it was the taxpayer's PPR.
4. It ruled as follows, at [47]-[51]: 47. The language of clause 6(7) is cumbersome, but the Appeal Panel is satisfied that the appellant's construction is correct. The clause 6 concession is denied in the event the landowner uses and occupies another residence he owns, as his principal place of residence. It is not sufficient to deny the exemption if the land owner merely resides at other premises he owns. This is consistent with ss 8 and 9 of the Land Tax Management Act that together provide that land tax is levied on the taxable value of all land that is not exempt, owned at midnight on the 31st of December of the year preceding the tax year. In order to determine the relevant taxable value it is necessary to determine whether any exemptions actually (not possibly might) apply, at the taxing date. 48. Furthermore, the reference in clause 6(7)(a) to a person being "entitled" to have his occupation of other land "taken into account" is a product of the reference in clause 6(7)(a) to s 9C and s 9D of the Land Tax Management Act. Section 9C allows a reduction of the land value for calculating land tax on flats or mixed development land when a flat is used and occupied by the owner of land as his principal place of residence. Section 9D allows a reduction in the land value for the purposes of assessing land tax in single dwellings on mixed use land where the single dwelling is used and occupied by the owner of land as his or her principal place of residence. 49. The phrase employed in subclause 6(7) "taken into account" is explained by reference to the calculations required by s 9C or s 9D. In either case, the actual use or occupation of the other land "is" only taken into account in assessing land value under s 9C or s 9D if the land is the principal place of residence of the owner: s 9C(3); s 9D(6). It is insufficient for s 9C or s 9D purposes if the flat or dwelling is merely one of all residences of the owner. 50. This supports the construction advanced by the appellant that the other land must be the principal place of residence of the owner, either as a result of the operation of s 3 and clause 2 of Schedule 1A, or as a result of a deeming provision in Schedule 1A, in order to activate clause 6(7) and disentitle an owner to the unoccupied land tax exemption. It is not enough if the other land is merely a contender for the principal place of residence exemption, rather, it must be the principal place of residence. 51. Despite this conclusion, we are not satisfied that the Tribunal at first instance made any error. Even though Aronstan was followed and in that case the Judicial Member appears to have accepted the Respondent's submission on construction, here the Tribunal concluded that the Panania property was the principal place of residence of the appellant and not merely a contender for that position.
5. Accordingly, if there is an owned property still occupied as the taxpayer's PPR, then cl 6(7) operates, and the availability of the concession is denied. The result is that the land to which the owner intends to return in due course and occupy it as his or her PPR does not attract the exemption. The actual PPR attracts the exemption.
6. The appellant did not challenge the Appeal Panel's interpretation of cl 6(7)(a). The contest related to the way the Tribunal at first instance applied that interpretation to the evidence.

Application to Present Case

1. There was evidence going both ways on the question of whether Panania remained the appellant's PPR as at the taxing date or Arncliffe had become his PPR (and therefore did not trigger the operation of cl 6(7)(a)).
2. In the course of its reasons, the Tribunal characterised the question before it in different ways: At [13]: 'The issue in these proceedings is whether the Assessment for the 2014 tax year should provide that the Randwick property is exempt from land tax for that year.' At [74]: 'The parties agree that the issue for determination by the Tribunal is whether in respect of the 2014 year the Panania property was still the Applicant's principal place of residence.'
3. In its summing up, it expressed its conclusion as follows: 89. Having regard to the evidence before me as to the extent of the use and occupation of the Panania property by the Applicant which continued after the date on which the Applicant said he moved to Arncliffe I am not satisfied on the balance of probability that the Panania property ceased to be the principal place of residence of the Applicant as at 31 December 2013. Accordingly I am not satisfied that the Applicant is not entitled to have his actual use and occupation of the Panania property taken into account under the schedule.
4. It will be seen that in this passage it formulated the question differently again from how it was put at [13] and then at [74]. It was not put as 'whether on the balance of probability ... the Panania property ceased to be the principal place of residence ... as at 31 December 2013'.
5. The onus to which the Tribunal referred in this passage, and which is put in issue by the notice of appeal, is that imposed on taxpayers in this class of administrative review proceeding by s 100(3) of the Taxation Administration Act 1996: 100 Provisions relating to applications for review (3) The applicant has the onus of proving the applicant's case in an application for review.
6. The appellant's essential contention was that he had by the taxing date established Arncliffe as his new home pending completion of building works at Randwick.
7. We have referred already to the information the appellant gave to the Commissioner, and other information collected by the Commissioner: see [11]-[14].
8. In addition, the appellant's evidence at hearing before the Tribunal in favour of Arncliffe being treated as his PPR included: that he regularly slept in a bedroom given over to him at Arncliffe, he used about 30% of the storage space in the bedroom for his clothes, he used the kitchen and a TV room there. Documentary evidence included a receipt from a furniture store for goods supplied to the Panania address that included a bed, related items, and a mattress.
9. As to Panania, he said in his written testimony that he had left it unoccupied and used it principally for storage. But he had not disturbed its furnishings, for security reasons so that it continued to look lived in. He acknowledged that he did some cooking, eating and washing there, used the computer and used the exercise equipment. As he had informed the Commissioner in the objection process, he had stayed there continuously between 24 May and 15 June 2014. He expanded on his written evidence in his oral testimony, referring to his use of the landline there, and why he chose to used the internet connection there, and computer. He preferred to do many of the things to which he referred, out of consideration for his friend at Arncliffe whose home he was only using temporarily without having to pay any rent.
10. The Tribunal set out in some detail the usage of facilities shown by his water, electricity, telephone and internet bills for Panania, covering comparable periods before and after 14/15 December 2015. 88. The documentary evidence in relation to the Panania property in the s 58 documents outlined at [29] to [37] above indicates that:◦ (1) there was no appreciable reduction in water usage between 14 December 2013 and 12 May 2014 in comparison to the period prior to 14 December 2013. (2) There was a slight increase in average daily electricity usage for the three months after 14-15 December 2013 in comparison to the comparable period in previous year. The average electricity usage for the three months to 21 September 2011 was substantially less than in the period after September 2011. This is despite the Applicant's evidence that an electrician informed him, while he was residing at the Panania property that the majority of electricity usage related to an old refrigerator which was already at the Panania property when the Applicant moved there in September 2011. The average daily electricity usage in evidence for the period from September 2011 until 22 March 2014 varies from 15 kWh to 21 kWh. If a majority of that usage was attributed to the old refrigerator it would be reasonable to expect that, if the refrigerator was operating prior to September 2011, the refrigerator was using not less than 7 kWh per day. However the evidence shows that the average daily usage for the whole property for the three months prior to the Applicant moving in was 5 kWh. No evidence was led as to whether or not the refrigerator was in use prior to September 2011 nor when the apparent excessive usage of electricity commenced. This lack of evidence does not assist the Applicant satisfy his onus. (3) The average monthly usage charges in respect of outgoing calls on the telephone landline at the property declined somewhat after 4 March 2014 although it substantially increased in the period 4 December 2013 to 3 March 2014. The evidence is that the number of outgoing calls materially increased from the quarter commencing 4 December 2013 to the quarter commencing 4 March 2014. The Applicant's evidence that he maintained the landline at the Panania property so that Mr CD could call him there rather than call him on his mobile telephone does not explain the substantial number of outgoing phone calls made from the Panania property on the landline after the Applicant's move to Arncliffe. Accordingly the evidence as to outgoing phone calls from the Panania property after mid-December 2013 does not assist the Applicant in satisfying his onus. 89. Having regard to the evidence before me as to the extent of the use and occupation of the Panania property by the Applicant which continued after the date on which the Applicant said he moved to Arncliffe I am not satisfied on the balance of probability that the Panania property ceased to be the principal place of residence of the Applicant as at 31 December 2013. Accordingly I am not satisfied that the Applicant is not entitled to have his actual use and occupation of the Panania property taken into account under the schedule.
11. The appellant used both residences. While there was, as the appellant submitted, undisputed evidence as to his sleeping, eating and using the facilities of Arncliffe, there was circumstantial evidence pointing to very active use of Panania for domestic purposes. It is clear from its conclusion that the Tribunal did not accept that Panania had become the PPR by the taxing date, taking into account evidence of use and occupation of the respective premises before and after that date.
12. In referring to the need to be 'satisfied' the Tribunal was picking up the language seen at cl 2(2). In cases such as the present where an appellant is not able to show six months continuous use and occupation of the asserted PPR prior to the end of the tax year (cl 2(2)(a)), the respondent can treat a residence occupied for a shorter period as the PPR if so 'satisfied' (cl 2(2)(b)) of that matter. The Tribunal approached the issue before it on the same basis that, as it stood in the shoes of the respondent. It needed similarly to be 'satisfied' that the short term alternative (here one of only two weeks as the taxing date) had become the new PPR. The taxpayer carried the onus.
13. Though the question before it was put in different ways at [13], [74] and in the body of [89], we consider that the Tribunal's reasons, fairly read, do not mischaracterise the question before it in a way that might have led it into error. The formulations recognise that there were two contenders for treatment as the appellant's PPR - Panania and Arncliffe. In essence, the Tribunal expresses itself not satisfied that the previous PPR, Panania, had been replaced as PPR by Arncliffe, at the taxing date (having regard to evidence bearing on the question before and after that date). In those circumstances Panania remained his PPR.
14. In our view, strictly all the Tribunal needed address was whether the evidence, viewed overall, satisfied it that Arncliffe was now the principal of residence of the appellant, in a situation where he continued to make use of two residences for domestic purposes, Arncliffe and Panania. It put the question before it in various ways in its decision, as we have noted, but we are satisfied that its different formulations did not lead it into error.

The Onus

1. The taxpayer bears the onus of satisfying the decision maker (the respondent initially, the Tribunal on review) in relation to the question that the respondent (and the Tribunal on review) must decide. It did not misstate the onus that lies on the taxpayer in proceedings of the present kind. The taxpayer needed to satisfy the Tribunal that Arncliffe had become his PPR and conversely, therefore, that Panania had ceased to be his PPR.

Whether the Tribunal properly understood the meaning to be given to principal place of residence, and the relevance or otherwise of the consideration of use and occupation.

1. The present case is unusual in that it would seem that the respondent did not contest any of the appellant's evidence in relation to such matters as the extent to which he slept, ate and drank at Arncliffe as compared to Panania.
2. The respondent, as we understand the way the case is depicted in the Tribunal's reasons (we do not have a transcript) proceeded on the basis of an examination of all the material filed, and a consideration of the appellant's oral evidence. The respondent, it would appear, took the view that the appellant needed to satisfy it that Arncliffe had become the appellant's PPR and the evidence was insufficient. In those circumstances the PPR must remain Panania as the only other contender.
3. The appellant's submission was that the Tribunal focussed too greatly on, what it submitted were, occasional uses made by the appellant of the Panania property before and after the taxing date. The appellant submitted that the use of facilities there, such as the washing machine, a computer, the phone or gym equipment was not sufficient to make Panania the appellant's PPR. His evidence that he slept at Arncliffe most of the time, and lived there most of the time was not contested, and these facts led inescapably to the conclusion that Arncliffe had become his PPR. We understand these to be the 'undisputed facts' to which the grounds of appeal refer.
4. Section 3 of the Act simply states that 'principal place of residence' means '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'. It provides no additional meaning in relation to the words 'place of residence'. The appellant referred to old English law dealing with the meaning of place of residence and similar expressions in other statutory schemes. The English cases frequently repeat the dictum that the matter is to be determined by consideration of where a person 'eats, drinks and sleeps': Stoke-on-Trent Borough Council v Cheshire County Council [1915] 3 KB 699 at 706 per Ridley J; R v Inhabitants of North Curry (1925) 107 ER 1313 at 1315 per Bayley J.
5. Section 3 needs to be read in conjunction with the specific provisions of cl 2 of Sch 1A. Schedule 1A as contemplated by s 10(1)(r) of the Act sets down the scope of the exemption, and the circumstances to which it does and does not apply. Clause 2, which we set out earlier in these reasons, spells out the primary features of the exemption. The clause states that the exemption is to apply to land 'used' and 'occupied' as the PPR and 'only' for that purpose. It is clear, we consider, that the legislature intended that there be close consideration to the practicalities of the way the land is used and occupied. As the Tribunal case-law emphasises (e.g. Aronstan at [37], [38] and [42]) attention needs to be given to the extent and quality of use of occupation of the residences in contention.
6. In our view, the Tribunal appropriately took the various activities into account. They are all uses of a domestic kind, and ones consistent with residential use of premises. Those uses are not necessarily conclusive, and the Tribunal did not suggest that.
7. We accept that his primary evidence as to where he spent most nights was not contradicted or the subject of any adverse findings by the Tribunal. This was an unusual case as compared to some of the competing residence cases: Chief Commissioner of State Revenue v Mesiti [2003] NSWADTAP 57; Ghali, previously cited. Exclusive concentration on where a person usually eats, sleeps and drinks, while clearly relevant, may mislead. This case had the unusual feature of, what might be called, a day-time house (Panania) and a different night-time house (Arncliffe). There was sparse evidence as to the use made of the night-time house - Arncliffe - during the day.
8. It is apparent from the appellant's evidence that he saw himself as in something of a grace and favour arrangement with his friend at Arncliffe, and did not want to be seen to use unduly the facilities of his home. As he had good facilities still available to him at Panania, he continued to use them. The utility bills showed levels of consumption of services similar to those when he had used and occupied Panania exclusively. This material pointed to a level of use of a residential kind in respect of activities such as washing, bathing and cooking. It was also of some significance that he had not made administrative changes such as altering his electoral roll address.

Whether Decision Unreasonable or Unjust given Facts

1. We have dealt at some length with the evidence that was before the Tribunal. It had regard to relevant material. The conclusion it reached was not plainly unjust, or so unreasonable as to suggest that it failed properly to exercise its discretion. To repeat the conclusion of Beazley P in Lo v Chief Commissioner of State Revenue [2013] NSWCA 180 at [22]: 'Neither the outcome not the process of reasoning bespeaks unreasonableness, let alone a high degree of unreasonableness.'
2. The appeal is dismissed.

The Section 6(3)(b) Issue

1. In light of our conclusions, as in the 2013 Appeal it is not strictly necessary for us to go on and address the respondent's arguments in respect of cl 6(3)(b).
2. However, as this is now the second time the issue has been raised, we will make some observations on the respondent's submissions. The appellant's submissions in reply did address the respondent's submissions on this point.
3. We will begin by setting out again the whole of s 6(3): (3) This clause applies in respect of the assessment of a person's ownership of land only in the period of: (a) 4 tax years immediately following the year in which the person became owner of the land, or (b) if the land is used and occupied for residential purposes by a person other than the owner at any time after the person became owner, 4 tax years immediately following the tax year in which the building or other works necessary to facilitate the owner's intended use and occupation of the land are physically commenced on the land.
4. As we have already noted, in bringing his circumstances within para (b) the appellant relied on the (undisputed) fact that his niece also lived at Randwick in the years 1996 to 1999. In First Instance 2013 the Tribunal did not indicate in its reasons that a dispute existed in relation to the proper interpretation of cl 6(3)(b). It simply stated at [51]: Next, the applicants must satisfy cl 6(3), relevantly subclause (b). It is not disputed that the relevant taxing date fell less than four years after work commenced in 2011 and that the applicant's niece occupied the land for residential purposes for about seven years after the applicant became its owner. The requirements of cl 6(3)(b) are thus also met.
5. The respondent's submission then, and since, has been that para (b), properly construed, only refers to use and occupation by another person to the exclusion of the owner.
6. In relation to the present dispute, the Tribunal below expressed doubt as to the correctness of the First Instance 2013 decision, at [70]: Having regard to the evidence before me I am not satisfied that the Tribunal is bound by the 2013 decision in respect of the application of paragraph 6(3)(b). I accept the Applicant's argument that it is the words of the legislation which are to be construed and relied on. I also accept the Respondent's submission to the extent that it is arguable that the wording "other than the owner" could be interpreted as "to the exclusion of the owner". However in the circumstances and having regard to my findings below in respect of the application of clause 6(7) there is no need for me to make a finding as to whether or not the Applicant has satisfied the conditions of clause 6(3).
7. We agree with the respondent's submission that the proper approach in cases of this kind is first to deal with the cl 6(3) question, as it is a pre-condition for eligibility to apply for the concession. In our view, the Tribunal should have disposed of this question first, and not avoided it.
8. The respondent's submissions referred to the legislative history of cl 6(3). Sch 1A was inserted in the Act by Part 4 of the State Revenue Legislation Further Amendment Act 2003 No 80. The amendments brought together in the form of Sch 1A the provisions on this subject then scattered about the Act, and revised them in certain respects. Clause 6 should, we agree, be interpreted in a manner consistent with the overall context in which it appears.
9. The fundamental objective of Sch 1A is to give a landowner an exemption from land tax in respect of his or her actual PPR. The basic principle is that the subject land must have been used and occupied on a continuous basis as residential land (see esp cl 2(2)(a)). The Schedule then deals with the effect on the eligibility of the land to be treated as the taxpayer's PPR where non-residential uses are carried on there (for example, cl 5, use of residence for business purposes) or residential occupation of the part of the dwelling or part of the land by another is permitted (e.g. occupancies from which income is derived, cl 4, and where the owner's residence forms part of a large allotment or a multi-unit apartment block, cl 13).
10. Clause 8 allows the owner to continue to receive the PPR exemption for a former residence from which he or she is absent, provided the owner does not then occupy other land they own as their PPR (cl 8(1)(b)). An example might be where the owner has moved overseas or interstate to live and work. The concession is time limited. The respondent submits that cl 6 works in the same way. It is concerned with situations where the owner does not have the use and occupation of the land to which the concession applies, and from which the owner is actually absent while building work is being completed, with the intention of returning. The submission is that this understanding should be taken into account in construing cl 6(3)(b).
11. The respondent has asked us to draw infer, therefore, that the words in cl 6(3)(b) - 'is used and occupied for residential purposes by a person other than the owner' - means a 'person other than the owner to the exclusion of the owner' (as would be the case in a normal tenancy). It follows that the approach inherent in the finding of the Tribunal in First Instance 2013 is wrong. It cannot cover a circumstance where the owner remains in occupation and allows another person to share the premises.
12. Clause 6(3)(a) is clear in its operation. It limits the right to claim the concession to owners not in occupation for the first four tax years after they become owner. Clause 6(3)(b) is not as definitive. An owner could cease to be eligible under cl 6(3)(a) after four years, and many years later regain eligibility via cl 6(3)(b) by having the land tenanted for a period. If that is right, the owner could then preserve a claim to the concession for many more years, until such time, however far away, when the owner, having resumed occupation of the dwelling as his PPR decides to leave it temporarily to allow rebuilding works to proceed.
13. In our view, the words of cl 6(3)(b) are clear and unambiguous, and do not admit of the qualification pressed by the respondent. They simply speak of another person having the use and the occupation of the land for residential purposes. As we read the provision, the words do not exclude in terms the possibility that the other person may be present on the land in a way that satisfies the description 'use and occupation for residential purposes'. There are other provisions, as we noted, that deal with the possibility of more than one person being present on the land with the owner at the same time. We do not think it open to qualify the words of cl 6(3)(b) in the way suggested.
14. It may be that cl 6(3)(b) should be reviewed to make more clear the circumstances in which it operates, both as to the position where both the owner and other person might be said to have the use and occupation of the land at the same time, and in relation to the relationship in time between the other person's use and occupation and the commencement of any building works by the owner.
15. We do accept, however, the further submission of the respondent that where a taxpayer relies on cl 6(3)(b) to found a claim to the concession, it is necessary for the taxpayer to produce satisfactory evidence that the other person's use and occupation is of a kind that accords with the approach adopted in leading authorities, i.e. Newcastle City Council v Royal Newcastle Hospital [1959] AC 248; Commissioner of Land Tax v Christie [1973] 2 NSWLR 526 at 533 per Bowen JA. Account need also to be taken of the decisions in Flaracos v Chief Commissioner of State Revenue [2003] NSWSC 68 (Gzell J); Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2011] NSWCA 366 at [21] per Allsop P (Campbell and Whealy JJA agreeing); and De Marco v Chief Commissioner of State Revenue [2013] NSWCA 86 per McColl JA (dissenting as to result) at [27]; and per Basten JA at [71]-[72].
16. In this regard, we acknowledge the respondent's submission that in light of the approach adopted by Gzell J in Flaracos it is unlikely, on the facts as we have them, that the niece's presence at the appellant's property in the years 1996 to 1999 could qualify as 'occupation' in the sense emphasised in many of these cases (but note the qualification entered by Basten JA at [71]-[72] in De Marco).
17. In Flaracos, Gzell J dealt with the meaning to be given to 'continuous use and occupation' and its application to circumstances where the owner was absent from the property for intervals of time while a tenant remained in possession of the property. The provision under notice was the then equivalent of cl 2(2)(a) of Sch 1A.
18. His Honour explained that mere intervals of absence did not by that fact alone defeat continuousness of occupation, and thereby deprive the owner of the PPR exemption. In the course of his reasons, his Honour accepted that both the owner and the tenant were 'users' of the property for residential purposes, but he saw the on-site owner as the only person who could be regarded as being in 'occupation' of the property in the requisite sense, as he had the legal right to control possession. The tenant did not have that right. For example, he said at [30] (emphasis added): 30 In the instant circumstances, there were extended periods of two to three months during which the plaintiff was absent from his Peakhurst home and during which various tenants were in possession. That does not seem to me to have contravened the requirement in s 3(3)(a) of the Act [see now Sch 1A cl 2(2)(a)] for continuous occupation. The plaintiff was in occupation of the premises when he and a tenant were physically present in it. Like the tenant he was in possession but unlike the tenant he had the right of control. When he left on his extended trips he intended to and did return to live in the premises. During his physical absence he retained the right to possession and he maintained his rights of control over the land.
19. We will not seek to develop this point any further in these reasons. Much will depend on the facts. It may be that the dichotomy reflected in the sentence we have italicised overstates the distinction, and there may be cases in which the tenant, or sharer, had a right of control in the necessary sense.

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: 23 May 2016