Background
The Applicants purchased a residential property as tenants in common in February 1994. Karen Bampton purchased an adjoining property in February 1999. It was accepted that Mr Bampton was at all relevant times, a beneficial owner of the adjoining Property.
The Applicants moved into 4 Chambers Ave in December 2000 and at that time 2 Chambers Ave was left vacant pending construction to join the Properties.
Land tax assessments were issued for both properties.
In 2001, 2005 and 2007 Mr Bampton (or his accountant) queried the land tax assessments in respect of the adjoining Property, however no objection was lodged until March 2009, when an objection to 2000 to 2008 land tax was lodged. The basis for the objection was that the PPR exemption should apply to the adjoining Property being one parcel with 2 Chambers Avenue. The Chief Commissioner’s response was that the objections were not lodged in time, but the reasons for the objection had been considered and it was determined that the assessments were valid. There was no reference to appeal rights in the response.
Land tax assessments continued to be issued for both properties in the usual course for 2010 to 2021.
On 4 March 2021 Mrs Bampton lodged an objection to the land tax assessments in respect of the adjoining Property for the 2003 to 2021 land tax years. In November 2021 the Chief Commissioner issued a re-assessment for the 2017 to 2021 land tax years exempting the adjoining Properties from land tax as the Applicants’ principal place of residence.
In May 2022 the Applicants lodged an objection against the Chief Commissioner’s decision not to review the land tax assessments for the years prior to 2017. Ultimately, the Chief Commissioner accepted the Applicants’ objection to the assessments in respect of the 2009 to 2016 land tax years out of time, and allowed the objections.
On 4 October 2023, the Applicants were informed that the Chief Commissioner did not accept the objection in respect of the assessments for the 2000 to 2008 land tax years, noting that an objection had already been made in respect of those assessments and a determination had been made.
The Applicants commenced proceedings six months later, seeking a refund, and seeking an order extending the time to commence proceedings.
The Applicants sought the PPR on the basis of the principles in Ryan & Anor v Commissioner of Land Tax [1982] 1 NSWLR 305 (Ryan’s case), which set out when land comprised of two or more lots may be entitled to the PPR:
The Tribunal cited Hunt J at p 310:
“It follows, in my view, that contiguous blocks of land can comprise a parcel of residential land within s 10 (1)(r)(ii) only where they are undivided not only by physical separation but also in use, occupation and title.”
This test is known as the “four unities” test.
Ryan’s case predates clause 13 of Schedule 1A of the Land Tax Management Act 1956, which came into force in July 2008. Clause 13 sets out the circumstances where the PPR may apply to a parcel of residential land that is comprised of two or more lots.
Decision
a. Length of delay
The Tribunal noted that there was a very significant delay in bringing the Application, as the Applicants were seeking an order extending the 60-day time period to commence proceedings by more than thirteen years, to 4 April 2023.
b. Explanation for delay
The Tribunal did not accept the Applicants’ lack of knowledge of their rights as a satisfactory explanation for the delay, noting that Mr Bampton was a lawyer and could have sought legal advice from colleagues. The Tribunal did not accept that there was any causal connection between the communications with the Chief Commissioner and the delay with commencing proceedings.
c. Prejudice to the Chief Commissioner
The Tribunal rejected the Applicants’ submission that, because the Chief Commissioner had dealt with objections to other tax years out of time, it followed that there could be no prejudice in allowing this application to be made out of time.
The Tribunal accepted that the Chief Commissioner would suffer prejudice if an order were made extending time for filing the application in respect of the 2000-2006 land tax years, as the Chief Commissioner would be unable to rigorously test Mr Bampton’s evidence as to precisely what construction works were undertaken and at what time.
d. Merits: The Principal Place of Residence Exemption
Given the factors weighing heavily against an order extending time for filing of the application, the Tribunal considered that it must be satisfied that the Applicants’ case had more substantial merit than merely being fairly arguable (Daoud v Chief Commissioner of State Revenue [2015] NSWCATAD 53 at [23]).
The Chief Commissioner accepted, and the Tribunal found on the evidence, that the Applicants demonstrated that in relation to the 2007 and 2008 land tax years, their case had substantial merit and the PPR exemption would apply.
However, the Tribunal considered that, in relation to 2000-2006, the Applicants had not proved on the balance of probabilities either that they were capable of seamless use and occupation of the adjoining properties or that they were in fact used and occupied as a “single residence”. The Applicants’ evidence in this regard lacked detail. Further, the Tribunal held that while the common wall remained in place the adjoining Properties could not be a single residence, and it follows that the Applicants did not establish that their case had merit in respect of the 2000-2006 assessments.
In relation to the 2007 and 2008 land tax years, the Tribunal accepted the evidence of Mr Bampton that the construction works were completed in 2006. Photos in evidence show that, once those works were undertaken, large portions of the common wall had been permanently removed allowing free movement between the Properties and that the Properties were, by that time physically undivided and being used and occupied by the Bampton family as one physical residence so that the PPR would apply for the 2007 and 2008 land tax years. In respect of the assessments for those land tax years, the Tribunal held that the Applicants demonstrated that their case has substantial merit.
e. Injustice for the Applicants if time limits strictly applied
For the 2000-2006 assessments, the Tribunal found that strict compliance with the rules would not work any injustice for the Applicants. Even if the Tribunal was prepared to make an order extending the time for filing in respect of those assessment, the PPR exemption did not apply for the 2000, 2001 and 2006 land tax years and that Applicants had not satisfied their onus of proof in respect of the exemption for the 2002-2005 land tax years.
f. Public interest considerations
The Tribunal held that there were no suggestions that there are any public interest considerations in favour of granting an extension of time for 2000-2006 assessments.
Conclusion
The Tribunal held that in the circumstances, it was not appropriate to make an order extending the time for bringing the application for review for the assessments for the 2000 to 2006 land tax years. Even if an order granting an extension of time to bring the application were made, the application would fail in respect of each of those assessments.
The Tribunal noted that in Daoud, it was stated that time limits are set to promote the orderly and efficient conduct of proceedings in the Tribunal, to provide certainty for the parties to proceedings, and to achieve finality in litigation and should generally be strictly enforced unless the interests of justice require otherwise.
In relation to the 2007 and 2008 land tax years, the Tribunal held that in the interests of justice, time to commence proceedings should be extended, the assessments should be revoked, and the PPR exemption applied to the adjoining Properties for those years.
Orders
- The application for an order extending time for the filing of the application for review in respect of the land tax assessments for the Property for the 2000 to 2006 land tax years is dismissed.
- The application for review in respect of the land tax assessments for the Property for the 2000 to 2006 land tax years is dismissed.
- Under s 41 of the Civil and Administrative Tribunal Act, the period of time for filing an application for review of the land tax assessments for the Property for the 2007 and 2008 land tax years is extended to 4 April 2023.
- The land tax assessments in respect of the Property for the 2007 and 2008 land tax years are revoked and remitted to the Chief Commissioner to reassess on the basis that the Property is exempt as the Applicants’ principal place of residence.
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