Hogarth & Anor v Chief Commissioner of State Revenue 106078

Date of judgement 09 July 2013 Proceeding No. 126102
Judge(s) Deputy President Needham
Court or Tribunal Administrative Decisions Tribunal
Legislation cited Chapter 2, Part 8, Division 1A of the Duties Act 1997
Catchwords Duties Act – Housing Construction Acceleration Plan. A new home that has not been previously occupied or sold as a place of residence.
Cases cited Nairn v Chief Commissioner of State Revenue [2011] NSWADT 41

Summary

On 28 July 2011, Deputy President Needham delivered an ex tempore judgment in this matter dismissing the application and affirming the decision of the Chief Commissioner of State Revenue (the Chief Commissioner) to refuse to grant the applicants an exemption under Division 1A (NSW Housing Construction Acceleration Plan) ("HCAP") of the Duties Act 1997 (Act) for the purchase of their home at Elderslie NSW. Deputy President Needham found that the applicants could not satisfy the criteria in s.87C of the Act, namely that their purchase of the home was the purchase of a 'new home' within the meaning of the Act and that the 'new home' they purchased was complete and ready for occupation.

Background

This was an application for a review of a decision of the Chief Commissioner under Chapter 2, Part 8, Division 1A of the Act. This Division provides a reduction in duty in respect of the purchase or construction of new homes by persons who are not eligible under the First Home Owners Grant Act 2000. The effect of Division 1A is that where a home satisfies all of the eligibility criteria, ad valorem duty on the agreement to purchase a house is reduced by 50%.

The property in Elderslie was constructed by Clarendon Homes and construction was completed on 15 August 2008. The home was classified under the Building Code of Australia as a detached residential home and an Interim Occupation Certificate was issued on 25 August 2008. On 8 May 2009, the home was sold to Mr and Mrs Smith (the Smiths). The Contract for Sale contained a special condition that the home be leased back to Clarendon Homes for a 12-month period to enable the home to be used as a display home by Clarendon Homes.

Before the expiry of the lease, the Smiths exchanged contracts with the applicants on 14 May 2010 for the purchase of the home. The contract stated that the purchase of the property was subject to the existing tenancy with Clarendon Homes. The contract also specified that once the lease had expired in June 2010, Clarendon Homes would be responsible for undertaking renovations to the home (such as installing a hot water unit) so that the home could be transformed from a display home to a functioning home for the applicants to live in. The applicants took occupation of the home some six weeks later.

During the purchase process, the applicants lodged an application for a reduction in duty under the HCAP legislation. The Chief Commissioner determined that the applicants were not entitled to the exemption and the applicants sought a review of this decision in the Administrative Decisions Tribunal.

Decision

Deputy President Needham found that the applicants could not satisfy both of the criteria in s.87C of the Act.

Firstly, for an agreement to attract the HCAP exemption the agreement must be for a "new home". A "new home" is defined in the Act as a home that "has not been previously occupied or sold as a place of residence". The Deputy President found that when the home was built, it was built as a residence. This fact arose from the nature of the property described by the Contact for Sale between Clarendon Homes and the Smiths. The fact that the home was not intended to be used as a residence by the Smiths, but as a display home by Clarendon Homes as per the lease arrangement, did not change the fact that it was a home within the meaning of s.87J(1). The subjective intention of the parties was insufficient to displace the objective nature of the home itself. Because the home had been sold to the Smiths as a place of residence, the purchase by the applicants was the purchase of a home that had been previously sold as place of residence.

Secondly, the applicants failed to satisfy s.87C of the Act, which required that the acquisition of a new home had to be for a home that "is complete and ready for occupation". The applicants' own evidence was that when they purchased the home, it was not ready for occupation.

The Application was dismissed and the decision of the Chief Commissioner was affirmed.

Link to decision

Being Ex Tempore, the decision has not been published by the ADT.

Last updated: 17 May 2016