Administrative Decisions Tribunal New South Wales

• Medium Neutral Citation: Ghali v Chief Commissioner of State Revenue [2011] NSWADT 261
• Hearing dates: 20 October 2011
• Decision date: 14 November 2011
• Jurisdiction: Revenue Division
• Before: R Perrignon, Judicial member

Decision

The assessments of the Chief Commissioner for the tax years 2004, 2005, 2006 and 2007 are set aside.

• Catchwords: Land tax - principal place of residence exemption - taxpayer absent from subject property for six-year period - resides in and renovates another property partly owned by him - returns to live at subject property twice a year for about three weeks at a time
• Legislation Cited: Land Tax Management Act 1956; Taxation Administration Act 1996
• Cases Cited: Chief Commissioner of State Revenue v Aldridge [2003] NSWADTAP 50; Chief Commissioner of State Revenue v Ferrington [2004] NSWADTAP 41; Chief Commissioner of State Revenue v McIlroy [2009] NSWADTAP 21; Chief Commissioner of State Revenue v Mesiti [2003] NSWADTAP 57; Mohamed v Chief Commissioner of State Revenue [2010] NSWADT 146
• Category: Principal judgment
• Parties: Magdi Botros Ghali (Applicant); Chief Commissioner of State Revenue (Respondent)
• Representation: Counsel; N Allan (Applicant); S Free (Respondent); Northside Law (Applicant); Crown Solicitor (Respondent)
• File Number(s): 116026

Reasons for Decision

1 On 16 November 2010, the Chief Commissioner of State Revenue assessed the applicant's property at Beecroft Road, Pennant Hills, to land tax for the tax years 2004, 2005, 2006 and 2007.

2 The applicant, Mr Ghali, seeks review of those assessments pursuant to section 96 of the Taxation Administration Act 1996. He submits that the property was exempt from land tax, because it was his principal place of residence.

3 He has made formal objection pursuant to section 86 of the Act, and his objection has been disallowed. The requirements of section 96(1) being satisfied, it is common ground that the Tribunal enjoys jurisdiction to review the assessments.

4 Mr Ghali bears the onus of proving his case: section 100(3).

Facts

5 For the most part, the facts are not in dispute.

6 Mr and Mrs Ghali married in 1978. In 1982, they jointly purchased a house in Harold Avenue, Pennant Hills, and occupied it as their matrimonial home. At some stage, they also acquired jointly an investment property in Pennant Hills Road.

7 In 1999, the marriage came to an end, and the couple separated. They did not, however, divorce. Their marriage remains legally undissolved. Though they have lived apart since 1999, their relationship remains an amicable one.

8 In 1999, Mr Ghali purchased in his sole name the subject property in Beecroft Road, intending to reside there. With the consent of Mrs Ghali, some or all of the purchase price was borrowed on the security of the investment property in Pennant Hills Road.

9 After he had purchased the Beecroft Road property, Mr Ghali moved out of the matrimonial home at Harold Avenue, and occupied the Beecroft Road property as his home. Mrs Ghali continued to occupy the former matrimonial home in Harold Avenue.

10 This state of affairs continued until 2001. Mrs Ghali then asked Mr Ghali if he would please renovate the home at Harold Avenue for her. She admired the way he had renovated his home at Beecroft Road, and wished to enjoy a similar standard of living. She reminded him that she had assisted him to purchase Beecroft Road, by consenting to the use of the Pennant Hills Road property as security.

11 Mr Ghali obliged her. He arranged for Mrs Ghali to move out of Harold Avenue, and into the Beecroft Road property, with all her furniture. Mr Ghali explained to the Tribunal that he needed the Harold Avenue house empty of furniture in order to conduct the extensive renovations he envisaged.

12 In May 2001, Mr Ghali moved out of his home at Beecroft Road, and into the Harold Avenue property. The latter was bereft of all furnishings, except a bed and a kitchen table, which Mr Ghali brought with him. He also brought his clothes, toiletries and bed linen.

13 On moving into Harold Avenue, he commenced to renovate it. The renovations were extensive. Though their extensiveness was not contested, Mr Ghali put before the Tribunal a great number of receipts by way of corroboration. He consulted Mrs Ghali from time to time on her choice of fittings and finishes. The renovations took over six years to complete, finishing in November 2006.

14 In March 2007, Mr Ghali moved back into the Beecroft Road property, and Mrs Ghali moved back to her home at Harold Avenue.

15 During the long course of the renovations, Mr Ghali lived at the Harold Avenue property, and Mrs Ghali lived at the Beecroft Road property, except for two occasions each year. On these occasions, they would swap residences - Mr Ghali would move back into Beecroft Road, and Mrs Ghali into Harold Avenue. This occurred annually for about three weeks from around 20 December to 10 January, and for about the same period of time from mid-July to early August.

16 Mr Ghali explained that he was a member of the Coptic Christian religion. During the Christmas and New Year period, he would celebrate Christmas at the appropriate time for members of that faith, and entertain his friends at the Beecroft Road home. He explained that his wife would not attend these celebrations, as she was of Japanese background, and did not speak Arabic, which was the language of his guests.

17 In the period July to August, Mr Ghali would celebrate the anniversary of his purchase of his Beecroft Road home, again by entertaining his friends there and living there. His wife would again return to her home at Harold Avenue at this time.

18 Mr Ghali is a bus driver. While he lived at Harold Avenue, he would work his normal shift, and return home to the Harold Avenue property to live. His spare time was consumed in executing the renovations there.

19 He did not notify the Roads and Traffic Authority that he had moved to Beecroft Road when he moved out of the matrimonial home in 1999. He did not do so until March 2007. Until then, his registered address had continued to be at Harold Avenue.

20 On 9 August 2002, he completed a passport application, describing his home address as Harold Avenue. On 3 November 2002, he completed a passenger entry card on which he recorded his intended address as Harold Avenue.

21 Similarly, in December 2005 Mrs Ghali recorded her residential address as Beecroft Road in a passport application. In October 2006 she described her intended address as Beecroft Road on a passenger entry card.

22 From 2004 to 2006, the address disclosed on Mr Ghali's tax returns was Harold Avenue. Throughout the entire period in question, his home address, as notified to the Electoral Commission, remained Harold Avenue.

23 On the other hand, his electricity bills, gas bills and mobile phone bills were sent to Beecroft Road.

24 His bank statements were forwarded to a post office box in West Pennant Hills.

Mr Ghali's evidence

25 Mr Ghali gave evidence orally and by way of affidavit. He told the Tribunal that his sole purpose for occupying the Harold Avenue property was to conduct renovations there, and that it was always his intention to move back to his own home at Beecroft Road on their completion.

26 He agreed that he had specified Harold Avenue as his address in his passport application of August 2002, and in his entry card about three months later. In the passport application, he said, he used that address to be consistent with his driver's licence, which he had not bothered to change to Beecroft Road after he had first moved there to live in 1999. He put the same address on his entry card in order to be consistent with his passport and driver's licence, believing - probably, with good reason - that any other address would raise suspicion.

27 In an affidavit sworn on 7 June 2011, Mr Ghali said:

'8. I did not at any time occupy Beecroft Road as a PPR after I moved into Harold Avenue in May 2001 until I returned in March 2007.

9. Both residences have at all times continued to be capable of being used and occupied as residences.'

28 He qualified this in a supplementary affidavit sworn on 18 August 2011:

'3. Although I did not continuously occupy Beecroft Road after I moved into Harold Avenue in May 2001 until I returned in March 2007, I regarded it as my PPR. Twice a year my wife and I returned to our respective PPRs for a short period for the reasons explained in the next following clauses.'

29 Those reasons have been recited above. Mr Ghali also said:

'8. In the same way that I regarded my home at Beecroft Road as my place of invitation to friends for personal celebrations, I have always regarded it as my PPR. My period of overnight accommodation at Harold Avenue was purely for the purpose of convenient access to the building for tasks as a renovator of the property for my wife because I would recommence renovation tasks in the morning before I went to work which was normally an 11.00 am start with an 8.00 pm or 9.000 pm finish. ....

9. The purpose of my use of Harold Avenue was the non-residential purpose of renovating it as if I were a tradesman and overseer of other tradesmen. ....'

30 In oral evidence, Mr Ghali explained the error in paragraph 8 of his first affidavit by saying that 'principal place of residence' was a legal concept with which he was unfamiliar. Though that paragraph does nothing to assist his case, I am satisfied that it was the result of confusion on his part, and that his statement in the supplementary affidavit accurately reflected his subjective view of the Beecroft Road property.

31 Mr Ghali was cross-examined, but his evidence was essentially unchallenged. Save for the one paragraph referred to, it was internally consistent, and not so improbable as to cause the Tribunal to doubt its veracity.

32 The period it took to complete the renovations, and the period during which Mr Ghali resided at Harold Avenue for that purpose, was remarkably long. However, I am satisfied that he resided there solely for the purpose of executing the renovations. Such an intention is corroborated by the Spartan conditions in which he lived throughout the long period of his residence there. They were unrelieved at any stage of the renovations. Had he any intention of staying for another purpose, or of residing permanently, one would have expected him to arrange for at least some degree of comfort. The lack of it, for such a long time, strongly suggests a single-mindedness of purpose - that is, the purpose of renovating the property.

33 Mr Ghali was motivated, it seems, by a strong desire to maintain his amicable relationship with Mrs Ghali. He also enjoyed a proprietary interest in the Harold Avenue property. A legitimate expectation of benefiting from the renovations might readily be inferred, at least by way of an increase in the value of the asset. In those circumstances, a desire to conduct lengthy renovations at Harold Avenue is not as surprising as it might otherwise be. I am satisfied of the truth of Mr Ghali's evidence, and make findings in accordance with it.

Mrs Ghali's evidence

34 Mrs Ghali also gave evidence by way of affidavit. In her first affidavit, sworn on 7 June 2011, she said of the length of the renovations:

'10. The renovation was slower than I expected at the beginning, but I had to abide by the Applicant's available time and energy in conducting the repairs and renovations.'

35 From this, I infer that the renovations were not originally envisaged to last for six years. Of her subjective attitude to Harold Avenue, Mrs Ghali said:

'8. I have always regarded Harold Avenue as my PPR during my absence from it, because of our separation and the need for the Applicant to live there while he was working on the house outside of his employed working hours.'

36 In a supplementary affidavit sworn on 19 August 2011, Mrs Ghali said:

'6. I have always regarded my home at Harold Avenue as my PPR in the same way as I regard Beecroft Road as my husband's PPR. My stay at Beecroft Road was an arrangement of convenience while my husband carried out renovations to the building at Harold Avenue ....

.....

9. To maintain our separated lifestyles, it was necessary for me to occupy Beecroft Road and for my husband to occupy Harold Avenue while he carried out the renovations.'

37 A taxpayer's subjective attitude to the property assessed to land tax is relevant to the issue as to whether it was his principal place of residence, though that subjective attitude is to be ascertained objectively: Chief Commissioner of State Revenue v Ferrington [2004] NSWADTAP 41; approved in Chief Commissioner of State Revenue v McIlroy [2009] NSWADTAP 21 [at 44-45]. As Mrs Ghali is not the taxpayer, her attitude to either property is not directly relevant. Her evidence as a whole, however, corroborates that of Mr Ghali. It was not challenged. It is consistent with the evidence of Mr Ghali, and I make findings in accordance with it.

Issue for determination

38 The sole issue for determination in these proceedings is whether, in respect of the tax years 2004, 2005, 2006 and 2007, the Beecroft Road property was Mr Ghali's principal place of residence, as defined in clause 2 of Schedule 1A to the Land Tax Management Act 1956.

Submissions

39 Mr Ghali says it was, because it was 'used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose', in satisfaction of the requirements of clause 2(1) of Schedule 1A to the Act.

40 The Chief Commissioner says that, throughout the relevant period, Mr Ghali had two places of residence - Harold Avenue and Beecroft Road. The applicant must prove that, of these, Beecroft Road was the 'principal' one. The Tribunal must decide that issue on objective grounds. The subject views of the applicant are 'of little significance'.

41 On the evidence, he says, Mr Ghali did not view Beecroft Road as his principal place of residence. He listed Harold Avenue as his residence in a passport application, and an entry card, and maintained that address on the records held by the Road and Traffic Authority, the Australian Taxation office and the Electoral Commission throughout most of the period concerned.

42 Objectively, the Chief Commissioner says, the pattern of occupation strongly favoured Harold Avenue as Mr Ghali's principal place of residence, because:

'... the overwhelming majority of [his] time during this period was spent living at Harold Avenue. His use and occupation of the land had the settled character of residential occupation as a principal place of residence'.

43 In contrast, the Chief Commissioner says that Mr Ghali 'used Beecroft Road effectively as a holiday retreat, as a place to rest from his renovation works and celebrate significant dates on the calendar with friends'.

44 At the hearing, counsel for the Chief Commissioner ventured an argument, not prefigured in the respondent's written submissions, to the effect that in order to satisfy the requirements of clause 2(2)(a) of Schedule 1A to the Act ( infra ), Mr Ghali would have had to reside at the Beecroft Road property continuously for the six months prior to the commencement of each tax year. It is common ground that Mr Ghali did not do so. It has been unnecessary to consider that submission because, for the reasons given below, I am satisfied on other grounds that Mr Ghali is not entitled to the benefit of clause 2(2)(a).

Legislation

45 Land tax is levied and payable on the taxable value of all land in New South Wales, except land which is exempted from taxation: section 7, Land Tax Management Act 1956. For each calendar year, tax is charged on land as owned at midnight on 31 December the previous year: section 8. For the calendar years 2004 to 2007 inclusive, section 10(1)(r) provided that land attracting the 'principal place of residence' exemption under Schedule 1A was exempt from land tax.

46 Schedule 1A came into effect on 31 December 2003. Clause 2 of the Schedule provided relevantly:

(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 on 1 January 2004 or any succeeding year, if:

(a) the land has a land value in respect of the year of less than the premium tax threshold, and

(b) the land is ... a parcel of residential land .....'

(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 purpose 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.

47 'Principal place of residence' was defined in section 3(1) of the Act to mean:

'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.'

48 Clause 2(2) mirrors section 3(3) of the Act as it stood before Schedule 1A was enacted. That section was considered by the Appeal Panel in Chief Commissioner of State Revenue v Aldridge [2003] NSWADTAP 50. The Appeal Panel observed at [12]-[16]:

'[12] Given the scheme of the Act aforementioned, it is implicit in Section (3)(3)(b) that the time at which the Chief Commissioner must be satisfied that the land is used and occupied by the owner as the owner's principal place of residence must be as at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied. Accordingly, for land to be exempt from taxation under Section 10(1)(r) of the Act, among other things:

(i) (to satisfy the principal place of residence definition in Section 3(1)) that land must be the one place of residence that is, among the one or more places of residence of owner within and outside Australia, the principal place of the owner (as midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied) AND

(ii) (to satisfy Section 3(3)) (a) that land and no other land or flat must, since before the first day of July that last preceded the commencement of that year, have been continuously used and occupied by the owner for residential purposes and for no other purpose OR (b) in any other case, the Chief Commissioner must be satisfied that the land is used and occupied by the owner as the owner's principal place of residence (as midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied); AND

(iii) (to satisfy Section 10(1)(r)) that land must be used and occupied (as at midnight on the thirty-first day of December immediately preceding the year for which the land tax is levied) as the principal place of residence of the owner and for no other purpose except as provided in Section 10.

[13] If any one of the conditions referred to above is not satisfied, Section 10(1)(r) of the Act will not apply.

[14] Section 10(1)(r) requires that the property "is used and occupied as the principal place of residence of the owner". A subjective intention to occupy is not alone sufficient to bring a property within Section 10(1)(r). In Zakariya v Chief Commissioner Office of State Revenue [2003] NSWADT 26, a case involving a requirement of occupation of property under the First Home Owners Grant Act 2000, Ms Needham, Judicial Member, held at paragraph 14 as follows:

'It does not appear to me that the subjective intention of the applicant at the date of purchase brings him within the eligibility criteria. Sub-section 12(1) provides that the applicant "must occupy the home as the applicant's principal place of residence" within the twelve-month period. Those words require an actual occupation, not merely an intention to occupy.

Accordingly, the applicant's stated intention (which is not contested by the respondent) does not bring him within the eligibility criteria.'

[15] In respect to the requirement that the land must be "occupied", Bowen JA in Commissioner of Land Tax v Christie [1973] 2 NSWLR 526 stated at 533-534:

"Occupation" is not synonymous with legal possession. It includes possession, but it also includes something more: see Newcastle City Council v Royal Newcastle Hospital . It involves an element of control, of preventing or being in a position to prevent the intrusion of strangers ( Newcastle City Council v Royal Newcastle Hospital ). It is for this reason that physical presence on the land and fencing are evidence of occupation. But continuous physical presence or physical presence on every part of the land does not have to be shown in order to establish occupation. If it were necessary to prove physical presence on every part of a residential block to secure the deduction a substantial proportion of residential blocks could well be denied it. It is not uncommon in our community for there to be portions of such blocks which are rarely or never visited. Indeed, as these present cases illustrate, there may well be portions of such blocks which are precipitous, or are under water or are covered with dense bushland and which are, therefore, in a practical sense difficult if not impossible to traverse physically. This does not mean they are not "occupied" in a legal sense. To hold otherwise, would be to subvert the obvious intent of s 9(3)(e). Nor, although the presence of fencing may be some evidence of occupation, does the absence of fencing establish that there is no occupation: Newcastle City Council v Royal Newcastle Hospital.

[16] In Flaracos v Chief Commissioner of State Revenue [2003] NSWSC 68, Gzell J held at paragraph 29: "So long as the person retains the right to possession and controls possession, that person remains in occupation, in my view."'

49 Of the discretion provided by section 3(3)(b) - now, clause 2(2)(b)of Schedule 1A - the Appeal Panel found:

'[26] We agree with the Appellant that the Tribunal at first instance erred at law in holding that the Chief Commissioner had a discretion to treat the Respondents' Croydon property as the Respondents' principal place of residence and in purporting to exercise that discretion in favour of the Respondents. Section 3(3)(b) of the Act [whose terms are now found in clause 3(3)(b) of Schedule 1A] does not confer a true discretion on the Chief Commissioner. If the evidence of the factual circumstances supports that a particular parcel of land or a flat is used and occupied by a person as the person's principal place of residence (as defined in Section 3(1) of the Act) as at midnight on 31 December in a particular year, the Chief Commissioner must be "satisfied" of that fact. If the factual circumstances do not support that a particular parcel of land or a flat is used and occupied by a person as the person's principal place of residence as at midnight on 31 December in a particular year, the Chief Commissioner cannot be "satisfied" of that fact.'

50 The principal place of residence exemption was also considered by the Appeal Panel in Chief Commissioner of State Revenue v Mesiti [2003] NSWADTAP 57. In that case, the taxpayer claimed successfully that a home she owned at Willoughby in Sydney was her principal place of residence, despite the fact that she lived full-time with her partner at his home in Drummoyne during the relevant tax years. She maintained her two sons at the Willoughby home, kept most of her belongings there, stayed there whenever her partner was away, regarded it as her principal place of residence, and intended to return there on a full-time basis in the event that her relationship with her partner came to an end.

51 Among other issues, the Appeal Panel considered:

(1) whether the Willoughby property had been 'used and occupied' as a principal place of residence at the relevant times,

(2) whether any other property (ie, Drummoyne) had been so used and occupied, and

(3) whether, of her two residences, Willoughby was the principal one.

Whether land 'used and occupied' by owner

52 In finding that the Willoughby property had been used and occupied as a principal place of residence, the Panel observed at [41] to [47]:

'41 The test contained in subparagraph (a) [of section 3(3)] has a number of elements. The first links up with the phrase used in S.10(1)(r), "used and occupied as", a phrase that is not used in the definition section, S. 3(1). Use and occupation would be required for the purposes of S. 10(1)(r) in any event. This test then adds the following requirements:

-the land must have been continuously used and occupied since a certain date;

-that continuous use and occupation must have been by that person;

-the use and occupation must have been for residential purposes;

-it must have been for no other purpose ; and

- no other land has, since that date, met those other requirements.

42 "Use" and "occupation" are separate and cumulative requirements. Knowles v Newcastle Corporation (1909) 9 CLR 534 at 545; Commissioner of Land Tax v Christie [1973] 2 NSWLR 526 at 533.

43 "Use" has regard to the purpose to which the land is put. Commissioner of Land Tax v Christie supra at 533. The only premises in issue in this case, the Willoughby property and the Drummoyne property, were at all times used for residential purposes and for no other purposes.

44 "Occupation", on the other hand, deals with the relationship between a person and the land in question. Bowen JA, as he then was, said in Christie supra, at 533-4,

"'Occupation' is not synonymous with legal possession. It includes possession, but it also includes something more: see Newcastle City Council v Royal Newcastle Hospital (1957) 96 CLR 493, at 500 et seq ; confirmed (1959) 100 CLR 1; [1959] AC 248. It involves an element of control, of preventing or being in a position to prevent the intrusion of strangers. ( Newcastle City Council v Royal Newcastle Hospital (1959) 100 CLR 1 at 4; [1959] AC 248 at 255). It is for this reason that physical presence on the land and fencing are evidence of occupation. But continuous physical presence or physical presence on every part of the land does not have to be shown in order to establish occupation. ...Nor, although the presence of fencing may be some evidence of occupation, does the absence of fencing establish that there is not occupation: Newcastle City Council v Royal Newcastle Hospital (1957) 96 CLR 493 at 504."

45 On the other hand, legal possession is not required for "occupation". A person who, without having any title, takes actual possession of a house or piece of land, whether by leave of the owner or against his will, is the occupier of it. Pro-Campo Ltd v Commissioner of Land Tax (NSW) (1981) 81 ATC 4270 at 4277 .

46 We agree with the Appellant that Section 3(3)(a) of the Act is not limited to apply only to cases where the taxpayer is the owner of two (or more) properties used for residential purposes. It is possible for land or a flat to have been "continuously used and occupied by a person for residential purposes and for no other purpose" within the meaning of Section 3(3)(a) without the person being the "owner" (as defined in Section 3(1) of the Act). Nothing in the language of Section 3(3)(a) of the Act suggests otherwise. We therefore uphold ground (c) of the grounds of appeal.

47 We have no doubt that the Willoughby property was at all relevant times both used and occupied by the respondent, that it was so used and occupied continuously by her, that the use and occupation was for residential purposes, and that it was used and occupied by her for no other purpose. Indeed, we do not understand counsel for the appellant to contend to the contrary.'

53 In this case, as in Mesiti , Mr Ghali was the owner of the subject property throughout the period in question. He had control over it. It was he who invited Mrs Ghali to live there, and to install her furniture and belongings there. It was he who decided the duration of her stay, and who decided that she would vacate the property twice a year to accommodate his desire to recreate and entertain friends. Like Mrs Mesiti, he used the land for residential purposes and for no other purposes, even though he arranged for his wife to live in the property for most of the time while he was living elsewhere. Like Mrs Mesiti, he occupied the land because, as its sole owner, he enjoyed control over it and exercised that control. He maintained the right to exclude strangers, and even - however politely - to exclude Mrs Ghali when it suited his convenience. There is no evidence that the Beecroft Road property was used for any purpose other than residential purposes.

54 For those reasons, I am satisfied that at all relevant times the land was 'continuously used and occupied by [Mr Ghali] for residential purposes and for no other purposes', in satisfaction of the requirements of clause 2(2)(a) of Schedule 1A.

Whether no other land used and occupied as PPR

55 In considering whether the Drummoyne property had been so used and occupied by Mrs Mesiti, the Appeal Panel said at [48] to [51]:

'48 The only possible point at issue in the application of this subsection to this case is whether "no other land" was so used and occupied by her. The only relevant land is the Drummoyne property.

49 On the only evidence in this case, over the relevant period the Drummoyne property was continuously used for residential purposes and for no other purpose. The only question remaining is whether that use and occupation was by the respondent.

50 The Drummoyne property was at all times owned by the respondent's partner and husband to be. She had no legal interest in it. She did not even have possession of it, whether legal possession or otherwise, let alone that "something more" to which Bowen JA referred in Christie supra. There is no evidence that she had any element of control over it, or that she was in any way able to prevent the intrusion of strangers into it. That possession and control resided in her partner, the owner of the property, and in him alone. It was he who was using and occupying it. She was living there, as she admitted, and as is evidenced by her change of address on her licence and notification to the electoral authorities. But that is not the same thing as "use and occupation" for the purposes of this legislation.

51 It follows that, on the evidence, no land other than the Willoughby property was continuously used and occupied over the relevant period by the respondent for residential purposes.'

56 Mr Ghali's relationship to the Harold Avenue property was quite different from that of Mrs Mesiti to the Drummoyne property. Mrs Mesiti had no interest in her partner's property at Drummoyne. Mr Ghali was at all times a co-owner of the Harold Avenue property, and remains so. I am satisfied that he also exercised control over it, as he had at all times the right to exclude strangers, jointly with Mrs Ghali. Like the Beecroft Road property, it was used for residential purposes, and for no other.

57 For those reasons, Mr Ghali's relationship to the Harold Avenue property distinguishes his case from Mesiti . In this case, it cannot be said that 'no other land [ie, no land other than Beecroft Road], has been continuously used and occupied by [Mr Ghali] for residential purposes and for no other purpose'. For that reason, the requirements of clause 2(2)(a) of Schedule 1A are not met, and Mr Ghali is not entitled to the benefit of that provision.

Whether principal place of residence

58 It remains to consider whether the Tribunal is satisfied that the alternative requirements of clause 2(2)(b) were met, namely, that 'the land is used and occupied by the person as the person's principal place of residence'.

59 In Mesiti , the Appeal Panel approached this issue in the following way, at [59] and following:

'59 Whether it was her principal place of residence is an objective fact, to be decided by us. Her own impression does not conclude the matter. Nevertheless, it is relevant that she was not cross-examined on the following statement made by her:

"(k) Up until June 2002 I considered Willoughby my home and principal place of residence as did my sons. I had full control over the property at all times and the only reason I didn't sell it when I took up full-time residence at Drummoyne was because I still considered it my home while my children were living there and I wasn't prepared to ask them to leave their family home while there was even the slightest chance that my relationship would not be permanent."

60 We note that in that statement she speaks of full time residence at Drummoyne, and that the question is not whether Willoughby was her family home but whether it was her principal place of residence.

61 Nevertheless, when we compare the respective rights that she had in respect of the two places of residence, despite the indications to the contrary that we have noted, in all the circumstances we are persuaded that the Willoughby property was, at the relevant times, her principal place of residence. She owned it. She had continuous control of possession and occupation over it. Apart from her clothing, her possessions were there. Her sons lived there, rent free. The ties of her connection to it as a residence were stronger and more settled than those of her connection to Drummoyne.'

60 Similarly, Mr Ghali owned the Beecroft Road property. He had continuous control and possession of it. Apart from a bed, bed linen, toiletries, some clothes and a table, all his possessions were there. His wife lived there, rent free.

61 In one sense, his ties to Beecroft Road were stronger than Mrs Mesiti's ties to her Willoughby home, because she only intended to return permanently to Willoughby if her relationship ended. To that extent, her return was contingent upon the failure of her relationship. I am satisfied that, at all relevant times, Mr Ghali had a present intention to return to his home at Beecroft Road when the renovations concluded. There was no doubt that they would conclude - the date of their conclusion was a matter entirely within his control. There was nothing contingent about his return to Beecroft Road. It was certain. Only the timing was uncertain, and that uncertainty was at all times capable of being rendered a certainty by Mr Ghali.

62 As Mr Ghali resided both at Beecroft Road and at Harold Avenue during the relevant period, it is also necessary to consider which of them was his 'principal' residence. Relevant considerations include his subjective view as to which was his principal place of residence, and objective factors such as the relative amount of time he spent in each, and which of them he nominated as his address in communications with the various government and other agencies with which he had to deal.

63 Subjective factors, objectively ascertained, are relevant, though not conclusive. I am satisfied that, throughout the period in question, Mr Ghali regarded Harold Avenue as a renovation site, where he lived solely in order to execute the renovations which he had undertaken to please Mrs Ghali. He regarded Beecroft Road as his real home, and at all times intended to return there.

64 His occupation of Harold Avenue was lengthy. To that extent, it acquired a 'settled character', as the Chief Commissioner as submitted. However, because the sole purpose of that occupation was a temporary one of renovation, and there was an ever-present intention to return to Beecroft Road as soon as the renovation was complete, the occupation of Harold Avenue was characterised by an underlying transience which did not apply to Beecroft Road.

65 This is to be distinguished from cases like Mohamed v Chief Commissioner of State Revenue [2010] NSWADT 146, in which the taxpayer intended to stay in her home, unless she married a spouse who desired to live elsewhere. It is also distinguishable from cases where home buyers intend to inhabit a home until they are able to upgrade to a bigger or more suitable one. Such circumstances do not necessarily impart a sense of transience to an owner's occupation. In this case, there was never any doubt in Mr Ghali's mind that he would leave Harold Avenue, and resume occupation at Beecroft Road, as soon as convenient after completion of the renovations. He never intended permanently to reside at Harold Avenue.

66 The respondent rightly submits that an intention to renovate is not inconsistent with an intention to reside. On the contrary, it is common for owners to renovate the homes in which they permanently and principally reside. Mr Ghali, however, was renovating a home which he had left permanently when his marriage came to an end. He moved back there for the sole purpose of renovating it, so that his wife could enjoy a higher standard of living. He had no intention of residing there after the renovations were finished. Even though an intention to renovate is not necessarily inconsistent with an intention to reside permanently, in this case the two did not coincide.

67 On the other hand, it is common ground that Mr Ghali spent much more time at Harold Avenue than at Beecroft Road. This is a strong indicator as to which of two residences is the principal one, though not conclusive. As the Appeal Panel observed in Mesiti at [57]:

'Another strong indication is the fact that [Mrs Mesiti] spent practically all her time living [at Drummoyne], and little time living at the Willoughby property. .... That fact also does not conclusively demonstrate the conclusion, and it would be wrong to decide that a place was the principal place of residence merely, or even mainly, on the basis of a comparison of times spent in each.'

68 The relative amount of time spent in each of two residences proved to be critical in McIlroy . In that case, the taxpayer had convinced the Tribunal at first instance that his principal place of residence was at Palm Beach, despite the fact that he also lived with his partner and children in Melbourne. The Tribunal had found that he spent around a third of his time at Palm Beach. The Appeal Panel had regard to fresh evidence, which demonstrated that he spent only 10% to 13% of his time at Palm Beach. It was not satisfied that this relatively small amount of time, even when combined with Mr McIlroy's subjective attitude to the Palm Beach property, was sufficient to outweigh the strength of his connection with Melbourne, in circumstances where he remained in a committed relationship with his partner, that she and their children resided there permanently, and that he resided with them there.

69 The facts in McIlroy are distinguishable from this case, because the marital relationship between Mr and Mrs Ghali had come to an end long ago, even if the marriage remained undissolved, and Mr Ghali did not reside with family members at Harold Avenue at any time during the period in question.

70 The evidence concerning the provision of his residential address to public utilities, banks and other agencies is equivocal, as is often the case. Some of it pointed to Harold Avenue as the principal residence, some of it to Beecroft Road. I am satisfied that he neglected - whether through oversight or lack of immediate necessity - to change his address with the RTA after moving out of Harold Avenue in 1999, and that the later use of that address in his passport application and entry card flowed from that circumstance. The failure to notify the Electoral Commission of his move to Beecroft Road is probably of a similar nature. The use of Harold Avenue as his address for taxation purposes appears to have been a matter of convenience. After all, he resided there for most of the time. The fact that his electricity, gas and mobile phone bills continued to be directed to Beecroft Road, tends to corroborate his permanent ties with that address.

71 Whether it favours Beecroft Road or Harold Avenue as Mr Ghali's principal place of residence, none of this evidence causes the Tribunal to doubt that he regarded Beecroft Road as his home, that he intended at all times to return there permanently, and that he viewed his stay at Harold Avenue as transient, and one of convenience only, for the purpose of renovations.

72 For the reasons given above, though the facts in this case are unique, they more closely resemble those of Mesiti than McIlroy . I am satisfied that, of the two properties in which Mr Ghali resided at the relevant times, the Beecroft Road property was the one in which he principally resided. Mr Ghali has satisfied the requirements of clause 2(2)(b), by establishing that Beecroft Road was 'used and occupied by [him as his] principal place of residence'.

Concession for absences from home

73 In passing, counsel for the Chief Commissioner referred to the concession for absences from a taxpayer's former residence provided by clause 8 of the Schedule. This is not a case which attracts that concession. It is available only to taxpayers who reside in a property which they do not own.

74 Mr Ghali had a proprietary interest in each of the two houses in which he resided. Clause 8 was not intended to apply to such circumstances, and does not limit or prevent the application of clause 2(2)(b) to them in this case.

Orders

75 The assessments of the Chief Commissioner for the tax years 2004, 2005, 2006 and 2007 are set aside.

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Decision last updated: 14 November 2011