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Banfirn Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 1058
Bayton Cleaning Company Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 657; 109 ATR 879
Bonner v Chief Commissioner of State Revenue [2022] NSWSC 441
Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd [2020] NSWCA 126
Compass Group Education Hospitality Services Pty Ltd v Commissioner of State Revenue [2021] QCA 98
Drake Personnel Ltd v Commissioner of State Revenue (Vic) (1998) 40 ATR 304
Drake Personnel Ltd v Commissioner of State Revenue (2000) 2 VR 635; [2000] VSCA 122
E Group Security Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1190
Electrolux Home Products Pty Ltd v Australian Workers’ Union (2004) 221 CLR 309; [2004] HCA 40
H R C Hotel Services Pty Ltd v Chief Commissioner of State Revenue [2018] NSWSC 820; 108 ATR 84
Jackmain (a pseudonym) v R (2020) 102 NSWLR 847; [2020] NSWCCA 150
JP Property Services Pty Ltd v Chief Commissioner of State Revenue [2017] NSWSC 1391; 106 ATR 639
Olde English Tiles Australia Pty Ltd v Transport for New South Wales [2022] NSWCA 108
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4
Securecorp (NSW) Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 744
Southern Cross Community Healthcare Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317
Southern Cross Group Services Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 666; 110 ATR 16
UNSW Global Pty Ltd v Chief Commissioner of State Revenue [2016] NSWSC 1852; 102 ATR 577
Background
In the Supreme Court proceeding below, E Group Security Pty Ltd (“E Group”) sought review of payroll tax assessments that were issued by the Chief Commissioner. The assessments were issued by the Chief Commissioner on the basis that E Group was an “employment agent” (within the meaning of that term in s. 37 of the Act) and liable for payroll tax on payments made to its service providers. The determination related to the provision of security guarding services by E Group to its clients.
It was common ground before the primary judge (Ward CJ in Eq) that the definition of “employment agency contract” in s. 37 of the Act was to be construed in accordance with the reasoning in UNSW Global Pty Ltd v Chief Commissioner of State Revenue [2016] NSWSC 1852; 102 ATR 577 (“UNSW Global”) at [62], that an employment agency contract was a contract under which “a person procures the services of another person in and for the conduct of the business of the employment agent’s client”. Ward CJ in Eq applied the UNSW Global construction and found that the arrangements by which E Group provided security guard services to its clients did not constitute “employment agency contracts” and did not give rise to a payroll tax liability. After the hearing at first instance but before the hearing of this appeal, judgment was delivered in Bonner v Chief Commissioner of State Revenue [2022] NSWSC 441 (“Bonner”), which suggested that the UNSW Global construction was erroneous and warranted appellate review.
The Statutory Framework
The relevant provision of the Payroll Tax Act under consideration was s. 37(1), which states:
“For the purposes of this Act, an employment agency contract is a contract, whether formal or informal and whether express or implied, under which a person (an employment agent) procures the services of another person (a service provider) for a client of the employment agent.”
Submissions
Chief Commissioner's submissions
The Chief Commissioner submitted:
the points made by Basten J in Bonner were correct, in that the UNSW Global construction imposed an unwarranted gloss upon the definition of “employment agency contract”, thereby departing from and narrowing the statutory text, contrary to ordinary principles of statutory construction. In particular, the requirement that the services be provided “in and for” the conduct of a business of a client excluded from the scope of the provisions cases where entities caused services to be provided domestically (and not in a business); and
the UNSW Global construction involved the restoration of a statutory proviso which had been removed from the legislation. That proviso was that the worker “carry out duties of a similar nature to those of an employee”, which had been removed by amendments in 1987, and were effectively reinstated by the UNSW Global construction.
Decision
The Court of Appeal held, in dismissing the Chief Commissioner’s three appeal grounds concerning the interpretation of s. 37(1) of the Act, that there should be no departure from the UNSW Global construction of s.37. This was based on the following findings:
This was based on the following findings:
it was difficult “to draw any inference from the absence of a proviso in 1998 legislation when the previous legislation had been repealed a decade before, and when the 1998 legislation was hastily enacted” (at [24]);
the Court referred to the principle of statutory construction set out by the High Court in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 at [52], to find that “legislative amendment to other provisions in a statute sustains the inference that a legislature is to be understood as endorsing the construction given to unamended provisions of the same statute” (at [29]);
the fact that the Act had been reviewed and amended regularly, and where the Chief Commissioner had himself consistently propounded the test in UNSW Global, which was originally proposed by him in 2016, meant “there is a powerful inference that the Legislature is to be taken to have endorsed the construction in UNSW Global” (at [33]). Further, the Court relied on Olde English Tiles Australia Pty Ltd v Transport for New South Wales [2022] NSWCA 108 to find that “the enactment of the 2017 amendments militate strongly against overturning the construction given to the statute in 2016” (at [42]);
there was “no artificiality in attributing to the Legislature an understanding that the term “employment agency contracts” bore the meaning given in UNSW Global” (at [40]);
there was no compelling reason to depart from the UNSW Global test (although the Court acknowledged that, “if the construction in UNSW Global were palpably wrong, this Court would overturn it” (at [43]));
the construction in UNSW Global reflects a “not unnatural meaning of the statutory words ‘procures the services of another person for a client of the employment agent’” (at [46]). Further, that construction accords with the purpose of the Act, by taking relationships which fall short of traditional employer/employee relationships and deeming them to be such;
the broader construction for which the Chief Commissioner contended gave rise to difficulties, and whilst the Court “would not place great weight on this consideration on which E Group relied, but nonetheless disfavouring impractical outcomes is an orthodox principle of construction” (at [48]); and
the significance of the harmonised payroll tax legislation in other jurisdictions, as well as the fact the change in the legal meaning of the law as contended by the Chief Commissioner would have retrospective effect, led the Court to conclude it would be “far better for the law to be changed, if indeed it is to be changed, by legislation, and with clearly stated transitional provisions” (at [53]).
Orders
Grounds 1, 2 and 3 of the amended notice of appeal, dismissed with costs.
The balance of the appeal to be listed for directions before the Registrar on a date to be advised.